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Federal Circuit IP Blog

Nearest Referent, Nearest Resolution: Federal Circuit Clarifies Encryption Claim Language

February 27, 2026

Authored and Edited by Erik R. Puknys; Karlie I. Hinton; Ryan V. McDonnell

In Netflix, Inc. v. DivX, LLC, No. 24-1541 (Fed. Cir. Feb. 13, 2026), the Federal Circuit reversed the Patent Trial and Appeal Board’s claim construction, vacated its final written decision, and remanded for further proceedings.

Netflix petitioned for an inter partes review of DivX’s patent, asserting obviousness over a combination of prior art. The dispute centered on the construction of a claim limitation that required “locating encryption information that identifies encrypted portions of frames of video within the requested portions of the selected stream.” Over the dissent of one administrative law judge, the Board construed the limitation to require that the encryption information itself be located within the requested portions and concluded that Netflix had failed to show that the limitation was met by the prior art. Netflix appealed.

The Federal Circuit reversed, holding that the phrase “within the requested portions” modifies “encrypted portions of frames of video,” not “encryption information.” To reach this conclusion, the Court applied the “nearest reasonable referent” canon of grammatical construction, in which a modifier is presumptively understood to be tied to the nearest available semantically plausible modificand where commas or other textual signals are not used. The Court found this reading confirmed by the claim structure, specification embodiments, and the prosecution history of a related grandparent patent. Under the correct construction, the asserted prior art indisputably taught the disputed limitation, warranting remand for further proceedings.

Tags

Obviousness (35 USC § 103), claim construction

Related Practices

Appeals, Issues, and Legal Strategy

Federal Circuit and Supreme Court Appeals

Patent Office Invalidation Proceedings

PTAB Invalidation Proceedings: IPR and PGR

Related Industries

AI, Electronics, and Information Technology

Communications

Media

Related Offices

Palo Alto, CA

Washington, DC

Contacts

Erik R. Puknys
Partner
Palo Alto, CA
+1 650 849 6644
Email
Karlie I. Hinton
Associate
Washington, DC
+1 202 408 4481
Email
Ryan V. McDonnell
Associate
Washington, DC
+1 202 408 4167
Email

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