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In Netflix, Inc. v. DIVX, LLC, No. 2024-1541 (Fed. Circ. 2026), the Federal Circuit clarified how to interpret ambiguous claim language involving modifiers. The issue was whether a modifier in a patent claim should apply to the nearest term or a more distant one when both interpretations are plausible.
The dispute arose when DivX accused Netflix of infringing a patent related to streaming partially encrypted video. The key claim language at issue involved a step of “locating encryption information that identifies encrypted portions of frames of video within the requested portions of the selected stream of protected video”. The phrase “within the requested portions of the selected stream of protected video” could be interpreted to modify either “encrypted portions of frames of video” or “encryption information.” This led to two different interpretations: either requiring only certain encrypted video frame portions to be located within a requested stream segment or requiring both video frame portions and the associated encryption information to be located within it.
Initially, the Patent Trial and Appeal Board (PTAB) adopted the first interpretation, that the associated encryption information was not needed to infringe the claim. Then, on remand for an unrelated issue, adopted the second interpretation, that the associated encryption information was needed to infringe the claim.
On appeal, the Federal Circuit reversed the PTAB’s interpretation. Relying on well established “precepts of English grammar,” the Federal Circuit determined that when claim language is ambiguous with respect to a modifier, and both readings are grammatically and semantically valid, the modifier is presumed to attach to the nearest reasonable term. The Federal Circuit added this presumption can be overcome, but only with strong contrary evidence. Since the Federal Circuit found no such evidence here, it determined that the first interpretation excluding encryption information was correct.
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