By Sabrina Bellantoni and Matt Johnson

Recently, District Court Judge Thomas S. Zilly in the Western District of Washington granted Ironburg Inventions Ltd.’s (“Ironburg”) motion for inter partes review (“IPR”) estoppelpursuant to 35 U.S.C. § 315(e)(2), which precludes Valve Corporation (“Valve”) from arguing non-petitioned grounds of invalidity of asserted patent claims in U.S. Patent No. 8,641,525 B2 in Ironburg Inventions Ltd. v. Valve Corporation, No. 2:17-CV-01182.  See D.I. 544; 545.

The patent-in-suit, U.S. Patent No. 8,641,525 B2 (“’525 Patent”), is owned by Ironburg and discloses an invention for “a hand held controller for a game console.”  In 2021, a jury found that Valve willfully infringed the ’525 Patent and awarded $4,029,533.93 in damages to Ironburg since Valve sold over 1.5 million devices known as the “Steam Controller.”  See D.I. 413; 416; 417.  On appeal, the Federal Circuit vacated only one ruling, which entailed the impact of an IPR petition filed by Valve in 2016 regarding the ’525 Patent.  See Ironburg Inventions Ltd. v. Valve Corp., 64 F.4th 1296 n.7 & 1297–1300 (Fed. Cir. 2023).

The IPR was instituted in part at the Patent Trial and Appeals Board (“PTAB”) as IPR2016-00948 (“948 IPR”), where Valve challenged different grounds of validity than those grounds challenged at the district court level.  In 2018, while cross-appeals were pending regarding the 948 IPR, Collective Minds Gaming Co. Ltd. (“Collective Minds”) petitioned for an IPR arguing claims of the ’525 Patent to be invalid on grounds not petitioned in the 948 IPR.   See Pet. for Inter Partes Review, Collective Minds Gaming Co. v. Ironburg Inventions Ltd., No. IPR2018-00354, 2018 WL 280722 (Jan. 3, 2018).  The PTAB instituted the request, but it was never ruled on since a settlement was reached between the parties.  Shortly after, the Federal Circuit affirmed the PTAB’s decision in the 948 IPR that certain claims were unpatentable.

On appeal from the Western District of Washington, the Federal Circuit remanded the case since the District Court incorrectly placed the burden on Valve to disprove IPR estoppel rather than requiring Ironburg to prove IPR estoppel.  In relevant part, IPR estoppel, 35 U.S.C. § 315(e)(2) states “[t]he petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision . . . may not assert. . . in a civil action arising in whole or in part under section 1338 of title 28 . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.”  Significantly, for the first time, the Federal Circuit provided the burden of proving IPR estoppel and stated that the burden is “by a preponderance of the evidence, that a skilled searcher exercising reasonable diligence would have identified an invalidity ground rests on the patent holder, as the party asserting and seeking to benefit from the affirmative defense of IPR estoppel.”  Ironburg Inventions, 64 F.4th at 1299.

On remand, the District Court acknowledged the importance of the timing of the 948 IPR since it occurred prior to the Supreme Court’s ruling in SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018).  There, the Supreme Court held that the PTAB is no longer allowed to institute an IPR in part, that is, to review less than all the claims in an IPR petition.  Therefore, Valve could have, but did not, request a post-SAS remand to the PTAB, where it could have sought to consolidate both IPRs involving the ’525 Patent.  If the IPRs were consolidated, it could have covered the two grounds of unpatentability that the jury found infringement on.

The District Court considered the evidence and relevant materials of Valve’s own search efforts surrounding the preparation of the 948 IPR to determine what references were reasonably discoverable.  The Court considered Valve’s classification searches and keyword searches conducted within the United States and Japan’s patent databases and searches for non-patent literature documents.  Based on the search methodology used, the Court found the sources in question all should have been discoverable by “a skilled searcher conducting a diligent search, at the relevant time.”  Thus, the Court precluded Valve pursuant to 35 U.S.C. § 315(e)(2) from arguing the asserted claims were unpatentable based on the grounds not petitioned in the 948 IPR.

Takeaway:

The granted motion by Judge Zilly exemplifies that a petitioner should exhaust all possible invalidity challenges in front of the PTAB, based on prior art that a skilled searcher exercising reasonable diligence could have discovered at that time, to prevent a patent owner the affirmative defense of IPR estoppel in a subsequent district court litigation regarding the same patent.

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Matt Johnson is one of the Firm's primary contacts on practice before the PTAB. Currently co-chairing the Firm's PTAB subpractice and involved in proceedings at the Board since the first day of their availability in September 2012, Matt regularly represents clients as both petitioners and patent owners at the Board. He further works as an advocate for clients in appeals from Board proceedings at the Federal Circuit.

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