Ironburg Inventions LTD. v. Valve Corp., 21-2295 (Fed. Cir. 2023)

This case presented the Court of Appeals for the Federal Circuit with an opportunity to clarify the standards for determining estoppel of invalidity grounds in inter partes review (IPR) pursuant to 35 U.S.C. § 315(e)(2).

Ironburg initially sued Valve in 2015 for infringement of their U.S. Patent 8,641,525 (the ‘525 patent) which describes a handheld video game controller with the particular innovation of back control buttons. Valve’s “Steam Controller” included similar back buttons. The trial took place in 2021 over Zoom with the jury returning a verdict of willful infringement by Valve and awarding over $4 million in damages to Ironburg. Both parties appealed.

Valve raised on appeal the arguments that: first, the claims of the ‘525 patent are invalid as indefinite; second, that Valve is entitled to judgment as a matter of law because trial record contained insufficient evidence to find infringement, or alternately that Valve is entitled to a new trial because the trial court erroneously allowed a co-inventor to provide testimony wile Valve’s genera counsel’s testimony was excluded; third, the district court erred in denying Valve’s motion for judgment as a matter of law on the issue of willfulness, or alternatively for a new trial on willfulness; and fourth, Valve should not have been estopped from asserting prior art grounds against the ‘525 patent. Ironburg’s cross-appeal for enhanced damages was dismissed as the district court was within its discretion to decline a grant of enhanced damages.

The appeals court dismissed Valve’s first arguments for indefinite claims. The terms describing the controller back buttons as “elongate member[s]” “substantially the full distance between the top and bottom edge” were found clearly, to a person of ordinary skill in the art, to be descriptive of long buttons spanning the length of the back of the controller which are accessible to the users third, fourth, and fifth fingers.

Judge Clevenger’s dissenting opinion on this issue contends that the “extends substantially the full distance between the top edge and bottom edge” language is indefinite because it gives a person of ordinary skill in the art no certain boundaries for starting and ending such a measurement. He finds that the district court merely “held ipse dixit that Valve did not carry its burden” for proving that this language is indefinite without properly addressing Valve’s measurement argument.

Valve’s appeal for judgment as a matter of law was dismissed by the appeals court based on finding that the jury was provided with substantial enough evidence to reach their conclusion. A significant factor in this finding was the fact that each juror had an actual Steam Controller sent to their homes for hands-on examination. The alternate appeal for new trial was also dismissed because the district court was found to have acted within its discretion in excluding Valve’s proffered testimony.

The appeals court did find that the district court erred as to Valve’s third issue on appeal regarding willfulness, however the error was harmless and thus the denial of Valves motions was upheld.

Valve’s fourth issue on appeal resulted in a significant clarification to the standards for Non-Petitioned Grounds estoppel in IPR review. Valve presented four grounds for invalidity, two Non-Instituted and two Non-Petitioned. The appeals court found that the district court was correct in estopping the two Non-Instituted Grounds because they were included in Valve’s initial IPR petition but not instituted by the Patent and Trademark Office. Valve chose not to seek remand for this decision and therefore forfeited their claim against estoppel.

In contrast, estoppel of the Non-Petitioned Grounds was vacated and remanded. The “standards by which a determination is to be made as to what invalidity grounds not presented in a petition are estopped” had not yet been addressed by the appeals court. Thus, the district court was left to look to other district court rulings, and erroneously placed the burden of proof on Valve for determining whether “a skilled searcher conducting a diligent search reasonably could have been expected to discover” the grounds in question. The appeals court held instead that “the burden of proving, by 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 affirmative defense of IPR estoppel.”

The court’s holding on Valve’s fourth issue on appeal will have significant impact on litigation concerning IPR estoppel moving forward, as patent owners have now been strapped with a new burden of proof in defenses against invalidity.