Ironburg Inventions Ltd. v. Valve Corp., 64 F.4th 1274 (Fed. Cir. 2023) (Lourie, Clevenger (dissenting in part), Stark)

Ironburg sued Valve for infringement of Ironburg’s video-game-console controller patent. Valve responded by filing an IPR challenging the claims on various grounds. The Patent Trial & Appeal Board instituted partial review (pre-SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018)) and cancelled some, but not all, claims.

Back in district court, Valve challenged the remaining claims based on the non-instituted grounds, as well as non-petitioned grounds involving prior art that Valve discovered after filing its petition. In response, Ironburg argued that Valve’s invalidity challenges were barred by 35 U.S.C. § 315(e)(2), which estops an IPR petitioner following a final written decision from asserting in district court invalidity grounds that the petitioner “raised or reasonably could have raised” during the IPR. The district court agreed with Ironburg, and the case went to trial, resulting in a verdict of willful infringement and a damages award of more than $4 million.

The Federal Circuit affirmed the district court’s estoppel ruling with respect to the non-instituted grounds but vacated the court’s ruling with respect to the non-petitioned grounds. As to the non-instituted grounds, the court held that, because those grounds were included in the petition, they were “raised” during the IPR and thus subject to estoppel. The court noted, moreover, that Valve’s post-SAS choice not to seek remand for the Board to address the non-instituted grounds “does not shield it from estoppel.”

As to the non-petitioned grounds, the Federal Circuit agreed with the district court that such grounds “reasonably could have been raised” in an IPR petition if “a skilled searcher conducting a diligent search reasonably could have been expected to discover” the grounds. But the Federal Circuit disagreed with the district court’s determination that the patent challenger bears the burden to show that this standard has not been met. The Federal Circuit held instead that the patentee, “as the party asserting and seeking to benefit from the affirmative defense of IPR estoppel,” bears “the burden of proving, by a preponderance of the evidence, that a skilled searcher exercising reasonable diligence would have identified an invalidity ground.” This burden allocation, the court reasoned, “is consistent with the general practice that a party asserting an affirmative defense bears the burden to prove it.”

In so holding, the court rejected Ironburg’s argument that the burden should be borne by the patent challenger merely because details of its search efforts are uniquely within its possession and will often be claimed as privileged. The Federal Circuit noted that district courts frequently encounter and resolve such privilege issues without difficulty. In any event, such details are largely irrelevant because the inquiry focuses on what a skilled searcher would find by exercising reasonable diligence, not on what the patent challenger did (or did not) find. Accordingly, the Federal Circuit vacated the district court’s estoppel ruling as to the non-petitioned grounds and remanded for the district court to determine whether Ironburg, as the party asserting estoppel, could meet its burden.

The appeal also involved issues relating to indefiniteness, infringement, and damages. Specifically, Valve argued that the terms “elongate member” and “substantially the full distance between the top and bottom edge” were indefinite and that it was entitled to JMOL or a new trial on the issues of infringement and willfulness, while Ironburg argued that the district court erred in declining to award enhanced damages for willful infringement. The Federal Circuit rejected those arguments and affirmed the district court on each issue. Judge Clevenger dissented in part, arguing that “substantially the full distance between the top edge and bottom edge” was indefinite because a skilled artisan would not know with reasonable certainty how to measure that distance.

This article appeared in the Federal Circuit IP Appeals: Summaries of Key 2023 Decision report.