Background
Ironburg Inventions Ltd. holds U.S. Patent No. 8,641,525, which is directed to a handheld video game controller with additional input buttons on the back of the controller — a design that allows gamers to keep their thumbs on the analog sticks while activating secondary inputs with their fingers. Valve Corporation makes the Steam Controller, which includes a similar back-panel button configuration.
Ironburg sued Valve for patent infringement, and a jury trial was held in 2021 via Zoom. The jury returned a verdict of willful infringement and awarded Ironburg over $4 million in damages. Separately, Valve had filed IPR petitions challenging the ‘525 patent, and certain invalidity grounds based on prior art that Valve had discovered through a third-party IPR proceeding became relevant to whether Valve was estopped under 35 U.S.C. § 315(e)(2) from raising those grounds in the district court litigation. The district court found Valve estopped because, it concluded, Valve could have raised the grounds in its own IPR petition. Valve challenged both the willfulness verdict and the estoppel ruling on appeal.
The Court’s Holding
The Federal Circuit issued a split decision. On willfulness, the court affirmed. Valve had received pre-suit notice of infringement but did not take steps to design around the ‘525 patent, continuing to sell the Steam Controller through trial. The court found sufficient evidence to support the jury’s willfulness finding and upheld the denial of Valve’s motion for judgment as a matter of law.
On IPR estoppel, the Federal Circuit vacated and remanded. Section 315(e)(2) bars an IPR petitioner from asserting in litigation invalidity grounds that it “raised or reasonably could have raised” during the IPR. The district court had placed the burden on Valve (the petitioner) to show it could not reasonably have raised the late-discovered prior art in its petition. The Federal Circuit reversed on this burden allocation: the statute protects petitioners from undue estoppel, and it is the patent owner who seeks to invoke estoppel as a shield. Therefore, the burden must fall on the patent owner — Ironburg — to prove that Valve could reasonably have raised the relevant prior art in its IPR petition. The case was remanded for the district court to apply the correct burden standard.
Key Takeaways
- The burden of proving IPR estoppel under § 315(e)(2) falls on the patent owner seeking to invoke estoppel — not on the petitioner seeking to assert invalidity grounds not raised in the IPR.
- The “reasonably could have raised” standard for IPR estoppel requires a fact-specific inquiry; courts must assess what a skilled prior art searcher using reasonable diligence would have found at the time of petitioning.
- Pre-suit notice of infringement without any effort to design around can support a jury’s willfulness finding, even where infringement was disputed at trial.
- Late-discovered prior art — found through third-party IPR proceedings after the petitioner’s own petition was filed — may fall outside the scope of § 315(e)(2) estoppel if the patent owner cannot show it was reasonably discoverable earlier.
Why It Matters
IPR estoppel is one of the most consequential and frequently litigated aspects of post-grant patent proceedings. When a company files an IPR petition and the PTAB institutes review, § 315(e)(2) potentially forecloses the petitioner from raising invalidity grounds in later district court litigation — a significant constraint that can shape litigation strategy for years. The Federal Circuit’s clarification that the burden of proving estoppel rests with the patent owner changes the practical dynamics of these disputes: defendants no longer must affirmatively prove they could not have raised a ground; rather, patent owners must prove they could have.
For technology companies litigating patents on hardware and consumer electronics — like gaming controllers — the decision also reinforces that serial patent enforcement campaigns can generate willfulness exposure. Companies that receive infringement notices should document any design-around investigations they undertake, as failure to respond to notice is evidence courts and juries will weigh when assessing willfulness.