Ironburg Inventions Ltd. v. Valve Corp. 21-2296 (Fed. Cir. Apr. 3, 2023) | Sheppard Mullin Richter & Hampton LLP

This case addresses the “skilled and diligent searcher” standard used for establishing Inter Partes Review (“IPR”) estoppel (or lack thereof). In particular, this case establishes: (1) which party bears the burden of proof regarding whether a “skilled and diligent searcher” could have reasonably been expected to discover prior art such that failure to include it in an IPR petition estops the petitioner from raising it in other civil actions under 35 U.S.C. § 315(e)(2); and (2) the “skilled and diligent searcher” inquiry itself with respect to what a skilled and diligent searcher reasonably would have been expected to discover.

Background

In 2015, Ironburg Inventions Ltd. (“Ironburg”) sued Valve Corporation (“Valve”) for infringing U.S. Patent No. 8,641,525 (“the ’525 patent”). Valve also filed an IPR petition, which the PTAB instituted on two of the four asserted grounds.

Before the district court, Valve raised four grounds of invalidity. The district court held: (1) Valve was estopped from litigating two of the grounds because they were included in the IPR petition, but not instituted (the “Non-Instituted Grounds”); and (2) Valve was estopped from litigating the other two grounds (the “Non-Petitioned Grounds”) not raised in the IPR petition because Valve failed to prove a “skilled and diligent searcher” could not have been reasonably expected to discover the Non-Petitioned Grounds prior to the petition.

At trial, Ironburg was awarded a verdict of willful infringement and awarded damages of over $4 million. Both parties appealed on multiple grounds (not all of which are discussed here for brevity) – including whether Valve was properly estopped from litigating the Non-Petitioned Grounds.

Issue(s)

1. Who bears the burden of proof regarding what prior art references a “skilled and diligent researcher” could have reasonably been expected to discover that could have formed the basis for an invalidity challenge in an IPR petition?
2. What is the burden of proof?

Holding(s)

1. The party asserting IPR estoppel (typically a patent owner) bears the burden of proving that a “skilled and diligent searcher” could have been reasonably expected to discover prior art that could have formed the basis of an invalidity challenge in an IPR petition. Accordingly, the district court incorrectly placed the burden on Valve (i.e., the non-asserting party) to prove a “skilled and diligent searcher” could not have been reasonably expected to discover the Non-Petitioned Grounds.
2. A party asserting IPR estoppel must prove, “by a preponderance of the evidence, that a skilled searcher conducting a diligent search reasonably would have been expected to discover” Non-Petitioned Prior Art Grounds. In other words, the proper inquiry is not “what an actual researcher in fact did find through whatever level of diligence she exercised,” but is what the skilled searcher “would find through reasonable diligence.”

Reasoning

1. A party asserting IPR estoppel bears the burden of proof because it is “the party asserting and seeking the benefit from the affirmative defense of IPR estoppel.” This reasoning is consistent with the general principle that “a party asserting an affirmative defense bears the burden to prove it.”
2. The “skilled searcher” standard “is consistent with the statutory requirement that a petitioner be estopped from asserting ‘any ground that the petitioner . . . reasonably could have raised during . . . inter partes review.’”

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