Valve Corp. v. Electronic Scripting Products
IPR2019-00062
Decision Issued: April 2, 2019

On April 2, 2019, The Patent Trial and Appeal Board (PTAB) declined Valve’s petition to institute an Inter Partes Review of U.S. Patent No. 9,235,934 (the ‘934 Patent) for being a repetitive challenge to the patent. The genesis of this action is the patent infringement lawsuit, Electronic Scripting Products, Inc. v. HTC America, Inc., No. 3:17-cv-05806-RS, filed on October 9, 2017, in the Northern District of California. Electronic Scripting claimed HTC and Valve had infringed the ‘934 Patent and U.S. Patent No. 8,553,935 by integrating Valve’s technology into HTC’s VIVE headsets. On January 25, 2018, Electronic Scripting voluntarily dismissed Valve from the lawsuit, but not HTC, who in turn filed a first IPR petition on the ‘934 Patent. The PTAB declined to institute an IPR based on the first petition because HTC failed to show that any of the challenged claims would likely be invalid. Five months after the PTAB rejected HTC’s first petition, Valve submitted additional petitions to the PTAB based on other grounds, which the PTAB suggested were based on lessons learned from the denial of the first petition.

Electronic Scripting asked the PTAB to exercise their discretion to reject Valve’s additional IPR petitions under 35 U.S.C. § 314(a) because Valve was seeking to invalidate the same claims as HTC’s earlier IPR and is “similarly situated” to HTC. Valve counters by arguing the only similarity it has with HTC is wishing to see the ‘934 Patent invalidated, but otherwise, the two companies are unrelated. When it comes to a petition on a patent that the PTAB has already reviewed, the board applies a seven-factor test to determine if it should grant the second petition, as set forth in General Plastics. Case IPR2016-01357, slip op. at 16 (PTAB Sept. 6, 2017):

• whether the same petitioner previously filed a petition directed to the same claims of the same patent;
• whether at the time of filing of the first petition the petitioner knew of the prior art asserted in the second petition or should have known of it;
• whether at the time of filing of the second petition the petitioner already received the patent owner’s preliminary response to the first petition or received the Board’s decision on whether to institute review in the first petition;
• the length of time that elapsed between the time the petitioner learned of the prior art asserted in the second petition and the filing of the second petition;
• whether the petitioner provides adequate explanation for the time elapsed between the filings of multiple petitions directed to the same claims of the same patent;
• the finite resources of the Board; and
• the requirement under 35 U.S.C. § 316(a)(11) to issue a final determination not later than 1 year after the date on which the Director notices institution of review. Id.

The PTAB found that every factor weighed against instituting Valve’s later IPR petitions because of how closely linked Valve is to the litigation and HTC’s previous IPR petition. The first factor weighed against Valve because the PTAB found Valve’s petition was directed at the same claims as the previous IPR. Factor two weighed against institution due to the new prior art Valve asserted in its petition being fairly easy to find, which meant HTC should have known it existed. The third factor weighed against instituting the IPR as a result of Valve using the outcome of the first petition to help craft its petition.

Factors four and five weighed against Valve because of the five-month delay on Valve’s part to file the petition. The Board explored the impact of the Federal Circuit’s Click-to-Call decision in factors four and five. Prior to the Click-to-Call decision, Valve was not time barred because Electronic Scripting had dismissed the complaint against Valve. However, the Click-to-Call decision changed the law, and Valve was put in a position where  it had to file or Valve would become time-barred. The PTAB reviewed the situation but ultimately decided that this did not impact the fairness of Valve’s delay in filing its IPR petitions.  Finally, factors six and seven weighed against Valve because allowing similarly situated parties to continuously petition for IPRs would drain the resources of the PTAB.

With all seven factors weighing against instituting Valve’s IPR petition, the PTAB denied institution. Because institution was denied here, Valve may still be able to challenge the validity of the patents back in the district court, but as noted above Valve is no longer a party to the ongoing litigation. See Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016). We will continue to follow this case, and provide updates when available.