Video Game Giant Ripped Off Controller Patent, Jury Hears

By Cara Salvatore
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Law360 (January 26, 2021, 11:09 PM EST) -- A Zoom trial against Valve Corp. began Tuesday with allegations the online video gaming giant sold 1.6 million game controllers that flagrantly infringed a patent belonging to a smaller company, whose lawyers told the jury, "Goliath does what Goliath wants to do."

In opening arguments Tuesday in the pioneering remote trial, a lawyer for Ironburg Inventions — the IP-holding arm of controller maker SCUF — told the remote jury that Valve was warned in 2014 that a prototype of its Steam Controller contained the same rear-side control surfaces Ironburg had just patented.

But Valve pressed forward with the controller, part of a planned expansion from PC-focused gaming into living-room-console gaming.

"Valve's intentional disregard of its infringement is at the heart of this case," Ironburg lawyer Robert Becker of Manatt Phelps & Phillips LLP told the jury over Zoom.

"Valve did know that its conduct involved an unreasonable risk of infringement, but it simply proceeded to infringe anyway — the classic David and Goliath story: Goliath does what Goliath wants to do," Becker said.

In early 2014, shortly after finding out that the patent at the heart of the trial was going to be granted, SCUF CEO Duncan Ironmonger saw Valve's Steam Controller prototype at the premier CES trade show.

Concerned by the Steam Controller's incorporation of rear-side controls, Ironmonger informed Valve staffers at the show about the soon-to-issue patent, and then wrote a letter to Valve that March, explaining Ironburg's belief that the rear controls were an infringement of a patent with which "Ironburg really created a new category of controllers," Becker said.

The extra controls allowed gamers to ratchet up their speed and control by using a finger besides the thumb and index finger. Microsoft licensed the patent and now uses rear buttons on performance Xbox controllers that cost upwards of $150 apiece, he said.

Valve's lawyer, though, suggested Ironburg was fighting an information war set in an alternate universe.

"Ironburg's case will be based on altered graphics, modified pictures, and skewed viewing angles ... and then they'll ask you to make that decision based on an altered reality," Valve lawyer Trent Webb of Shook Hardy & Bacon LLP said.

He said the rear features on the Steam Controller didn't fit the outlines of the patent, which calls for "resilient" back members that are "elongate" and "extend substantially the full distance" from the controller's top to its bottom along an area that, on the Steam Controller, melds into the battery cover.

Ironburg "will colorize portions of a picture of that battery back and tell you that those colorized portions are elongate members," Webb said, suggesting to the eight jurors picked Monday that the case is adjudicable only through the first-hand knowledge they'll gain when they're each mailed a Steam Controller this week.

"Nothing you will see or hear from Ironburg will change what you can see with your own eyes and feel with your own hands when you get that Steam Controller," Webb said. "Alternative reality has no place here."

The patent at issue is U.S. Patent No. 8,641,525.

Ironburg is represented by Robert Becker, Christopher Wanger and Alexandra Hill of Manatt Phelps & Phillips LLP and Stephen Willey of Savitt Bruce & Willey LLP.

Valve is represented by Patrick Lujin, B. Trent Webb, Mark Schafer, Tanya Chaney and Lydia Raw of Shook Hardy & Bacon LLP, Gavin Skok of Fox Rothschild LLP and Reynaldo Barcelo, Joshua Harrison and Guadalupe Garcia of Barcelo Harrison & Walker LLP.

The case is Ironburg Inventions Ltd. v. Valve Corp., case number 2:17-cv-01182, in the U.S. District Court for the Western District of Washington.

--Additional reporting by Ryan Davis. Editing by Michael Watanabe.

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