Patents Aren't 'Crown Jewels,' Gaming Co. GC Tells Jury

By Cara Salvatore
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Law360 (January 27, 2021, 10:28 PM EST) -- Gaming platform Valve's top lawyer told a Washington federal jury Wednesday in a patent infringement trial against the company over game controllers that he doesn't view patents as being of paramount importance to a business.

General Counsel Karl Quackenbush, testifying from Valve's Bellevue, Washington, office in the remote trial, told the jury about the company's corporate culture, as well as phone conversations with Ironburg Inventions' CEO before Ironburg sued Valve in 2015 over the rear buttons on Valve's Steam Controller.

After Ironburg CEO Duncan Ironmonger told Quackenbush on a call that Ironburg's patents were its "crown jewels," Quackenbush responded that he disagreed, he told the jury Wednesday.

"I typically don't think of patents as crown jewels," Quackenbush said. "I certainly don't think of Valve's patents that way."

Ironburg — the IP-holding arm of controller maker SCUF — reached out to Valve formally in the spring of 2014 after seeing a Steam Controller prototype at a trade show; Quackenbush and Ironmonger talked multiple times before Ironburg eventually sued.

In one of those calls, Quackenbush said, he warned Ironmonger that launching patent litigation could be a bad business move, responding yes when Ironburg lawyer Christopher Wanger asked if Quackenbush had told Ironmonger that "when you start a patent case, like Ironburg did, you put your intellectual property at risk."

Wanger then asked if Quackenbush told Ironmonger that a company's intellectual property "might end up being smaller at the end of the case."

"I shared with him my experience over the last four years or so doing cases like this, and I tried to pass that on," Quackenbush replied.

"And Mr. Ironburg seemed offended by your statement, did he not?" Wanger asked.

"It clearly was not something he wanted to hear from me," Quackenbush said.

With 40 to 50 observers listening on a phone line throughout the day, two former Valve engineers critical to the Steam Controller project also testified. Former engineer Jason Beach said he'd never heard of or seen Ironburg's patent before this case, and explained that Valve is "flat," eschewing manager hierarchies and setting engineers free to work on whatever they want.

In Beach and former engineer Jeff Bellinghausen's "cabal" — Valve's word for loose, ionically shifting work groups — that freedom turned into the large Steam Controller initiative, which took shape through seven prototype groups and was finally released for public sale in mid-2015. Ironburg's patent for elongated rear controls was issued in early 2014 after a lengthy application process.

Rear controls changed gaming by allowed players to ratchet up speed and control with the use of fingers besides the thumb and index finger. Microsoft licensed the Ironburg patent and now uses rear buttons on performance Xbox controllers that cost upwards of $150 apiece, Ironburg's lawyer said in openings Tuesday.

The jury also heard Wednesday afternoon from Ironburg expert witness Garry Kitchen, a longtime game developer and now consultant who said he inspected the Steam Controller and believes it infringes Ironburg's patent.

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 Breda Lund.

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