Valve Fails to Nullify $4M Jury Verdict in Steam Controller Patent Infringement Case – The Esports Observer

On Wednesday, a federal judge in Washington state denied a motion by Valve Corporation to throw out a jury verdict that awarded gaming peripheral maker SCUF Gaming $4M USD on Feb. 1. 

The jury found that Valve’s now-discontinued Steam Controller infringed on SCUF Gaming/Ironburg Inventions’ “rear-fitted paddle lever controller” patent. Ironburg Inventions/SCUF filed the lawsuit in 2017, and earlier this year the trial served as a bit of a milestone for another reason – it was the very first patent infringement jury trial to be held via Zoom due to the pandemic.

The Steam controller was part of a larger and mostly unsuccessful effort by Valve to build a console-like ecosystem using third-party PC manufacturers to build hardware that used its digital game distribution platform, Steam.

The Dota 2 and Counter-Strike: Global Offensive maker filed a post-trial motion asking the Western District Court of Washington in Seattle to nullify the verdict, but U.S. District Judge Thomas S. Zilly ruled Wednesday that the company failed to prove that there was insufficient evidence presented at trial because that evidence, according to the ruling, was straightforward and easy for the jury to understand. Zilly also denied a motion by SCUF, who was seeking enhanced damages.

Darius Gambino, a partner at Pennsylvania-based law firm Saul Ewing Arnstein & Lehr LLP and an attorney specializing in intellectual property litigation, spoke to The Esports Observer about the lawsuit on Thursday.

First, we asked Gambino why he thought the jury found that Valve infringed on SCUF’s patent. He said that Valve really didn’t know about the patent when it started the design process for the Steam Controller – the company was in the dark. The lead designer for Valve’s Steam Controller testified in court that he wasn’t aware of it during the design phase and by the time he learned of it, the company was deeply invested in continuing with its development.  

“Once the litigation began [in 2017], they had really deeply invested in it,” Gambino said. “I think that if you read between the lines, it was that they came up with what they thought was a great design, not realizing this patent was out there. I think they thought they could argue around infringement in the litigation, but that didn’t prove to work out for them, so we are where we are today.”

Gambino says that Valve’s motion for a new trial was rejected because it ultimately failed to convince Zilly that the evidence at the first trial was insufficient.

“What happens at the end of a trial, whether it’s a jury or a bench trial, is that you have the opportunity to file post-trial motions. And one of the things that you can ask the judge for is a new trial, or judgment in your favor despite the jury’s verdict.’ So you can call into question things like expert testimony, and pieces of documentary evidence. And basically, that’s what Valve did, they said:  ‘We don’t think the evidence supports this infringement verdict or the damages award. And a couple of things that they attacked were expert testimony regarding damages and whether or not their controller actually infringed the patent.”

Likewise, Gambino said that SCUF failed to convince Zilly that it was entitled to more than the $4M the jury awarded in its verdict because of the Valve designer’s ignorance of the existence of the patent.  

“Ironburg/SCUF Gaming came back with their own post-trial motion. This happens a lot – parties file post-trial motions trying to get the things that they didn’t get during the trial. And SCUFcame back and said, ‘Alright, we believe that Valve/Steam did this intentionally and therefore under the patent laws, we’re entitled to treble damages for willful infringement,’ which would mean the jury’s verdict of about $4M would be tripled to $12M.”

Gambino went on to say that the judge weighed two important things when it considered SCUF’s motion:

“Two of the things that the judge focused on was that the lead designer of the Steam controller testified that he didn’t see the patent until well after he began the design process, he didn’t see it until after the commercial version of the controller was fully developed. The other thing that the judge found to be important is that this case started out with four or five patents being asserted by SCUF against Valve.  But everything was narrowed down to a single patent because Valve had attacked the validity of SCUF’s other patents at the Patent & Trademark Office. So the judge looked at that because the Patent Office invalidated some of the claims of the other patents.”

When asked if this successful lawsuit by SCUF will lead to other controller makers becoming targets of subsequent infringement lawsuits, Gambino thinks it probably won’t be any major players in the industry, but smaller start-ups trying to enter the market that may inadvertently or unknowingly utilize some patented technology.   

“I haven’t taken a look at SCUF’s other patents – I’m sure they have quite a few –   but I’d say the targets for them would be independent controller companies who are looking to go out into the market or maybe Microsoft or Sony the next time they develop a new controller redesign.  Microsoft already holds a license from SCUF for their Xbox ‘Elite’ controller.”

Finally, while it’s usually a given that lawsuits are appealed, Gambino doesn’t think either party in this case wants to take the matter to the Ninth Circuit.  

“They have been litigating this case for a long time. Valve is not making the controller anymore. I don’t think that the denial of the willful infringement damages on behalf of SCUF is something that they would probably want to appeal. Just from reading Judge Zilly’s order, I don’t know that there will be an appeal. Valve may just pay the $4M and be done with it since it’s not an ongoing product that they’re continuing to generate sales from.”

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