United States: Converting An IPR Loss Into A District Court Win

It is very common to defend against a claim of patent infringement by litigating in the district court and the PTAB in parallel. The most straightforward-way for the defendant to win is to persuade the PTAB that the asserted patent is invalid. But, that is becoming more difficult as Director Iancu pushes the PTAB to apply greater scrutiny to petitions in order to address patent owner criticism that the PTAB proceedings are unfair. However, a recent decision disposing of a non-practicing entity's long-running litigation against Ubisoft highlights how a defendant that ultimately lost on an issue before the PTAB can use the loss to their advantage in district court.

Magistrate Judge Burke issued a report and recommendation granting Ubisoft's motion for summary judgment of noninfringement. Judge Burke found that statements made by patent owner Princeton Digital Image Corporation in its preliminary response to Ubisoft's petition for inter partes review disclaimed the patent owner's theory of infringement, and therefore summary judgment was proper. Princeton Digital Image Corp. v. Ubisoft Entertainment, SA, 13-cv-00353 (D. Del. Apr. 8, 2019) (slip op.).

Princeton Digital's '129 patent claimed creating and controlling a virtual environment in part based on a prerecorded control track having control information corresponding to a music signal. Id. at 8. The court found that there was no dispute as to how the accused products operate. One example is Ubisoft's Rocksmith. During development, a designer creates a beat map by listening to an audio file, and tapping out where the beats are to create a "beat map." The musical notes to be displayed to the player are layered onto the beat map according to the time code in the audio file. During game play, the audio file begins playing and starts a timer. The game's graphical elements are triggered by the beat map and the timer. Id. at 13-14. Ubisoft presented evidence that the graphical elements are displayed regardless of the content of the audio file. For example, if the audio file was replaced with white noise, the game would continue displaying the graphical elements according to the beat map.

Ubisoft filed a petition for inter partes review based upon the Williams reference. The Williams reference taught methods of synchronizing actions and sounds for display on a computer system. Id. at 9. In order to avoid institution of inter partes review, Princeton Digital argued that Williams did not render the claims unpatentable. Princeton Digital claimed that Williams teaches synchronizing actions such as "face changes, arm movements, a bird flying...with the time, positions or locations in the sound recording...." Id. at 10. Princeton Digital argued that this did not invalidate the claims because using time, position or location in an audio file as the control information does not meet the claim's requirement that the control information is based on the content of the musical signal. Id. This argument won at the PTAB, and the Ubisoft's IPR was not instituted for those claims.

Magistrate Judge Burke found that Princeton Digital's statements in the IPR disclaimed "a control track with control information that corresponds to time, position, or locations in a sound record—such that 'once the timer starts, the graphics are displayed irrespective of the audio content.'" Id. at 17. Given there was no dispute as to how Ubisoft's games worked (i.e. the graphical elements were displayed based upon time), the court found that patent owner's disclaimer was dispositive and recommended granting Ubisoft summary judgment of noninfringement. Id. at 20-21.

In short, the Princeton Digital Image decision is a timely reminder defendants should spend some time mining the patent owner's statements from the inter partes review for admissions and disclaimers that can be used in the district court litigation.

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