In Princeton Digital Image Corp. v. Harmonix Music Systems Inc., C.A. No. 12-1461-LPS-CJB (D. Del. Jan. 19, 2017), Magistrate Judge Burke recommended that Princeton Digital Image Corp.’s (“Princeton”) motion to dismiss defendants Konami Digital Entertainment Inc., Harmonix Music Systems, Inc., and Electronic Arts, Inc.’s counterclaims for declaratory judgments of invalidity and noninfringement be granted in part and denied in part.
Princeton argued that the defendants were estopped from asserting invalidity based on prior art that was or could have been raised during two previous inter partes review (“IPR”) proceedings in which the defendants were petitioners. But the Court held that statutory estoppel under the AIA took effect only when IPR proceedings resulted in a final written decision regarding the validity of the claims at issue. Since the defendants did not seek review of the claims at issue during the first IPR, and the PTAB did not institute review of the same claims during the second IPR, Judge Burke recommended that Princeton’s motion to dismiss this counterclaim be denied.
However, Judge Burke recommended granting Princeton’s motion to dismiss the defendants’ counterclaim for noninfringement, since the defendants failed to allege any specific facts and thus could not state a claim under Iqbal and Twombly.
Key Points: In practice, the scope of the statutory estoppel arising from IPR proceedings is turning out to be narrower than some may have expected when IPRs first became available.