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PalTalk Holdings, Inc. v. Valve Corp.

United States District Court, D. Delaware

October 13, 2017

PALTALK HOLDINGS, INC., Plaintiff,
v.
VALVE CORPORATION, Defendant.

          REPORT AND RECOMMENDATION

          Sherry R. Fallon United State Magistrate Judge.

         I. INTRODUCTION

         Presently before the court in this patent infringement action is the motion to transfer venue pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure and 28 U.S.C. §§ 1400(b) and 1406, filed by defendant Valve Corporation ("Valve"). (D.L 19) For the following reasons, I recommend that the court grant Valve's motion to transfer venue to the Western District of Washington.

         II. BACKGROUND

         A. Parties

         On December 16, 2016, plaintiff PalTalk Holdings, Inc. ("PalTalk"), a Delaware corporation headquartered in Jericho, New York, filed the present patent infringement action against Valve, alleging infringement of U.S. Patent Nos. 5, 822, 523 ("the 4523 patent") and 6, 226, 686 ("the '686 patent") (together, the "patents-in-suit"). (D.I. 1 at ¶¶ 1, 6-7) PalTalk was incorporated in 2001 and is the owner of various patents regarding methods and systems for communicating over networks. (Id. at ¶ 1) PalTalk's predecessor-in-interest, HearMe (formerly known as MPath Interactive Inc.), was a pioneer of technology allowing users to participate in multiplayer games over the internet. (Id. at ¶ 5) PalTalk's technology includes communications through a group messaging server and the establishment of groups for online game play. (Id.)

         Valve is a Washington corporation headquartered in Bellevue, Washington. (Id. at ¶ 2) Valve developed and published a multiplayer online battle arena ("MOBA") video game called Defense of the Ancients 2 ("DOTA 2"). (Id. at ¶ 22) DOTA 2 has gained worldwide popularity, grossing in excess of $235 million in 2015, and exceeding 1 million peak simultaneous players in many months. (Id. at ¶¶ 23-24) Valve has servers supporting DOTA 2 throughout the United States, including servers in Seattle, Washington and Sterling, Virginia. (Id. at ¶ 25; D.I. 25, Ex. B) Valve's server in Sterling, Virginia is maintained by a third-party contractor. (D.I. 25, Ex. C)

         B. Patents-In-Suit

         The '523 patent, entitled "Server-Group Messaging System for Interactive Applications, " was issued on October 13, 1998 to MPath Interactive Inc. as the assignee of inventors Jeffrey Rothschild, Marc Kwiatkowski, and Daniel Samuel. (D.I. 1 at ¶ 6) The '523 patent is directed to using a group messaging server to receive individual messages from each computer, which simplifies the communications between computers by reducing the number of messages that each individual computer must send and receive. (Id. at ¶ 12) The '686 patent, entitled "Server-Group Messaging System for Interactive Applications, " issued on May 1, 2001. (Id. at ¶ 7) The '686 patent is a continuation of U.S. Patent No. 6, 018, 766, which is a continuation of the '523 patent. (Id.) The '686 patent claims forming a message group and maintaining consistency between the computers within the group, thereby facilitating efficient communications between host computers and reducing the burden of maintaining consistency between the host computers within the message group. (Id. at ¶ 13)

         The patents-in-suit underwent an ex parte reexamination before the United States Patent and Trademark Office ("PTO") on June 14, 2010. (Id. at ¶¶ 8-9) All claims of the '523 patent were confirmed patentable without amendment, and an additional forty-one claims were added. (Id. at ¶ 8) All but two claims of the '686 patent were confirmed patentable without amendment, and an additional fifty-one claims were added. (Id. at ¶ 9) The remaining two claims were canceled. (Id.) The reexamination requests stemmed from ongoing litigation between PalTalk and various other companies in the Eastern District of Texas. (Id. at ¶¶ 10, 17) The litigations resolved when each of the former defendants took licenses to the patents-in-suit. (Id.)

         C. Related Litigation

         A related case, PalTalk Holdings, Inc. v. Riot Games, Inc., C.A. No. 16-1240-JFB-SRF (the "Riot Games Litigation"), is currently pending before the court.[1] Both cases involve the same patents-in-suit and are operating on a joint schedule for pre-trial purposes. (D.I. 15)

         III. LEGAL STANDARD

         Generally, "venue provisions are designed ... to allocate suits to the most appropriate or convenient federal forum." Brunette Mach. Works, Ltd. v. Kockum Indus., Inc.,406 U.S. 706, 710 (1972). A party may move to dismiss a lawsuit for improper venue in accordance with Rule 12(b)(3), and the court must then determine whether venue is proper under the applicable statutes. See Albright v. W.L. Gore &Assocs., Inc., 2002 WL 1765340, at *3 (D. Del. July 31, 2002). Under Rule 12(b)(3), it is Valve's burden to establish that venue is improper. See Graphics ...


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