Big Video Game Case|Stays Put in Delaware

SAN FRANCISCO (CN) — Makers of "World of Warcraft," "Grand Theft Auto V" and other video games must go to Delaware to fight a technology company's patent lawsuits after unsuccessfully trying to move the case to California.

U.S. District Judge Richard Seeborg granted Acceleration Bay's requests to transfer the three cases to Delaware, and declined to dismiss them.

Electronic Arts, Activision Blizzard and Take-Two sued Acceleration Bay in June in the Northern District of California. All three companies are incorporated in Delaware.

"This dispute has been pending there in front of Judge Andrews for many months," Seeborg said in a Thursday hearing. "We can go back and forth on this chess game, but that's my view."

Acceleration Bay's 2015 lawsuits claim Activision's "World of Warcraft," Electronic Arts' FIFA sports games, and Take-Two's "Grand Theft Auto V," among others, violate its patents.

"World of Warcraft" has earned nearly $3 billion in its various versions, most of it from subscription fees for the more than 57 million units sold, according to industry publications. "Grand Theft Auto V" earned $800 million on the day it was released, Sept. 17, 2013.

U.S. District Judge Richard Andrews related the three suits for discovery and claim construction, and the Delaware court has been "heavily involved" in the litigation for more than a year, Acceleration Bay says in its motions to dismiss or transfer the cases.

Andrews also ruled that Acceleration Bay lacked prudential standing to pursue its claims without the joinder of assignor Boeing Company, and gave it until June 17 this year to cure standing.

Acceleration Bay cured standing on June 17 by revising its patent purchase agreement with Boeing. It asked Andrews to dismiss its 2015 claims and filed revised claims the same day.

All three video game companies sought declaratory judgment in the Northern District of California on June 16 in what Acceleration Bay called an attempt to delay the case.

Because the declaratory judgment actions are based on its own patent infringement claims, Acceleration Bay asked Seeborg to dismiss them under the first-to-file rule.

It argued that the voluntary dismissal of its original claims was procedural, and that the claims had been pending before Andrews since they were filed in 2015, long before the video game companies sought declaratory judgment in California.

In lieu of dismissal, Acceleration Bay asked Seeborg to send the case back to Delaware.

"You knew the litigation was going to be reinstituted in Delaware, and yet you ran out here and filed," Seeborg told the video game companies' attorney Michael Tomasulo on Thursday.

"You can't stand there and tell me you thought they were going to fold up shop and not proceed with litigation in Delaware."

Tomasulo told Seeborg the gaming companies plan to add Sony as a potential witness, and because Sony is based in San Mateo, Calif., it can't be subpoenaed in Delaware.

The games at issue are played on Sony's PlayStation console, giving Sony rights in the Acceleration Bay patents, Tomasulo said.

Acceleration Bay attorney Aaron Frankel countered that party and nonparty witnesses in the case are all over the world.

"The fact that there is one potential third-party witness in California doesn't move the whole center of gravity," he said.

Tomasulo disagreed.

"Sony is not just any witness," he said. "If Sony's license passes through us, if Sony grants us a license, if Sony's right to sublicense deprives Acceleration Bay of the right to claim injury, all of those things will cut out perhaps half of the potential damages in this case."

Before sending the case back to Delaware, Seeborg told Tomasulo he had made a persuasive argument for why Sony would choose to join the litigation there.

Tomasulo is with Winston & Strawn in Los Angeles; Frankel with Kramer Levin Naftalis & Frankel in New York.

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