Treehouse Avatar LLC v. Valve Corp.

570 F.Supp.3d 1005

TREEHOUSE AVATAR LLC, Plaintiff,

v.VALVE CORPORATION, Defendant.

C17-1860 RAJ

United States District Court, W.D. Washington, at Seattle.

Signed November 4, 2021

Lawrence D. Graham, Mark P. Walters, Lowe Graham Jones PLLC, Seattle, WA, for Plaintiff.

Gavin William Skok, Laura P. Hansen, Fox Rothschild LLP, Seattle, WA, Joshua C. Harrison, Pro Hac Vice, Kenneth Nielsen, Pro Hac Vice, Reynaldo C. Barcelo, Pro Hac Vice, Barcelo Harrison & Walker LLP, Newport Beach, CA, for Defendant.

ORDER

Richard A. Jones, United States District Judge

THIS MATTER comes before the Court on a motion for summary judgment, docket no. 206, brought by defendant Valve Corporation ("Valve"). Having reviewed all papers filed in support of, and in opposition to, the motion, and having concluded that the motion can be decided without oral argument, which neither party requested, the Court enters the following Order.

Background

Plaintiff Treehouse Avatar LLC ("Treehouse") has sued Valve for infringement of U.S. Patent No. 8,180,858 (the "’858 Patent"), which appears to have expired on July 12, 2020,¹ during the pendency of this action. Valve has asserted counterclaims seeking declaratory judgment as to non-infringement and invalidity of the ’858 Patent. Valve develops and distributes video games, including Defense of the Ancients 2 ("DotA 2") and Team Fortress 2 ("TF2"). DotA 2 is a multiplayer game in which each team of characters attempts to destroy the other team's base. Friedman Report at ¶¶ 41–42, Ex. 9 to Skok Decl. (docket no. 213-6).² TF2 is a first-person shooter game. Id. at ¶ 45. In both games, a user may select from among various playable characters, each of which has different combat abilities, and then pay extra fees to customize the chosen character's appearance. Id. at ¶¶ 41 & 46–47. The games may, however, be played without any customization. See id. at ¶¶ 143 & 190; see also Friedman Dep. at 67:7–19 & 73:10–74:6, Ex. 11 to Skok Decl. (docket no. 213-8).

The ’858 Patent discloses a method for "presenting data over an information network based on choices made by the users of the network and collecting data related to the choices made by the users." ’858 Patent at Col. 1, Lines 19–22 (docket no. 1-1). Treehouse accuses Valve of directly infringing Claims 1–4, 6, and 21–24 of the ’858 Patent, with all of these claims allegedly reading on DotA 2 and only Claims 21–24 reading on TF2. See Ex. 13 to Skok Decl. (docket no. 213-10). Of the asserted claims, only Claims 1 and 21 are independent, and they each contain the phrase "character-enabled network sites." See ’858 Patent at Col. 13, Line 26 & Col. 15, Lines 36–37 (docket no. 1-1). In instituting an inter partes review ("IPR") proceeding concerning certain claims of the ’858 Patent, the United States Patent and Trademark Office's Patent Trial and Appeal Board ("PTAB") construed the term "character-enabled network site" as follows: "a network location, other than a user device, operating under control of a site program to present a character, object, or scene to a user interface ." See PTAB Decision at 11 (docket no. 205-2) (emphasis added).³ The parties did not ask the Court to construe the phrase, see Order (docket no. 155), and instead agreed to adopt the PTAB's interpretation, see Joint Claim Construction Statement at Term No. 3 (docket no. 55-1).

In his report on infringement, Treehouse's expert (Stacy A. Friedman), did not apply the applicable definition of "character-enabled network site," and the Court struck inter alia the paragraphs of Friedman's report in which he opined that the DotA 2 "servers are character-enabled network sites" and that "TF2 operates a plurality of character enabled (CE) network sites for a plurality of users." See Order at 4 (docket no. 239) (striking numerous paragraphs, including ¶¶ 67 & 187, as well as Appendices 2 and 3, of the Friedman Report, Ex. A to Skok Decl. (docket no. 187)). The Court's ruling was made after the briefing on Valve's motion for summary judgment had been completed, and Treehouse's sole response to Valve's argument that no evidence supports a finding that the accused video games operate on "character-enabled network sites" was as follows:

Valve's motion with respect to CE Network Sites is based solely on the proposition that Mr. Friedman's testimony should be stricken.... [A]ssuming that his testimony is not stricken, this portion of Valve's motion should be denied.

Pl.’s Resp. at 10 (docket no. 217).

Discussion

A. Summary Judgment Standard

The Court shall grant summary judgment if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). To survive a motion for summary judgment, the adverse party must present "affirmative evidence," which "is to be believed" and from which all "justifiable inferences" are to be favorably drawn. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 257, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When the record, taken as a whole, could not, however, lead a rational trier of fact to find for the non-moving party on matters as to which such party will bear the burden of proof at trial, summary judgment is warranted. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

B. Character-Enabled Network Sites

In its summary judgment motion, Valve presented three arguments, but the Court need address only one of them, namely that Treehouse cannot establish that Valve operated "character-enabled network sites," as required by each asserted patent claim. To prove direct infringement, Treehouse must establish that "all steps of a claimed method are performed by or attributable to a single entity," in this case, Valve. See Akamai Techs., Inc. v. Limelight Networks, Inc., 797 F.3d 1020, 1022 (Fed. Cir. 2015). The phrase "character-enabled network sites" appears in the preamble of both Claims 1 and 21 of the ’858 Patent, as well as in the first step of the method disclosed in Claim 1 and the first, third, fourth, and fifth steps of the method set forth in Claim 21.

Claim 1 describes:

A method of collecting data from an information network in response to user choices of a plurality of users made while accessing said information network and navigating character-enabled (CE) network sites on said information network, said method comprising:

storing a plurality of character data in a database accessible by said CE network site ....

’858 Patent at Col. 13, Lines 23–29 (docket no. 1-1). Claim 21 outlines:

A method of operating a plurality of character enabled (CE) network sites for a plurality of users, said method comprising the steps of:

a. causing a user, through a user interface operating on a device of said user, to create a character for use on said plurality of CE network sites, said character having a character profile including a plurality of attributes selected by said user;

...

c. storing said associating information and said character profile in a database that is accessible to said CE network site;

d. upon receiving a request for access to one of said plurality of CE network sites, enabling a user to retrieve a previously created character profile from said database using said associating information;

e. if said user has previously created a character profile, retrieving said character profile from said database and causing said character to be displayed on said CE network site on said device of said user; and

f. repeating steps a through e for a plurality of users.

Id. at Col. 15, Line 36–Col. 16, Line 12.

Relying on the opinion of its expert, Michael Zyda, Ph.D., Valve contends that its servers for DotA 2 and TF2 do not qualify as "character-enabled network sites," and that, as a result, the accused video games do not perform every step of the methods claimed in, and do not infringe, the ’858 Patent. Treehouse has moved to strike portions of one of Zyda's reports and to exclude in part Zyda's testimony at trial, but neither of its motions challenge Zyda's opinion that Valve's servers are not "character-enabled network sites." See Pl.’s Mot. to Strike⁴ (docket no. 183); Pl.’s Daubert Mot.⁵ (docket no. 204).

In his Infringement Report, Zyda explained that Valve operates Steam, which is a distribution platform via which users can create accounts and download computer-game software onto their own devices. Zyda Non-Infringement Report at ¶¶ 43–44, Ex. 12 to Skok Decl. (docket no. 213-9). After being downloaded, both DotA 2 and TF2 can be played in either online or offline mode. Id. at ¶¶ 47–48, 50–51, & 58. Zyda has indicated that, in connection with DotA 2 and TF2, he is "not aware of any Valve server or other network location that ‘operat[ed] under control of a site program to present a character, object, or scene to a user interface.’ " Id. at ¶ 74 (alteration in original). Rather, given the way DotA 2 and TF2 are designed and operate, the "presenting to and displaying on" the user's interface is "performed by that user's client computer," when it executes the downloaded DotA 2 or TF2 software and other software residing on the user's computer, including its operating system (e.g., Microsoft Windows), rendering software (e.g., Microsoft DirectX), and video and sound card drivers. Id. at ¶ 75. According to Zyda, the various characters ("heroes" in DotA 2 and "classes" in TF2) and all available items (weapons, clothing, etc.) in the universe of each game, including the defaults accessible to all users and the extra inventory that may be purchased, are contained in the downloaded software, which is why each program is "so large in size, more than 10 GB each." Id. Zyda further states that the DotA 2 and TF2 clients (or servers) do not themselves have "the capability to present anything to a user interface or display anything on a user's device." Id.

Zyda criticizes Treehouse's expert (Frie...