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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

MARSHALL DIVISION

QUANTUM TECHNOLOGY 

INNOVATIONS, LLC,

 Plaintiff,

v.

VALVE CORPORATION and 

GEARBOX SOFTWARE, L.L.C.,

 Defendants.

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CIVIL ACTION NO. 2:23-CV-425-JRG-RSP

REPORT & RECOMMENDATION

Before the Court is the Motion to Dismiss for Improper Venue filed by Defendant Valve 

Corporation. Dkt. No. 27. Pursuant to a joint stipulation between the Parties, the briefing1 for this 

Motion was consolidated into Case No. 2:23-cv-419. See Dkt. No. 44. Since the 2:23-cv-419 case 

has now been dismissed, the Court addresses the Motion in this case.2 For the reasons below, the 

motion should be GRANTED.

I. LEGAL STANDARD

Section 1400(b) of Title 28 is the “sole and exclusive provision controlling venue in patent

infringement actions” and is not supplemented by the general venue statutes. TC Heartland LLC

v. Kraft Foods Grp. Brands LLC, 581 U.S. 258, 266 (2017) (citing Fourco Glass Co. v. Transmirra

Prod. Corp., 353 U.S. 222, 229 (1957)). Pursuant to 28 U.S.C. § 1400(b), venue lies “in the judicial

district where the defendant resides,” or “where the defendant has committed acts of infringement

and has a regular and established place of business.”

1 The briefing entailed an identical motion (2:23-cv-419, Dkt. No. 55), a response (2:23-cv-419, Dkt. No. 63), a 

reply (2:23-cv-419, Dkt. No. 66), a revised sur-reply (2:23-cv-419, Dkt. No. 75), and a sur-sur-reply (2:23-cv-419, 

76).

2 Hereinafter docket citations are to the Case No. 2:23-cv-419 unless otherwise specified.

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Three elements must be met in order to establish that a defendant has a ‘regular and

established place of business’ in the district: (1) there must be a physical place in the district; (2)

it must be a regular and established place of business; and (3) it must be a place of the defendant.

In re: Cray Inc., 871 F.3d 1355, 1360 (Fed. Cir. 2017).

When challenged, the plaintiff has the burden of establishing that venue is proper under 

§1400(b). In re: ZTE (USA) Inc., 890 F.3d 1008, 1013–14 (Fed. Cir. 2018). “A court may decide 

whether venue is improper based upon (1) the complaint alone; (2) the complaint supplemented 

by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts 

plus the court’s resolution of disputed facts.” AGIS Software v. T-Mobile USA Inc., No. 2:21-cv72-JRG-RSP, 2021 WL 6616856, at *1 (E.D. Tex. Nov. 10, 2021) (quoting Ambraco, Inc. v. 

Bossclip B.V., 570 F.3d 233, 238 (5th Cir. 2009)), R&R adopted, 2022 WL 178804 (E.D. Tex. Jan. 

19, 2022).

When a forum selection clause is asserted, the Court first determines if the forum selection 

clause governs the dispute. See Gen. Protecth Grp., Inc. v. Leviton Mfg. Co., 651 F.3d 1355, 1359 

(Fed. Cir. 2011). In patent cases, the applicability of a forum selection clause often arises when a 

defendant asserts a defense based on a license agreement. See, e.g., Zix Corp. v. Echoworx Corp., 

No. 2:15-cv-01272-JRG, 2016 WL 7042221 (E.D. Tex. June 9, 2016). The Federal Circuit has 

held that a forum selection clause applies if the nexus between the case and the agreement at issue 

is “non-frivolous.” Gen. Protecth Grp, 651 F.3d at 1359. 

II. ANALYSIS

A. Contractual Waiver

As a threshold matter, Plaintiff asserts that a 2016 Global Settlement and License 

Agreement’s (“GSALA”) forum selection clause should be enforced. Dkt. No. 63 at 4–10. By 

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Plaintiff’s own admission, the 2016 GSALA did not involve any of the patents asserted against 

Valve in the case currently before this Court. See Dkt. No. 63 at 8. And Valve does not assert a 

license defense based on the 2016 GSALA. Dkt. No. 55 at 18; Dkt. No. 66 at 3; cf. Dkt. No. 63 at 

11 (Plaintiff indicates that a license defense has yet to be asserted). While the agreement does 

include a waiver of venue objections, it is clear from the face of the agreement that the extent of 

that waiver applies to disputes arising from the 2016 GSALA. See GSALA ¶ 11.1. The Court finds

that the current case clearly does not arise out of the 2016 GSALA since the agreement did not 

cover the asserted patents and Valve is not asserting a license defense based on the agreement.

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Accordingly, the Court finds that the venue waiver in the 2016 Global Settlement and License 

Agreement does not govern this dispute. 

B. Litigation Waivers

Plaintiff also argues that since Valve waived venue in certain previous cases, the Court

should enforce a venue waiver here. Dkt. No. 63 at 10–11; see 2:23-cv-425, Dkt. No. 23 ¶ 9, 10

(“Amended Complaint”). Valve’s consent and waiver of venue in previous actions does not bind

it in this proceeding, especially where in the previous actions the waivers were made explicitly for

the relevant action only. See Amended Complaint ¶ 9, 10.

C. Venue Analysis

Plaintiff asserts that venue is proper pursuant to 28 U.S.C. § 1391(c)(2), arguing that 

general and specific jurisdiction over Valve is present. Dkt. No. 63 at 10, 11. However, Plaintiff’s 

argument is in direct contradiction to Supreme Court precedent which delineates 28 U.S.C. § 

1400(b) as the exclusive statute for venue in patent infringement proceedings. TC Heartland LLC

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The Court notes that Plaintiff discusses the applicability of the 2016 GSALA to the instant plaintiffs as affiliates of 

the original signatories. Having found that the agreement does not govern this dispute on other grounds, the Court 

does not reach this dispute.

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v. Kraft Foods Grp. Brands LLC, 581 U.S. 258, 266 (2017) (citing Fourco Glass Co. v. Transmirra

Prod. Corp., 353 U.S. 222, 229 (1957)). Accordingly, the Court evaluates venue in this action

pursuant to § 1400(b).

Plaintiff does not dispute that Valve is incorporated under the laws of, and has a principal

place of business within, the State of Washington. Amended Complaint ¶ 2. Accordingly, the Court 

finds that venue is not established under the residency requirements of 28 U.S.C. § 1400(b). Id. at 

1521. 

Therefore, to establish venue, Plaintiff must present facts that, taken as true, show that the 

Defendant has a regular and established place of business in this District. Under the patent venue 

statute, a "regular and established place of business" must be (1) "a physical place in the district"; 

(2) "regular and established"; and (3) "the place of the defendant." In re Cray, 871 F.3d at 1360.

Plaintiff argues that “a physical place in the district” is shown by the use of Valve’s product, 

“Steam,” in PC Gaming Cafés in this District, the sale of “Steam” gift cards in “brick and mortar 

retailers,” and the presence of employees “to perform inspections of its dedicated servers” in this 

District. See Dkt. No. 63 at 11–12; Amended Complaint ¶¶ 8, 12. Valve does not dispute that these 

are physical places, Valve’s objection is that they are not places of the defendant. See Dkt. No. 55 

at 6–12.

1. PC Gaming Cafés

PC Gaming Cafés provide gaming computers loaded with video games and video game 

platforms to customers who pay for usage time. Steam, a Valve product, is a video game platform 

through which developers publish video game titles for purchase and play. Steam’s inclusion in 

PC Gaming Café setups can be accomplished through a PC Café Agreement between Valve and 

the café owner. Dkt. No. 55 at 7. Plaintiff points to several PC Gaming Cafés in this District, which 

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include access to the Steam platform, as establishing venue. Amended Complaint ¶ 12; Dkt. No. 

63 at 11–12. 

Valve confirms that, at the time of the Complaint, the identified PC Gaming Cafés had 

signed Valve’s PC Café Agreement. Dkt. No. 55 at 8. However, Valve contends that it “only 

provides a license to the digital content” and otherwise does not exert control over the businesses 

such that the cafes are physical places of business for Valve. Dkt. No. 55 at 8, 11–15. Valve asserts 

that the PC Cafés operate independently and “once an individual signs the PC Café Agreement, as 

far as Valve is concerned, . . . They can choose to do whatever they like.” Dkt. No. 55 at 13–14. 

Further, Valve asserts that they do not control the “day-to-day operations.” Dkt. No. 55 at 13. 

Under the third Cray factor, “‘the regular and established place of business’ must be ‘the 

place of the defendant.’” In re Cray, 871 F.3d at 1363. To be the place of the defendant, “the 

defendant must establish or ratify the place of business.” Id. A court may consider “whether the 

defendant owns or leases the place”; “exercises other attributes of possession or control over the 

place”; “marketing or advertisements . . . but only to the extent they indicate that the defendant 

itself holds out a place for its business”; “whether the defendant lists the alleged place of business 

on a website, or in a telephone or other directory”; or whether the defendant “places its name on a 

sign associated with or on the building itself.” Id. at 1363-64. However, the Federal Circuit stated 

that “the mere fact that a defendant has advertised that it has a place of business or has even set up 

an office is not sufficient.” Id. at 1364.

Despite the agreement’s branding usage provision, Plaintiff cites no evidence that the

relevant businesses elected to use the branding, nor is there evidence that the branding was 

pervasive within the businesses. Plaintiff’s assertion that the PC Gaming Cafés “advertise Valve’s 

STEAM gaming platform” is insufficient under Cray since it is an advertisement by the Café itself 

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and not Valve indicating a place for its business through advertisement. See In re Cray, 871 F.3d 

at 1363–64. And Plaintiff’s assertion that Valve employees provide support for these businesses 

is contradicted by the agreement itself. See 2:23-cv-425, Dkt. No. 27-3 § 4.A (exemplary PC Café 

Agreement with one of the referenced PC Cafés).

Valve’s contribution to the PC Gaming Cafés is the Steam platform and the extent of the 

control exerted over the inclusion of Steam in the cafés is pursuant to the PC Café Agreement. The 

Court notes that the agreement itself does not mandate the use of Steam within the businesses. See 

PC Café Agreement at 2. Based on the plain language of the agreement, the businesses could 

decide not to provide Steam to its customers. The nature of this option cuts against finding that the 

PC Gaming Cafés are “established” as places of business for Valve. Cf. In re Cray, 871 F.3d at 

1363.

Plaintiff asserts that Valve’s ability to inspect the PC Gaming Cafés “establishes them as 

being ratified by Valve Corporation for purposes of establishing venue.” Dkt. No. 63 at 12. Valve 

asserts that the inspection provision constitutes “limited standards and constraints” that do not rise 

to the level of control needed to find venue. Dkt. No. 55 at 14. Additionally, Valve contends that 

such an inspection has never been conducted in this District. Id. Upon review of the relevant 

provision, the Court does not find that the inspection alone exhibits control over the PC Gaming 

Cafés such that it can be considered a place of the defendant for venue purposes. See In re Cray, 

871 F.3d at 1363–64. The inspection is narrowly reserved for evaluating compliance with the 

agreement and any inspections that occur are conducted during regular business hours. See PC 

Café Agreement § 5. 

Perhaps most importantly, the Federal Circuit has held in In re Google, 949 F.3d 1338, 

1344–45 (Fed. Cir. 2020), that “a ‘regular and established place of business’ requires the regular, 

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physical presence of an employee or other agent of the defendant conducting the defendant's 

business at the alleged ‘place of business.’” As discussed below, the record shows that this element 

is lacking.

2. Gift Cards

Plaintiff asserts that venue is proper due to Steam gift cards that are sold in stores such as 

“Best Buy, GameStop, and Walmart.” Amended Complaint at 4. The sale of gift cards alone is 

insufficient to establish venue. See Alexsam, Inc. v. Simon Prop. Grp. (Texas), L.P., 2021 WL 

8441707, at *2 (E.D. Tex. 2021). Compared to Alexsam, venue on gift cards is even more tenuous 

here, where the accused instrumentalities do not involve the gift cards.

3. Employees

Plaintiff asserts that “Valve Corp. has agency over employees that reside in this district 

that perform inspections of its dedicated servers[.]” Dkt. No. 63 at 12. Despite the benefit of venue 

discovery, Plaintiff does not identify any employees in this District, nor where the dedicated 

servers are hosted. In contrast, Valve asserts that its Texas based servers are located in Dallas 

County and represents that “Valve has no employees in Texas, and no Valve employee has ever 

travelled to Dallas County to inspect its servers” (Dkt. No. 55 at 11), and offers sworn testimony 

in support thereof. Dkt. No. 55-5 at 5.

The Court finds that Valve’s evidence that no employees work in Texas and that no 

employees have travelled to Texas cuts against a finding that Valve has a “regular and established 

place of business” in Texas. In re Google, 949 F.3d 1338, 1344–45 (Fed. Cir. 2020) (“We conclude 

that a ‘regular and established place of business’ requires the regular, physical presence of an 

employee or other agent of the defendant conducting the defendant's business at the alleged ‘place 

of business.’”).

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III. CONCLUSION

Accordingly, IT IS RECOMMENDED that Defendant Valve’s Motion to Dismiss the 

First Amended Complaint for Improper Venue (Dkt. No. 27) be GRANTED. 

A party’s failure to file written objections to the findings, conclusions, and 

recommendations contained in this report within 14 days bars that party from de novo review by

the District Judge of those findings, conclusions, and recommendations and, except on grounds of 

plain error, from appellate review of unobjected-to factual findings and legal conclusions accepted 

and adopted by the district court. Fed. R. Civ. P. 72(b)(2); see Douglass v. United Servs. Auto. 

Ass’n, 79 F.3d 1415, 1430 (5th Cir. 1996) (en banc). Any objection to this Report and 

Recommendation must be filed in ECF under the event “Objection to Report and 

Recommendations [cv, respoth]” or it may not be considered by the District Judge.

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