IP Law Daily, PATENT—D. Mass.: Court refuses to transfer suit against Mastercard to NY, (Aug 15, 2024)

By Martin A. Steinberg, J.D.

Plaintiff’s separate patent infringement case against Mastercard did not justify transfer.

Plaintiff OV Loop, Inc. sued Defendants Mastercard Inc. and Mastercard International Inc.’s (collectively, “Mastercard”) alleging that its refusal to allow OV Loop access to Mastercard’s mobile wallet payment platform was anticompetitive behavior in violation of Section 2 of the Sherman Act. The federal court in Boston denied Mastercard’s motion to transfer the case but granted Mastercard’s motion to stay discovery. Mastercard sought to transfer the antitrust action to the Southern District of New York because OV Loop has a patent infringement action against Mastercard pending there. The court noted that venue for OV Loop’s patent suit was based on a different venue provision – 28 U.S.C. § 1400 – than was applicable in the Massachusetts case. The court further ruled that Mastercard’s motion to dismiss will remain under advisement(OV Loop, Inc. v. MasterCard Inc., No. 1:24-cv-10412-IT (D. Mass. Aug. 14, 2024)).

Mastercard’s network allows merchants to route credit card transactions from their point of sale to the bank. It also operates a token service provider, which permits digital, or mobile, use of a card to conduct a transaction. This platform is referred to as the Mastercard Digital Enablement Service (MDES). Mastercard controls access to its tokens, and only approved mobile wallet providers can use the MDES platform. OV Loop’s digital platform provides users with multiple payment rail options to use when making purchases, including Mastercard’s payment processing network.

On February 21, 2024, OV Loop sued Mastercard for violations of Section 2 of the Sherman Act. OV Loop alleged that Mastercard is refusing to allow OV Loop’s use of Mastercard’s MDES tokenization service as a means to exert control over mobile wallet payment platforms and to squeeze out competition in the payment marketplace. Mastercard filed a motion to dismiss, with OV Loop responding by filing an Amended Complaint asserting the same one-count claim for violations of Section 2 of the Sherman Act but removing, among other things, much of the factual background related to OV Loop’s own technology. Mastercard then filed a renewed Motion to Dismiss. Mastercard had also filed motions to transfer the case to NY and to stay discovery pending a decision on its motion to dismiss.

Related patent infringement case. On March 1, 2023, OV Loop sued Mastercard in the Southern District of New York, alleging that Mastercard’s MDES platform infringed on OV Loop’s patent for cloud-based semi-permanent cryptographic information storage, the technology used to generate the tokens used in digital payments. Mastercard initiated inter partes review (IPR) proceedings before the Patent Trial and Appeal Board and filed a motion to stay the federal litigation until the IPR proceeding was complete. The court granted Mastercard’s motion on November 16, 2023, and the action there remains stayed.

Motion to transfer. Mastercard had not met its burden of showing that transfer was warranted under Section 1404(a). The burden is on the party moving for transfer to show that the transfer is warranted. The preliminary question in a 1404(a) analysis is whether the lawsuit could have been brought in the proposed transferee district. Because Mastercard is headquartered in Purchase, New York, the case could have been brought in the Southern District of New York.

While the pendency of related litigation in another court is a proper factor to be considered in resolving choice of venue questions, it did not create a presumption in favor of transfer. The first-to-file rule creates a presumption in favor of the forum of the first-filed action “where identical actions are proceeding concurrently in two federal courts.” OV Loop’s complaint in the Southern District of New York is for infringement of a patent while this case focuses on Mastercard’s dominance of the payment platform market and its refusal to allow OV Loop access to Mastercard’s existing point-of-sale mobile wallet payment network. Simply because both actions involve facts about Mastercard’s remote payment platform, and the nature of the payment platform marketplace does not mean that the complaints raised the same or even substantially similar allegations.

There is a strong presumption in favor of Plaintiff’s choice of forum. This presumption may be overcome only when the private and public interest factors clearly point towards trial in the alternative forum. OV Loop elected to file in this court because its principal place of business is in Massachusetts and OV Loop alleged that Mastercard has engaged in an illegal scheme directed at persons throughout the U.S., including in this district. Proceedings under the antitrust laws against a corporation may be brought not only in the judicial district where it is an inhabitant, but also in any district wherein it may be found or transacts business.

On balance, the convenience of the parties weighed in favor of keeping the case in Plaintiff’s choice of forum. OV Loop is headquartered in Massachusetts, and it is therefore more convenient to Plaintiff to conduct this litigation in its home forum. Contrary to Mastercard’s assertions, OV Loop’s bringing of its patent infringement suit in New York did not in itself undermine the potential convenience of bringing this action in the District of Massachusetts. Venue for the patent suit was based on a different venue provision. Under 28 U.S.C. § 1400, venue is appropriate only “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.” Both actions will involve many of the same factual issues, witnesses, and discovery burdens. While it may be more efficient to litigate both actions in the same forum, the parties can resolve this burden by simply agreeing to share discovery between the two actions. Because transferring the case to New York would just shift the burden of litigating in a foreign forum from Defendant to Plaintiff, the court would not transfer the case on account of convenience of the parties.

Mastercard conceded that the public interest factor was neutral. The public interest factors the court may weigh include the administrative difficulties flowing from court congestion and the local interest in having localized controversies decided at home. Because of the stay in the New York action, there is no discovery ongoing in that case. Therefore, any discovery efforts that would be undertaken in this case would not be duplicative.

Motion to stay discovery. The court granted Mastercard’s motion to stay discovery pending resolution of its motion to dismiss. “[I]t is well within a district court’s province, at least in the absence of a showing of changed circumstances or particularized need, to stay further discovery pending the determination of a dispositive motion.” Antitrust matters are typically complex and fact-intensive, and Mastercard adequately demonstrated that discovery would be burdensome and costly. The court also found that Mastercard’s requested stay is reasonable in duration, as the court anticipates leaving the stay in place only until the pending Motion to Dismiss is resolved. OV Loop’s concerns regarding prejudice seemed to be based primarily on a fear that a stay of discovery would be long, however, Mastercard did not request an extended stay nor did the court anticipate granting one. Accordingly, the relatively short duration of the stay mitigates OV Loop’s arguments regarding prejudice.

The Case is No. 1:24-cv-10412-IT.

Judge: Talwani, I.

Attorneys: Lawrence G. Green (Burns & Levinson LLP) for OV Loop, Inc. Kenneth A. Gallo (Paul, Weiss, Rifkind, Wharton & Garrison LLP) for MasterCard Inc. and MasterCard International Inc.

Companies: MasterCard Inc.; MasterCard International Inc.

Cases: Patent MassachusettsNews