Ultimax’s Motion to Dismiss Lawsuit Over NFT Marketplace and Video Game Development Denied by California Court

News | March 19, 2024 By:

On Wednesday, February 7, 2024, the United States District Court for the Central District of California denied Ultimax Digital Inc.’s motion to dismiss a lawsuit filed by Little Orbit Inc.

Little Orbit, a video game publisher based in California, had sued Ultimax, a digital marketplace developer headquartered in New York, alleging breach of contract, patent infringement, and trade secret misappropriation. Little Orbit claimed it was hired by Ultimax in 2020 to develop and publish a video game called “Tantra Rumble,” later renamed “StoneHold,” and to design a digital card NFT marketplace. Over the next two years, Little Orbit sent Ultimax over 30 invoices totaling $1.8 million for its work but alleged that Ultimax failed to pay the remaining balance of $662,120.

The lawsuit was filed in October 2023 in the Central District of California. Ultimax then filed a motion to dismiss, arguing the court lacked jurisdiction over the case and that Little Orbit failed to present valid legal claims. In its ruling, the court denied Ultimax’s motion. Regarding jurisdiction, the court determined that Ultimax had purposefully availed itself of conducting business in California by hiring Little Orbit, a California company, to perform major work over two years. The court also found the lawsuit arose from Ultimax’s contacts with California.

On the validity of the legal claims, the court disagreed with Ultimax’s argument that Little Orbit’s patent infringement claim involved only state law issues of ownership. The court found the claim implicated federal patent law regarding whether any of Little Orbit’s intellectual property was improperly included in one of Ultimax’s patent applications. The court also ruled Little Orbit sufficiently alleged details of its trade secret misappropriation claim against Ultimax.

Finding federal jurisdiction established over the patent and trade secret claims, the court further exercised supplemental jurisdiction over Little Orbit’s remaining claims, like breach of contract, as all claims arose from a common set of facts around the parties’ core dispute. The court order allows the full lawsuit against Ultimax to move forward in California.

Please contact BlockTribune for access to a copy of this filing.