Case 5:21-cv-03868-VKD Document 248 Filed 11/12/24 Page 1 of 6
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`SAN JOSE DIVISION
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`10TALES, INC.,
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`Plaintiff,
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`v.
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`TIKTOK INC., et al.,
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`Defendants.
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`Case No. 21-cv-03868-VKD
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`ORDER DENYING DEFENDANTS'
`MOTION FOR ATTORNEYS' FEES
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`Re: Dkt. No. 236
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`Defendants TikTok, Inc., TikTok Pte. Ltd., ByteDance Ltd., and ByteDance, Inc.
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`(collectively “TikTok”) move pursuant to 35 U.S.C. § 285 and 28 U.S.C. § 1927 for an award of
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`their attorneys’ fees incurred in successfully defending against plaintiff 10Tales, Inc.’s
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`(“10Tales”) patent infringement claim. Dkt. Nos. 236, 240. TikTok argues that 10Tales’ pursuit
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`of this litigation justifies a fee award in the amount of $4,856,824.20 and that 10Tales’ counsel
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`should be held jointly liable for TikTok’s fees. 10Tales opposes the motion. Dkt. No. 239. Upon
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`consideration of the moving and responding papers, as well as the oral arguments presented, the
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`Court denies TikTok’s fees motion.
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`I.
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`BACKGROUND
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`In this action, 10Tales alleged TikTok infringed claim 1 of U.S. Patent No. 8,856,030 (“the
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`’030 patent”), titled “Method, System and Software for Associating Attributes within Digital
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`Media Presentations.” 10Tales filed the action originally in the Western District of Texas. Dkt.
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`No. 1. On TikTok’s motion, the case was transferred to this district and assigned to Judge
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`Gonzalez Rogers. Dkt. Nos. 88, 89.
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`Upon the parties’ consent, this action subsequently was reassigned to the undersigned for
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`Case 5:21-cv-03868-VKD Document 248 Filed 11/12/24 Page 2 of 6
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`all purposes, including trial. 28 U.S.C. § 636; Fed. R. Civ. P. 72; Dkt. Nos. 174, 175. After
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`holding a tutorial and a claim construction hearing (Dkt. Nos. 189, 190), the Court issued its claim
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`construction order (Dkt. No. 204). The Court subsequently granted TikTok’s Rule 12(c) motion
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`for judgment on the pleadings, concluding that the ’030 patent claimed ineligible subject matter
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`under 35 U.S.C. § 101 and entered judgment in favor of TikTok. Dkt. Nos. 223, 224. 10Tales’
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`appeal of this decision is pending before the Court of Appeals for the Federal Circuit. Dkt. No.
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`230.
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`II.
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`LEGAL STANDARD
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`A.
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`“Exceptional” Case under 35 U.S.C. § 285
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`A court “in exceptional cases may award reasonable attorney fees to the prevailing party.”
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`35 U.S.C. § 285. An exceptional case is “simply one that stands out from others with respect to
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`the substantive strength of a party’s litigating position (considering both the governing law and the
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`facts of the case) or the unreasonable manner in which the case was litigated.” Octane Fitness,
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`LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014). “District courts may determine
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`whether a case is ‘exceptional’ in the case-by-case exercise of their discretion, considering the
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`totality of the circumstances.” Id. Relevant considerations in assessing the totality of the
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`circumstances may include “‘frivolousness, motivation, objective unreasonableness (both in the
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`factual and legal components of the case) and the need in particular circumstances to advance
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`considerations of compensation and deterrence.’” Id. at 554 n.6 (quoting Fogerty v. Fantasy, Inc.,
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`510 U.S. 517, 534 n.19 (1994)). Courts “may award fees in the rare case in which a party’s
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`unreasonable conduct—while not necessarily independently sanctionable—is nonetheless so
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`‘exceptional’ as to justify an award of fees.” Id. at 555. “[A] case presenting either subjective bad
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`faith or exceptionally meritless claims may sufficiently set itself apart from mine-run cases to
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`warrant a fee award.” Id. The moving party must establish its entitlement to a fees award by a
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`preponderance of the evidence. Id. at 557-58.
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`B.
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`Sanctions under 28 U.S.C. § 1927
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`Under § 1927, an attorney “who so multiplies the proceedings in any case unreasonably
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`and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and
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`Case 5:21-cv-03868-VKD Document 248 Filed 11/12/24 Page 3 of 6
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`attorneys’ fees reasonably incurred because of such conduct.” 28 U.S.C. § 1927. The
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`determination whether sanctions are warranted under § 1927 is an issue of regional circuit law.
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`United Cannibis Corp. v. Pure Hemp Collective, Inc., 66 F.4th 1362, 1367 (Fed. Cir. 2023). In the
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`Ninth Circuit, fees may be awarded under § 1927 upon a showing of “subjective bad faith, which
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`is present when an attorney knowingly or recklessly raises a frivolous argument, or argues a
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`meritorious claim for the purpose of harassing an opponent.” B.K.B. v. Maui Police Dep’t, 276
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`F.3d 1091, 1107 (9th Cir. 2002) (quotations and citation omitted); see also Fink v. Gomez, 239
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`F.3d 989, 993 (9th Cir. 2001) (affirming that “sanctions are permissible when an attorney has
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`acted recklessly if there is something more—such as an improper purpose.”). While the Ninth
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`Circuit has not addressed the burden of proof required for § 1927 sanctions, a finding of bad faith
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`by clear and convincing evidence is sufficient. Lahiri v. Universal Music & Video Distribution
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`Corp., 606 F.3d 1216, 1219 (9th Cir. 2010).
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`III. DISCUSSION
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`For purposes of the present motion, it is undisputed that TikTok is the “prevailing party”
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`under 35 U.S.C. § 285. TikTok argues that the present case is exceptional, warranting an award of
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`attorneys’ fees, because 10Tales continued to press a weak litigating position with respect to
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`patent eligibility under 35 U.S.C. § 101 and otherwise litigated this case in an unreasonable
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`manner. 10Tales responds that TikTok fails to show exceptional circumstances regarding
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`10Tales’ § 101 position or that 10Tales engaged in any unreasonable, unprofessional, or otherwise
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`sanctionable conduct.
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`TikTok maintains that that the ’030 patent plainly claimed ineligible subject matter under
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`§ 101, in view of Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208 (2014) and its progeny.
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`While the Court granted TikTok’s § 101 motion for judgment on the pleadings, the Court does not
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`find it exceptional for 10Tales to have opposed that motion. Critiquing an adversary’s position
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`and offering counterarguments is “typical of the ordinary, unexceptional patent infringement
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`case.” Realtime Adaptive Streaming, LLC v. Sling TV, LLC, 113 F.4th 1348, 1358 (Fed. Cir.
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`2024). Moreover, “[s]imply being on notice of adverse case law and the possibility that opposing
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`counsel would pursue § 285 fees does not amount to clear notice that [asserted patent] claims were
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`Case 5:21-cv-03868-VKD Document 248 Filed 11/12/24 Page 4 of 6
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`invalid[.]” Id. A fees award under § 285 is not meant as a penalty for weak arguments. See
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`Octane Fitness, 572 U.S. at 548; Munchkin, Inc. v. Luv n' Care, Ltd., 960 F.3d 1373, 1378 (Fed.
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`Cir. 2020).
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`A closer call is presented by TikTok’s argument that 10Tales took different positions, at
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`various points in the litigation, concerning the necessity of claim construction regarding alleged,
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`patent-eligible improvements over the prior art reportedly found in claim 1 of the ’030 patent. In
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`TikTok’s view, 10Tales did so in an effort to unduly delay adjudication of the question of
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`eligibility under § 101. 10Tales maintains that its claim construction position remained consistent
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`from the outset of the litigation, noting that its essential contention has always been that those
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`skilled in the art would understand the scope of claim 1 of the ’030 patent based on the plain and
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`ordinary meaning of the claim terms. See Dkt. No. 239 at 11-14; see also Dkt. No. 243 at 26-27.
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`10Tales misses the point. In successfully opposing TikTok’s initial § 101 motion to
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`dismiss, 10Tales argued to Judge Gonzalez Rogers that claim construction was necessary with
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`respect to alleged “analyzing” and “algorithm” improvements that 10Tales maintained were found
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`in claim 1 of the ’030 patent. See Dkt. No. 145 at 19-21, 23-24; see also Dkt. No. 1 ¶ 25; Dkt. No.
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`28 ¶ 60, Dkt. No. 134; Dkt. No. 148. Judge Gonzalez Rogers denied TikTok’s initial § 101
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`motion without prejudice, concluding that a § 101 determination should wait until after claim
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`construction. See Dkt. No. 156. However, in the subsequent claim construction proceedings
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`following reassignment to the undersigned, 10Tales did not argue for a construction of the
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`“retrieving” term that included “analyzing,” or for a construction that claim 1 of the ’030 patent
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`requires the use of an “algorithm.” And the Court did not construe the patent to require those
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`elements. See Dkt. No. 204. Yet, in opposing TikTok’s renewed § 101 motion for judgment on
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`the pleadings, 10Tales once again argued that the ’030 patent provided technological
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`improvements including “analyz[ing] how that user interacts with other users in an online social
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`network,” and the use of “a rule based algorithm.” Dkt. No. 215 at 15, 16. As discussed in the
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`Court’s order granting TikTok’s renewed § 101 motion for judgment on the pleadings, none of
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`these alleged “improvements” is actually claimed in the ’030 patent. See Dkt. No. 223 at 9-11.
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`On this record, the Court cannot find that it was reasonable for 10Tales to insist on claim
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`Case 5:21-cv-03868-VKD Document 248 Filed 11/12/24 Page 5 of 6
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`construction proceedings prior to a ruling on the issues raised in TikTok’s § 101 motions.
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`While the Court does not condone 10Tales’ shifting positions on the need for claim
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`construction regarding the alleged “analyzing” and “algorithm” improvements, it also does not
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`find that 10Tales’ conduct rises to a level sufficient to render this case exceptional. Although
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`TikTok maintains that 10Tales’ shifting positions were contrived in order to unduly delay
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`adjudication of the question of § 101 eligibility, the § 101 issue was resolved before the parties
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`conducted merits discovery, filed any other dispositive motions, or otherwise engaged in
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`substantial activities required to prepare the action for trial.1
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`TikTok also cites several examples of other misconduct that it argues 10Tales undertook in
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`order to postpone an adverse § 101 determination. First, TikTok maintains that 10Tales
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`opportunistically chose to file this suit in the Western District of Texas. But the record does not
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`support a finding that 10Tales’ choice of venue was improper. Indeed, Judge Albright transferred
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`the matter to this district, not due to a defect in venue, but for convenience. See Dkt. No. 88.
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`Second, TikTok complains about the volume of venue-related discovery 10Tales pursued while
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`the case was pending in the Western District of Texas. The Court finds no basis to conclude that
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`10Tales violated any rule or order in pursuing that discovery. Third, TikTok argues 10Tales failed
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`to cooperate in the preparation of the parties’ joint claim construction statement and then belatedly
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`and unilaterally filed a statement that contained 10Tales’ correction of a so-called “scrivener’s
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`error,” which 10Tales filed without TikTok’s consent and mischaracterized as a “joint” filing. The
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`Court considered and addressed the parties’ disagreement regarding 10Tales’ filing in its claim
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`construction order. As the order notes, TikTok ultimately was not prejudiced by 10Tales’
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`correction of the purported “scrivener’s error.” See Dkt. No. 204 at 14 n.5. Finally, TikTok points
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`to other less serious conduct, including 10Tales’ disclosure of TikTok’s confidential interrogatory
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`responses that TikTok says it inadvertently did not designate as confidential, and 10Tales’ filing of
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`a “joint” request for an extension of time that TikTok insists it did not “join,” but which TikTok
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`also did not oppose. However, it is not apparent that TikTok was seriously prejudiced (if at all) or
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`1 With the agreement of the parties, and pursuant to court order, discovery and other matters were
`stayed. See Dkt. Nos. 141, 161, 208.
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`Case 5:21-cv-03868-VKD Document 248 Filed 11/12/24 Page 6 of 6
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`that these missteps were anything more than careless errors.
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`As it must, the Court considers the totality of the circumstances presented. While it is not
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`difficult to find fault with aspects of 10Tales’ litigation conduct, “‘post-Octane decisions awarding
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`fees have generally cited egregious behavior’ as the litigation conduct necessary to support a fees
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`award.” Dropbox, Inc. v. Synchronoss Techs., Inc., No. 18-cv-03685-LHK, 2019 WL 3804640, at
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`*3 (N.D. Cal. Aug. 13, 2019) (quoting Vasudevan Software, Inc. v. Microstrategy, Inc., No. 11-cv-
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`06637-RS, 2015 WL 4940635, at *5 (N.D. Cal. Aug. 19, 2015)). The totality of circumstances
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`does not support a finding that 10Tales’ conduct rose to such a level, or that the present case is
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`“the rare case” that “stands out from others” as “exceptional,” so as to justify an award of fees
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`under § 285. Octane Fitness, LLC, 572 U.S. at 554, 555; Vasudevan Software, 2015 WL 4940635
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`at *6. Accordingly, the Court, in its discretion, denies TikTok’s motion for an award of fees under
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`§ 285.
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`TikTok also cites 28 U.S.C. § 1927 as a basis to hold 10Tales’ counsel liable for fees, as
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`well as a basis to argue that there has been independently sanctionable conduct. For the reasons
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`discussed above, the Court does not find that this case is exceptional under § 285. As TikTok has
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`not presented any additional arguments specific to the issue of a § 1927 fees award against
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`10Tales’ counsel, TikTok’s motion for fees under § 1927 is also denied.
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`IV. CONCLUSION
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`Based on the foregoing, TikTok’s motion for an award of fees under 35 U.S.C. § 285 and
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`28 U.S.C. § 1927 is denied.
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`IT IS SO ORDERED.
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`Dated: November 12, 2024
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`Virginia K. DeMarchi
`United States Magistrate Judge
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