Case 2:23-cv-00059-JRG Document 31 Filed 04/01/24 Page 1 of 13 PageID #: 871
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`TOUCHSTREAM TECHNOLOGIES,
`INC.,
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`Plaintiff,
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`v.
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`CHARTER COMMUNICATIONS,
`INC., et al.,
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`Defendant.
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`Case No. 2:23-cv-00059-JRG
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`JURY TRIAL DEMANDED
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`PLAINTIFF TOUCHSTREAM TECHNOLOGIES, INC.’S SUR-REPLY TO DEFENDANT
`CHARTER COMMUNICATIONS, INC., ET AL.’S AMENDED
`MOTION TO DISMISS FOR IMPROPER VENUE AND FOR FAILURE TO
`STATE A CLAIM FOR WILLFUL INFRINGEMENT
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`i
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`Case 2:23-cv-00059-JRG Document 31 Filed 04/01/24 Page 2 of 13 PageID #: 872
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`I.
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`II.
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`TABLE OF CONTENTS
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`INTRODUCTION ......................................................................................................... 1
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`ARGUMENT ................................................................................................................. 1
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`A.
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`Touchstream has met the standard to establish a lack of corporate
`separateness between CCI, CCO, and the subsidiaries. ..................................... 1
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`1.
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`Each of Charter’s arguments have been rejected by this Court in
`Entropic, and Charter has made no attempts to distinguish
`between the facts in this case and in the Entropic case. ...................... 2
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`2.
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`Charter’s cited cases are inapposite. .................................................... 4
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`B.
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`Touchstream has adequately pled pre-suit and post-suit willfulness. ................ 6
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`1.
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`2.
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`Touchstream requests leave to amend its pre-suit willfulness
`allegations. .......................................................................................... 6
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`Touchstream has adequately alleged post-suit willfulness. ................. 8
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`III.
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`CONCLUSION .............................................................................................................. 8
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`ii
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`Case 2:23-cv-00059-JRG Document 31 Filed 04/01/24 Page 3 of 13 PageID #: 873
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`Cases
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`TABLE OF AUTHORITIES
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`Page(s)
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`Biosonix, LLC v. Hydrowave, LLC,
`4:16-cv-139, 2016 WL 9229848 (E.D. Tex. Aug. 10, 2016) ............................................... 6
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`Flypsi, Inc. v. Google LLC,
`6:22-CV-0031, 2022 WL 3593053 (W.D. Tex. Aug. 22, 2022).......................................... 7
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`Interactive Toybox, LLC v. Walt Disney Company,
`1:17-cv-1137, 2018 WL 5284625 (W.D. Tex. Oct. 24, 2018) ............................................ 5
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`IPVX Patent Holdings, Inc. v. Broadvox Holding Company, LLC,
`6:11-cv-575, 2012 WL 13012617 (E.D. Tex. Sept. 26, 2023) ............................................ 4
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`Medtronic, Inc. v. Teleflex Life Sciences Ltd.,
`86 F.4th 902 (Fed. Cir. 2023) .............................................................................................. 1
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`Microsoft Corp. v. DataTern, Inc.,
`755 F.3d 899 (Fed. Cir. 2014).............................................................................................. 1
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`Touchstream Technologies Inc. v. Altice USA, Inc., et al.,
`23-cv-0060 (E.D. Tex.) ............................................................................................ 1, 6, 7, 8
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`Rules
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`FED. R. CIV. P. 15(a)(2) .............................................................................................................. 6
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`iii
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`Case 2:23-cv-00059-JRG Document 31 Filed 04/01/24 Page 4 of 13 PageID #: 874
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`I.
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`INTRODUCTION
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`In their Reply (Dkt. 17) (“Reply”), CCI and CCO “incorporate all arguments and facts
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`as asserted in Entropic before the District Court and the Federal Circuit” yet make no attempt
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`to distinguish the facts in this case from the facts in Entropic.1 Moreover, the cases Charter
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`cites in support of its positions are inapplicable here. Charter’s Motion to Dismiss CCI and
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`CCO (Dkt. 82)2 should be denied.
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`Similarly, the Court should deny Charter’s Motion to Dismiss Touchstream’s willful
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`infringement claims. Touchstream has adequately pled both pre- and post-suit willful
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`infringement. In the event the Court finds Touchstream’s willfulness allegations insufficient
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`under the 12(b)(6) standard, Touchstream respectfully requests permission to amend its First
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`Amended Complaint (Altice, Dkt. 53). Charter has long been on notice of Touchstream’s
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`additional factual allegations and will suffer no unfair prejudice by way of the proposed
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`amendments.
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`II.
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`ARGUMENT
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`A.
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`Touchstream has met the standard to establish a lack of corporate
`separateness between CCI, CCO, and the subsidiaries.
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`The facts, as set forth in Entropic and in Touchstream’s Opposition (Altice, Dkt. 155)
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`(“Opposition”), demonstrate that Charter has failed to establish corporate separateness between
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`CCI, CCO, and its subsidiaries. In their Reply, CCI and CCO fail to establish how the facts in
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`1 Touchstream objects to Charter’s attempt to incorporate this extraneous material, and Federal
`Circuit case law is clear that such incorporation by reference is improper. Microsoft Corp. v.
`DataTern, Inc., 755 F.3d 899, 910 (Fed. Cir. 2014); see also Medtronic, Inc. v. Teleflex Life
`Sciences Ltd., 86 F.4th 902, 906–07 (Fed. Cir. 2023).
`2 As filed in the previously consolidated docket Touchstream Technologies Inc. v. Altice USA,
`Inc., et al., 23-cv-0060 (E.D. Tex.) (hereinafter “Altice”).
`1
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`this case are different from the facts in Entropic. Rather, Charter merely regurgitates its failed
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`arguments to plead a different outcome. As the Court found in Entropic, “Charter and its
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`subsidiaries, including SGC, ‘act as a single enterprise’ so the actions of its subsidiaries are
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`properly imputed to Charter.” Opposition, Dkt. 155, Ex. A at 19. Touchstream has thus
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`sufficiently shown that Charter utterly lacks corporate formalities.
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`1. Each of Charter’s arguments have been rejected by this Court in
`Entropic, and Charter has made no attempts to distinguish between
`the facts in this case and in the Entropic case.
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`Charter revives its Entropic arguments without providing any reasons for why its
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`previously failed arguments are tenable here. In particular, Charter argues that “CCI’s officers
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`and directors do not participate in the hiring and firing of any employees” (Reply, Dkt. 17 at
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`4) (alterations omitted), but this Court rejected this same argument Entropic, finding that CCI’s
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`“management agreement [] gives Charter the ability to materially control the employees of CC
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`LLC.” Opposition, Dkt. 155, Ex. A at 10. Moreover, even “[i]n the worst case scenario, [and]
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`even if Charter’s officers did not participate in the hiring and firing of any employee, such has
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`no bearing on whether they have the right to do so.” Id. at 11.
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`Additionally, Charter contends that “there is nothing improper about CCI, as manager,
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`signing agreements on behalf of SGC (or other managed LLCs) because the SGC LLC
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`Agreement permits” this. Reply, Dkt. 17 at 4. This exact fact supported the Court’s finding that
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`venue was proper in Entropic. See Opposition, Dkt. 155, Ex. A at 16 (“Charter has signed the
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`lease agreement for SGC . . . The Management Agreement gives it wide latitude to manage
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`virtually every aspect of the Charter business.”).
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`Charter also minimizes the commonality in officers or directors among the CCI, CCO,
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`and their subsidiaries. Reply, Dkt. 17 at 5. Yet, in Entropic, this Court found the fact that “all
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`200+ subsidiaries have complete commonality of officers with each other and their parent
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`Charter” to be “[s]ignificant[].” Opposition, Dkt. 155, Ex. A at 2.
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`As another example, Charter argues that its website in fact shows that “services are
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`provided under the Spectrum brand” and that CCI and CCO are separate from its subsidiaries.
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`Reply, Dkt. 17 at 6. This argument, too, was expressly rejected in Entropic. Charter’s website
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`is used “to promote Charter/Spectrum jobs around the country, including within this District”
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`and “its website and annual shareholder report both characterize Charter as a company with
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`over 93,000 employees” even though CCI allegedly has no employees. Opposition, Dkt. 155,
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`Ex. A at 8, 11.
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`Charter also argues that it has not ratified Spectrum stores in this District as its own.
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`Reply, Dkt. 17 at 9. Again, this was rejected by the Court in Entropic, where Charter’s
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`advertisement of retail locations, service packages, and job listings through a nationwide
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`website was sufficient to show ratification. Opposition, Dkt. 155, Ex. A at 13–16.
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`Furthermore, Charter’s Reply is littered with arguments against positions that
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`Touchstream did not make, but that the Court also rejected in Entropic. In particular, Charter
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`contends that “[d]esignating CCI as a manager does not convert CCI into an alter ego of the
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`managed LLC” and that “Touchstream has not cited any evidence that CCI was improperly
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`appointed as manager of SGC (or any other subsidiary) . . . .” Reply, Dkt. 17 at 2–3. As the
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`Court stated in Entropic, “Charter is correct that a mere corporate relationship is not sufficient
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`to show an agency relationship, but here there is much more than a mere corporate
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`relationship.” Opposition, Dkt. 155, Ex. A at 10 (citing E. Texas Med. Ctr. Reg’l Healthcare
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`Sys. v. Slack, 916 F. Supp. 2d 719, 722 (E.D. Tex. 2013) (Gilstrap, J.)).
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`Additionally, Charter perplexingly argues that “Touchstream does not suggest” that
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`Charter “violates governing Delaware corporate law or applicable agreements.” Id. at 4. But
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`this argument is irrelevant to the corporate separateness analysis. See Opposition, Dkt. 155,
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`Ex. A at 10–11 (“The fact that Charter has not improperly managed its subsidiaries does not
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`have any bearing whether Charter has the right to control the CC LLC employees.”).
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`Touchstream has established that CCI and CCO’s conduct directed to this District is sufficient
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`for them to be sued here.
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`Charter has failed to present any arguments distinguishing this case from Entropic, and
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`the Court should follow its previous ruling and deny Charter’s motion to dismiss for improper
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`venue.
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`2. Charter’s cited cases are inapposite.
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`None of Charter’s cited cases on point here. For example, in IPVX, the court found that
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`corporate separateness was maintained because “there is no evidence that the control exerted
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`by Broadvox Holding is greater than that ‘normally associated with common ownership and
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`directorship.’” IPVX Patent Holdings, Inc. v. Broadvox Holding Company, LLC, 6:11-cv-575,
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`2012 WL 13012617, at *3 (E.D. Tex. Sept. 26, 2023) (citation omitted). However, there is
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`ample evidence here that CCI exerts greater control than that normally exerted by a manager
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`of an LLC. CCI’s ability to provide “advice” concerning the hiring, termination, and training
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`of CC LLC employees, to negotiate and execute contracts on behalf of its subsidiaries, or to
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`otherwise use the resources of its subsidiaries (i.e., personnel from CC LLC, funds from CCO,
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`and the Spectrum trademark from HoldCo) at every whim demonstrates far more control over
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`its subsidiaries than Broadvox Holding demonstrated over its subsidiaries in IPVX.
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`Similarly, Interactive Toybox is inapplicable here. In Interactive Toybox, the court
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`found corporate separateness was maintained based on weak evidence: Walt Disney
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`Company’s annual report stated that it “currently owns and operates 223 stores in North
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`America,” issued a public statement about its commitment to “fostering safe and inclusive
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`workplaces in ‘our Disney-owned stores,’” and “appoint[ed] the heads of its subsidiaries.”
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`Interactive Toybox, LLC v. Walt Disney Company, 1:17-cv-1137, 2018 WL 5284625, at *4
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`(W.D. Tex. Oct. 24, 2018). Here, CCI and CCO frequently hold themselves out as Spectrum.
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`CCI’s public filings, customer policies, and website all “make[] clear that Spectrum is just a
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`brand name or trade name, and it is Charter who is actually operating the business.” Opposition,
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`Dkt. 155, Ex. A at 5. Unlike in Toybox, where Walt Disney purported to own and operate stores
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`as part of its role as manager, CCI adopts CC LLC employees and Spectrum stores as its own.
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`See, e.g., Opposition, Dkt. 155 at 18–19, 14–15; see also id., Ex. R. Moreover, the officers of
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`CCI not only “appoint[] the heads of its subsidiaries” but also are the heads of its subsidiaries.
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`Interactive Toybox, 2018 WL 5284625, at *4; see also Opposition, Dkt. 155, Exs. I, J, K.
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`In Board of Regents v. Medtronic PLC, Medtronic’s subsidiary in San Antonio did not
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`“hold [itself] out to the public that it is Medtronic, Inc.’s regular place of business.” No. 17-cv-
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`942, 2018 WL 4179080, at *1 (W.D. Tex. July 19, 2018). The court therefore found that
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`Medtronic did not have “a regular and established place of business in the district” for proper
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`venue. Id. at *2. Not so here. Charter continually conflates its subsidiaries and uses the
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`Spectrum brand as its own. In fact, the Court found this exact case distinguishable in Entropic:
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`“Here, Charter has directly represented to the public that Charter itself is the entity that offers
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`broadband services under the Spectrum name.” Opposition, Dkt. 155, Ex. A at 14.
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`CCO.
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`All of Charter’s cases are distinguishable, and venue is proper with respect to CCI and
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`B.
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`Touchstream has adequately pled pre-suit and post-suit willfulness.
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`All that is needed at the pleading stage are factual allegations “giving rise to at least a
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`showing of objective recklessness of the infringement risk.” Biosonix, LLC v. Hydrowave,
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`LLC, 4:16-cv-139, 2016 WL 9229848, at *5 (E.D. Tex. Aug. 10, 2016) (citation omitted).
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`Indeed, “[a]ctual knowledge of infringement or the infringement risk is not necessary to plead
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`a claim for willful infringement, but the complaint must adequately allege factual
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`circumstances in which the patents-in-suit [are] called to the attention of the defendants.” Id.
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`Touchstream maintains its previous arguments that the standard is met here with regard to its
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`pre-suit and post-suit willful infringement allegations. However, in light of the Court’s order
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`in Comcast, Touchstream requests leave to amend its Complaint.
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`1. Touchstream requests leave to amend its pre-suit willfulness
`allegations.
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`Touchstream maintains its previous arguments, but appreciates that the Court
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`considered similar arguments in Comcast, 2:23-cv-00062 (see Altice, Dkt. 156), and found that
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`amendments were required for Touchstream’s pre-suit willfulness claim to survive.
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`Accordingly, Touchstream requests leave to make such amendments here.
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`Under FED. R. CIV. P. 15(a)(2), district courts should allow amendment “freely . . . when
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`justice so requires” and only deny amendment when it would be prejudicial to the opposing
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`party, there has been bad faith on the part of the moving party, or the amendment would be
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`futile. None of the circumstances for denial apply here, nor has Charter argued as such. In fact,
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`Charter has long been on notice of Touchstream’s willfulness claims, and would not be
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`Case 2:23-cv-00059-JRG Document 31 Filed 04/01/24 Page 10 of 13 PageID #: 880
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`prejudiced by any amendments to the Complaint. Specifically, Charter’s Interrogatory No. 1
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`requests that Touchstream detail all bases for Touchstream’s allegation that Charter’s
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`infringement has been willful. See Opposition, Dkt. 155, Ex. GG at 3. Touchstream has
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`diligently provided responses to this Interrogatory on three separate occasions: September 8,
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`2023 (Original Response), December 5, 2023 (First Supplemental Response), and March 1,
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`2024 (Second Supplemental Response). See id. at 3–13. Under the Federal Rules, accordingly,
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`Touchstream should be allowed to amend its Complaint.
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`While Charter relies heavily on this Court’s opinion dismissing Touchstream’s pre-suit
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`willfulness allegations against Comcast (see, e.g., Dkt. 17 at 9–10), it fails to distinguish why
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`Touchstream should not be allowed to amend its complaint in this case. Indeed, the Court
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`dismissed Touchstream’s claims of pre-suit willful
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`infringement against Comcast
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`“WITHOUT PREJUDICE” and “permitted leave” for Touchstream “to amend its pre-suit
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`willful infringement allegations through the filing of a subsequently amended complaint.”
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`Altice, Dkt. 156 at 8 (emphasis original). Courts routinely permit plaintiff to amend its
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`complaint when dismissing pre-suit willful infringement claims. See, e.g., Flypsi, Inc. v.
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`Google LLC, 6:22-CV-0031, 2022 WL 3593053 (W.D. Tex. Aug. 22, 2022) (“recogniz[ing]
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`that it may be impossible for [plaintiff] to allege [defendant’s] pre-suit knowledge without the
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`benefit of fact discovery” and “permit[ting plaintiff] to amend its Complaint after the start of
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`fact discovery . . . to re-plead . . . willful infringement claims”).
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`Therefore, Touchstream respectfully requests similar treatment in the event the Court
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`finds Touchstream’s pre-suit willful infringement allegations insufficient.
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`2. Touchstream has adequately alleged post-suit willfulness.
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`A claim for post-suit willfulness may survive when, as here, the operative complaint
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`puts the defendant on notice of the patents and alleges ongoing willful infringement. “As this
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`Court has repeatedly recognized, ‘allegations that a defendant “continues its allegedly
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`infringing conduct even after receiving notice of the patent in the complaint are sufficient to at
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`least state a claim for post-suit willful infringement.’” Altice, Dkt. 156 at 7 (citing Arigna Tech.
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`Ltd. v. Bayerische Motoren Werke AG, 2:21-cv-00172, 2022 WL 610796, at *6 (E.D. Tex. Jan.
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`24, 2022)).
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`Here, Touchstream’s Amended Complaint cites the asserted claims, details the
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`infringing conduct, and alleges that the infringing conduct is ongoing. See Altice, Dkt. 53, at ¶
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`16 (“Spectrum . . . continues to commit acts of patent infringement”); see also ¶¶ 50
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`(“Spectrum’s infringement . . . has been, is, and continues to be willful”), 55 (same), 60 (same).
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`These allegations are sufficient under the 12(b)(6) standard. See Blitzsafe Texas, 2016 WL
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`4778699, at *7 (finding that the complaint adequately “state[d] a claim to post-suit willful
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`infringement [where t]he Complaint notifie[d] the [] Defendants of the patents that they are
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`accused of infringing” and that the “Defendants have not ceased their infringing activities”).
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`This Court has already found these allegations sufficient to survive a motion to dismiss. Altice,
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`Dkt. 156 at 7.
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`Accordingly, Touchstream has at least adequately pled post-suit willful infringement.
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`III. CONCLUSION
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`CCI and CCO have not set forth any persuasive arguments to contradict this Court’s
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`holdings in the Entropic and DirecTV cases. The interdependence of Defendants’ entities are
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`such that the activities of SGC and other subsidiaries are legally attributable to CCI and/or
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`CCO. As such, CCI and CCO have a regular and established place of business in the District,
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`have physical locations in this District that are regular and established places of business, and
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`have ratified the locations in this District as their own. Venue is therefore proper in this District.
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`Touchstream has also adequately pled both pre- and post-suit willfulness. In the event,
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`however, the Court finds that Touchstream has not sufficiently alleged willful infringement,
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`Touchstream requests that the Court grant it leave to amend its Complaint.
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`Dated: March 25, 2024
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`Respectfully Submitted,
`/s/ Ryan Dykal
`
`Ryan Dykal (Pro Hac Vice)
`Shook, Hardy & Bacon L.L.P.
`2555 Grand Blvd.
`Kansas City, MO 64108
`Phone: 816.559.2572
`Fax: 816.421.5547
`Email: rdykal@shb.com
`
`Counsel for Plaintiff
`Touchstream Technologies, Inc.
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`CERTIFICATE OF SERVICE
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`I hereby certify that, on March 25, 2024, the foregoing was filed under seal with the
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`Clerk of Court using the CM/ECF system, and all counsel of record who are deemed to have
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`consented to electronic service are being served with a notice of this document via the Court’s
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`CM/ECF system. Further, I hereby certify that a courtesy copy of the foregoing was emailed
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`to counsel for Defendants on March 25, 2024.
`
`Deron R Dacus
`The Dacus Firm, PC
`821 ESE Loop 323
`Suite 430
`Tyler, TX 75701
`Tel: 903-705-1117
`
`Daniel Reisner
`David Benyacar
`Dina M. Hayes
`Elizabeth A. Long
`Melissa A. Brown
`Arnold & Porter Kaye Scholer LLP
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`Case 2:23-cv-00059-JRG Document 31 Filed 04/01/24 Page 13 of 13 PageID #: 883
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`Fax: 903-581-2543
`Email: ddacus@dacusfirm.com
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`250 West 55th Street
`New York, NY 10019
`Tel: 212-836-8000
`Fax: 212-836-8689
`Email: daniel.reisner@arnoldporter.com
`Email: david.benyacar@arnoldporter.com
`Email: dina.hayes@arnoldporter.com
`Email: Elizabeth.long@arnoldporter.com
`Email: Melissa.brown@arnoldporter.com
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`/s/ Ryan Dykal
`Ryan Dykal
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