Case 6:20-cv-00810-ADA Document 49 Filed 02/11/21 Page 1 of 11
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` IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`WACO DIVISION
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` CIVIL ACTION NO. 6:20-CV-810-ADA
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` JURY TRIAL DEMANDED
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`10TALES, INC.,
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`TIKTOK INC., TIKTOK PTE. LTD.,
`BYTEDANCE LTD., and BYTEDANCE
`INC.,
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`Plaintiff,
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` v.
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`Defendants.
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`I.
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`MOTION TO STAY
`PENDING RESOLUTION OF THE MOTION TO TRANSFER VENUE
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`INTRODUCTION
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`Bytedance Ltd. (“BDL”), Bytedance Inc. (“BDI”), TikTok Inc. (“TTI”), and TikTok Pte.
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`Ltd. (“TTPL”) (collectively, “Defendants”) respectfully request a stay of all dates pending
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`resolution of Defendants’ motion to transfer. See ECF Nos. 24, 47.1 A stay is appropriate in this
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`case because it will alleviate undue prejudice currently being suffered by Defendants and conserve
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`judicial resources, with little or no prejudice to the Plaintiff. In addition, it is consistent with
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`Federal Circuit guidance that “the district court must stay all proceedings concerning the
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`substantive issues of the case and all discovery until such time that it has issued a ruling on the
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`motion [to transfer].” In re SK Hynix, No. 21-113, Dkt. 10 at 2-3. Because the Northern District
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`1 In response to Defendants’ transfer motion, 10Tales filed an amended complaint naming three
`additional parties. ECF No. 28. Those parties have since joined the transfer motion without
`adding any new arguments or otherwise complicating the transfer analysis. ECF No. 47.
`Defendants have also sought to streamline the proceedings by seeking transfer only under
`Section 1404(a) while withdrawing (for purposes of this case only) their challenges based on
`lack of personal jurisdiction and improper venue.
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`Case 6:20-cv-00810-ADA Document 49 Filed 02/11/21 Page 2 of 11
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`of California is more convenient to all parties (as it is where key witnesses and sources of proof
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`are located), moving forward with the schedule before resolving the transfer issue would be
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`inefficient, unnecessarily expensive, overly burdensome, and result in a duplication of efforts by
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`the parties and multiple courts. See In re Apple, 979 F.3d 1332, 1337 (Fed. Cir. 2020) (holding
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`that disposing of a transfer motion is a priority). This was recently illustrated, for example, in the
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`Northern District of California where that Court ordered the parties transferred there from this
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`Court to restart the claim construction briefing process even though initial briefs had already been
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`filed in this Court. See Synkloud Techs., LLC v. Adobe, Inc., No. 3:20-cv-7760, Dkt. 81, ¶¶ 16-18,
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`21-22 (N.D. Cal. Feb. 5, 2021).
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`Defendants’ prejudice is real, and the burden suffered extends far beyond the unnecessary
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`duplication of effort. It is also unfair that Defendants are forced to comply with the current
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`schedule requiring them to identify and produce technical documents related to various purported
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`infringement instrumentalities that Plaintiff 10Tales has yet to reasonably identify. Defendants
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`repeatedly detailed the deficiencies in 10Tales’ infringement claim in two motions to dismiss and
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`in respective letters to 10Tales’ counsel preceding each motion. As Defendants explained, 10Tales
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`has not identified various elements of the asserted claim or what portion of the TikTok system
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`infringes the asserted patent claim—forcing Defendants to fight in the dark. Ignoring Defendants’
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`detailed recitation of pleading deficiencies and omissions, 10Tales vaguely points to the entire
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`TikTok application and broadly alleges that it somehow infringes. 10Tales has been unwilling to
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`plead a viable infringement claim or provide more than a cursory response to Defendants’ letters,
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`leaving Defendants unable to adequately prepare for the substantive issues in the case. Instead, in
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`an attempt to comply with the Court’s deadlines, Defendants have been under pressure to spend
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`many hours investigating the entirety of a highly complex system rather than focusing on a
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`Case 6:20-cv-00810-ADA Document 49 Filed 02/11/21 Page 3 of 11
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`specific, allegedly infringing aspect of that system. As such, a modest stay of this litigation allows
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`time to resolve a priority transfer motion, with the incidental benefit of allowing 10Tales time to
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`provide adequate pleadings.
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`II.
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`ARGUMENT
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`A stay pending resolution of Defendants’ transfer motion is appropriate in this case to avoid
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`undue prejudice to Defendants and preserve resources of the court and all parties. In the “context
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`of transfer of venue motions,” the Federal Circuit emphasizes § 1404(a)’s “intent to ‘prevent the
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`waste of time, energy, and money and to protect litigants, witnesses and the public against
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`unnecessary inconvenience and expense.’” In re Google Inc., 2015 WL 5294800, at *1 (Fed. Cir.
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`July 16, 2015) (quoting Van Dusen v. Barrack, 376 U.S. 612, 616 (1964)).2 More recently, the
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`Federal Circuit explained that while “district courts have discretion as to how to handle their
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`dockets, once a party files a transfer motion, disposing of that motion should unquestionably take
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`top priority.” In re Apple, 979 F.3d 1332, 1337 (Fed. Cir. 2020) (emphasis added). Accordingly,
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`the Fifth Circuit and the Federal Circuit have both “stressed ‘the importance of addressing motions
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`to transfer at the outset of litigation.’” Google, 2015 WL 5294800, at *1 (quoting In re EMC
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`Corp., 501 F. App’x 973, 975 (Fed. Cir. 2013)). Timely motions to transfer venue “should be
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`given a top priority in the handling of a case.” Deep Green Wireless LLC v. Ooma, Inc., No. 2:16-
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`CV-0604-JRG-RSP, 2017 WL 679643, at *1 (E.D. Tex. Feb. 21, 2017) (quoting Horseshoe, 337
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`2 The “power to stay proceedings” is “incidental to a district court’s inherent power ‘to control the
`disposition of the causes on its docket with economy of time and effort for itself, for counsel,
`and for litigants.’” In re Beebe, 56 F.3d 1384, 1995 WL 337666, at *2 (5th Cir. 1995) (quoting
`Landis v. N. Am. Co., 299 U.S. 248, 254 (1936))(emphasis added).
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`Case 6:20-cv-00810-ADA Document 49 Filed 02/11/21 Page 4 of 11
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`F.3d at 433). Here, Defendants filed the pending motion to transfer well in advance of the March
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`1, 2021 deadline set forth in the Scheduling Order (see ECF No. 41).
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`In this case, a stay is warranted both because a transfer motion should take top priority, and
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`also because it would be both inefficient and prejudicial to proceed with the schedule before the
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`threshold transfer motion is fully resolved. See In re Apple, 979 F.3d at 1343-44 (questioning the
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`prioritization of other proceedings where invalidity contentions, Markman briefing, a Markman
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`hearing, and a claim construction order all occurred “after [defendant] moved for transfer”); see
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`also In re SK Hynix, No. 21-113, Dkt. 10 at 2-3 (“the district court must stay all proceedings
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`concerning the substantive issues of the case and all discovery until such time that it has issued a
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`ruling on the motion [to transfer]”). Indeed, courts in this Circuit often stay cases pending
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`decisions on transfer. See, e.g., Secure Axcess, LLC v. Nintendo of Am., Inc., No. 2:13-cv-0032,
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`ECF No. 133 (E.D. Tex. Feb. 10, 2014) (“[T]he Court is persuaded that a short stay pending
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`resolution of the severance and transfer issues is likely to simplify the issues in this case.”); DSS
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`Tech. Mgmt., Inc. v. Apple, Inc., No. 6:13-cv-919, ECF No. 83 (E.D. Tex. Oct. 28, 2014) (“The
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`Court hereby STAYS all proceedings . . . while it considers Defendant’s Motion to Transfer
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`Venue”).
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`“In determining whether a stay is proper, a district court should consider, among other
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`factors, (1) the potential prejudice to the non-moving party; (2) the hardship and inequity to the
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`moving party if the action is not stayed; and (3) judicial resources.” Neodron Ltd. v. Dell Techs.
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`Inc., No. 1-19-CV-00819-ADA, 2019 WL 9633629, at *1 (W.D. Tex. Dec. 16, 2019) (Albright,
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`J.) (citing Yeti Coolers, LLC v. Home Depot U.S.A., Inc., No. 1:17-CV-342-RP, 2018 WL 2122868
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`(W.D. Tex. Jan. 8, 2018)). “A district court has the inherent power to stay cases to control its
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`docket and promote efficient use of judicial resources.” Gomez v. Loomis Armored US, LLC, No.
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`5:16-CV-931-DAE, 2017 WL 2999431, at *3 (W.D. Tex. May 8, 2017) (quoting Coker v. Select
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`Energy Servs., LLC, 161 F. Supp. 3d 492, 494–95 (S.D. Tex. 2015)). Here, all three factors support
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`a brief stay of this action pending the resolution of Defendants’ transfer motion.
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`1.
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`A Stay Will Not Unfairly Prejudice 10Tales, the Non-Moving Party
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`A modest stay to permit resolution of the pending transfer motion will be of a finite and
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`relatively short duration, and will not prejudice 10Tales. See Coker, 161 F. Supp. 3d at 495
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`(explaining that where “the delay associated with the stay will be of a limited duration, no prejudice
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`to [the non-movant] would result from a brief stay in this case”). Both parties are diligently
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`proceeding with transfer-related discovery. Under the current Scheduling Order, the only
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`proceedings likely to be delayed by a stay pending resolution of the transfer motion are
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`Defendants’ service of preliminary invalidity contentions, the parties’ respective claim
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`construction briefing, and potentially the Markman hearing (see ECF No. 41), which are precisely
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`the types of proceedings over which the Federal Circuit has stated a transfer motion should take
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`priority. See In re Apple Inc., 979 F.3d at 1342-3; see also In re SK Hynix, Dkt. 10 at 3 (staying a
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`case prior to Markman pending resolution of a transfer motion).
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`Precedent also supports a lack of prejudice as Courts regularly stay cases that are much
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`further along than the present case. See, e.g., Secure Axcess, Dkt. 133 at 1 (“As this case is in its
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`early stages and claim construction briefing has just begun, a short stay of limited duration will
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`not unduly prejudice or present a clear tactical disadvantage to the Plaintiff.”); NFC Tech. LLC v.
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`HTC Am., Inc., No. 2:13-CV-1058-WCB, 2015 WL 1069111, at *3 (E.D. Tex. Mar. 11, 2015)
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`(granting a stay even though “the parties had engaged in significant discovery, and claim
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`construction briefing was complete,” because “the bulk of the expenses that the parties would incur
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`in pretrial work and trial preparation are still in the future” which “might be avoided if the stay
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`results in the simplification (or obviation) of further court proceedings”).
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`Therefore, as 10Tales will not be prejudiced by the minimal stay necessary to resolve
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`Defendants’ pending motion to transfer, this factor favors a stay.
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`2.
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`A Stay Will Prevent Hardship and Inequity to Defendants
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`As in this case, the Court may grant a motion to stay when good cause is shown and justice
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`is required “to protect a party or person from annoyance, embarrassment, oppression, or undue
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`burden or expense.” FED. R. CIV. P. 26(c); see Laundry v. Air Line Pilots Ass’n Int’l AFL-CIO,
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`901 F.2d 404, 436 (5th Cir. 1990) (explaining that “[d]iscovery is not justified when cost and
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`inconvenience will be its sole result”). Specifically, Courts resolve transfer motions prior to
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`addressing substantive matters to “prevent the waste ‘of time, energy, and money’ and protect
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`litigants, witnesses and the public against unnecessary inconvenience and expense . . . when
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`defendants are forced to expend resources litigating substantive matters in an inconvenient venue
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`while a motion to transfer lingers unnecessarily on the docket.” See In re EMC Corp, 501 Fed.
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`App’x. 973, 975-76 (Fed. Cir. Jan 29, 2013). A stay here would accomplish these goals.
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`Defendants are currently suffering undue prejudice, cost and inconvenience and, without
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`the requested stay, will continue to be prejudiced by having to proceed with substantive aspects of
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`the case where 10Tales has yet to provide even the most basic infringement allegations to support
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`its claim. The Amended Complaint fails to even mention some of the claim elements from the
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`single asserted claim, let alone identify where in the accused TikTok app the elements purportedly
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`exist. Other claim elements that 10Tales does “mention” in the Amended Complaint are merely
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`alleged in vague and conclusory fashion to exist (somewhere) in the TikTok app.
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`Notably, TikTok was compelled to spend time and money to file a motion to dismiss
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`10Tales’ original complaint and, in doing so, explained in detail why it failed to state a claim for
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`relief. Yet, when 10Tales filed its Amended Complaint adding three new defendants, 10Tales
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`ignored TikTok’s motion to dismiss and, again, failed to provide a patent infringement claim that
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`puts Defendants on notice of how they purportedly infringe the asserted claim. Subsequently,
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`Defendants again identified 10Tales’ failure to state a claim in detail in its recently filed motion to
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`dismiss the amended complaint. See ECF No. 48. Both motions to dismiss were preceded by
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`respective letters advising 10Tales of its failure to state a claim. Until 10Tales complies with its
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`pleading requirements, Defendants are unable to adequately investigate its vague allegations that
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`fail to identify the purportedly infringing aspects of the TikTok app. This unfairly results in
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`additional and currently felt prejudice to Defendants, who are facing a March 1, 2021 deadline to
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`provide technical documents and sales information with their invalidity contentions. (see ECF No.
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`41). As a result, Defendants are being forced to interview employees and collect documents all
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`without the required understanding of how 10Tales purports to read its (poorly written) patent
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`claim on the TikTok app. This has caused Defendants to expend an immense amount of human
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`and monetary resources on these tasks for the entirety of its highly complex system rather than
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`having the guidance of an adequately pled infringement allegation that would allow Defendants to
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`focus their interviews and document collection efforts. Allowing this to continue is unfair and
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`substantially prejudices Defendants.
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`Further, if this case is transferred to the Northern District of California, that court has local
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`rules and procedures that differ from those employed by this Court. It is very likely that the
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`Case 6:20-cv-00810-ADA Document 49 Filed 02/11/21 Page 8 of 11
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`Northern District of California would require new claim construction submissions that comply
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`with its local rules. Indeed, in Synkloud v. Adobe, the parties had filed opening claim construction
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`briefs and were less than one month away from a Markman hearing in this Court when the Federal
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`Circuit ordered the case transferred to the Northern District of California. In re Adobe Inc., 823
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`F. App’x 929, 932 (Fed. Cir. 2020); see also Synkloud Techs., LLC v. Adobe, Inc., No. 6:19-cv-
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`00527, Dkts. 27, 41, 42, 45 (W.D. Tex. Sep. 6, 2019). Once there, the Northern District of
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`California ordered the parties to restart the claim construction process, including the filing of
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`locally compliant claim construction briefs.3 See Synkloud v. Adobe, No. 3:20-cv-7760, Dkt. 81,
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`¶¶ 16-18, 21-22 (N.D. Cal. Feb. 5, 2021). Here, given Defendants similarly seek a transfer to the
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`Northern District of California, if the case is transferred, the parties would (absent a stay) have to
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`expend additional time and resources to duplicate efforts undertaken in this Court that could have
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`been avoided with a stay of short duration. Therefore, if this Court proceeds as scheduled before
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`ruling on the transfer motion, and transfer is ultimately ordered, the result would be additional
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`burden and expense to both parties and the judiciary, prejudicing not only Defendants, but 10Tales
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`as well.
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`As such, it would be inefficient and prejudicial to both parties to proceed now if this case
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`is ultimately transferred to the Northern District of California. Therefore, this factor strongly
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`favors a stay, which will preserve the economy of time and effort while avoiding unnecessary
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`inconvenience and expense. In re Google Inc., 2015 WL 5294800, at *1.
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`3 A restarted claim construction process in the Northern District of California will also require
`new or revised claim construction briefs that are potentially very different than those initially
`filed in this Court. See N.D. Cal. Local Patent Rules, Rule 4 (available at
`https://www.cand.uscourts.gov/wp-content/uploads/local-rules/patent-local-
`rules/Patent_Local_Rules_11-2020.pdf).
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`3.
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`A Stay Will Conserve Judicial Resources
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`A stay pending a decision on Defendants’ transfer motion will also conserve judicial
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`resources, as it eliminates the risk for unnecessary and duplicative briefing and hearings in two
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`different district courts. For example, assuming venue discovery in this case takes the full six
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`months allotted, the transfer motion will be fully briefed in June 2021, making it likely that, absent
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`a stay, the Markman hearing scheduled for June 4, 2021 will go forward. See ECF No. 41. If
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`transfer were granted after the Markman hearing and potentially even after the claim construction
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`order, monetary resources and efforts spent on Markman would have been wasted. Given that “a
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`Markman hearing and claim construction order are two of the most important and time-intensive
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`substantive tasks a district court undertakes in a patent case,” the potential to avoid unnecessarily
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`duplicating such tasks in multiple district courts represents a major conservation of judicial
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`resources. In re Apple Inc., 979 F.3d at 1338; see also McDonnell Douglas Corp. v. Polin, 429
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`F.2d 30, 30 (3d Cir. 1970) (“Judicial economy requires that another district court should not burden
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`itself with the merits of the action until it is decided that a transfer should be effected.”); see also
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`In re SK Hynix, Dkt. 10 at 3 (ordering a stay prior to a scheduled Markman hearing pending a
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`ruling on defendants’ motion to transfer). Moreover, if the stay pending a ruling on Defendants’
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`transfer motion results in a transfer to California and is issued prior to a ruling on Defendants’
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`Motion to Dismiss the Amended Complaint, the stay would save this Court from unnecessarily
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`expending judicial resources to decide the latter motion.
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`The Northern District of California is a much more convenient forum than Texas because
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`that is the location of key witnesses with knowledge on the accused functionality, relevant
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`domestic documents, and potential third-party witnesses. See ECF Nos. 24 and 47. And, 10Tales
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`has not identified any of its own witnesses or sources of proof in Texas. For these, and all the
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`other reasons described in Defendants’ pending transfer motion, all of the transfer factors favor
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`the Northern District of California being a more convenient forum. Thus, it would be inefficient
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`for the parties to proceed with extensive and expensive Markman hearing preparation under the
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`rules of this Court if the case ultimately gets transferred to the Northern District of California. In
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`sum, this factor likewise favors a stay.
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`III. CONCLUSION
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`The unique posture of this case makes it ripe for a brief stay pending a ruling on
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`Defendants’ transfer motion. Such a stay would comport with considerations of efficiency and
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`Federal Circuit precedent, relieve undue prejudice to Defendants and cause no prejudice to
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`Plaintiff. Therefore, for these reasons, and those stated above, Defendants request that this Court
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`stay the case pending resolution of the transfer motion.
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`Dated: February 11, 2021
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`By:/s/ Stephen S. Korniczky
`Stephen S. Korniczky (admitted pro hac vice)
`Martin R. Bader (admitted pro hac vice)
`Ericka J. Schulz (admitted pro hac vice)
`SHEPPARD, MULLIN, RICHTER & HAMPTON LLP
`12275 El Camino Real, Suite 200
`San Diego, CA. 92130
`T: 858.720.8900
`skorniczky@sheppardmullin.com
`mbader@sheppardmullin.com
`eschulz@sheppardmullin.com
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`Jason Mueller (State Bar No. 24047571)
`SHEPPARD, MULLIN, RICHTER & HAMPTON LLP
`2200 Ross Avenue, 24th Floor
`Dallas, TX 75201
`T: 469.391.7402
`jmueller@sheppardmullin.com
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`Attorneys for Defendants TikTok Inc., TikTok Pte. Ltd., Bytedance
`Ltd., and Bytedance Inc.
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`Case 6:20-cv-00810-ADA Document 49 Filed 02/11/21 Page 11 of 11
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`CERTIFICATE OF SERVICE
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`I hereby certify that on February 11, 2021, a true and correct copy of the foregoing
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`MOTION TO STAY PENDING RESOLUTION OF THE MOTION TO TRANSFER VENUE
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`was served on counsel of record in this case by electronic mail.
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`/s/ Stephen S. Korniczky
`Stephen S. Korniczky
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`-11-
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