Case 6:20-cv-00810-ADA Document 51 Filed 02/16/21 Page 1 of 22
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`WACO DIVISION
`
`
`10TALES, INC.,
`
`
`
`
`
`TIKTOK INC., TIKTOK PTE. LTD.,
`BYTEDANCE LTD., and BYTEDANCE
`INC.,
`
`
`
`
`
`v.
`
`
`
`
`
`
`
`
`
`
`Case No. 6:20-cv-00810-ADA
`
`JURY TRIAL DEMANDED
`
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`
`Plaintiff,
`
`Defendants.
`
`
`
`PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE
`AMENDED COMPLAINT WITH PREJUDICE UNDER FEDERAL RULE 12(b)(6)
`
`
`
`

`

`Case 6:20-cv-00810-ADA Document 51 Filed 02/16/21 Page 2 of 22
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`Table of Contents
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`INTRODUCTION .................................................................................................................. 1
`I.
`II. FACTS .................................................................................................................................... 2
`III.
`LEGAL STANDARD ......................................................................................................... 3
`IV.
`ARGUMENT ...................................................................................................................... 5
`A. 10Tales More Than Meets the Pleading Standard with its Claim for Direct Infringement 5
`B. 10Tales Has Properly Pled Indirect Infringement .............................................................. 8
`C. 10Tales Alleges a Plausible Claim for Willful Infringement and Enhanced Damages ...... 9
`D. Defendants Apply the Wrong Legal Standard with Regard to “Use” of a
`System Claim .................................................................................................................... 11
`In the Unlikely Event that the Court Were to Conclude that the Amended Complaint is
`Deficient, 10Tales Requests Leave to File a Second Amended Complaint to Cure
`Any Deficiencies Identified by the Court ......................................................................... 14
`V. CONCLUSION ..................................................................................................................... 16
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`
`
`
`
`E.
`
`i
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`

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`Case 6:20-cv-00810-ADA Document 51 Filed 02/16/21 Page 3 of 22
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`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`
`
`Cases
`
`U.S. ex rel. Adrian v. Regents of Univ. of California,
`363 F.3d 398 (5th Cir. 2004) ...................................................................................................16
`
`Am. Video Graphics, L.P. v. Elec. Arts, Inc.,
`359 F. Supp. 2d 558 (E.D. Tex. Mar. 11, 2005) ........................................................................7
`
`Artrip v. Ball Corp.,
`735 F. App’x 708 (Fed. Cir. 2018) ..........................................................................................16
`
`Ashcroft v. Iqbal,
`556 U.S. 662 (2009) ...................................................................................................................4
`
`Bell Atl. Corp. v. Twombly,
`550 U.S. 544 (2007) ...............................................................................................................3, 7
`
`In re Bill of Lading Transmission & Processing Sys. Patent Litig.,
`681 F.3d 1323 (Fed. Cir. 2012)..................................................................................................4
`
`Bio-Rad Labs Inc. v. Thermo Fisher Scientific Inc.,
`267 F. Supp. 3d 499 (D. Del. Jan. 31, 2017) ...........................................................................10
`
`Brown v. Taylor,
`911 F.3d 235 (5th Cir. 2018) ...................................................................................................15
`
`Centillion Data Sys., LLC v. Qwest Commc’ns Intern., Inc.,
`631 F.3d 1279 (Fed. Cir. 2011)....................................................................................12, 13, 14
`
`CoreBrace LLC v. Star Seismic LLC,
`566 F.3d 1069 (Fed. Cir. 2009)..................................................................................................3
`
`Disc Disease Sols. Inc. v. VGH Sols., Inc.,
`888 F.3d 1256 (Fed. Cir. 2018) .................................................................................................5
`
`Encoditech, LLC v. Citizen Watch Co. of Am., Inc.,
`No. 5:18-CV-1335-XR, 2019 WL 2601347 (W.D. Tex. June 25, 2019) ..................................6
`
`Erickson v. Pardus,
`551 U.S. 89 (2007) .....................................................................................................................4
`
`Estech Sys., Inc. v. Target Corp.,
`No. 2:20-CV-123-JRG-RSP, 2020 WL 6534094 (E.D. Tex. Aug. 27, 2020) ....................9, 11
`
`ii
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`

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`Case 6:20-cv-00810-ADA Document 51 Filed 02/16/21 Page 4 of 22
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`
`
`Foman v. Davis,
`371 U.S. 178 (1962) .................................................................................................................15
`
`Halo Elecs., Inc. v. Pulse Elecs., Inc.,
`136 S. Ct. 1923 (2016) ...................................................................................................9, 10, 11
`
`Inhale, Inc v. Gravitron, LLC,
`No. 1:18-CV-762-LY, 2018 WL 7324886 (W.D. Tex. Dec. 10, 2018) ....................................6
`
`Lormand v. US Unwired, Inc.,
`565 F.3d 228 (5th Cir. 2009) .....................................................................................................3
`
`Lowrey v. Texas A&M Univ. Sys.,
`117 F.3d 242 (5th Cir. 1997) .....................................................................................................3
`
`Meetrix IP, LLC v. Cisco Sys., Inc.,
`No. 1:18-CV-309-LY, 2018 WL 8261315 (W.D. Tex. Nov. 30, 2018) ..................................11
`
`Motiva Patents, LLC v. Sony Corp.,
`408 F. Supp. 3d 819 (E.D. Tex. Sept. 27, 2019) ......................................................................11
`
`N. Cypress Med. Ctr. Operating Co., Ltd v. Aetna Life Ins. Co.,
`898 F.3d 461 (5th Cir. 2018) ...................................................................................................15
`
`Nichia Corp. v. VIZIO, Inc.,
`No. 2:16-CV-1453-JRG, 2017 WL 3836141 (E.D. Tex. July 24, 2017) ...................................6
`
`Panoptis Patent Mgmt., LLC v. Blackberry Corp.,
`No. 2:16-CV-59-JRG-RSP, 2017 WL 780885 (E.D. Tex. Feb. 10, 2017) ..............................10
`
`Script Sec. Sols. L.L.C. v. Amazon.com, Inc.,
`170 F. Supp. 3d 928 (E.D. Tex. Mar. 17, 2016) ......................................................................10
`
`Slyce Acquisition Inc. v. Syte – Visual Conception Ltd.,
`No. 6:19-CV-257-ADA, 2020 WL 278481 (W.D. Tex. Jan. 10, 2020) ....................................4
`
`Uniloc USA, Inc. v. Avaya Inc.,
`No. 6:15-CV-1168-JRG, 2016 WL 7042236 (E.D. Tex. May 13, 2016) ......................4, 5, 6, 8
`
`Statutes
`
`35 U.S.C. § 271(a) ...............................................................................................................5, 12, 14
`
`35 U.S.C. § 287(a) ...........................................................................................................................8
`
`Other Authorities
`
`Fed. R. Civ. P. 8(a) ................................................................................................................ passim
`
`iii
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`Case 6:20-cv-00810-ADA Document 51 Filed 02/16/21 Page 5 of 22
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`Fed. R. Civ. P. 12(b)(6)................................................................................................................3, 4
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`Fed. R. Civ. P. 15(a) ......................................................................................................................15
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`
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`iv
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`Case 6:20-cv-00810-ADA Document 51 Filed 02/16/21 Page 6 of 22
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`I.
`
`INTRODUCTION
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`Defendants TikTok Inc. (“TI”), TikTok Pte. Ltd. (“TPL”), ByteDance Ltd. (“BL”), and
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`ByteDance Inc.’s (“BI”) (hereafter collectively “TikTok” or “Defendants”) Motion to Dismiss the
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`Amended Complaint with Prejudice (ECF No. 48, “Motion”) seeks to impermissibly expand the
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`well-understood pleading requirements of Rule 8 and Iqbal/Twombly to include requirements not
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`supported by case law in this circuit. Plaintiff 10Tales, Inc.’s (“10Tales”) well-pleaded Amended
`
`Complaint (ECF No. 28) sets forth more than sufficient detail to put Defendants on fair notice of
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`the plausible claims asserted and the grounds therefore.
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`Specifically, and given that this Court disfavors motions to dismiss, Defendants’ motion
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`should be denied because the Amended Complaint identifies: (1) as to direct infringement, the
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`patent that is infringed—the ’030 patent, the accused TikTok system that is infringing the patent,
`
`and the specific functionality of that system that infringes claim 1 of the ’030 patent; (2) as to
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`indirect infringement, facts supporting Defendants’ knowledge of the ’030 patent and, at this stage
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`absent discovery, the timing of that knowledge; (3) as to willful infringement, facts supporting
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`Defendants’ actual knowledge of the ’030 patent and, coupled with its ongoing infringement, the
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`factual predicate at the pleading stage for enhanced damages based on Defendants’ intentional
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`acts; and (4) as to joint infringement, claim 1 is a system claim that does not implicate joint
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`infringement, and 10Tales has alleged sufficient facts to show that Defendants infringe system
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`claim 1 by making and using an infringing system, and that Defendants’ customers also infringe
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`claim 1 by using Defendants’ infringing system as a whole and obtaining benefit from it.
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`Contrary to the applicable law, Defendants would have this Court require plaintiffs to
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`provide element-by-element, infringement contention-like information in a complaint to properly
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`state a claim, a position that has been soundly rejected in this circuit. As to inducement,
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`Defendants seem to be confused about the difference between dismissal of pleadings and any
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`potential limitation regarding 10Tales’ damages and, in any event, Defendants’ claim fails because
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`post-suit knowledge is sufficient to assert inducement at the pleading stage.
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`At bottom, Defendants are requesting the Court abrogate Rule 8 and Iqbal/Twombly and
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`conclude that dismissal is warranted here. The Court should decline Defendants’ request and deny
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`Defendants’ Motion because 10Tales’ Amended Complaint fully complies with the pleading
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`requirements of this Court and controlling case law.
`
`II.
`
`FACTS
`
`10Tales is the pioneering developer of innovative technology used to deploy advanced
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`storytelling through the use of short-form videos submitted by a network of friends that become
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`shared experiences among the friend network. 10Tales’ technology has received numerous
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`accolades from the entertainment industry, including, for example, the Mobile Excellence Awards.
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`ECF No. 28, Amended Complaint, ¶ 2.
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`10Tales filed its original Complaint for patent infringement on September 2, 2020, against
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`Defendant TikTok Inc., alleging TI’s infringement of United States Patent Number 8,856,030 (“the
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`’030 patent”). ECF No. 1, Complaint. On September 3, 2020, TI was served through its registered
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`agent. ECF No. 8. On December 10, 2020, 10Tales filed its First Amended Complaint for Patent
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`Infringement, which added TI’s foreign parent, ByteDance Ltd., as a defendant, as well as two
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`other subsidiaries as parties to the action, TikTok Pte. Ltd. and ByteDance Inc. Amended
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`Complaint. On December 29, 2020, BI was served through its registered agent. ECF No. 36.
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`Defendant BL is the parent and owner of TI, BI, and TPL. Amended Complaint, ¶ 2; see
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`https://www.bytedance.com/en/. BL is a global company incorporated in the Cayman Islands,
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`with offices in the United States, China, Singapore, and the United Kingdom, among others.
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`Amended Complaint, ¶ 10. BL developed the TikTok platform and operates and controls it in the
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`United States through subsidiaries and affiliates such as TI, BI, and TPL. Amended Complaint,
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`2
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`¶ 11. BL operates the TikTok platform throughout the United States, including within this District.
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`Amended Complaint, ¶ 12.
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`On January 11, 2021, the Summons and First Amended were served upon TPL directly,
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`via process server, at TPL’s address in Singapore. ECF No. 39. On January 26, 2021, counsel for
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`Defendants agreed to accept service of the Summons and First Amended Complaint on behalf of
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`BL. ECF No. 42.
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`On January 14, 2021, the Court entered a Scheduling Order setting the Markman hearing
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`for June 4, 2021, with trial being set for March 7, 2022. ECF No. 41. Pursuant to the Scheduling
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`Order, 10Tales served it preliminary infringement contentions on December 14, 2020. Id.
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`Defendants’ preliminary invalidity contentions and “technical documents, including software” are
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`due on March 1, 2021. Id.
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`III. LEGAL STANDARD
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`Federal Rule of Civil Procedure (“Fed. R. Civ. P.”) 8(a)(2) requires only “‘a short and plain
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`statement of the claim showing that the pleader is entitled to relief,’ in order to ‘give the defendant
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`fair notice of what the . . . claim is and the grounds upon which it rests.’” Bell Atl. Corp. v.
`
`Twombly, 550 U.S. 544, 545 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Motions
`
`to dismiss are procedural questions to which the Federal Circuit applies the law of the regional
`
`circuit. CoreBrace LLC v. Star Seismic LLC, 566 F.3d 1069, 1072 (Fed. Cir. 2009). In the Fifth
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`Circuit, “[m]otions to dismiss under Rule 12(b)(6) ‘are viewed with disfavor and rarely granted.’”
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`Lormand v. US Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009) (quoting Test Masters Educ.
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`Servs., Inc. v. Singh, 428 F.3d 559, 570 (5th Cir. 2005)); Lowrey v. Texas A&M Univ. Sys., 117
`
`F.3d 242, 247 (5th Cir. 1997).
`
`A plaintiff need provide “only enough facts to state a claim for relief that is plausible on
`
`its face.” Twombly, 550 U.S. at 570. This standard is met when “the plaintiff pleads factual content
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`3
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`that allows the court to draw the reasonable inference that the defendant is liable for the misconduct
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`alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (citing Twombly, 550 U.S. at 556). “Specific
`
`facts are not necessary; the statement need only ‘give the defendant fair notice of what the . . .
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`claim is and the ground upon which it rests.’” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting
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`Twombly, 550 U.S. at 555).
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`There is no requirement for the plaintiff to “prove its case at the pleading stage.” In re Bill
`
`of Lading Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 1339 (Fed. Cir. 2012).
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`Thus, the Court has specifically held that dismissal under Rule 12(b)(6) is inappropriate where fact
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`discovery could affect the court’s analysis. See Slyce Acquisition Inc. v. Syte – Visual Conception
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`Ltd., No. 6:19-CV-257-ADA, 2020 WL 278481, at *6 (W.D. Tex. Jan. 10, 2020) (denying Rule
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`12(b)(6) motion because fact discovery could affect the court’s Section 101 analysis).
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`In order to properly plead a claim for direct infringement, “a plaintiff must explicitly plead
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`facts to plausibly support the assertion that a defendant ‘without authority makes, uses, offers to
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`sell, or sells any patented invention during the term of the patent.’” Uniloc USA, Inc. v. Avaya
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`Inc., No. 6:15-CV-1168-JRG, 2016 WL 7042236, at *3-4 (E.D. Tex. May 13, 2016) (citing 35
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`U.S.C. § 271(a); Fed. R. Civ. P. 8(a); and Bowlby v. City of Aberdeen, 681 F.3d 215, 217 (5th Cir.
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`2012)) (concluding the identification by name of accused products and description of the accused
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`functionality within the products were sufficient to support a reasonable inference the defendant
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`was liable for direct infringement of the asserted claims, and that “[r]equiring more would
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`improperly and unfairly elevate the plausibility standard to a probability standard”).
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`4
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`IV. ARGUMENT
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`A.
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`10Tales More Than Meets the Pleading Standard with its Claim for Direct
`Infringement
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`Defendants’ assertion that 10Tales’ direct infringement claim fails to “articulate a plausible
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`claim of infringement” is without merit for a number of reasons. Motion at 4. Simply put, the
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`Amended Complaint identifies both the ’030 patent and Defendants’ accused system that infringes
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`the ’030 patent, and thus, the Amended Complaint provides Defendants the requisite knowledge
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`of 10Tales’ claim. The Rules require nothing more.
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`Indeed,
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`10Tales’ Amended Complaint
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`specifically
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`identifies Defendants’
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`“recommendation system” used in connection with the TikTok “For You” feed as the accused
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`system, and specifically alleges that Defendants are directly infringing “at least claim 1 of the ’030
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`patent” by making and using “inter alia, the ‘recommendation system’ used in connection with
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`the TikTok ‘For You’ feed.” Amended Complaint, ¶¶ 3, 47, 57, 66. The Amended Complaint
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`further describes the accused functionality of the “recommendation system” that infringes at least
`
`claim 1 of the ’030 patent, which was attached to the Amended Complaint. See Amended
`
`Complaint, ¶¶ 62-65. Thus, 10Tales has satisfied its burden of explicitly pleading facts to
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`plausibly support its assertion that Defendants “without authority makes, uses, offers to sell, or
`
`sells any patented invention during the term” of the ’030 patent. 35 U.S.C. § 271(a); see Disc
`
`Disease Sols. Inc. v. VGH Sols., Inc., 888 F.3d 1256, 1260 (Fed. Cir. 2018) (finding allegations
`
`sufficient under Rule 8 where the patentee attached the patent as an exhibit to the complaint,
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`identified the accused product by name, and alleged the accused product met each and every
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`element of at least one claim); Uniloc, 2016 WL 7042236, at *3 (E.D. Tex. May 13, 2016)
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`(concluding the identification by name of accused products and description of the accused
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`functionality within the products were sufficient to support a reasonable inference the defendant
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`5
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`was liable for direct infringement of the asserted claims, and that “[r]equiring more would
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`improperly and unfairly elevate the plausibility standard to a probability standard”); see also
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`Encoditech, LLC v. Citizen Watch Co. of Am., Inc., No. 5:18-CV-1335-XR, 2019 WL 2601347, at
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`*3-4 (W.D. Tex. June 25, 2019) (“clear[ing] the low Disc Diesease bar”); Inhale, Inc v. Gravitron,
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`LLC, No. 1:18-CV-762-LY, 2018 WL 7324886, at *2 (W.D. Tex. Dec. 10, 2018) (same).
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`Notably, in their Motion, Defendants do not dispute that the Amended Complaint provides
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`fair notice of what 10Tales’ claim is and the grounds upon which the 10Tales claim rests.
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`Moreover, given the very specific identification of the software system at issue—Defendants’
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`“recommendation system,” which Defendants know consists of servers and software created by
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`Defendants and loaded onto those servers—Defendants can hardly complain that they need any
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`additional factual information to defend against 10Tales’ claims. Defendants either wrote their
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`programming instructions on their servers in such a way that the software associates user attributes
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`with digital media asset attributes and creates a user specific composite digital media display as
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`claimed in claim 1 of the ’030 patent, or they did not. With that information in hand, they are able
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`to answer the Amended Complaint and either admit or deny the allegations therein.
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`Instead, Defendants suggest that 10Tales must include element-by-element contentions
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`within the Amended Complaint to properly state a claim, despite case law to the contrary. Courts
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`in this circuit have refused to require such element-by-element contentions within a complaint.
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`See, e.g., Nichia Corp. v. VIZIO, Inc., No. 2:16-CV-1453-JRG (lead case), 2017 WL 3836141, at
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`*2 (E.D. Tex. July 24, 2017) (“Importantly, ‘[a]llegations to the level of detail contained in
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`infringement contentions are not required at the pleading stage.’ . . . . At this early stage in the
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`case, the plaintiff is not required to provide an “exposition of his legal argument.’”); Uniloc, 2016
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`WL 7042236, at *3 (“In essence, Avaya is asserting that Uniloc must include element-by-element
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`6
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`
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`infringement contentions within the original complaint to properly state a claim for direct
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`infringement. The Court declines to infuse Federal Rule of Civil Procedure 8(a)’s well-established
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`pleading standard with such a heightened burden at the initial pleading stage.”).
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`10Tales’ Amended Complaint thus satisfies the requirements of the Rules and controlling
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`case law, and Defendants’ Motion should be denied.
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`Even if Defendants were sincere in their contention that they need element-by-element
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`infringement contentions in order to have “fair notice of what the . . . claim is and the grounds
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`upon which it rests,” they have them. Twombly, 550 U.S. at 555. 10Tales served Defendants with
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`its Preliminary Infringement Contentions on December 14, 2020—more than seven weeks before
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`Defendants filed their Motion—providing Defendants with such an element-by-element analysis.
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`10Tales’ contentions include a thirty-one page claim chart showing where each element of claim
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`1 of the ’030 patent is found in the accused system. A copy of those contentions is attached hereto
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`as Exhibit A. In the unlikely event the Court were to rule that 10Tales is required to include
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`element-by-element infringement contentions in their pleading in order to comply with Rule 8,
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`10Tales requests leave to amend its pleading to incorporate by reference its Preliminary
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`Infringement Contentions that it has already served on Defendants.1
`
`
`1 In their Motion, Defendants seem to imply that 10Tales preliminary infringement contentions
`are inadequate. See Motion at 7 (“Plaintiff was aware of the issues and failed to fix the
`inadequacies in both the Amended Complaint and its preliminary infringement contentions.”).
`Notably, however, Defendants have not filed any motion with the Court alleging any
`“inadequacies” with 10Tales’ contentions. Defendants know well that 10Tales’ contentions are as
`detailed as they can reasonably be until such time as Defendants produce their source code for the
`accused system, which is due with their Preliminary Invalidity Contentions on March 1, 2021,
`under the Scheduling Order. See, e.g., Am. Video Graphics, L.P. v. Elec. Arts, Inc., 359 F. Supp.
`2d 558, 560-61 (E.D. Tex. Mar. 11, 2005) (“Software cases present unique challenges for the
`parties and the courts because, prior to discovery, plaintiffs usually only have access to the
`manifestation of the defendants’ allegedly infringing source code and not the code itself. From
`this manifestation, plaintiffs must somehow divine whether the defendants’ code infringes.
`
`7
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`Case 6:20-cv-00810-ADA Document 51 Filed 02/16/21 Page 13 of 22
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`B.
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`10Tales Has Properly Pled Indirect Infringement
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`Defendants next argue that the “pre-suit portion of the indirect-infringement claims should
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`be dismissed” because the Amended Complaint fails to sufficiently allege pre-suit knowledge.
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`Motion at 7-8. As Defendants concede, the Amended Complaint sufficiently states a claim for
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`indirect infringement based on Defendants’ notice of the ’030 patent as of at least September 2,
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`2020, when the original Complaint was filed and thus, Defendants’ motion to dismiss should be
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`denied. See Amended Complaint, ¶¶ 54-55, 69, 72-73, 75-77.
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`Defendants appear to be confused between dismissal and damages. Whether 10Tales is
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`entitled to pre-suit relief is a damages issue rather than one related to the sufficiency of the
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`allegations in the Amended Complaint. Compare 35 U.S.C. § 287(a) (“In the event of failure so
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`to mark, no damages shall be recovered by the patentee in any action for infringement, except on
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`proof that the infringer was notified of the infringement and continued to infringe thereafter, in
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`which event damages may be recovered only for infringement occurring after such notice.”)
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`(emphasis added) with Uniloc USA, Inc., 2016 WL 7042236, at *4 (“Failing to allege pre-suit
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`knowledge of the patent is not a basis to dismiss indirect infringement claims.”) (emphasis added).
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`If discovery reveals that Defendants had notice that their system infringes the ’030 patent prior to
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`September 2, 2020, then 10Tales will be entitled to damages based on indirect-infringement prior
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`to that date. If not, then10Tales’ damages for indirect infringement may be limited to post-
`
`
`Although defendants vigorously and rightly guard their source code, until plaintiffs have access to
`it, plaintiffs are typically unable to give highly specified infringement contentions.”). If
`Defendants are confident that their source code does not infringe claim 1 of the ’030 patent, this
`case could be quickly resolved by providing 10Tales’ expert with access to Defendants’ source
`code to confirm Defendants’ claim, to which Defendants have refused to do despite numerous
`requests by 10Tales.
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`8
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`September 2, 2020, conduct.2 Accordingly, Defendants’ motion to dismiss 10Tales’ claim for “the
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`pre-suit portion” of its indirect infringement should be denied.
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`C.
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`10Tales Alleges a Plausible Claim for Willful Infringement and Enhanced
`Damages
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`Defendants complain that the First Amended Complaint does not allege “a single fact that
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`could raise a plausible inference of the egregious behavior required under Halo.” Motion at 8.
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`Defendants’ argument misstates the holding in Halo, and is also premised on a standard that does
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`not apply in a motion to dismiss. Halo confirmed that “Section 284 gives district courts discretion
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`in meting out enhanced damages. It ‘commits the determination’ whether enhanced damages are
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`appropriate ‘to the discretion of the district court . . . .’” Halo Elecs., Inc. v. Pulse Elecs., Inc., 136
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`S. Ct. 1923, 1934 (2016) (quoting Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 572 U.S. 559,
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`563 (2014)). Here, 10Tales has sufficiently pled its claim for willful infringement, and
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`Defendants’ request amounts to asking for insulation from potential enhanced damages in the event
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`10Tales prevails on that claim. In effect, Defendants are seeking to preempt 10Tales from having
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`the opportunity to request the district court to exercise its discretion to consider a claim for
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`enhanced damages before the record has even been developed.
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`In its Amended Complaint, 10Tales alleges that the public—including Defendants—has
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`been on notice of the ’030 patent since at least June 23, 2020, when it marked its products and
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`posted the same on its website. Amended Complaint, ¶¶ 54-55. In addition, 10Tales alleges that
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`2 See Estech Sys., Inc. v. Target Corp., No. 2:20-CV-123-JRG-RSP (lead case), 2020 WL
`6534094, at *5 (E.D. Tex. Aug. 27, 2020) (“Estech relies on the filing of the initial complaint to
`show Wells Fargo’s subsequent knowledge of the Asserted Patents. This approach has been
`approved in this District as well as ‘most courts that have considered the issue recently.’ Script
`Sec. Sols. L.L.C. v. Amazon.com, Inc., 170 F. Supp. 3d 928, 937 (E.D. Tex. 2016) (Bryson, J.)
`(collecting cases). Thus, at a minimum, Estech has shown that Wells Fargo had post-filing
`knowledge of the patents. It would be premature at this stage to distinguish between pre- and post-
`filing conduct, providing another reason why the Motion should be denied as to induced
`infringement.”).
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`9
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`Case 6:20-cv-00810-ADA Document 51 Filed 02/16/21 Page 15 of 22
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`Defendants have had actual knowledge that their system infringes the ’030 patent since at least
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`September 2, 2020, when Defendants received a copy of the original Complaint. Amended
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`Complaint, ¶ 69.
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`Defendants do not—and cannot—argue that the Amended Complaint fails to allege that
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`they had knowledge of and infringe the ’030 patent. The Rules require nothing more than “a short
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`and plain statement of the claim showing” that 10Tales is entitled to relief. Fed. R. Civ. P. 8(a)(2).
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`As the Court stated in Halo, “[t]he subjective willfulness of a patent infringer, intentional or
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`knowing, may warrant enhanced damages, without regard to whether his infringement was
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`objectively reckless.” Halo, 136 S. Ct. at 1933.
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`Courts in this circuit have held that at the pleading stage “actual notice of the patents” can
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`be “sufficient to plausibly infer that [Defendants] engaged in the type of culpable behavior
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`described in Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923 (2016).” Panoptis Patent
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`Mgmt., LLC v. Blackberry Corp., No. 2:16-CV-59-JRG-RSP, 2017 WL 780885, at *5 (E.D. Tex.
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`Feb. 10, 2017). Other courts have agreed. In Bio-Rad Labs Inc. v. Thermo Fisher Scientific Inc.,
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`267 F. Supp. 3d 499 (D. Del. Jan. 31, 2017), the court held that “[a]t the pleading stage, it is not
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`necessary to show that the case is egregious.” Id. at 501 (citing Halo Elecs., Inc. v. Pulse Elecs.,
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`Inc., 136 S. Ct. at 1934).
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`Here, based on the allegations in the Amended Complaint—when accepting all facts as
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`true and in the light most favorable to 10Tales—the facts state a claim for willful infringement and
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`enhanced damages that is plausible on its face. See Script Sec. Sols. L.L.C. v. Amazon.com, Inc.,
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`170 F. Supp. 3d 928, 935 (E.D. Tex. Mar. 17, 2016) (citing Bowlby v. City of Aberdeen, Miss., 681
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`F.3d 215, 219 (5th Cir. 2012)).
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`10
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`Case 6:20-cv-00810-ADA Document 51 Filed 02/16/21 Page 16 of 22
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`Moreover, Defendants’ reliance on Meetrix is misplaced, as Meetrix is not on point. In
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`Meetrix, the court found that the complaint failed to sufficiently allege pre-suit knowledge of the
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`asserted patents from which a plausible inference of subjective willfulness could be drawn, which
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`is at odds with the facts here. Meetrix IP, LLC v. Cisco Sys., Inc., No. 1:18-CV-309-LY, 2018 WL
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`8261315, at *3 (W.D. Tex. Nov. 30, 2018). Since 10Tales has alleged both constructive and actual
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`pre-suit knowledge, the Amended Complaint “indisputably state[s] a claim for willful
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`infringement.” See Amended Complaint, ¶¶ 54-55, 72-73, 75-77; Motiva Patents, LLC v. Sony
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`Corp., 408 F. Supp. 3d 819, 837 (E.D. Tex. Sept. 27, 2019). Indeed, under Halo, “[t]he subjective
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`willfulness of a patent infringer, intentional or knowing, may warrant enhanced damages, without
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`regard to whether his infringement was objectively reckless.” Halo, 136 S. Ct. at 1933. At the
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`very least, 10Tales has properly pled that Defendants’ conduct demonstrates subjective bad faith
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`sufficient to demonstrate “the intent element of willfulness at this stage” by and through pleadings
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`that “[Defendants] ha[d] knowledge of the relevant patents, that [Defendants’] customers are
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`infringing, and that [Defendants] encouraged this infringement.” Estech Systems, Inc., 2020 WL
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`6534094, at *7.
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`Thus, 10Tales has alleged sufficient facts to support a plausible claim for willful
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`infringement and Defendants’ motion to dismiss 10Tales’ claims for willful infringement and
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`enhanced damages should be denied.
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`D.
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`Defendants Apply the Wrong Legal Standard with Regard to “Use” of a
`System Claim
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`Defendants argue that 10Tales’ “Amended Complaint should also be dismissed for failing
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`to include any plausible allegations that a single actor performs the steps of claim 1 or, in the
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`alternative, any basis for a finding of joint infringement.” Motion at 9. Defendants’ argument
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`misses the mark, as claim 1 is directed to a system—not a method. When applying the correct
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`11
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`Case 6:20-cv-00810-ADA Document 51 Filed 02/16/21 Page 17 of 22
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`standard for determining infringement of a system claim, 10Tales has alleged sufficient facts to
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`plausibly show that Defendants infringe claim 1 of the ’030 patent by both making and using an
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`infringing system, and that Defendants’ customers infringe claim 1 of the ’030 patent through use
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`of that infringing system.
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`First, claim 1 of the ’030 patent is undeniably directed to a system. See ’030 patent, claim
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`1 (“A system for associating user attributes with digital media asset attribu