Case 6:20-cv-00810-ADA Document 53 Filed 02/23/21 Page 1 of 13
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`WACO DIVISION
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`Plaintiff,
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`10TALES, INC.,
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`TIKTOK INC., TIKTOK PTE. LTD.,
`BYTEDANCE LTD., and BYTEDANCE
`INC.,
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`CIVIL ACTION NO. 6:20-CV-810-ADA
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`JURY TRIAL DEMANDED
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`Defendants.
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`DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS THE AMENDED
`COMPLAINT WITH PREJUDICE UNDER FEDERAL RULE 12(b)(6)
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`Case 6:20-cv-00810-ADA Document 53 Filed 02/23/21 Page 2 of 13
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`I.
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`INTRODUCTION
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`Plaintiff’s Amended Complaint should be dismissed with prejudice because it cannot state
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`a claim for relief—and Plaintiff’s Opposition proves the point. Rather than address the gaping
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`holes in its Amended Complaint, Plaintiff misstates the law and argues that to survive dismissal it
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`need only identify a patent claim and generally point to TikTok’s system. This may be true in
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`limited circumstances when dealing with simple claims and simple technology, but this is not the
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`Twombly standard when dealing with complex subject matter. Far more is required before
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`dragging Defendants into an expensive patent infringement litigation.
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`The asserted claim is complex and requires vastly more than generating user specific
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`content based on user social network information—it requires the creation of a first and second
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`composite digital media display, a display server, monitoring for a trigger, and rule based
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`substitution. Under these circumstances, the law requires Plaintiff to state facts sufficient to allege
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`infringement of the entire claim, not just a few elements. In the Opening Brief, Defendants pointed
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`out numerous claim limitations that are not even mentioned in the Amended Complaint, and yet
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`Plaintiff fails to address these arguments in its Opposition.
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`Indeed, Plaintiff’s failure to identify how all the claim elements read on the TikTok system
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`means Plaintiff has not placed Defendants on notice as to what aspect of the TikTok system, if
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`any, purportedly infringes the asserted claim. Moreover, Plaintiff admits that the end-user is
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`required to put the system as a whole into service—if this is true, Plaintiff must either allege that
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`Defendants are vicariously liable for actions of the end-users, or discard its theory that the
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`Defendants directly infringe the alleged system claim.
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`Further, Plaintiff’s failure to allege any facts regarding pre-suit knowledge is fatal to its
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`allegations of indirect and willful infringement. Without these allegations, these claims cannot
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`Case 6:20-cv-00810-ADA Document 53 Filed 02/23/21 Page 3 of 13
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`stand. Defendants therefore request the Court proceed as it has in cases of similarly deficient
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`indirect and willful infringement claims and dismiss these claims.
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`In light of Plaintiff’s repeated failures to adequately address the above-mentioned
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`deficiencies and to allege sufficient facts, the Amended Complaint should be dismissed with
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`prejudice.
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`II.
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`ARGUMENT
`A.
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`the
`Plaintiff’s Conclusory Infringement Allegations Do Not Satisfy
`Iqbal/Twombly Plausibility Standard Especially When Complex Claims and
`Technology Are Involved
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`It is axiomatic that the more complex a patent infringement claim, the more facts Plaintiff
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`must allege to surpass the Iqbal/Twombly threshold for sufficiently pleading a claim. Plaintiff
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`argues the opposite: That no matter how complex the technology, all Plaintiff needs to do is
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`identify the patent and the accused product—nothing more. Plaintiff is wrong. Accordingly,
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`Plaintiff’s reliance on Disc Disease holds no water, because the asserted claim in Disc Disease
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`involved simple mechanical technology related to a spinal brace. Disc Disease Sols. Inc. v. VGH
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`Sols., Inc., 888 F.3d 1256, 1260 (Fed. Cir. 2018). In its opposition, Plaintiff ignores the
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`complexity of the ‘030 patent and the TikTok technology in order to skirt the pleading
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`requirements. Yet, in its Amended Complaint, Plaintiff admits that this case involves complex
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`technology including software and hardware operating over an interconnected system. Such
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`complexity dictates the level of factual allegations required to plead infringement in this case.
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`1.
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`Complicated Claims Require More Than Conclusory Allegations
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`Courts in this Circuit have distinguished Disc Disease based on the presence of “more
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`complicated claims and technology,” such as claims directed to “the hardware and software”
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`involved in a system. See, e.g., Chapterhouse, LLC v. Shopify, Inc., No. 2:18-CV-00300-JRG,
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`2018 WL 6981828, at *2 (E.D. Tex. Dec. 11, 2018) (“The Court finds Disc Disease to be
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`Case 6:20-cv-00810-ADA Document 53 Filed 02/23/21 Page 4 of 13
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`inapposite.”); Lexington Luminance LLC v. Serv. Lighting & Elec. Supplies, Inc., No. 3:18-CV-
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`01074-K, 2018 WL 10425908, at *1-2 (N.D. Tex. Oct. 9, 2018) (“in Disc Disease Solutions, the
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`Federal Circuit specifically pointed out that the case involved a simple technology . . . . The
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`present case is distinguishable”). In complex cases, “[a]dditional factual information, at least
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`pleaded on information and belief, is required under the standards of Twombly and Iqbal.”
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`Lexington, 2018 WL 10425908, at *2; see also Chapterhouse, 2018 WL 6981828 at *2 (reciting
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`the claim language and pointing to the accused product “on its own, is a mere conclusory
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`statement, and in order to pass the Iqbal/Twombly standard, there must be accompanying factual
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`allegations”). Indeed, the Federal Circuit has recently confirmed that “conclusory formulaic
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`recitations of the elements of patent infringement” are insufficient. Golden v. Apple Inc., 819 F.
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`App'x 930, 931 (Fed. Cir. 2020), cert. denied, No. 20-624, 2021 WL 78174 (U.S. Jan. 11, 2021).
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`Here, Plaintiff has failed to provide the requisite “additional factual information”—in
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`some instances, failing to even mention certain limitations—and has therefore failed to satisfy
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`the Iqbal/Twombly standard in cases involving complex patent claims. The claim at issue here
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`appears even more complex than the “complicated claims and technology” at issue in
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`Chapterhouse, and far from the “simple technology” at issue in Disc Disease. Plaintiff describes
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`the asserted claim as covering “a server-based system that associates user attributes with digital
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`media attributes and creates a user-specific composite digital media display.” (ECF 28, ¶58.)
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`This compares to, if not surpasses the complexity level of the claims in Chapterhouse, which
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`“cover the hardware and software involved in an electronic transaction receipt system.”
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`Chapterhouse, 2018 WL 6981828, at *2. Plaintiff even admits that its claims are “not
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`conventional or generic.” (ECF 28, ¶59.) Such unconventional and complex claims are clearly
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`Case 6:20-cv-00810-ADA Document 53 Filed 02/23/21 Page 5 of 13
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`distinct from the simple mechanical device at issue in Disc Disease.1 Accordingly, Plaintiff
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`cannot rely on its mere conclusory allegations to satisfy the Iqbal/Twombly standard and, instead,
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`must provide additional factual information in its pleadings.
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`2.
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`Omission of Patent Claim Limitations is a Pleading Failure
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`Plaintiff’s Opposition fails to address the claim limitations missing from its Amended
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`Complaint, including the “first” and “second” “composite digital media display,” the “trigger,”
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`the “display server,” and the “rule based substitution.” (ECF 48, 5-6.) A search for “trigger,”
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`“display server” (the claim requires a “server” and “display server”), and “substitution” reveal
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`that these terms do not appear even a single time in the Amended Complaint. Plaintiff’s failure
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`to even acknowledge that these claim limitations exist highlight its failure to provide the
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`sufficient factual information required to meet the Iqbal/Twombly standard.2 Both this Court and
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`the Federal Circuit have found similar infringement allegations inadequately pled where patent
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`claim limitations are entirely missing from the complaint. See Metricolor LLC v. L'Oreal S.A.,
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`791 F. App'x 183, 188 (Fed. Cir. 2019) (inadequately pled because “nothing in the complaint
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`shows that the Accused Products contain the ‘air-tight reclosing seal’\‘air-tight reclosable seal’
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`required by the independent claims”); see also De La Vega v. Microsoft Corp., No. W-19-CV-
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`00612-ADA, 2020 WL 3528411, at *6 (W.D. Tex. Feb. 11, 2020) (same where plaintiff did not
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`“include even a short written description of how the accused instrumentalities meet the
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`‘coupling’ limitation”).
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`Plaintiff points to paragraphs 62-65 of the Amended Complaint as its attempt to
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`1 Inhale, another case which Plaintiff cites (ECF 51, 6), is similarly distinguishable because that
`“case involves simple technology—a handheld tobacco grinder.” Inhale, Inc v. Gravitron, LLC,
`No. 1-18-CV-762-LY, 2018 WL 7324886, at *2 (W.D. Tex. Dec. 10, 2018).
`2 While Plaintiff relies on the Encoditech case, there the plaintiff’s allegation included “all claim
`elements” making the reliance misplaced. Encoditech, LLC v. Citizen Watch Co. of Am., Inc., No.
`SA-18-CV-1335-XR, 2019 WL 2601347, at *4 (W.D. Tex. June 25, 2019) (emphasis added).
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`“describe[] the accused functionality.” (ECF 51, 5.) However, the asserted claim involves far
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`more than the claim’s preamble and a single limitation covering a computer-readable storage
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`medium—if these elements were all that was required, the claim could have been much shorter
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`and less complex (i.e., eliminating the need for the other dozen elements). Therefore, even if this
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`section of the Amended Complaint adequately describes some portion of the claim, it fails to
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`address the majority of the claim, leaving Defendants without a basis to reasonably understand
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`what the asserted claim covers or how it purports to read on the accused instrumentality.3 For
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`example, Plaintiff fails to allege where the “first” or “second” “composite digital display” is
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`found, how or what kind of “trigger” is monitored, how and what is substituted in the “rule based
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`substitution,” or what the “display server” is in the TikTok system. Plaintiff does not deny these
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`elements were omitted, and thus, there is no question Plaintiff failed to meet the Twombly
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`threshold for providing adequate pleadings.
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`3.
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`Plaintiff’s Infringement Contentions do not Cure the Deficiencies
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`Plaintiff’s attempt to incorporate the infringement contentions into its deficient Amended
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`Complaint is improper. CODA Dev. S.R.O. v. Goodyear Tire & Rubber Co., 916 F.3d 1350,
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`1360 (Fed. Cir. 2019) (“Assessment of the facial sufficiency of the complaint must ordinarily be
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`undertaken without resort to matters outside the pleadings.”). Setting this impropriety aside,
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`Plaintiff’s infringement contentions, even if incorporated into the Amended Complaint, would
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`still fail to satisfy the Iqbal/Twombly plausibility standard. First, many of the limitations
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`“charted” by Plaintiff are accompanied by nothing more than a recitation of the claim language
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`and screen shot(s) from TikTok’s website. (See ECF 51-2, 14-23 (1[f] and 1[g]), 25-28 (1[i] and
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`3 Thus, Plaintiff’s reliance on Uniloc is misplaced, as in that case the plaintiff “provided
`descriptive illustrations of [the accused] products and the accused functionality.” Uniloc USA,
`Inc. v. Avaya Inc., No. 6:15-CV-1168-JRG, 2016 WL 7042236, at *4 (E.D. Tex. May 13, 2016).
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`1[j]), 29-31 (1[l]).) This is insufficient as “[s]uch a statement, on its own, is a mere conclusory
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`statement, and in order to pass the Iqbal/Twombly standard, there must be accompanying factual
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`allegations. There are none here . . . [because] Plaintiff must further allege how the screenshots
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`meet the text of the exemplary claim.” Chapterhouse, 2018 WL 6981828, at *2. Notably, the
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`limitations that Plaintiff fails to sufficiently chart in its infringement contentions are the same
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`limitations that Plaintiff completely omits mentioning in the Amended Complaint, including the
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`“display server” (1[f]), “second composite digital media display” (1[l]), “trigger” (1[i]), and
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`“rule based substitution” (1[j]). Because both documents provide insufficient factual allegations,
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`incorporating the contentions into the Amended Complaint will not remedy its deficiencies.4
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`Moreover, in order to comply with its Rule 11 obligation, Plaintiff should have identified
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`a system practiced by Defendants that contains each limitation of the asserted claim prior to
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`filing suit. Therefore, it belies logic that Plaintiff cannot tell Defendants in either the Amended
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`Complaint or Plaintiff’s infringement contentions where the omitted claim limitations are
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`practiced in Defendants’ allegedly infringing system.5 Thus, it appears that Plaintiff cannot even
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`make its allegations based on sufficient “information and belief.” Therefore, these claims cannot
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`stand.
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`4 Plaintiff’s suggestion that it cannot provide adequate infringement allegations or contentions
`until it receives source code is disingenuous. Plaintiff has yet to state (either in writing or during
`telephonic meet and confers) that it needs source code to provide adequate allegations. In the Joint
`Case Readiness report, Plaintiff merely requested a date by which source code would be produced.
`(ECF 27, 3.) Similarly, its infringement contentions merely reserve the right to supplement based
`on source code. (See, e.g., ECF 51-2, 12.) Plaintiff cannot now claim that it has been unable to
`provide adequate infringement allegations without source code. Further, this Court has already
`made clear that source code is not part of the production due with Defendants’ Preliminary
`Invalidity Contentions on March 1, 2021.
`5 Where does the “trigger” or “rule based substitution” occur? Where is the “display server” that
`presents the second composite digital media display? Are these limitations practiced by the end-
`user’s device or somewhere on Defendants’ back-end?
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`Case 6:20-cv-00810-ADA Document 53 Filed 02/23/21 Page 8 of 13
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`B.
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`Plaintiff Has Not Alleged Facts to Support Pre-Suit Indirect Infringement.
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`Pre-suit indirect infringement requires a defendant to have pre-suit knowledge of the
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`asserted patent. The Amended Complaint fails to plead any facts related to the Defendants’ pre-
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`suit knowledge of the ‘030 Patent; Plaintiff does not dispute this omission. See Amended
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`Complaint, ¶¶ 72-73, 76-77. Accordingly, Defendants respectfully request Plaintiff’s pre-suit
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`indirect infringement claims be dismissed. See Castlemorton Wireless, LLC v. Bose Corp., No.
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`6:20-CV-00029-ADA, 2020 WL 6578418, at *5 (W.D. Tex. July 22, 2020) (dismissing the
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`complaint because it “did not plead any facts that would support an allegation of pre-suit
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`knowledge.”)
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`C.
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`Plaintiff Has Not Pled Facts Sufficient to Sustain Allegations of Enhanced
`Damages Based on Willful Infringement
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`Plaintiff’s willful infringement claims should be dismissed because Plaintiff admits its
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`claims fail to allege actual pre-suit knowledge, and that it failed to plead any egregious conduct.
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`(ECF 51, 9-10.) “Knowledge of the patent alleged to be willfully infringed continues to be a
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`prerequisite to enhanced damages.” WBIP, LLC v. Kohler Co., 829 F.3d 1317, 1341 (Fed. Cir.
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`2016). Although “[a]ctual knowledge of infringement or the infringement risk is not necessary
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`to plead a claim for willful infringement, [] 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.” Maxell
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`Ltd. v. Apple Inc., No. 5:19-CV-00036-RWS, 2019 WL 7905455, at *3 (E.D. Tex. Oct. 23,
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`2019). Here, Plaintiff does not dispute that it failed to allege actual pre-suit knowledge. Further,
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`the simple act of marking its product does not “adequately allege factual circumstances in which
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`the patents-in-suit [are] called to the attention of the defendants.” Id. (emphasis added). Even
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`assuming filing of the Complaint gave Defendants notice of the ‘030 patent, Plaintiff “has
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`offered no allegations suggesting that [Defendants] deliberately re-dedicated [themselves] to
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`infringing after being served with the complaint.” M & C Innovations, LLC v. Igloo Prod. Corp.,
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`No. 4:17-CV-2372, 2018 WL 4620713, at *5 (S.D. Tex. July 31, 2018). “[T]his post-suit fact
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`pattern characterizes every infringement action” making this case “simply [] the kind of ‘garden-
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`variety’ patent case that Halo affirms is ill-suited for a finding of willfulness.” Id. (dismissing
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`willful infringement claims with prejudice). Therefore, Defendants request the Court follow its
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`practice from similar cases and dismiss Plaintiff’s insufficient willful infringement allegations.
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`See, e.g., Kuster v. Western Digital Techs., Inc., No. 6:20-CV-00563-ADA, 2021 WL 466147, at
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`*9 (W.D. Tex. Feb. 9, 2021); VLSI Tech., LLC v. Intel Corp., No. 6:19-CV-000254-ADA, 2019
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`WL 11025759, at *1 (W.D. Tex. Aug. 6, 2019).
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`D.
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`Plaintiff is Legally Unable to Plead that Defendants “use” the Purported
`System Claim
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`Plaintiff does not dispute the standards for joint infringement set forth in Defendants’
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`Opening Brief. (ECF 48, 9-11.) Rather, Plaintiff claims that it need not address joint
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`infringement because it is asserting a pure system claim.6 Regardless, given Plaintiff’s
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`admissions in the Amended Complaint that users are required to put “the system as a whole inter
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`[sic] service” (ECF 28, ¶ 67) Plaintiff either needs to allege that Defendants are vicariously liable
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`for the actions of the users, or drop its allegations that Defendants directly infringe the asserted
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`claim. See Centillion Data Sys., LLC v. Qwest Commc'ns Int'l, Inc., 631 F.3d 1279, 1286-87
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`(Fed. Cir. 2011).
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`Under the standard in Centillion, in order to “use” a system, the infringer must “exercise
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`physical or direct control over each individual element of the system,” which means the infringer
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`6 Plaintiff’s allegation that claim 1 of the ‘030 patent is “undeniably directed to a system” because
`it includes the word “system” in the preamble is questionable. (ECF 51, 12.) Based on this same
`logic, claim 1 could “undeniably” be directed to a method. See ‘030 patent, claim 1 (“performing
`a method” and “the method comprising”).
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`must have “the ability to place the system as a whole into service.” Centillion, 631 F.3d at 1284.
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`The system in Centillion required both a “front-end personal computer” operated by end users
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`and “back-end processing” operated by defendant that included software for installation on the
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`end user’s “front-end personal computer.” Id. at 1283, 1286. Centillion held that “as a matter of
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`law, [defendant] does not ‘use’ the patented invention” because “[w]hile [defendant] may make
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`the back-end processing elements, it never ‘uses’ the entire claimed system because it never puts
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`into service the personal computer data processing means.” Id. at 1286.
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`As Plaintiff acknowledges, its asserted claim “is analogous to the system found ‘used’ for
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`purposes of the infringement analysis in Centillion.” (ECF 51, 13.) Indeed, Plaintiff’s
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`Opposition and Amended Complaint state that “TikTok’s end users and customers put the
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`system as a whole into service by downloading and running the TikTok app on a device and
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`accessing the ‘For You’ feed.” (ECF 51, 13; ECF 28, ¶68); see also Centillion, 631 F.3d at
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`1284. Thus because TikTok end users “place the system as a whole into service,” it is the
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`TikTok end users and customers that allegedly “use” Plaintiff’s asserted system claim, not
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`Defendants. See Centillion, 631 F.3d at 1286 (“Supplying the software for the customer to use is
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`not the same as using the system.”) Plaintiff has not stated a claim that Defendants directly
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`infringe the asserted claim through “use” of the system, because Plaintiff is legally unable to do
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`so.7 Therefore, at a minimum, the direct infringement allegations against Defendants should be
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`dismissed.
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`7 Similarly, because Plaintiff alleges that “TikTok’s end users and customers put the system as a
`whole into service by downloading and running the TikTok app on a device,” (ECF 51, 13),
`Defendants do not “make” the claimed system either. See Centillion, 631 F.3d at 1288 (“Qwest
`does not ‘make’ the patented invention under § 271(a) as a matter of law. Qwest manufactures
`only part of the claimed system. . . . The customer, not Qwest, completes the system by providing
`the ‘personal computer data processing means’ and installing the client software.”).
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`E.
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`The Amended Complaint Should be Dismissed With Prejudice
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`Plaintiff’s Opposition begs for a fourth bite at the apple, stating that “10Tales could
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`readily cure the alleged ‘deficiencies’ with an amended pleading.” (ECF 51, 15.) But it makes
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`no sense that the “deficiencies” understood by Plaintiff since at least the original motion to
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`dismiss, and that Defendants have detailed in multiple pre-motion letters, can now be “readily
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`cured.” Rather, as made clear in the Opposition, Plaintiff has proven that its position on
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`infringement of the purported system claim at issue is untenable as a matter of law, making
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`dismissal with prejudice appropriate because “the pleadings show that further amendment would
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`be futile.” See Sigmon v. Branch Banking & Tr. Co., No. A-15-CV-590-LY, 2016 WL 8285748,
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`at *1 (W.D. Tex. Mar. 1, 2016). Because Plaintiff has received numerous notifications of the
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`pleading deficiencies and refused to address such deficiencies in its Amended Complaint—likely
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`out of an inability to do so—dismissal with prejudice is appropriate. Further, because indirect
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`and willful infringement requires an underlying direct infringement, Plaintiff’s inability to plead
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`direct infringement necessitates dismissal of these claims with prejudice as well.
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`III. CONCLUSION
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`For the foregoing reasons, Defendants respectfully request that the Court dismiss this
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`case in its entirety, with prejudice.
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`Dated: February 23, 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
`F: 858.509.3691
`skorniczky@sheppardmullin.com
`mbader@sheppardmullin.com
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`Case 6:20-cv-00810-ADA Document 53 Filed 02/23/21 Page 12 of 13
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`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
`F: 469.391.7550
`jmueller@sheppardmullin.com
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`Attorneys for TikTok Inc., TikTok Pte. Ltd.,
`Bytedance Inc., and Bytedance Ltd.
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that the foregoing document was filed electronically in
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`compliance with Local Rule CV-5(a) on February 23, 2021, and was served via CM/ECF on all
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`counsel who are deemed to have consented to electronic service. Local Rule CV-5(b)(1).
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`/s/ Stephen S. Korniczky
`Stephen S. Korniczky
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