Beijing Meishe Network Technology Co., Ltd. v. TikTok Inc.

Background

Meishe alleged that defendants TikTok Inc., TikTok Pte. Ltd., ByteDance Ltd., and ByteDance Inc. infringed its copyrights, violated Section 1202 of the Digital Millennium Copyright Act, misappropriated trade secrets, and violated the Lanham Act through false advertising. Meishe claimed ownership of confidential source code and related software used for video and audio editing. It alleged that defendants copied portions of that code into TikTok and other software, including Faceu, CapCut, Lemon8, the 轻颜 application, and the BytePlus Video Editor Software Development Kit.

Meishe alleged that a former employee, Jing Xie, had access to its source code while working for Meishe and later worked for ByteDance. It also alleged that defendants’ code contained identical portions of Meishe’s code, including typographical errors and comments, and that defendants removed Meishe’s copyright-management information and replaced it with their own information. Meishe further alleged that defendants used its trade secrets in the United States and that their statements and policies concerning intellectual-property rights were commercial advertising or promotion.

Legal standard

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not allege enough facts to support a legally recognized claim. At this stage, the court treated Meishe’s factual allegations as true and drew reasonable inferences in Meishe’s favor. The court did not decide whether Meishe would ultimately prove its allegations.

Copyright claims

The court held that Meishe plausibly alleged defendants had access to copyrighted works created after Xie left Meishe. Meishe alleged that defendants’ source code contained verbatim text from Meishe app version 2.5.4, which Meishe said was completed more than a year after Xie’s departure. The court found it reasonable to infer that some copied code did not exist before Xie left and that the alleged striking similarity could support an inference of access to other post-departure code.

The court also held that Meishe plausibly alleged its works were foreign works exempt from the United States copyright-registration requirement. Meishe alleged that its source code had never been publicly available, was authored by Chinese employees in China, and, if publication occurred through distribution of compiled software, was first distributed in China. The court did not decide whether the works had been published, but found the allegations sufficient under either possibility. The defendants’ motion was denied on this basis.

Digital Millennium Copyright Act claim

The court held that Meishe’s amended allegations plausibly stated a claim under 17 U.S.C. § 1202. Meishe identified copyright-management information in its source-code modules, alleged that defendants removed Meishe’s information and replaced it with ByteDance’s copyright notice, described distribution of the allegedly altered code and software, and alleged facts supporting the required mental state. The court also declined to decide at the pleading stage whether the original and copied software had to be identical in their entirety.

Trade-secret claims

The court denied dismissal of the federal Defend Trade Secrets Act claim against ByteDance Ltd. and TikTok Pte. Ltd. on the ground that Meishe had not alleged a United States act furthering the alleged misappropriation. The court found that Meishe plausibly alleged that its trade secrets were used in the United States. It also held that Meishe described its additional alleged trade secrets with enough particularity, especially when considered with an interrogatory response identifying source-code material. Whether the code was publicly available was a factual dispute that could not be resolved on a motion to dismiss.

The court further held that Texas’s Uniform Trade Secrets Act could apply to Meishe’s claim. Because the case had been transferred under 28 U.S.C. § 1404, the court applied the state-law rules that would have applied in the original forum. The court concluded that Meishe had alleged actions in Texas and that defendants had not shown a conflict requiring dismissal or substitution of California law. Meishe therefore did not have to replead the claim under California’s trade-secret statute.

Lanham Act claim

The court granted dismissal of Meishe’s Lanham Act false-advertising claim without leave to amend. The court concluded that Meishe had not plausibly alleged that the challenged statements—concerning defendants’ copyright notices, terms of service, intellectual-property policies, code of conduct, and source-code security—were commercial speech or commercial advertising and promotion. The statements addressed defendants’ intellectual-property and security policies generally, rather than advertising a particular product or proposing a commercial transaction.

Other accused software

The court rejected defendants’ argument that Meishe’s copyright and trade-secret claims should be limited to the TikTok application. Taking the pleaded facts as true, the court found Meishe’s allegations concerning the other identified software sufficient at the pleading stage. The court stated that defendants could raise the issue later in a motion addressing the merits if they could show that the other software did not contain relevant Meishe source code.

Disposition

The court granted in part and denied in part defendants’ motion to dismiss the Fourth Amended Complaint. It granted the motion as to the Lanham Act claim without leave to amend and denied the motion as to the copyright infringement and trade dress misappropriation claims. The opinion’s discussion separately addresses and denies dismissal of the Digital Millennium Copyright Act and trade-secret claims.