10Tales, Inc. v. TikTok, Inc.

Background

10Tales alleged that TikTok, Inc., TikTok Pte. Ltd., ByteDance Ltd., and ByteDance, Inc. infringed claim 1 of U.S. Patent No. 8,856,030, titled “Method, System and Software for Associating Attributes within Digital Media Presentations.” The case was originally filed in the Western District of Texas and was transferred to the Northern District of California for convenience.

The court previously granted TikTok’s motion for judgment on the pleadings under Rule 12(c), ruling that the patent claimed ineligible subject matter under 35 U.S.C. § 101. Judgment was entered for TikTok. 10Tales appealed that decision to the Federal Circuit, and the appeal was pending when this fee ruling was issued.

TikTok’s Fee Motion

TikTok sought $4,856,824.20 in attorneys’ fees under 35 U.S.C. § 285 and argued that 10Tales’ counsel should be jointly liable for the fees under 28 U.S.C. § 1927. TikTok argued that the case was “exceptional” because 10Tales continued to pursue a weak patent-eligibility position and litigated the case unreasonably.

Under § 285, a court may award reasonable fees to the prevailing party in an exceptional case. The court explained that an exceptional case is one that stands out because of the strength of a party’s position or the unreasonable way the case was litigated. Under § 1927, an attorney may be ordered to pay fees caused by unreasonably and vexatiously multiplying the proceedings. In the Ninth Circuit, sanctions under § 1927 require subjective bad faith, such as knowingly or recklessly making a frivolous argument or pursuing a claim for harassment.

Court’s Analysis

The court agreed that TikTok was the prevailing party for purposes of § 285, but it did not find the case exceptional. The court held that 10Tales’ opposition to TikTok’s patent-eligibility motion was not, by itself, exceptional. Challenging an adversary’s position and presenting counterarguments are ordinary features of patent litigation, and a fee award is not a penalty for making weak arguments.

The court found that 10Tales had taken shifting positions about whether claim construction was needed concerning alleged “analyzing” and “algorithm” improvements in the patent. 10Tales had argued during an earlier patent-eligibility motion that claim construction was necessary, but later did not seek constructions incorporating those alleged improvements. It nevertheless referred to those improvements when opposing TikTok’s renewed patent-eligibility motion, even though the court later concluded that the patent did not claim them.

The court did not condone those shifting positions, but it found that they did not make the case exceptional. The patent-eligibility issue was resolved before merits discovery, other dispositive motions, or substantial trial preparation. The court also rejected or found insufficient TikTok’s other examples of alleged misconduct, including the choice of venue, venue-related discovery, a disagreement over a joint claim-construction statement, disclosure of confidential interrogatory responses, and a disputed request for an extension of time. The court found no support for concluding that the venue choice was improper, no rule violation in the venue discovery, no prejudice from the filing correction, and no serious prejudice from the other conduct, which appeared to be careless errors.

Disposition

The court held that the totality of the circumstances did not show egregious conduct or a case that stood out from ordinary cases. It therefore denied TikTok’s motion for attorneys’ fees under 35 U.S.C. § 285.

Because TikTok presented no additional arguments specifically supporting fees or sanctions against 10Tales’ counsel under 28 U.S.C. § 1927, the court also denied the motion under that statute. The final order states that TikTok’s motion for an award of fees under both § 285 and § 1927 is denied.