Factor2 Multimedia Systems, LLC v. TikTok Inc.

Background

Factor2 Multimedia Systems, LLC sued TikTok Inc. over alleged direct and indirect infringement of six patents concerning authentication with a second computing device and a temporary code. Factor2 originally also sued Bytedance, Inc., but its second amended complaint dropped the claims against Bytedance.

TikTok moved under 28 U.S.C. § 1404(a) to transfer the case from the District of Columbia to the Northern District of California. TikTok also moved to seal portions of its transfer motion, reply, and supporting declarations. In addition, TikTok moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6), which concerns whether a complaint states a legally sufficient claim.

Transfer analysis

The court determined that the Northern District of California was a district where the action could have been brought. TikTok was incorporated in California, making that district a proper venue for this patent case, and TikTok consented to personal jurisdiction there.

The court concluded that the transfer factors favored California. Factor2 had no apparent connection to the District of Columbia, and the underlying events did not occur there. TikTok’s application and back-end system, including its two-step verification feature, were developed, implemented, tested, maintained, and distributed in the Northern District of California and China. TikTok also had multiple offices and more than one thousand employees in the Northern District of California, including personnel involved in the relevant technical work.

The court found that California would be more convenient for TikTok, while the District of Columbia would be somewhat more convenient for Factor2 because Factor2’s identified employees were in Virginia. The witness-convenience factor strongly favored California because TikTok’s potential witnesses were primarily in California, with others in China, and Factor2 identified no witness for whom a District of Columbia trial would be more convenient. Access to evidence was neutral because the evidence would likely consist of electronic documents. The courts’ familiarity with the governing law and the relative congestion of their calendars were also neutral, while California had the stronger local interest in the dispute.

Sealing analysis

The court applied the six-factor test used to decide whether judicial records should be sealed. It found that the filings concerned TikTok’s confidential business operations, that the public had no significant interest in the information, that Factor2 did not oppose sealing, and that TikTok had a strong privacy interest in its confidential technical information. The court also found that the material concerned the transfer motion rather than the substance of Factor2’s claims or TikTok’s defenses, and that the sealing request was narrowly tailored.

Disposition

The court granted TikTok’s motion to transfer the case to the Northern District of California. It granted TikTok’s motions to seal. It denied TikTok’s motion to dismiss without prejudice to refiling in the transferee district. The court did not decide whether TikTok infringed Factor2’s patents or otherwise resolve the patent claims on their merits.