`Case 2:23-cv-00059-JRG Document 46 *SEALED* Filed 05/02/24 Page 1 of 11 PageID #: Case 2:23-cv-00059-JRG Document 64-1 Filed 06/06/24 Page 1 of 11 PageID #: 1535
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
`
`
`
`
`
`
`CASE NO. 2:23-cv-00059-JRG
`(Lead Case)
`
`
`
`
`
`
`
`
`
`CASE NO. 2:23-cv-00062-JRG
`(Member Case)
`
`
`
` §
`
`
`§
`§
`§
`§
`§
`§
`§
`§
`§
`
`
` §
`
`Plaintiff,
`
`
`
`Defendants.
`
`
`
`TOUCHSTREAM TECHNOLOGIES, INC.,
`
`
`
`v.
`
`CHARTER COMMUNICATIONS, INC., et
`al.,
`
`
`
`
`TOUCHSTREAM TECHNOLOGIES, INC.,
`
`
`
`v.
`
`COMCAST CABLE COMMUNICATIONS,
`LLC d/b/a XFINITY, et al.,
`
`
`
`
`
`Plaintiff,
`
`
`
`Defendants.
`
`
`§
`§
`§
`§
`§
`§
`§
`§
`§
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`
`
`MEMORANDUM OPINION AND ORDER
`
`Before the Court is Defendants’ Motion to Dismiss the First Amended Complaint for
`
`Improper Venue Pursuant to FRCP 12(b)(3) and for Failure to State a Claim for Willful
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`Infringement Under FRCP 12(b)(6) (the “Motion”) filed by Defendants Charter Communications,
`
`Inc. (“CCI”), Charter Communications Operating, LLC (“CCO”), Time Warner Cable Enterprises
`
`LLC (“TWCE”), Spectrum Management Holding Company, LLC (“SMHC”), Spectrum Gulf
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`Coast, LLC (“SGC”), and Charter Communications, LLC (“CCL”) (collectively, “Charter”). (No.
`
`

`

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`2:23-cv-00060-JRG, Dkt. No. 82.1) Having considered the Motion, the briefing, and the
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`accompanying exhibits, and for the reasons set forth herein, the Court is of the opinion that the
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`Motion should be and hereby is GRANTED-IN-PART and DENIED-IN-PART.
`
`I.
`
`BACKGROUND
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`On February 16, 2023, Plaintiff Touchstream Technologies, Inc. (“Plaintiff”) filed a patent
`
`infringement complaint against Charter.2 (Dkt. No. 1.) The complaint alleged infringement of a
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`single patent: U.S. Patent No. 8,356,251 (“the ’251 patent”). (Id. ¶¶ 40–44.) The case was
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`subsequently consolidated with two others filed by Plaintiff for all pretrial issues. (Dkt. No. 12.)
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`After consolidation, Charter moved to dismiss the complaint under (1) Rule 12(b)(3) for
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`improper venue as it relates to CCI and CCO, and (2) Rule 12(b)(6) for failure to state a claim for
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`willful infringement against Charter. (No. 2:23-cv-00060-JRG, Dkt. No. 36.) The Parties agreed
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`to a venue discovery protocol, and the Court entered a corresponding order. (Id., Dkt. No. 49.) As
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`part of that protocol, Charter agreed to produce venue discovery from a co-pending case in this
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`Court: Entropic Communications, LLC v. Charter Communications, Inc., No. 2:22-cv-00125 (E.D.
`
`Tex.) (“Entropic”). (Id.)
`
`In the Entropic case, CCI filed Defendant Charter Communications, Inc.’s Motion to
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`Dismiss the Second Amended Complaint for Improper Venue Pursuant to FRCP 12(b)(3) (“CCI’s
`
`Motion”). Entropic, Dkt. No. 61 (Jan. 30, 2023). There, on May 3, 2023, the Court denied CCI’s
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`Motion. Id., Dkt. No. 91 (May 3, 2023). The Court found that CCI committed acts of infringement
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`and has a regular and established place of business in the Eastern District of Texas, relying on in-
`
`district Spectrum-branded stores operated by SGC. See generally, id. The Court rejected CCI’s
`
`
`1 After Charter filed the Motion, this case was deconsolidated. (No. 2:23-cv-00060-JRG, Dkt. No. 158.) Unless
`otherwise indicated, all docket entries cited herein refer to those entered in Case No. 2:23-cv-00059-JRG.
`2 CCL was the only Charter entity not originally accused of infringement. Plaintiff added CCL as a co-defendant in
`the First Amended Complaint for Patent Infringement. (No. 2:23-cv-00060-JRG, Dkt. No. 53.)
`
`
`
`2
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`

`

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`argument that its business was not being carried out from those in-district locations, finding that
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`CCI was “actually operating the business” and “engaged in the challenged conduct” as to the in-
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`district stores. Id. at 5–6, 14. The Court also found that CCL’s employees were acting as CCI’s
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`agents from those locations pursuant to management agreements that gave CCI material control
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`over the in-district stores’ operations. Id. at 10–12. The Court further found that CCI had ratified
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`those stores as its own, explaining that CCI’s nationwide website advertises the store locations and
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`services and that CCI had negotiated and signed the lease agreements for the stores. Id. at 15–16.
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`The Court further found that the in-district activities of CCL and SGC “may be properly imputed
`
`to” CCI, explaining that CCI “unabashedly holds itself out to the world as a single enterprise” and
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`the lines between the different corporations were simply “legal formalities.” Id. at 16–19.
`
`Here, on May 25, 2023, Plaintiff filed a First Amended Complaint for Patent Infringement
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`(“FAC”).3 (No. 2:23-cv-00060-JRG, Dkt. No. 53.) Most notably, the FAC included two new
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`counts for infringement of U.S. Patent Nos. 11,048,751 and 11,086,934 (the “’751 patent” and the
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`“’934 patent,” respectively; the ’251, ’751, ’934 patents are referred to collectively as “the
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`Asserted Patents”). (See id. ¶¶ 52-61.)
`
`Turning back to the Entropic case, on June 16, 2023, CCI filed a petition for a writ of
`
`mandamus challenging this Court’s venue decision and requesting the Federal Circuit to direct the
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`Court to dismiss the Entropic case for improper venue. In re: Charter Comms., Inc., No. 23-136,
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`Dkt. No. 2-1 (Fed. Cir. Jun. 16, 2023) (“In re: Charter”).
`
`Here, on June 23, 2023, Charter filed the Motion. (No. 2:23-cv-00060-JRG, Dkt. No. 82.)
`
`In the Motion, Charter once again argues that the FAC should be dismissed (1) under Rule 12(b)(3)
`
`
`3 In view of the FAC, the Court denied Charter’s initial motion to dismiss. (No. 2:23-cv-00060-JRG, Dkt. No. 128.)
`
`
`
`3
`
`

`

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`for improper venue as it relates to CCI and CCO,4 and (2) under Rule 12(b)(6) for failure to state
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`a claim for willful infringement against Charter. (Id. at 1.) Soon after Charter filed the Motion, on
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`July 6, 2023, the Parties filed the Joint Motion Regarding Extension of Time to Conduct Additional
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`Venue Discovery and for Touchstream to Respond to Defendants’ Motion to Dismiss. (Id., Dkt.
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`No. 90.) In this filing, the Parties jointly acknowledged that the Federal Circuit’s decision on the
`
`Entropic mandamus petition “may be relevant to the portion of the [Motion] as it relates to venue
`
`over CCI and CCO.” (Id. at 3.) In view of the Federal Circuit’s forthcoming decision, the Parties
`
`requested the Court to extend the time for venue discovery to “reduce the burden on all parties,
`
`and to streamline the issues for the Court.” (Id.)
`
`On July 7, 2023, in response to the Joint Motion, the Court issued an Order staying all
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`venue discovery deadlines and corresponding deadlines for responses until five days after the
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`Federal Circuit issued an order on the petition for writ of mandamus in the Entropic case. (Id., Dkt.
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`No. 92.)
`
`On September 5, 2023, the Federal Circuit denied CCI’s petition for writ of mandamus in
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`the Entropic case. In re: Charter, No. 23-136, 2023 WL 5688812 (Fed. Cir. Sept. 5, 2023). The
`
`Federal Circuit held that “[a]t most, CCI’s arguments present a record-specific dispute: whether
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`CCI exerts control sufficient to impute its subsidiaries’ in-district operations to CCI under Fifth
`
`Circuit law,” and CCI thus failed to raise a question that warrants mandamus review. Id. at *2.
`
`Here, in view of the Federal Circuit’s decision and after receiving the Parties’ joint filing
`
`notifying the Court of the Entropic decision (No. 2:23-cv-00060-JRG, Dkt. No. 108), on October
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`18, 2023, the Court issued an Order allowing additional venue discovery and outlining the briefing
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`timeline for the Motion. (No. 2:23-cv-00060-JRG, Dkt. No. 118.) The Court subsequently held a
`
`
`4 TWCE, SMHC, SGC, and CCL do not dispute that venue is proper. (No. 2:23-cv-00060-JRG, Dkt. No. 82 at 1
`n.1.)
`
`
`
`4
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`

`

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`telephonic conference on March 4, 2024 and directed Plaintiff to file a response to the Motion by
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`March 11, 2024 (id., Dkt. No. 155, the “Response”), and for Defendants to file a reply in support
`
`of the Motion by March 18, 2024 (Dkt. No. 17, the “Reply”). Plaintiff also filed a sur-reply on
`
`March 25, 2024. (Dkt. No. 20, the “Sur-Reply.)
`
`II.
`
`LEGAL STANDARD
`
`A. Rule 12(b)(3)
`
`A party may move to dismiss an action for “improper venue.” FED. R. CIV. P. 12(b)(3).
`
`“Once a defendant raises a 12(b)(3) motion to dismiss for improper venue, the burden of sustaining
`
`venue lies with the plaintiff.” ATEN Int’l Co., Ltd. v. Emine Tech. Co., Ltd., 261 F.R.D. 112, 120–
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`21 (E.D. Tex. 2009) (citation omitted). A plaintiff may carry its burden by presenting facts, taken
`
`as true, that establish venue. Id. The Court “must accept as true all allegations in the complaint and
`
`resolve all conflicts in favor of the plaintiff.” Mayfield v. Sallyport Glob. Holdings, Inc., No. 6:13-
`
`cv-00459, 2014 WL 978685, at *1 (E.D. Tex. Mar. 5, 2014) (citing Ambraco, Inc. v. Bossclip,
`
`B.V., 570 F.3d 233, 237–38 (5th Cir. 2009)). The Federal Circuit has emphasized that “each case
`
`depends on its own facts” and “no one fact is controlling.” In re Cray Inc., 871 F.3d 1355, 1362,
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`1366 (Fed. Cir. 2017). If venue is improper, the Court must dismiss the case, “or if it be in the
`
`interest of justice, transfer such case to any district or division in which it could have been
`
`brought.” 28 U.S.C. § 1406(a).
`
`In an action for patent infringement, venue is controlled by 28 U.S.C. § 1400(b). Pursuant
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`to 28 U.S.C. § 1400(b), “[a]ny civil action for patent infringement may be brought in the judicial
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`district where the defendant resides, or where the defendant has committed acts of infringement
`
`and has a regular and established place of business.” Under the residency requirement, the Supreme
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`Court has held that “a domestic corporation ‘resides’ only in its State of incorporation for purposes
`
`
`
`5
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`

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`of the patent venue statute.” TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 581 U.S. 258,
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`262 (2017). If the plaintiff does not satisfy this residency requirement, it must present facts that, if
`
`taken as true, show that the defendant has a regular and established place of business in the judicial
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`district. Under 28 U.S.C. § 1400, a “regular and established place of business” must be (1) “a
`
`physical place in the district”; (2) “regular and established”; and (3) “the place of the defendant.”
`
`In re Cray, 871 F.3d at 1360.
`
`B. Rule 12(b)(6)
`
`Under the Federal Rules of Civil Procedure, a complaint must include “a short and plain
`
`statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A
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`Court can dismiss a complaint that fails to meet this standard. Fed. R. Civ. P. 12(b)(6). To survive
`
`dismissal at the pleading stage, a complaint must state enough facts such that the claim to relief is
`
`plausible on its face. Thompson v. City of Waco, 764 F.3d 500, 502 (5th Cir. 2014) (quoting Bell
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`Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when the plaintiff
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`pleads enough facts to allow the Court to draw a reasonable inference that the defendant is liable
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`for the misconduct alleged. Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). The Court
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`accepts well-pleaded facts as true and views all facts in the light most favorable to the plaintiff,
`
`but is not required to accept the plaintiff’s legal conclusions as true. Id.
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`In the Fifth Circuit, motions to dismiss under Rule 12(b)(6) are viewed with disfavor and
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`are rarely granted. Lormand v. US Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009); Lowrey v.
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`Texas A&M Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997). “The court may consider ‘the complaint,
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`any documents attached to the complaint, and any documents attached to the motion to dismiss
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`that are central to the claim and referenced by the complaint.’” Script Sec. Sols. L.L.C. v.
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`
`
`6
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`

`

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`Amazon.com, Inc., 170 F. Supp. 3d 928, 935 (E.D. Tex. 2016) (quoting Lone Star Fund V (U.S.)
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`L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010)).
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`In the context of patent infringement, a complaint must place the alleged infringer on notice
`
`of what activity is being accused of infringement. Lifetime Indus., Inc. v. Trim-Lok, Inc., 869 F.3d
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`1372, 1379 (Fed. Cir. 2017). However, the plaintiff is not required to prove its case at the pleading
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`stage. Id. Assessing the sufficiency of pleadings is a context specific task; simpler technologies
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`may require less detailed pleadings, while more complex technologies may demand more. Disk
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`Disease Sols. Inc. v. VGH Sols., Inc., 888 F.3d 1256, 1260 (Fed. Cir. 2018).
`
`III. DISCUSSION
`
`A. Venue Is Proper as to CCI and CCO
`
`i. Charter Does Not Attempt to Distinguish this Case from Entropic
`
`The Parties previously stated that the Federal Circuit’s decision on CCI’s petition for a writ
`
`of mandamus in Entropic “may be relevant to the portion of the [Motion] as it relates to venue
`
`over CCI and CCO.” (Dkt. No. 90 at 2–3.) The Parties further stated that the decision could “reduce
`
`the burden on all parties” and “streamline the issues for the Court.” (Id. at 3.) In view of this
`
`representation to the Court, the Court stayed venue discovery until after the Federal Circuit issued
`
`a decision on CCI’s petition. (Dkt. No. 92.) The petition was denied: venue was proper as to CCI.
`
`In re: Charter, 2023 WL 5688812.
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`Predictably, Plaintiff in the Response and the Sur-Reply relies upon the Court’s reasoning
`
`in Entropic to argue that venue is also proper in this case. (No. 2:23-cv-00060, Dkt. No. 155 at
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`13–25; Dkt. No. 20 at 1–6.) In the Reply, Charter does not attempt to distinguish Entropic or
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`explain why the outcome here should be any different. (Dkt. No. 17.) Charter at most states that
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`Plaintiff “relies on the Court’s ruling in Entropic without asserting any arguments, facts, or
`
`
`
`7
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`

`

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`supporting information for the Court to consider. CCI and CCO incorporate all arguments and
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`facts as asserted in Entropic before the District Court and the Federal Circuit.” (Id. at 2 n.2.)
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`The Court declines to revisit its decision in Entropic. Charter failed to take the opportunity
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`to explain why this Court’s recent findings and analysis in Entropic should not also apply to this
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`case. It offered no explanations. Accordingly, the Court finds Plaintiff has established that venue
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`is proper in this Court with respect to CCI based upon the same reasoning, and much of the same
`
`evidence, as explained by the Court in Entropic.
`
`ii. CCO Maintains Control of Charter Subsidiaries
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`While the Entropic decision directly concerned CCI, it did not directly concern CCO.
`
`However, the Court also finds that CCO—like CCI—maintains control over Charter subsidiaries
`
`in this district—including CCL and SGC—such that the subsidiaries’ activities are properly
`
`imputed to CCO. Accordingly, the Court finds that Plaintiff has shown that venue is also proper
`
`as to CCO.
`
`As Plaintiff explains, CCO performs many activities that support its control over Charter
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`subsidiaries in this district, thereby supporting venue. First, Plaintiff explains that CCO does not
`
`have any of its own employees; rather, it uses “whatever [CCL] employees as a situation may
`
`require.”5 (No. 2:23-cv-00060-JRG, Dkt. No. 155 at 5–6.) Indeed, Charter’s general counsel
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`testified that employees (1) are employed by CCL, (2) perform functions “for whatever specific
`
`entity would be appropriate,” and (3) generally are not aware of a distinction between the various
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`Charter entities. (Id., Dkt. No. 155-3 at 74:1–17.) For example, CCL employees may select third-
`
`party vendors to provide Charter with goods or services, but CCO is the entity that contracts with
`
`
`5 Charter’s 10-K states that it has approximately “101,700 active full-time equivalent employees” as of December 31,
`2022. (No. 2:23-cv-00060-JRG, Dkt. No. 155-15 at 18.) Charter also promotes Texas employment opportunities on
`its website under the “Spectrum” name, but it is unclear what entity the prospective candidate might actually work
`for. (No. 2:23-cv-00060-JRG, Dkt. No. 155 at 19 (citing id., Dkt. No. 155-21).)
`
`
`
`8
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`

`

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`the third-party vendor. (Id., Dkt. No. 155 at 16 (citing id., Dkt. No. 155-8 at 78:7–21).)
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`Additionally, CCO appears to own SGC and CCL, according to Charter’s organizational chart.
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`(Id., Dkt. No. 155-2 at 1–2.)
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`Second, Plaintiff explains that “CCO holds and controls funds for all Charter entities.” (Id.
`
`at 6.) For example, SGC does not have its own bank account, and when an “
`
`
`
`
`
`.” (Id. at 6–7 (citing id., Dkt. No. 155-
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`4 at 89:3–7, 89:8–20; 119:10–120:5).) Within those bank accounts, CCO cannot mark funds
`
`separately for the various Charter entities. (Id. at 7 (citing id., Dkt. No. 155-4 at 123:12–17).)
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`Moreover, CCO allocates funds to other Charter subsidiaries that are used to pay, for example,
`
`leases and employee salaries. (Id. at 7; Dkt. No. 155-4 at 68:25–69:9, 61:13–62:6.)
`
`Third, CCI, CCO, and SGC all share the same twenty-four executive officers. “In fact,
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`Charter simply copies the same officer list for every new entity that gets created.” (Id. at 8 (citing
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`id., Dkt. No. 155-3 at 42:4–12, 69:15–17).)
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`Fourth, CCO, like CCI, uses the Spectrum brand. (Id. at 8 (citing Dkt. Nos. 155-12
`
`(advertisement for the “Spectrum TV” application sold by CCO)); Dkt. No. 155-4 at 72:5–73:5.)
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`The foregoing evidence demonstrates that Charter advertises and operates as a single
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`enterprise, and CCO plays a significant role within that enterprise. As the Court found in Entropic
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`with respect to CCI, the in-district activities of CCL and SGC “may be properly imputed to” CCO
`
`because Charter “unabashedly holds itself out to the world as a single enterprise” and the lines
`
`between the different corporations are simply “legal formalities.” Entropic, Dkt. No. 91 at 16–19.
`
`Therefore, the same rationale for finding that venue is proper for CCI applies equally for CCO.
`
`
`
`9
`
`

`

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`Accordingly, the Court finds Plaintiff has established that venue is proper in this Court
`
`with respect to CCO.
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`B. Willful Infringement
`
`In the Motion, Charter argues that Plaintiff fails to adequately plead willful infringement.
`
`(No. 2:23-cv-00060-JRG, Dkt. No. 82 at 23–25.) First, Charter argues that Plaintiff fails to
`
`sufficiently allege that Charter had pre-suit knowledge of the Asserted Patents. (Id.) Second,
`
`Charter argues that Plaintiff’s willful infringement allegations should be dismissed entirely for
`
`failing to allege culpable conduct. (Id. at 25.)
`
`i. Pre-Suit Willful Infringement
`
`With respect to pre-suit willful infringement, Plaintiff acknowledges in the Sur-Reply that
`
`the Court has already dismissed Plaintiff’s pre-suit willful infringement claims in a related case
`
`that were substantially the same as Plaintiff’s willful infringement claims here. (Dkt. No. 20 at 6.)
`
`See Touchstream Techs., Inc. v. Altice USA, Inc., 2:23-cv-00060-JRG, 2024 WL 1117930, at *2–
`
`3 (E.D. Tex. Mar. 14, 2024) (“Comcast”). For the same reasons provided by the Court in Comcast,
`
`the Court is persuaded, under these specific facts, that Plaintiff’s willful infringement allegations
`
`with respect to the ’251 patent should be dismissed prior to service of the original complaint to
`
`Charter, and Plaintiff’s allegations with respect to the ’751 and ’934 patents should be dismissed
`
`prior to filing of the FAC.
`
`ii. Post-Suit Willful Infringement
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`However, Plaintiff sufficiently pleads post-suit willful infringement. As this Court has
`
`routinely held, “a plaintiff need not plead facts demonstrating egregious [i.e., ‘culpable’] conduct
`
`to establish a claim for willful infringement at the 12(b)(6) stage.” Comcast, 2024 WL 1117930,
`
`at *3 (quoting Argina Tech. Ltd. v. Bayerische Motoren Werke AG, 2:21-CV-00172-JRG, 2022
`
`
`
`10
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`

`

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`WL 610796, at *6 (E.D. Tex. Jan. 24, 2022)). Instead, “allegations that a defendant continues its
`
`allegedly infringing conduct even after receiving notice of a complaint are sufficient to at least
`
`state a claim for post-suit willful infringement.” Id. (quoting Argina, 2022 WL 610796, at *6).
`
`Here, Plaintiff alleges in the original Complaint that Charter’s “infringement of the ’251 patent
`
`has been, is, and continues to be willful.” (Dkt. No. 1 ¶ 43.) Plaintiff further alleges in the FAC
`
`that “Charter’s infringement of the [’751 and ’934 patents] has been, is, and continues to be
`
`willful.” (No. 2:23-cv-00060-JRG, Dkt. No. 53 ¶¶ 55, 60.) Accordingly, Plaintiff sufficiently states
`
`a claim for post-suit willful infringement.
`
`IV. CONCLUSION
`
`For the reasons noted above, the Motion is GRANTED with respect to pre-suit willful
`
`infringement, but it is DENIED in all other respects. Accordingly, Plaintiff’s claims of pre-suit
`
`willful infringement against Charter are DISMISSED WITHOUT PREJUDICE. Plaintiff is
`
`permitted leave during the ensuing fourteen (14) days from the issuance of this Order to amend its
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`pre-suit willful infringement allegations through the filing of a subsequently amended complaint.
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`Failure to amend within fourteen days, or any period extended by the Court, shall constitute a
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`substantive waiver of such pre-suit willful infringement claims by Plaintiff.
`
`
`
`11
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`.
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`____________________________________
`RODNEY GILSTRAP
`UNITED STATES DISTRICT JUDGE
`
`So ORDERED and SIGNED this 2nd day of May, 2024.
`
`