Youtoo Technologies LLC v. Twitter Inc

Filing 323

MEMORANDUM OPINION AND ORDER denying 260 Motion for Preliminary Injunction. (Ordered by Chief District Judge David C Godbey on 7/22/2024) (cfk)

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
VIDSTREAM, LLC ,
Plaintiff,

TWITTER, INC.,
Defendant.

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Civil Action No. 3:16-CV-0764-N

MEMORANDUM OPINION AND ORDER
This Order Addresses Plaintiff Vidstream LLC’s (“VidStream”) motion for
preliminary injunction [260]. Because VidStream fails to make a sufficient showing of
irreparable injury, the Court denies the motion.
I. ORIGINS OF THE DISPUTE
This case arises from the alleged infringement of U.S. Patent No. 8,464,304 (“the
’304 Patent”). The patents cover a system of receiving and distributing user-generated
video content for distribution on television broadcasts and the internet. VidStream’s
predecessor, Youtoo Technologies, alleged Twitter infringed the ’304 Patent though its
video creation and distribution in its application. The long procedural history of this case
is well established, see, e.g., VidStream, LLC v. Twitter, Inc., 2022 WL 992743 (N.D. Tex.
Apr. 1, 2022), and the Court will not recount it in great depth here. Importantly, the Court
substituted VidStream as plaintiff on April 19, 2021, and granted VidStream leave to file
its Second Amended Complaint (“SAC”). Order [190]. After the Court denied Twitter’s
motion to dismiss VidStream’s SAC, see Order [199] at 7–8, parties re-started discovery.
MEMORANDUM OPINION AND ORDER – PAGE 1

As part of discovery, VidStream asked Twitter on May 17, 2022, to describe “any
difficulties” Twitter would encounter by being “required to comply with an injunction.”
Pl.’s Mot. App., Ex. 3, 52 [265]. On January 9, 2024, VidStream filed its motion for a
preliminary injunction asking the Court to enjoin Twitter’s use of the infringing features in
dispute in this case.
II. THE COURT DENIES VIDSTREAM’S MOTION FOR
PRELIMINARY INJUNCTION
“The prerequisites for preliminary injunctive relief are long-established in this
circuit.” Libertarian Party of Tex. v. Fainter, 741 F.2d 728, 729 (5th Cir. 1984). The
movant must establish that: (1) it is likely to succeed on the merits; (2) it is likely to suffer
irreparable harm in the absence of preliminary relief; (3) the balance of equities tips in its
favor; and (4) an injunction is in the public interest. Tex. Midstream Gas Servs., LLC. v.
City of Grand Prairie, 608 F.3d 200, 206 (5th Cir. 2010) (citation omitted). The party
seeking the preliminary injunction bears the burden of persuasion on all four requirements.
Bluefield Water Ass’n, Inc. v. City of Starkville, Miss., 577 F.3d 250, 253 (5th Cir. 2009).
The Court denies VidStream’s motion for preliminary injunction because VidStream fails
to demonstrate irreparable harm.
VidStream is a nonpracticing entity. The Supreme Court rejected a per se rule “that
a court of equity has no jurisdiction to grant injunctive relief to a patent holder who has
unreasonably declined to use the patent.” eBay Inc. v. MercExchange, L.L.C., 547 U.S.
388, 393 (2006) (citing Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U.S.
405, 422–430 (1908)). Conversely, the Supreme Court in eBay did not create a per se rule
MEMORANDUM OPINION AND ORDER – PAGE 2

that purported ongoing infringement on a patent constitutes irreparable harm as VidStream
suggests in its motion. Pl.’s Mot. 11. VidStream, quoting eBay, asserts, “that the decision
whether to grant or deny injunctive relief rests within the equitable discretion of the district
courts, and that such discretion must be exercised consistent with traditional principles of
equity . . . .” Id. (quoting eBay, 547 U.S. at 394). Still, instead of looking forward to how
the Federal Circuit and district courts have applied this language from eBay, VidStream
takes a backward-looking approach, citing the practices of the Eighteenth Century English
Court of Chancery. See generally id. at 11–18. VidStream does not cite any post eBay
cases that apply the same principles. Id.
The Supreme Court in eBay vacated the judgment of the Court of Appeals and
remanded the case. eBay, 547 U.S. at 392. The Federal Circuit, in turn, remanded the case
to the district court so “as to enable the district court to apply the proper framework for
considering injunctive relief ‘in the first instance.’” MercExchange, L.L.C. v. eBay, Inc.,
188 F. App’x 993 (Fed. Cir. 2006) (“MercExchange I”). In its application of the Supreme
Court’s framework, the district court explained that “taking a page from history, it is
apparent that the Federal Circuit has repeatedly recognized that ‘the lack of commercial
activity by the patentee is a significant factor in the calculus’ of whether the patentee will
suffer irreparable harm absent an injunction.” MercExchange, L.L.C. v. eBay, Inc., 500 F.
Supp. 2d 556, 570–71 (E.D. Va. 2007) (“MercExchange II) (quoting High Tech Medical
Instrumentation, Inc. v. New Image Indus., Inc., 49 F.3d 1551, 1556 (Fed. Cir. 1995)
(emphasis added)).

The district court stated that a plaintiff’s “lack of commercial

activity . . . does not eliminate [a plaintiff’s] ability to establish irreparable harm, but it
MEMORANDUM OPINION AND ORDER – PAGE 3

weighs against the need for an equitable remedy as it evidences [ a plaintiff’s] willingness
to forgo its right to exclude in return for money.” MercExchange II, 500 F. Supp. 2d at
571.
Under this precedent, VidStream has the burden to demonstrate why Twitter’s
purported infringement cannot be compensated with monetary damages. See Automated
Merchandising Sys., Inc. v. Crane Co., 357 Fed. App’x 297, 301 (Fed. Cir. 2009) (posteBay “[t]he burden is now on the patentee to demonstrate that its potential losses cannot be
compensated by monetary damages”). VidStream fails to meet this burden. VidStream’s
entire irreparable harm argument relies on an unsubstantiated rule that a likelihood of
irreparable harm is established where “Plaintiff has established that it is likely to succeed
on the merits and also because the Defendant’s infringement is ongoing . . . .” Pl.’s Mot.
22. Because VidStream fails to carry its burden of showing that its purported infringement
cannot be compensated by monetary damages, VidStream fails to demonstrate irreparable
harm.
CONCLUSION
For the foregoing reasons, VidStream failed to carry its burden of showing why a
preliminary injunction should be issued in this case.
VidStream’s motion for a preliminary injunction.

MEMORANDUM OPINION AND ORDER – PAGE 4

Therefore, the Court denies

Signed July 22, 2024.

David C. Godbey
Chief United States District Judge

MEMORANDUM OPINION AND ORDER – PAGE 5