Patent Infringement Complaints After the Change in Rules

For many years prior to Dec. 1, 2015, patent infringement complaints were exempt from the pleading requirements of Federal Rule of Civil Procedure 8. Prior to the change, FRCP 84 provided that infringement pleadings that complied with FRCP Form 18 automatically satisfied the pleading requirements of FRCP 8(a) and were effectively immunized against an ­attack regarding the sufficiency of the pleading. Compliance was relatively simple since Form 18 only required a direct ­infringement complaint to set forth: (1) an allegation of jurisdiction; (2) a statement that the plaintiff owns the patent; (3) a statement that the defendant has been infringing the patent by making, selling, or using a device embodying the patent; (4) a statement that the plaintiff gave the defendant notice of its infringement; and (5) an injunction demand. (See McZeal v. Sprint Nextel, 501 F.3d 1354, 1356-57 (Fed. Cir. 2007); and K-Tech Telecommunications v. Time Warner Cable, 714 F.3d 1277, 1283(Fed. Cir. 2013).) The Dec. 1, 2015, federal rules changes brought a sea change to the requirements for pleading patent infringement. With the passing of Form 18 into legal history, patent infringement complaints are subject to the pleading requirements of FRCP 8; however, the courts are struggling to deal with the change and how to apply it to pre-existing complaints. This article presents a snapshot of the cases dealing with transiting to and defining the new requirements.

Historically, courts denied approximately 70 percent of the motions to dismiss for failure to state a claim or for a more ­definite statement for direct infringement files against Form 18 complaints. Courts generally examined the complaint against the five Form 18 requirements and held that pleadings which satisfied those five requirements were valid, as in McZeal; Beco Dairy Automation v. Global Tech Systems, 2015 U.S. Dist. LEXIS 130503, at *11-13 (E.D. Cal. 2015); Fairchild Semiconductor v. Power Integrations, 935 F. Supp. 2d 772, 775-76 (D. Del. 2013); and Clouding IP v. Amazon.com, 2013 U.S. Dist. LEXIS 73655, at *8, *15 (D. Del. 2013).

In those cases where courts granted motions attacking Form 18 pleadings, the reasons were very limited. Those reasons included: the use of broad terminology that was unclear as to what service or products were accused; the complaint did not provide factual details of the particular product or ­product lines accused; broad accusations that mixed ­accusations against an apparatus and a system without distinguishing between them; and, the complaint does not identify what technology within that product is protected, as in Bender v. Motorola, 2010 U.S. Dist. LEXIS 26076, at *6-9 (N.D. Cal. 2010); Ware v. Circuit City Stores, 2010 U.S. Dist. LEXIS 25674, at *6-10 (N.D. Ga. 2010); and Brookins Hybrid Drive Systems v. M.A.C., 2013 U.S. Dist. LEXIS 65419, at *13-14 (D.N.D. 2013).

Following the Dec. 1, 2015, FRCP rule change, the U.S. Courts of Appeals for the Third Circuit has been divided on whether to apply the earlier Form 18 analysis or the current Rule 8 analysis to pending complaints that were filed before the Dec. 1, 2015, rule change, but pending after the effective date. Some courts maintain the earlier analysis look to the interest of justice on the reasoning that the Supreme Court stated that the ­amendment would govern in civil cases both commenced after Dec. 1, 2015, and pending by the effective date only if in the interest of justice and practicability, as held in Nexeon v. Eaglepicher Technologies, 2016 U.S. Dist. LEXIS 96995, at *10-11 (D. Del. 2016). Another court in the same circuit applied the FRCP Rule 8 analysis on the reasoning that both the Supreme Court and the Third Circuit have held that the Supreme Court's pleading standards (announced in Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic v. Twombly, 550 U.S. 544 (2007)) apply in all civil cases, in Robern v. Glasscrafters, 2016 U.S. Dist. LEXIS 95590, at *11-12 (D.N.J. 2016).

In addition to intra circuit differences, the courts in various circuits also treat the pending pre-rules change Form 18 complaints differently. Most district courts have held that the Iqbal/Twomblypleading standard now applies to direct patent infringement claims and that complaints which merely comply with Form 18 are no longer immunized from attack on that basis, as in Atlas IP v. Pacific Gas & Electric, 2016 U.S. Dist. LEXIS 60211, at *4-8 (N.D. Cal. 2016); and in Rembrandt Patent Innovations v. Apple, 2015 U.S. Dist. LEXIS 167148, at *12-14 (N.D. Cal. 2015). However, at least one court in the District of Nevada concluded that a plaintiff still sufficiently pleads a claim for direct patent infringement if the complaint complies with Form 18, as in Hologram USA v. Pulse Evolution, 2016 U.S. Dist. LEXIS 5426, at *8-9 (D. Nev. 2016). In so holding, the Nevada court relied on "the advisory committee note associated with the abrogation of Rule 84 and Form 18, which states, 'The abrogation of Rule 84 does not alter existing pleading standards or otherwise change the requirements of Civil Rule 8.'" The Hologram court apparently reasoned that the prior case law addressing the Form 18 immunity was an exception to the Iqbal/Twombly standard that constituted part of the "existing pleading standards."

After the Dec. 1, 2015, abrogation of FRCP Rule 84 and Form 18, the decisions on motions to dismiss for failure to state a claim or motions for a more definite statement for direct infringement complaints are almost evenly split, but favor denials ­(approximately 56 percent were denied and approximately 44 percent were granted). But, there appears to be a trend toward finding infringement complaints invalid for failing to meet the heightened pleading standard of FRCP Rule 8. Several courts applied the heightened standard to claims of direct patent infringement and required the plaintiff to plausibly allege that the accused product practices each of the limitations found in at least one asserted claim. One court has held that complaint allegations that do not allege that the accused product infringes each element of at least one claim are not suggestive of infringement, but merely establish they are compatible with infringement. This is apparently a recognition of the infringement principle that the absence of a single claim element is sufficient to negate infringement of that claim, as in Pacific Gas, 2016 U.S. Dist. LEXIS 60211, at *7 (N.D. Cal. 2016); Atlas IP, v. Exelon, 2016 U.S. Dist. LEXIS 64571, at *12 (N.D. Ill. 2016); RainDance Technologies v. 10x Genomics, 2016 U.S. Dist. LEXIS 33875, at *7 (D. Del. 2016); and Advanced Steel Recovery v. X-Body Equipment, 808 F.3d 1313, 1319 (Fed. Cir. 2015).

The reasoning of the courts granting these motions appears to focus on how closely the patentee aligns the elements of at least one claim with the accused product, system, or method. Using exemplary language in describing the claim or the alleged ­infringement has been held to be insufficient to allege facts suggesting that the accused products practice the limitation set out in the claim, as in e.Digital v. iBaby Labs, 2016 U.S. Dist. LEXIS 111689, *12 (N.D. Cal. 2016). Similarly, alleging actions that may support an infringement claim without identification of the actual infringement does not constitute a sufficient infringement pleading, as in Gym Door Repairs v. Young Equip. Sales, 2016 U.S. Dist. LEXIS 123116, at *20-22 (S.D.N.Y. 2016); and Robern v. Glasscrafters, 2016 U.S. Dist. LEXIS 95590, *15, (D.N.J. 2016).

One example of what at least one court found to be sufficient to plead direct infringement under the post-Dec. 1, 2015, FRCP is found in InCom v. Walt Disney, 2016 U.S. Dist. LEXIS 71319 (C.D. Cal. 2016). The plaintiff's Nov. 23, 2015, amended complaint alleged infringement of three patents related to tracking systems using Radio Frequency Identification. InCom identified specific accused products in the complaint—Disney's attendance tracking device, "MagicBand," and the "MyMagic+" attendance monitoring system. InCom's complaint described the use of RFID technology and identification badges to track large volumes of human presence in its system and named specific products which, like the plaintiff's system, track human presence in large volumes. The InComcomplaint did not require InCom to identify any exemplary asserted claim or provide an element-by-element analysis of a claim. The court acknowledged that naming a product and providing a conclusory statement that it infringes the patent does not satisfy the Iqbal/Twombly 'plausibility' standard; however, the court found that InCom had done enough by identifying specific products and alleging they perform the same unique function as the patented system to defeat the motion.

Although the available case decisions do not provide clear guidance or a road map for complaint drafting, the Supreme Court standards announced in Iqbal and Twombly makes clear that Form 18 and the associated practices are quickly becoming artifacts. However, this should not cause undue concern. First, the prefiling requirement of Rule 11 for a reasonable investigation should provide most of the additional information needed for a complaint. Second, many courts have patent rules that require infringement contentions and/or claim charts that require similar information. The preparation of these items in advance of filing, for at least one claim, should provide the needed information. Finally, the litigation strategy or assertion plan you worked out with your client should identify at least one infringement with enough details for the new form of patent complaint. The requirement for this information in the complaint may increase the necessary prefiling work, but it does not have to tip your hand about your strategy for prosecuting the matter. •