Effective December 1, 2015, patent plaintiffs in litigation are now required to be more specific when drafting their complaints because the pleadings standards for claims of patent infringement under the Federal Rules have dramatically changed. Form 18 of the Federal Rules of Civil Procedures no longer provides a low bar for patent infringement complaints. Instead, a complaint must satisfy the Supreme Court’s “plausibility” pleading standard in patent cases for the first time. Patent litigators and judges will now need to determine what it means to have a “plausible” claim for patent infringement. Patent litigants will need to quickly adapt to the new standard for patent infringement complaints or risk having their complaints dismissed.
The “plausibility” standard was announced in 2007 with the Supreme Court’s decision in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and reaffirmed two years later in Ashcroft v. Iqbal, 556 U.S. 662 (2009). In Twombly, the Supreme Court held that Rule 8 of the Federal Rules requires that a complaint “state a claim to relief that is plausible on its face.” Twombly, 127 S. Ct. 1974. In so doing, the Court struck down it prior “notice-pleading” or “no set of facts” standards from Conley v. Gibson, 355 U.S. 41 (1957), which had governed all federal pleadings for more than 50 years. Given the difficulty in applying these standards, as well as the rising costs of federal litigation, the Court held that the more liberal “no set of facts” standard had “earned its retirement.” Id. at 1969.
Two years later, in Iqbal, the Court elucidated its plausibility standard, explaining that “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 129 S.Ct. at 1949. Furthermore, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. Rather, “[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. … Where a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and plausibility of ‘entitlement to relief.’” Id.
Soon after the Supreme Court’s decision in Twombly, the Federal Circuit was called upon to determine whether the new plausibility pleading standard applied to patent infringement complaints. In McZeal v. Sprint Nextel Corp., the Federal Circuit reviewed a district court’s decision to dismiss a patent infringement complaint that did not include any factual allegations, aside from identifying the asserted patent and the allegedly infringing product. See 501 F. 3d 1354, 1355 (Fed. Cir. 2007). While the Federal Circuit cited Twombly in its decision, it focused primarily on Form 18 of the Federal Rules of Civil Procedure. According to the court, Form 18 controlled and required only a bare-bones allegation of patent infringement:
[Form 18] set[s] forth a sample complaint for patent infringement that includes only the following elements: 1) an allegation of jurisdiction; 2) a statement that the plaintiff owns the patent; 3) a statement that defendant has been infringing the patent “by making, selling, and using [the device] embodying the patent”; 4) a statement that the plaintiff has given the defendant notice of its infringement; and 5) a demand for an injunction and damages.
McZeal at 1356-57 (emphasis added). Because McZeal had recited these basic elements in his complaint, the Federal Circuit found that “[n]othing more is required.” Id. at 1357 (citing Conley v. Gibson, 355 U.S. 41 (1957)).
Five years later, in In re Bill of Lading Transmission, the Federal Circuit was again asked to apply the plausibility standard to patent infringement complaints. Given that five years had passed since McZeal and the Supreme Court’s intervening decision in Iqbal, some patent practitioners believed that the Federal Circuit would apply the plausibility pleading standard to patent infringement claims. But the Federal Circuit resisted the change in the law, holding that “to the extent the parties argue that Twombly and its progeny conflict with the Forms and create differing pleadings requirements, the Forms control.” In re Bill of Lading Transmission, 681 F.3d 1323, 1334 (Fed. Cir. 2012):
As we held in McZeal, Form 18 and the Federal Rules of Civil Procedure do not require a plaintiff to plead facts establishing that each element of an asserted claim is met. McZeal, 501 F.3d at 1357. Indeed, a plaintiff need not even identify which claims it asserts are being infringed. Id.
Form 18 has been deleted from the Federal Rules as part of the abolition of form pleading, generally. Prior to the recent amendments, Federal Rule 84 stated that federal complaints that mirrored the forms found in the Appendix to the Federal Rules were presumed to be sufficient. See Fed. R. Civ. P. 84 (abrogated) (“The forms in the Appendix suffice under these rules and illustrate the simplicity and brevity that these rules contemplate.”). However, since the Supreme Court’s decisions in Twombly and Iqbal, it became increasingly clear that, in many cases, the forms failed to allege facts sufficient to state a plausible claim for relief. To eliminate this inconsistency between the antiquated forms and modern pleading standards, the Advisory Committee on Rules of Civil Procedure recommended that Rule 84 and the forms be deleted from the Federal Rules.
The amendments to the Federal Rules of Civil Procedure became effective December 1, 2015. However, many questions remain as to how the Supreme Court’s decisions in Iqbal and Twombly will affect pleadings standards in patent cases. While it appears likely that bare-bones pleadings will no longer be allowed, practitioners are left wondering what level of factual specificity will now be required to properly state a claim for patent infringement. While nobody knows just how district courts or the Federal Circuit will implement modern pleading requirements in the absence of Form 18, there are several factors that may guide the analysis.
Prior to the Federal Circuit’s McZeal decision, only one district court had the opportunity to apply the new plausibility standard to patent infringement claims. In Anticancer, Inc. v. Xenogen Corp., the district court dismissed a patent infringement complaint that only alleged that “[e]ach of the defendants has directly infringed the [ ] Patent and has indirectly infringed the [ ] Patent by contributing to or inducing direct infringements of the [ ] Patent by others.” 248 F.R.D. 278, 282 (S.D. Cal. 2007). The court reasoned that dismissal was appropriate “[s]ince the Plaintiff has failed to plead any further facts beyond a bare statement of direct and indirect infringement so as to demonstrate a plausible entitlement to relief …” Id. (emphasis added). This decision indicates that a boilerplate allegation of patent infringement, which would be adequate under Form 18, may not be sufficient under Iqbal and Twombly after December 1, 2015.
One notable source of evidence for how Iqbal and Twombly might apply to a patent infringement claim comes from Judge Payne’s decision in Macronix International Co. v. Spansion Inc., 4 F. Supp.3d 797, 803 (E.D. Va. 2014). In this decision, the court acknowledged the Federal Circuit’s stance regarding Form 18, but still applied the Supreme Court’s plausibility standard. In that decision, the court dismissed Macronix’s complaint because the allegations of direct infringement were expressed “in a bare bones, conclusory form.” Id. at 804. According to the court, the complaint “simply allege[d] that each element of a cited claim [was] infringed and then parroted the claim language for each element. That simply does not satisfy the notice and showing requirements of Rule 8(a) as interpreted by Twombly and Iqbal.” Id. (emphasis added). While the court stopped short of holding that particularized claim charts would be required, Judge Payne’s decision indicates that the complaint must include some indication of how the offending products allegedly infringe the claims. See id. at 804.
Courts will also likely look at how Iqbal and Twombly have been applied to other types of multi-element claims, where the plausibility standard has been the law of the land since 2007. Those courts have noted that neither Iqbal nor Twombly appears to require an element-by-element factual presentation in all pleadings in order to state a valid claim for relief. Several courts addressing this question in other contexts have cited to Swierkiewicz v. Sorema N.A., where the Supreme Court held that it is not necessary for a complaint to establish a prima facie case in order to state a claim. See 534 U.S. 506 (2002). The Supreme Court in Twombly, stated that Swierkiewicz remains good law thus several courts have held “that a Rule 12(b)(6) [motion] need not be granted solely because a complaint fails to plead facts supporting each element of a claim.” See, e.g., Montantes v. Inventure Foods, No. 14-cv-1128, 2014 WL 3305578, at * 6 (C.D. Cal. July 2, 2014). Instead, several cases have found that, while notice pleading may not require that the pleader allege a “specific fact” to cover every element of a claim, “a complaint must include ‘either direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory.’” Brooks v. Roy, 776 F.3d 957, 960 (8th Cir. 2015) (emphasis added); see also Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008); Roberts v. Caesar’s Ent., Inc., 72 F.Supp.3d 575, 581 (E.D. Pa. 2014).
In the context of a patent claim, it may be difficult to identify the “material” claim limitations that require some factual explanation within the complaint. But some justification with respect to the non-routine limitations of at least one independent claim would seem to satisfy the need to “include … allegations respecting all the material elements necessary to sustain a recovery” in a patent case. Where the nature of the claim or the accused product would obviate the need for detailed factual allegations for some limitations, sufficient notice and factual plausibility may be established by providing a plain explanation of the infringement theory with respect to the remaining, material claim limitations. This approach might strike the appropriate balance between the need to allege facts plausibly suggesting infringement and the need to honor Rule 8’s requirement for “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).
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The amendment of the Federal Rules will likely require some degree of factual plausibility in claims for patent infringement. “Bare-bones, conclusory” allegations will no longer be sufficient. It will take time for courts to determine what “plausibility” means in patent infringement complaints. Until then, courts will likely apply a common-sense fact-specific approach, under Iqbal and Twombly, whereby some factual explanation will be required for at least the material elements of the asserted patent claims.