Twombly, Iqbal and Heightened Pleading Standards in Patent Infringement

Two cases decided last month highlight the somewhat disparate pleading standards in patent infringement actions among districts after Twombly and Iqbal. In The Nielsen Co. v. comScore, Inc., a plaintiff in the Eastern District of Virginia overcame a motion to dismiss infringement claims. Case No. 11-cv-168 (E.D.Va. Aug. 19, 2011) (Davis, J.). The court held that the claims for direct infringement met the lenient pleading standard of Form 18 provided under the Federal Rules. While in Medsquire LLC v. Spring Med. Sys. Inc., the district court for the Central District of California granted the defendant’s motion to dismiss. 2-11-cv-04504 (C.D. Cal. August 31, 2011) (Nguyen, J.). The court held the plaintiff’s Form 18 pleading resulted in conclusory statements that failed to include any facts identifying the relevant aspect of the [accused product] that infringed the patents and the complaint was insufficient to meet the “plausibility” standard set forth in Twombly and Iqbal.

Despite the heightened standard created in Twombly and Iqbal, district courts generally have not required heightened pleadings in the patents context with regard to direct infringement. In McZeal v. Sprint Nextel Corp., a pre-Iqbal decision, the Federal Circuit set a low bar for pleading direct infringement holding that the allegations of a pro se plaintiff must only meet the requirements of Form 18 of the Federal Rules. 501 F.3d 1354 (Fed. Cir. 2007). Furthermore, Federal Rule 84 expects a court to accept a pleading made in conformance with the forms as sufficient. Thus, for most districts the sufficiency of a Plaintiff’s direct infringement allegations can be met by following the dictates of Form 18. The Court in Medsquire, however, distinguished McZeal on the grounds that Plaintiff was represented by sophisticated counsel and the fact that the McZeal decision came before the holding in Iqbal.

A claim of direct infringement under Form 18 requires only: an allegation of jurisdiction and the specific patent law infringed; the identification of the patent and a statement that the plaintiff owns the patent; an identification of at least one infringing product; a statement that the defendant has been infringing the patent “by making, selling, and using” the product and a demand for relief. Under a Form 18 complaint, a plaintiff is not required to plead specifics as to how an allegedly infringing product works. See e.g. Adiscov, LLC v. Autonomy Corp., 762 F.Supp.2d 826 (E.D.Va. 2011), Mark IV Indus. Corp. v. Transcore, L.P., Case No. 09-cv-418 (D.Del. Dec. 2, 2009); Sharafabadi v. University of Idaho, Case No. 09-cv-1043 (W.D. Wash. Nov. 27, 2009); Automated Transactions, LLC v. First Niagara Fin. Group, Inc., Case No. 10-cv-00407 (W.D.N.Y. Aug. 31, 2010); Traffic Info., LLC v. Yahoo! Inc., Case No. 09-cv-246 (E.D.Tex. April 13, 2010); Microsoft Corp. v. Phoenix Solutions, Inc., 741 F.Supp.2d 1156 (C.D. Cal. 2010); and Apple Inc. v. Eforcity Corp., Case No. 10-cv-03216 (N.D. Cal. Apr. 5, 2011).

Generally, the cases dismissing direct infringement claims have done so because the complaint failed to allege any details of specific infringing products. Requiring a plausibility standard, these courts found complaints merely alleging the defendant was ‘selling goods that infringe Plaintiff’s … patent’ or ‘upon information and belief Defendant was infringing’ was insufficient under Twombly/Iqbal. While it is probably not necessary to identify each infringing device and the aspects thereof, a Plaintiff must cite examples of infringing devices and allege some information about the circumstances giving rise in the complaint. Otherwise, Form 18 provides nothing more than a short and plain statement and offers little to show that the pleader is plausibly entitled to relief as necessitated by Twombly and Iqbal. See e.g. Li Ming Tseng v. Marukai Corp. USA et al., Case No. 09-cv-00968 (C.D. Cal. Nov. 13, 2009); In re Papst Licensing Litigation, 602 F. Supp. 2d 17 (D.D.C. 2009); Realtime Data, LLC v. Stanley, Case No. 09-cv-326 (E.D.Tex. June 10, 2010); Elan Microelectronics Corp. v. Apple, Inc., Case No. 09-cv-01531 (N.D. Cal. Sept. 14, 2009); Bender v. LG Electronics U.S.A., Inc., 09-cv-02114 (N.D. Cal. Mar. 11, 2010); and Fifth Market, Inc. v. CME Group, Inc., Case No. 08-cv-520 (D.Del. May 14, 2009).

Other district courts have streamlined discovery using Local Patent Rules requiring early, detailed, and binding disclosures of infringement contentions, followed by corresponding non-infringement and invalidity contentions in short order. These Local Patent Rules narrow cases even more effectively than heightened pleading requirements. Thus, districts adopting Local Patent Rules, such as Massachusetts, New Jersey, WD of Pennsylvania, ED of North Carolina, Northern District of Georgia, WD of Washington, Minnesota, SD of California, ND of Illinois, ED of Texas, SD of Texas, and ND of California are less likely to dismiss a claim properly plead under Form 18 and McZeal and more likely to find it meets the Twombly/Iqbal standards.

In contrast to direct infringement, District Courts have almost uniformly applied a higher standard for pleading claims of indirect infringement. Furthermore, there is no form for indirect infringement analogous to Form 18. Since Iqbal, Courts have required specific factual allegations showing knowledge and intent to induce or contribute to infringement by another. Some cases appear to suggest that to satisfy Twombly/Iqbal, a claim of indirect infringement must include: facts showing how the alleged infringer either induced or contributed to another party’s direct infringement; an allegation that the alleged infringer knew of the patent at the time of the infringing activities; for induced infringement, an allegation that the alleged infringer specifically intended to induce infringement; for contributory infringement, an allegation that the alleged infringer knew that the combination for which his component was especially designed was both patented and infringing. See e.g. Desenberg v. Google Inc., Case No. 08-cv-10121 (S.D.N.Y. July 30, 2009); Friday Group v. Ticketmaster, Case No. 08-cv-01203 (E.D. Mo. Dec. 12, 2008). See also Elan Microelectronics Corp. v. Apple, Inc., Case No. 09-cv-01531 (N.D. Cal. Sept. 14, 2009); Sharafabadi v. Univ. of Idaho, Case No. 09-cv-1043 (W.D. Wash. Nov. 27, 2009); Eolas Techs., Inc. v. Adobe Sys., Inc., 09-cv-446 (E.D.Tex. May 6, 2010); Halton Co. v. Streivor, Inc., 10-cv-00655 (N.D. Cal. May 21, 2010); Taurus IP, LLC v. Ford Motor Co., 539 F. Supp. 2d 1122 (W.D. Wis. 2008) and both Medsquire and Nielsen.

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