An Overview of Twombly on Patent Pleading Disputes

In Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007), an antitrust case, the U.S. Supreme Court put to rest the five-decade-old pleading standard from Conley v. Gibson that 'a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief.' Conley v. Gibson, 355 U.S. 41, 45-46 (1957). The Court replaced the Conley standard with one that requires a claimant to plead sufficient facts to 'nudge[ ] their claims across the line from conceivable to plausible' in order to survive dismissal. Twombly, 127 S.Ct. at 1974. Thus, Twombly appears to have raised the pleading threshold for all claims, including patent claims. But although some district courts have held that Twombly did raise the pleading threshold in patent cases, the Court of Appeals for the Federal Circuit ('CAFC') has only discussed the application of Twombly in a pro se plaintiff case where it concluded that the pro se plaintiff met the low bar for pro se litigants to avoid dismissal. In addition to not addressing the effect of Twombly on patent infringement pleading requirements for non-pro se plaintiffs, the CAFC also did not address whether Twombly heightens the pleading standard for patent claims, counterclaims, and affirmative defenses falling outside of the infringement claims addressed by Fed. R. Civ. P. Form 16 ('Form 16'), which is a matter of much disagreement among the various district courts addressing the effect of Twombly on patent pleading. As a result, at present, the effect of Twombly on patent claims and affirmative defenses is an issue that practitioners should pay close attention to in each district court in which they practice.

Twombly

In Twombly, local telephone and Internet service subscribers, as a class, alleged that a group of regional telephone companies violated '1 of the Sherman Act ('Act'), 15 U.S.C. '1 (2006), prohibiting unlawful agreements between parties to restrain trade in carrying out the requirements of the Telecommunications Act of 1996 ('Telecom Act'), Pub. L. No. 104-104. The Telecom Act required those regional telephone companies to open their local telephone service monopolies to competition, provide network connectivity to competitors, and to sell wholesale services to competitors. The Twombly plaintiffs were such competitors, and they alleged that the defendants restrained trade by conspiring in 'parallel conduct' to prevent new competitors from entering the market. Twombly, 127 S. Ct. at 1962. Specifically, the plaintiffs complained that the regional telephone companies interfered with customer relationships, did not provide adequate network connectivity to new competitors, and would not negotiate in good faith with new competitors. Id. Second, the plaintiffs claimed that this alleged conspiracy was the result of an 'agreement' between the defendants. Id. at 1962-63. The district court dismissed the complaint because the plaintiffs failed to plead facts sufficient to exclude the possibility that the parallel behavior of the regional telephone service companies was independent, self-interested conduct ' not the result of an agreement among them. Bell Atlantic v. Twombly, 313 F. Supp. 2d 174, 179 (S.D.N.Y. 2003). The Court of Appeals for the Second Circuit ('Second Circuit') reversed the district court, holding that the dismissal was not appropriate because it could not 'conclude that there is no set of facts that would permit a plaintiff to demonstrate that the particular parallelism asserted was the product of collusion rather than coincidence.' Bell Atlantic v. Twombly, 425 F.3d 99, 114 (2d. Cir. 2005).

The Supreme Court disagreed with the Second Circuit and reversed. The Court first rejected the opinion that Rule 8(a)(2) 'dispensed with the pleading of facts altogether' and instead held that the Rule still requires a ”showing,' rather than a blanket assertion, of entitlement to relief.' Twombly, 127 S. Ct. at 1965 n.3. The Court next addressed the language from Conley suggesting that a complaint may not be dismissed under Rule 12(b)(6) unless a plaintiff 'can prove no set of facts in support of his claim.' Id. at 1968. The Court disavowed the isolated interpretation given to the phrase and, to avoid any future uncertainty, said it was 'best forgotten' and has 'earned its retirement.' Id. at 1969. Citing the expense of discovery, especially in antitrust class actions, the Court held that '[b]ecause the plaintiffs here have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed.' Id. at 1974.

Patent Pleading Dispute Resolution After Twombly

District Court Cases Before the CAFC Considered Twombly

The two district courts deciding motions to dismiss patent claims after Twombly but before the CAFC considered it came to similar conclusions regarding claims and counterclaims, but different conclusions regarding the effect of Twombly on pleading affirmative defenses.

Bartronics v. Power-One, 245 F.R.D. 532 (S.D. Ala. 2007), was the first published patent case addressing pleading standards after the Twombly decision. In Bartronics, the plaintiff objected to invalidity counterclaims under ”103 and 112, but not to the affirmative defenses on the same grounds. Bartronics, 245 F.R.D. at 534. The court held that the counterclaims were conclusory and dismissed them under the heightened pleading standard from Twombly, but also held that nothing in Twombly would 'require more detailed pleading of affirmative defenses,' which it did not dismiss. Id. at 537 n.5.

Anticancer Inc. v. Xenogen, No. 05-CV-0448-B, 2007 WL 2345025 (S.D. Cal. Aug. 13, 2007), was the next patent case in which a district court cited and applied Twombly when resolving a motion to dismiss patent claims, and it went a step beyond the court in Bartronics to find that Twombly applied to affirmative defenses as well. The plaintiff in Anticancer pled simple allegations of infringement, indirect infringement, and contributory infringement. Id. at *1. Relying on the Twombly 'plausibility' standard, and rejecting the Bartronics opinion regarding affirmative defenses, the district court found that 'in this patent infringement action, parties must demonstrate a plausible entitlement to relief in all pleadings, including claims, counterclaims, cross-claims, third party claims, and separate affirmative defenses.' Id. at *4.

The CAFC Considers Twombly

The CAFC considered the application of Twombly to a pro se litigant in a patent and trademark infringement matter and, under those particular facts, held that 'the plaintiff met the low bar for pro se litigants to avoid dismissal on the basis of Fed. R. Civ. P. 12(b)(6),' but that the complaint did not contain enough facts to support his request for a temporary restraining order and injunctions. McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1358-59 (Fed. Cir. 2007). In McZeal, the CAFC held that the pro se plaintiff properly put the defendants on notice under Rule 8(a)(2) because its complaint: 1) asserted the plaintiff owned the patents at issue; 2) named the defendants; 3) stated that the defendants infringed the patents; 4) described in general terms the means by which the patents were infringed; and 5) identified the specific parts of patent law that are implicated. Id. at 1357. The court also noted that a patent infringement claim pled according to Form 16, which requires only: '1) an allegation of jurisdiction; 2) a statement 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 infringement; and 5) a demand for an injunction and damages' was likely a sufficient claim. Id. at 1357. Surprisingly, the CAFC also held that although the plaintiff conceded he knew nothing of how the accused products worked, 'the specifics of how Sprint Nextel's purportedly infringing device works is something to be determined through discovery.' Id. at 1358.

Judge Timothy B. Dyk dissented, arguing that, while Rule 84, which states that 'forms contained in the Appendix of Forms are sufficient under the rules,' would prevent courts from dismissing pleadings modeled on Form 16, Form 16 is inadequate to provide notice for direct infringement after Twombly and should not be allowed to suffice for claims of infringement under the doctrine of equivalents as was pleaded by McZeal. Id. at 1360-61. Specifically, he cited the multiple claims with multiple limitations in the multiple patents in concluding that 'McZeal's complaint utterly fails to provide any meaningful notice as to how Sprint has infringed the claims under the doctrine of equivalents' as required by Twombly. Id. at 1361.

District Court Cases After McZeal

No district court since McZeal appears to have held that the pleading requirements of Form 16 are inadequate, but the district courts do disagree about whether Twombly heightens the pleading standard for claims beyond a claim of direct infringement.

In CBT Flint Partners, LLC v. Goodmail Systems, Inc., 529 F. Supp. 2d 1376 (N.D. Ga. 2007), the plaintiff claimed the defendant infringed, induced infringement, and contributed to infringement of the patents in suit. The defendant moved to dismiss for failure to state a claim, citing Twombly as requiring more than mere accusations by the plaintiff. Id. at 1378. The court noted the CAFC decision in McZeal for the proposition that motions to dismiss were matters of law of the regional circuits but did not rely on its holding regarding patent pleading. Id. at 1379. The court in CBT disagreed that Twombly extends beyond antitrust defendants and further held that Twombly 'did not alter pleading standards ' especially in the patent context.' Id. at 1379, 1380.

Taltwell, LLC v. Zonet USA Corp., No. 3:07cv543, 2007 WL 4562874 (E.D. Va. Dec. 20, 2007) was decided three days after CBT, and adopted the CAFC suggestion from McZeal when denying the defendant's motion to dismiss patent infringement claims. It did so in part because the Fourth Circuit had not 'had occasion to discuss a motion to dismiss a patent infringement action in light of the Twombly decision,' and because it provided 'appropriate guidance on the present issue.' Id. at *13. Surprisingly, the court did not distinguish the difference between the pro se plaintiff in McZeal and the represented plaintiff in Taltwell.

In another interesting twist, the court in Aspex Eyewear, Inc. v. Clariti Eyewear, Inc., 531 F. Supp. 2d 620, 622 (S.D.N.Y. 2008), held that the plaintiff's complaint that identified a product, claimed that it owned two patents that the product infringed, and stated that the defendant did not have the right to manufacture or sell the product was a sufficient pleading for infringement. On the other hand, the court found the defendant's similarly pled counterclaims and affirmative defenses such as obviousness and anticipation to be deficient under the Twombly standard, and it granted the plaintiff's motion to strike, albeit without prejudice to re-plead within 10 days. Id. at 623.

In the latest published district court patent infringement case to cite Twombly, the district court granted the defendant's motion to strike claims of willfulness and the associated treble damages because the plaintiff did not plead any facts that showed that the defendant had knowledge of the patent. F5 Networks, Inc. v. A10 Networks, Inc., No. C07-1927RSL, 2008 WL 687114 (W.D. Wash. Mar. 10, 2008). Specifically, the court held that '[a]sserting that A10 willfully infringed 'insofar' ' or to the extent ' that it had knowledge of the patent is not the same as actually alleging that A10 had knowledge of the patent.' Id. at *1.

Conclusion

The majority and dissent opinions in McZeal reveal the tension between the holding in Twombly, Rule 84, and Form 16 in that Twombly clearly requires more specificity than is set out in Form 16, but Rule 84 states that Form 16 is sufficient under the Rules. Additionally, Form 16 is limited to direct infringement claims, and does not address other claims, counterclaims, and affirmative defenses that can be raised by the parties to a patent infringement suit. However, district courts vary widely on whether to apply a heightened standard to patent claims, so patent litigants need to stay apprised of the pleading standards applied in every district court in which they appear when making patent claims and counterclaims and asserting affirmative defenses.

Dion Messer is a patent litigation associate with Weil, Gotshal & Manges, LLP, in Austin, TX, who previously clerked for the Honorable William C. Bryson for CAFC. The views expressed are solely those of the author and not necessarily the views of the author's firm, clients, or any organization with which they may be associated.

In Bell Atlantic Corp. v. Twombly , 127 S.Ct. 1955, 1965 (2007), an antitrust case, the U.S. Supreme Court put to rest the five-decade-old pleading standard from Conley v. Gibson that 'a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief.' Conley v. Gibson, 355 U.S. 41, 45-46 (1957). The Court replaced the Conley standard with one that requires a claimant to plead sufficient facts to 'nudge[ ] their claims across the line from conceivable to plausible' in order to survive dismissal. Twombly, 127 S.Ct. at 1974. Thus, Twombly appears to have raised the pleading threshold for all claims, including patent claims. But although some district courts have held that Twombly did raise the pleading threshold in patent cases, the Court of Appeals for the Federal Circuit ('CAFC') has only discussed the application of Twombly in a pro se plaintiff case where it concluded that the pro se plaintiff met the low bar for pro se litigants to avoid dismissal. In addition to not addressing the effect of Twombly on patent infringement pleading requirements for non-pro se plaintiffs, the CAFC also did not address whether Twombly heightens the pleading standard for patent claims, counterclaims, and affirmative defenses falling outside of the infringement claims addressed by Fed. R. Civ. P. Form 16 ('Form 16'), which is a matter of much disagreement among the various district courts addressing the effect of Twombly on patent pleading. As a result, at present, the effect of Twombly on patent claims and affirmative defenses is an issue that practitioners should pay close attention to in each district court in which they practice.

Twombly

In Twombly, local telephone and Internet service subscribers, as a class, alleged that a group of regional telephone companies violated '1 of the Sherman Act ('Act'), 15 U.S.C. '1 (2006), prohibiting unlawful agreements between parties to restrain trade in carrying out the requirements of the Telecommunications Act of 1996 ('Telecom Act'), Pub. L. No. 104-104. The Telecom Act required those regional telephone companies to open their local telephone service monopolies to competition, provide network connectivity to competitors, and to sell wholesale services to competitors. The Twombly plaintiffs were such competitors, and they alleged that the defendants restrained trade by conspiring in 'parallel conduct' to prevent new competitors from entering the market. Twombly, 127 S. Ct. at 1962. Specifically, the plaintiffs complained that the regional telephone companies interfered with customer relationships, did not provide adequate network connectivity to new competitors, and would not negotiate in good faith with new competitors. Id. Second, the plaintiffs claimed that this alleged conspiracy was the result of an 'agreement' between the defendants. Id. at 1962-63. The district court dismissed the complaint because the plaintiffs failed to plead facts sufficient to exclude the possibility that the parallel behavior of the regional telephone service companies was independent, self-interested conduct ' not the result of an agreement among them. Bell Atlantic v. Twombly, 313 F. Supp. 2d 174, 179 (S.D.N.Y. 2003). The Court of Appeals for the Second Circuit ('Second Circuit') reversed the district court, holding that the dismissal was not appropriate because it could not 'conclude that there is no set of facts that would permit a plaintiff to demonstrate that the particular parallelism asserted was the product of collusion rather than coincidence.' Bell Atlantic v. Twombly, 425 F.3d 99, 114 (2d. Cir. 2005).

The Supreme Court disagreed with the Second Circuit and reversed. The Court first rejected the opinion that Rule 8(a)(2) 'dispensed with the pleading of facts altogether' and instead held that the Rule still requires a ”showing,' rather than a blanket assertion, of entitlement to relief.' Twombly, 127 S. Ct. at 1965 n.3. The Court next addressed the language from Conley suggesting that a complaint may not be dismissed under Rule 12(b)(6) unless a plaintiff 'can prove no set of facts in support of his claim.' Id. at 1968. The Court disavowed the isolated interpretation given to the phrase and, to avoid any future uncertainty, said it was 'best forgotten' and has 'earned its retirement.' Id. at 1969. Citing the expense of discovery, especially in antitrust class actions, the Court held that '[b]ecause the plaintiffs here have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed.' Id. at 1974.

Patent Pleading Dispute Resolution After Twombly

District Court Cases Before the CAFC Considered Twombly

The two district courts deciding motions to dismiss patent claims after Twombly but before the CAFC considered it came to similar conclusions regarding claims and counterclaims, but different conclusions regarding the effect of Twombly on pleading affirmative defenses.

Bartronics v. Power-One , 245 F.R.D. 532 (S.D. Ala. 2007), was the first published patent case addressing pleading standards after the Twombly decision. In Bartronics, the plaintiff objected to invalidity counterclaims under ”103 and 112, but not to the affirmative defenses on the same grounds. Bartronics, 245 F.R.D. at 534. The court held that the counterclaims were conclusory and dismissed them under the heightened pleading standard from Twombly, but also held that nothing in Twombly would 'require more detailed pleading of affirmative defenses,' which it did not dismiss. Id. at 537 n.5.

Anticancer Inc. v. Xenogen, No. 05-CV-0448-B, 2007 WL 2345025 (S.D. Cal. Aug. 13, 2007), was the next patent case in which a district court cited and applied Twombly when resolving a motion to dismiss patent claims, and it went a step beyond the court in Bartronics to find that Twombly applied to affirmative defenses as well. The plaintiff in Anticancer pled simple allegations of infringement, indirect infringement, and contributory infringement. Id. at *1. Relying on the Twombly 'plausibility' standard, and rejecting the Bartronics opinion regarding affirmative defenses, the district court found that 'in this patent infringement action, parties must demonstrate a plausible entitlement to relief in all pleadings, including claims, counterclaims, cross-claims, third party claims, and separate affirmative defenses.' Id. at *4.

The CAFC Considers Twombly

The CAFC considered the application of Twombly to a pro se litigant in a patent and trademark infringement matter and, under those particular facts, held that 'the plaintiff met the low bar for pro se litigants to avoid dismissal on the basis of Fed. R. Civ. P. 12(b)(6),' but that the complaint did not contain enough facts to support his request for a temporary restraining order and injunctions. McZeal v. Sprint Nextel Corp. , 501 F.3d 1354, 1358-59 (Fed. Cir. 2007). In McZeal, the CAFC held that the pro se plaintiff properly put the defendants on notice under Rule 8(a)(2) because its complaint: 1) asserted the plaintiff owned the patents at issue; 2) named the defendants; 3) stated that the defendants infringed the patents; 4) described in general terms the means by which the patents were infringed; and 5) identified the specific parts of patent law that are implicated. Id. at 1357. The court also noted that a patent infringement claim pled according to Form 16, which requires only: '1) an allegation of jurisdiction; 2) a statement 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 infringement; and 5) a demand for an injunction and damages' was likely a sufficient claim. Id. at 1357. Surprisingly, the CAFC also held that although the plaintiff conceded he knew nothing of how the accused products worked, 'the specifics of how Sprint Nextel's purportedly infringing device works is something to be determined through discovery.' Id. at 1358.

Judge Timothy B. Dyk dissented, arguing that, while Rule 84, which states that 'forms contained in the Appendix of Forms are sufficient under the rules,' would prevent courts from dismissing pleadings modeled on Form 16, Form 16 is inadequate to provide notice for direct infringement after Twombly and should not be allowed to suffice for claims of infringement under the doctrine of equivalents as was pleaded by McZeal. Id. at 1360-61. Specifically, he cited the multiple claims with multiple limitations in the multiple patents in concluding that 'McZeal's complaint utterly fails to provide any meaningful notice as to how Sprint has infringed the claims under the doctrine of equivalents' as required by Twombly. Id. at 1361.

District Court Cases After McZeal

No district court since McZeal appears to have held that the pleading requirements of Form 16 are inadequate, but the district courts do disagree about whether Twombly heightens the pleading standard for claims beyond a claim of direct infringement.

In CBT Flint Partners, LLC v. Goodmail Systems, Inc., 529 F. Supp. 2d 1376 (N.D. Ga. 2007), the plaintiff claimed the defendant infringed, induced infringement, and contributed to infringement of the patents in suit. The defendant moved to dismiss for failure to state a claim, citing Twombly as requiring more than mere accusations by the plaintiff. Id. at 1378. The court noted the CAFC decision in McZeal for the proposition that motions to dismiss were matters of law of the regional circuits but did not rely on its holding regarding patent pleading. Id. at 1379. The court in CBT disagreed that Twombly extends beyond antitrust defendants and further held that Twombly 'did not alter pleading standards ' especially in the patent context.' Id. at 1379, 1380.

Taltwell, LLC v. Zonet USA Corp., No. 3:07cv543, 2007 WL 4562874 (E.D. Va. Dec. 20, 2007) was decided three days after CBT, and adopted the CAFC suggestion from McZeal when denying the defendant's motion to dismiss patent infringement claims. It did so in part because the Fourth Circuit had not 'had occasion to discuss a motion to dismiss a patent infringement action in light of the Twombly decision,' and because it provided 'appropriate guidance on the present issue.' Id. at *13. Surprisingly, the court did not distinguish the difference between the pro se plaintiff in McZeal and the represented plaintiff in Taltwell.

In another interesting twist, the court in Aspex Eyewear, Inc. v. Clariti Eyewear, Inc. , 531 F. Supp. 2d 620, 622 (S.D.N.Y. 2008), held that the plaintiff's complaint that identified a product, claimed that it owned two patents that the product infringed, and stated that the defendant did not have the right to manufacture or sell the product was a sufficient pleading for infringement. On the other hand, the court found the defendant's similarly pled counterclaims and affirmative defenses such as obviousness and anticipation to be deficient under the Twombly standard, and it granted the plaintiff's motion to strike, albeit without prejudice to re-plead within 10 days. Id. at 623.

In the latest published district court patent infringement case to cite Twombly, the district court granted the defendant's motion to strike claims of willfulness and the associated treble damages because the plaintiff did not plead any facts that showed that the defendant had knowledge of the patent. F5 Networks, Inc. v. A10 Networks, Inc., No. C07-1927RSL, 2008 WL 687114 (W.D. Wash. Mar. 10, 2008). Specifically, the court held that '[a]sserting that A10 willfully infringed 'insofar' ' or to the extent ' that it had knowledge of the patent is not the same as actually alleging that A10 had knowledge of the patent.' Id. at *1.

Conclusion

The majority and dissent opinions in McZeal reveal the tension between the holding in Twombly, Rule 84, and Form 16 in that Twombly clearly requires more specificity than is set out in Form 16, but Rule 84 states that Form 16 is sufficient under the Rules. Additionally, Form 16 is limited to direct infringement claims, and does not address other claims, counterclaims, and affirmative defenses that can be raised by the parties to a patent infringement suit. However, district courts vary widely on whether to apply a heightened standard to patent claims, so patent litigants need to stay apprised of the pleading standards applied in every district court in which they appear when making patent claims and counterclaims and asserting affirmative defenses.

Dion Messer is a patent litigation associate with Weil, Gotshal & Manges, LLP, in Austin, TX, who previously clerked for the Honorable William C. Bryson for CAFC. The views expressed are solely those of the author and not necessarily the views of the author's firm, clients, or any organization with which they may be associated.