The Uncertainty of Patent Pleadings After Iqbal

Patent infringement pleadings often include minimal facts in support of the infringement allegations contained therein. Indeed, Form 18 of the Federal Rules of Civil Procedure, formerly Form 16 prior to the 2007 “restyling” amendments, provides a model pleading for direct and literal patent infringement that merely recites 35 U.S.C. ' 271(a) for the allegation. However, the Supreme Court's recent Twombly and Iqbal decisions have placed in question the validity of Form 18 by reinterpreting the mandated minimal pleading standards required by Fed. R. Civ. P. 8. See Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007); Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009). An additional question has arisen as to whether the protection afforded by Form 18 is equally applicable to claims of indirect infringement or infringement under the doctrine of equivalents. When faced with the apparent dichotomy of pleading standards, some courts have applied a different ' more relaxed ' standard for direct literal infringement pleadings as compared with indirect or doctrine of equivalents pleadings. This article explores this pleading dichotomy to place the practitioner on notice of this potential trap.

Rule 8, Twombly and Iqbal

Fed. R. Civ. P. 8 states: “A pleading that states a claim for relief must contain ' a short and plain statement of the claim showing that the pleader is entitled to relief.” Until 2007, practitioners followed this general pleading standard with little fear of dismissal as long as the complaint satisfied the low threshold set forth in Conley v. Gibson, 355 U.S. 41 (1957). In Conley, the Supreme Court stated “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 which would entitle him to relief.” Id. at 45 (emphasis added). However, Twombly, which Iqbal reaffirmed, retired the “no set of facts” test in Conley, thus redefining the standard for pleading.

In Twombly, the Court was presented with an appeal from the Second Circuit that included allegations of a conspiracy in violation of antitrust laws. The legal allegations were supported by citations of “instances of parallel business behavior that suggest an agreement.” Twombly, 550 U.S. at 552. The district court had dismissed plaintiff's complaint for failing to plead “facts that 'ten[d] to exclude independent self-interested conduct as an explanation for defendants' parallel behavior.'” Id. The Second Circuit reversed the district court. Citing Conley's “no set of facts” test, the Second Circuit held that the plaintiff did not need to plead facts under Section 1 of the Sherman Act that excluded parallel behavior as long as the facts pleaded “include[d] conspiracy among the realm of 'plausible' possibilities in order to survive a motion to dismiss.” Id. at 553. Surprising many, the Supreme Court reversed and remanded the case to the Second Circuit. In doing so, the Court unsettled the prevailing standard for evaluating a pleading's sufficiency that had been in place for more than 50 years.

Twombly directed district courts, when deciding a motion to dismiss a complaint pursuant to Rule 12(b)(6), to determine first whether the complaint contains well-pleaded factual allegations, Id. at 555, and if so, to determine whether those well-pleaded factual allegations, taken as true, plausibly give rise to an entitlement of relief. Id. at 556-57. If the complaint failed either of these steps, then the complaint should be dismissed. In a footnote, Twombly also discussed the complaint's failure to satisfy Form 9, the model form for pleading negligence provided in the Appendix of the Rules. See Id. at 564, n. 10 (discussing how even though the pleading was similar to Form 9, which provides a sample pleading for negligence, the complaint was still likely not sufficient as it “furnishe[d] no clue as to which of the [defendants] supposedly agreed, or when and where the illicit agreement took place”).

After Twombly, it did not appear that the likelihood of a patent infringement complaint being dismissed for failure to state a claim increased as courts and practitioners alike understood Twombly to be specific to antitrust. For example, in McZeal, the Federal Circuit reversed a dismissal of a patent complaint that complied with Form 16 (now Form 18) and further stated that “[Twombly] did not change the pleading requirement of Federal Rule of Civil Procedure 8 as articulated in Conley.” McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1357 n. 4 (Fed. Cir. 2007). The decision, however, was not unanimous.

Judge Timothy B. Dyk, dissenting-in-part, was not so quick to disregard Twombly's applicability to patent infringement pleadings. Id. at 1360 (“In my view, a bare allegation of literal infringement using [Form 16] is inadequate to provide sufficient notice ' under the theory of literal infringement.”). Reluctantly, Judge Dyk acknowledged that Fed. R. Civ. P. 84 indicated “that a bare allegation of literal infringement in accordance with Form 16 [is] sufficient under Rule 8 to state a claim.” Id. However, as applied to McZeal, Judge Dyk would still have dismissed the complaint because the record reflected an allegation of patent infringement under the doctrine of equivalents, which was not covered by Form 16. Id. at 1361 (“Form 16 does not appear on its face to address the doctrine of equivalents.”). Thus, reviewing the complaint under Twombly, Judge Dyk stated that the complaint was insufficient because it “failed to provide any meaningful notice as to how [defendant] infringed under the doctrine of equivalents.” Id.

After McZeal, the Supreme Court's Iqbal decision clarified that Twombly applied to all federal civil pleadings, and not just antitrust pleadings. See Iqbal, 129 S.Ct. at 1953. In Iqbal, the petitioners, including the former attorney general and the director of the Federal Bureau of Investigations, appealed the Second Circuit's affirmance of the district court's denial of its motion to dismiss. As part of its argument that the district court's ruling was correct, the respondents argued that Twombly was limited to antitrust. Id. The Supreme Court rejected this argument stating that Twombly applied to all federal civil matters. Id. As for the merits of the motion to dismiss, the Court reviewed the complaint under the two steps prescribed in Twombly: 1) whether the complaint contained any well-pleaded factual allegations; and 2) whether those well-pleaded factual allegations, taken as true, took the claims “across the line” from conceivable to plausible and thus, gave rise to an entitlement of relief. Finding that the factual allegations taken as true did not meet the applicable legal standard for liability, the Court reversed and remanded. Although Iqbal was not a patent infringement case, it nonetheless placed Twombly's redefined pleading standard in apparent contradiction with Form 18.

Impact of Iqbal and McZeal On Patent Cases

After Iqbal, two issues that impact patent pleadings still remain unanswered. First, is Form 18 still a proper model to allege literal and direct patent infringement? Second, if Form 18 is a proper model for direct and literal infringement, does the form also apply to allegations of indirect patent infringement or infringement under the doctrine of equivalents?

Recent district court cases make it apparent that these questions are far from settled. One district court, for example, felt compelled to accept a dichotomy in pleading standards for direct infringement as compared with indirect infringement ' denying a motion to dismiss direct infringement claims that followed Form 18 except to the extent that the complaint failed to allege infringing activity within the United States, while granting dismissal of indirect infringement claims that were not covered by Form 18. See Advanced Analogic Techs., Inc. v. Kinetic Techs., Inc., No. C-09-1360 MMC, at *1-2 (N.D. Cal. July 08, 2009). Another judge in the same district also wrestled with the uncertainty created by Form 18 and Iqbal. See Elan Microelectronics Corp. v. Apple, Inc., No. C 09-01531 RS, 2009 WL 29722374 (N.D. Cal. Sept. 14, 2009). In Elan, the counterclaimant asserted infringement “directly and/or indirectly.” Id. at *2. Finding that Form 18 only addressed “direct patent infringement” and “in the absence of any other form that addressed indirect infringement and is made binding on the courts through Rule 84,” the court felt compelled to apply Twombly and Iqbal. Finding that the pleading “[fell] within the prohibition against 'threadbare recitals of the elements of a cause of action, supported by mere conclusory statements,'” Id. at *2-3 (quoting Iqbal, 129 S.Ct. at 1949), the court dismissed the infringement counterclaims in their entirety. Although in this latter example the complaint did not even satisfy Twombly's first requirement of containing well-pleaded factual allegations, the question still arises as to what factual enhancements are necessary to plead contributory infringement or inducement to take them from possibility to plausibility as required by Twombly. For example, to properly plead contributory infringement should a plaintiff be required to plead facts showing that a defendant knew the article it was selling was “especially made or especially adapted for use in an infringement” as stated in the statute? See 35 U.S.C. ' 271(c). The answers to these questions are unresolved but need to be considered by both patent plaintiffs and defendants.

To rectify the apparent inconsistency in pleading standards, it may be necessary to amend Form 18 to provide an example pleading for literal infringement that conforms with the standard set forth in Twombly. Even the Summary of Proposed Amendments to the Federal Rules dated Nov. 1, 2006 acknowledged that “the [substance of the] Forms have not been revised or updated for many years and some of the Forms may not be consistent with current practice.” www.uscourts.gov/rules/supct1106/summary_proposed_amend.pdf. Additionally, the Forms for patent infringement could also be expanded to provide samples of sufficient pleadings for all commonly pled claims in patent infringement actions. Alternatively, Rule 84 could be amended so that a pleading in conformity with the forms no longer suffices under the rules. And, as a final alternative, the Supreme Court could address the issue directly. These suggestions, however, may be for naught if the House and Senate continue to move forward on their respective bills that would reset the pleading standard back to Conley's “no set of facts” test. See H.R. 4115 and S. 1504.

Conclusion

In Twombly and Iqbal, the Supreme Court redefined the standards for pleading under Rule 8 for all civil actions. However, the pleading standards appear to contradict Form 18, which sets forth the model pleading for direct patent infringement. Form 18, Twombly, and Iqbal have thus created an environment where a dichotomy of pleading standards may exist for direct literal infringement as compared with infringement under the doctrine of equivalents and indirect infringement. Until the Supreme Court addresses or clarifies these uncertainties, lower courts and practitioners will have to continue to address the situation without clear guidance.

Jose Villarreal is a partner and Aden Allen is a second-year associate in the IP Litigation group at Wilson Sonsini Goodrich & Rosati PC. The thoughts expressed in this article are solely those of the authors and are not to be attributed to their law firm, Wilson Sonsini Goodrich & Rosati PC.

Patent infringement pleadings often include minimal facts in support of the infringement allegations contained therein. Indeed, Form 18 of the Federal Rules of Civil Procedure, formerly Form 16 prior to the 2007 “restyling” amendments, provides a model pleading for direct and literal patent infringement that merely recites 35 U.S.C. ' 271(a) for the allegation. However, the Supreme Court's recent Twombly and Iqbal decisions have placed in question the validity of Form 18 by reinterpreting the mandated minimal pleading standards required by Fed. R. Civ. P. 8. See Bell Atl. Corp. v. Twombly , 550 U.S. 544 (2007); Ashcroft v. Iqbal , 129 S.Ct. 1937 (2009). An additional question has arisen as to whether the protection afforded by Form 18 is equally applicable to claims of indirect infringement or infringement under the doctrine of equivalents. When faced with the apparent dichotomy of pleading standards, some courts have applied a different ' more relaxed ' standard for direct literal infringement pleadings as compared with indirect or doctrine of equivalents pleadings. This article explores this pleading dichotomy to place the practitioner on notice of this potential trap.

Rule 8, Twombly and Iqbal

Fed. R. Civ. P. 8 states: “A pleading that states a claim for relief must contain ' a short and plain statement of the claim showing that the pleader is entitled to relief.” Until 2007, practitioners followed this general pleading standard with little fear of dismissal as long as the complaint satisfied the low threshold set forth in Conley v. Gibson , 355 U.S. 41 (1957). In Conley, the Supreme Court stated “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 which would entitle him to relief.” Id. at 45 (emphasis added). However, Twombly, which Iqbal reaffirmed, retired the “no set of facts” test in Conley, thus redefining the standard for pleading.

In Twombly, the Court was presented with an appeal from the Second Circuit that included allegations of a conspiracy in violation of antitrust laws. The legal allegations were supported by citations of “instances of parallel business behavior that suggest an agreement.” Twombly, 550 U.S. at 552. The district court had dismissed plaintiff's complaint for failing to plead “facts that 'ten[d] to exclude independent self-interested conduct as an explanation for defendants' parallel behavior.'” Id. The Second Circuit reversed the district court. Citing Conley's “no set of facts” test, the Second Circuit held that the plaintiff did not need to plead facts under Section 1 of the Sherman Act that excluded parallel behavior as long as the facts pleaded “include[d] conspiracy among the realm of 'plausible' possibilities in order to survive a motion to dismiss.” Id. at 553. Surprising many, the Supreme Court reversed and remanded the case to the Second Circuit. In doing so, the Court unsettled the prevailing standard for evaluating a pleading's sufficiency that had been in place for more than 50 years.

Twombly directed district courts, when deciding a motion to dismiss a complaint pursuant to Rule 12(b)(6), to determine first whether the complaint contains well-pleaded factual allegations, Id. at 555, and if so, to determine whether those well-pleaded factual allegations, taken as true, plausibly give rise to an entitlement of relief. Id. at 556-57. If the complaint failed either of these steps, then the complaint should be dismissed. In a footnote, Twombly also discussed the complaint's failure to satisfy Form 9, the model form for pleading negligence provided in the Appendix of the Rules. See Id. at 564, n. 10 (discussing how even though the pleading was similar to Form 9, which provides a sample pleading for negligence, the complaint was still likely not sufficient as it “furnishe[d] no clue as to which of the [defendants] supposedly agreed, or when and where the illicit agreement took place”).

After Twombly, it did not appear that the likelihood of a patent infringement complaint being dismissed for failure to state a claim increased as courts and practitioners alike understood Twombly to be specific to antitrust. For example, in McZeal , the Federal Circuit reversed a dismissal of a patent complaint that complied with Form 16 (now Form 18) and further stated that “[ Twombly ] did not change the pleading requirement of Federal Rule of Civil Procedure 8 as articulated in Conley .” McZeal v. Sprint Nextel Corp. , 501 F.3d 1354, 1357 n. 4 (Fed. Cir. 2007). The decision, however, was not unanimous.

Judge Timothy B. Dyk, dissenting-in-part, was not so quick to disregard Twombly's applicability to patent infringement pleadings. Id. at 1360 (“In my view, a bare allegation of literal infringement using [Form 16] is inadequate to provide sufficient notice ' under the theory of literal infringement.”). Reluctantly, Judge Dyk acknowledged that Fed. R. Civ. P. 84 indicated “that a bare allegation of literal infringement in accordance with Form 16 [is] sufficient under Rule 8 to state a claim.” Id. However, as applied to McZeal, Judge Dyk would still have dismissed the complaint because the record reflected an allegation of patent infringement under the doctrine of equivalents, which was not covered by Form 16. Id. at 1361 (“Form 16 does not appear on its face to address the doctrine of equivalents.”). Thus, reviewing the complaint under Twombly, Judge Dyk stated that the complaint was insufficient because it “failed to provide any meaningful notice as to how [defendant] infringed under the doctrine of equivalents.” Id.

After McZeal, the Supreme Court's Iqbal decision clarified that Twombly applied to all federal civil pleadings, and not just antitrust pleadings. See Iqbal, 129 S.Ct. at 1953. In Iqbal, the petitioners, including the former attorney general and the director of the Federal Bureau of Investigations, appealed the Second Circuit's affirmance of the district court's denial of its motion to dismiss. As part of its argument that the district court's ruling was correct, the respondents argued that Twombly was limited to antitrust. Id. The Supreme Court rejected this argument stating that Twombly applied to all federal civil matters. Id. As for the merits of the motion to dismiss, the Court reviewed the complaint under the two steps prescribed in Twombly: 1) whether the complaint contained any well-pleaded factual allegations; and 2) whether those well-pleaded factual allegations, taken as true, took the claims “across the line” from conceivable to plausible and thus, gave rise to an entitlement of relief. Finding that the factual allegations taken as true did not meet the applicable legal standard for liability, the Court reversed and remanded. Although Iqbal was not a patent infringement case, it nonetheless placed Twombly's redefined pleading standard in apparent contradiction with Form 18.

Impact of Iqbal and McZeal On Patent Cases

After Iqbal, two issues that impact patent pleadings still remain unanswered. First, is Form 18 still a proper model to allege literal and direct patent infringement? Second, if Form 18 is a proper model for direct and literal infringement, does the form also apply to allegations of indirect patent infringement or infringement under the doctrine of equivalents?

Recent district court cases make it apparent that these questions are far from settled. One district court, for example, felt compelled to accept a dichotomy in pleading standards for direct infringement as compared with indirect infringement ' denying a motion to dismiss direct infringement claims that followed Form 18 except to the extent that the complaint failed to allege infringing activity within the United States, while granting dismissal of indirect infringement claims that were not covered by Form 18. See Advanced Analogic Techs., Inc. v. Kinetic Techs., Inc., No. C-09-1360 MMC, at *1-2 (N.D. Cal. July 08, 2009). Another judge in the same district also wrestled with the uncertainty created by Form 18 and Iqbal. See Elan Microelectronics Corp. v. Apple, Inc., No. C 09-01531 RS, 2009 WL 29722374 (N.D. Cal. Sept. 14, 2009). In Elan, the counterclaimant asserted infringement “directly and/or indirectly.” Id. at *2. Finding that Form 18 only addressed “direct patent infringement” and “in the absence of any other form that addressed indirect infringement and is made binding on the courts through Rule 84,” the court felt compelled to apply Twombly and Iqbal. Finding that the pleading “[fell] within the prohibition against 'threadbare recitals of the elements of a cause of action, supported by mere conclusory statements,'” Id. at *2-3 (quoting Iqbal, 129 S.Ct. at 1949), the court dismissed the infringement counterclaims in their entirety. Although in this latter example the complaint did not even satisfy Twombly's first requirement of containing well-pleaded factual allegations, the question still arises as to what factual enhancements are necessary to plead contributory infringement or inducement to take them from possibility to plausibility as required by Twombly. For example, to properly plead contributory infringement should a plaintiff be required to plead facts showing that a defendant knew the article it was selling was “especially made or especially adapted for use in an infringement” as stated in the statute? See 35 U.S.C. ' 271(c). The answers to these questions are unresolved but need to be considered by both patent plaintiffs and defendants.

To rectify the apparent inconsistency in pleading standards, it may be necessary to amend Form 18 to provide an example pleading for literal infringement that conforms with the standard set forth in Twombly. Even the Summary of Proposed Amendments to the Federal Rules dated Nov. 1, 2006 acknowledged that “the [substance of the] Forms have not been revised or updated for many years and some of the Forms may not be consistent with current practice.” www.uscourts.gov/rules/supct1106/summary_proposed_amend.pdf. Additionally, the Forms for patent infringement could also be expanded to provide samples of sufficient pleadings for all commonly pled claims in patent infringement actions. Alternatively, Rule 84 could be amended so that a pleading in conformity with the forms no longer suffices under the rules. And, as a final alternative, the Supreme Court could address the issue directly. These suggestions, however, may be for naught if the House and Senate continue to move forward on their respective bills that would reset the pleading standard back to Conley's “no set of facts” test. See H.R. 4115 and S. 1504.

Conclusion

In Twombly and Iqbal, the Supreme Court redefined the standards for pleading under Rule 8 for all civil actions. However, the pleading standards appear to contradict Form 18, which sets forth the model pleading for direct patent infringement. Form 18, Twombly, and Iqbal have thus created an environment where a dichotomy of pleading standards may exist for direct literal infringement as compared with infringement under the doctrine of equivalents and indirect infringement. Until the Supreme Court addresses or clarifies these uncertainties, lower courts and practitioners will have to continue to address the situation without clear guidance.

Jose Villarreal is a partner and Aden Allen is a second-year associate in the IP Litigation group at Wilson Sonsini Goodrich & Rosati PC. The thoughts expressed in this article are solely those of the authors and are not to be attributed to their law firm, Wilson Sonsini Goodrich & Rosati PC.