Immediate Impact of the Repeal of Form 18 On Patent Litigation

Rule 84 provided that the forms in the Appendix to the Federal Rules “suffice under these rules and illustrate the simplicity and brevity that these rules contemplate.” Form 18 was the exemplar for a patent infringement complaint, and it includes the following allegations:

'

1. (Statement of Jurisdiction)
2. On (Date), United States Letters Patent No. (__) were issued to plaintiff for an invention in an (electric motor). The plaintiff owned the patent throughout the period of the defendant's infringing acts and still owns the patent.
3. The defendant has infringed and is still infringing the Letters Patent by making, selling, and using (electric motors) that embody the patented invention, and the defendant will continue to do so unless enjoined by this court.
4. The plaintiff has complied with the statutory requirement of placing a notice of the Letters Patent on all (electric motors) it manufactures and sells and has given the defendant written notice of the infringement.

'

The Court of Appeals for the Federal Circuit has held that a complaint including this information sufficed to allege patent infringement, even after the Iqbal and Twombly decisions. See, In re Bill of Lading Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 1334 (Fed. Cir. 2012) (“[T]o the extent the parties argue that Twombly and its progeny conflict with the Forms and create differing pleadings requirements, the Forms control”); see also, McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1358 (Fed. Cir. 2007) (applying Form 18, then Form 16, and explaining “In this case, the specifics of how [the] purportedly infringing device works is something to be determined through discovery”); K-Tech Telecommunications, Inc. v. Time Warner Cable, Inc., 714 F.3d 1277, 1283 (Fed. Cir. 2013) (“Any criticism we may have regarding the sufficiency of the forms themselves is strictly proscribed by Supreme Court precedent.”).

Notably, Form 18 only applied to allegations of direct infringement, while the Iqbal/Twombly standard applied to the other elements of induced and contributory infringement. In re Bill of Lading, 681 F.3d at 1336 (“We agree with several district courts that have addressed this issue that Form 18 should be strictly construed as measuring only the sufficiency of allegations of direct infringement”).

The Practical Implications Of Form 18 Pleading

The Form 18 standard was a boon for patent owners and a source of frustration for accused infringers. A Form 18 complaint did not have to explain which claims were being asserted or exactly how the defendants' products or services allegedly met the claim elements. See, e.g., EON Corp. IP Holdings LLC v. FLO TV Inc., 802 F. Supp. 2d 527, 532 (D. Del. 2011)'('[A] plaintiff is not required to specifically plead each element of the asserted patent's claims or even identify which claims it is asserting.').'Accused infringers often felt that they were the target of baseless lawsuits and left without any efficient means for early resolution in advance of costly and time-consuming discovery. For example, it was difficult to win a motion to dismiss a suit for patent infringement for failure to provide adequate detail in the complaint. See, e.g., Fairchild Semiconductor Corp. v. Power Integrations, Inc., 935 F. Supp. 2d 772, 776 (D. Del. 2013)'(rejecting counterclaim-defendant's argument that 'it will be unable to properly investigate and respond to [counterclaim-plaintiff's] infringement allegations because [counterclaim-defendant] sells 'more than 20,000 different products' and is 'in the dark' regarding which products stand accused').'

Accused infringers also could be left with insufficient information to evaluate the nature of the claims and the potential exposure. These issues have compounded with rapid advances in innovation and globalization. Unlike the accused products of 1938, when Form 18 was drafted, modern accused products can be extremely complex systems comprising thousands of different features. Modern products and services also can be implemented and controlled by different actors in different locations. They can have long and international manufacturing and distribution chains, so even if a patent defendant has a general idea of what the infringement allegations are, the investigation of the merits can be long and burdensome. These factors gave plaintiffs an asymmetric advantage at the outset of patent infringement cases.

The End of Form 18 Pleading

Now that Form 18 is gone, it is not clear what the pleading standard is for patent infringement cases. Courts will need to decide what level of detail suffices to “give the defendant fair notice of what the claim is and the grounds upon which it rests.” Bell Atl., 550 U.S. at 555 (internal citations omitted). According to analysis of docket activity, patent plaintiffs filed 790 complaints in November 2015, including 212 complaints on Nov. 30, 2015, the day before Rule 84 was eliminated. This figure, and other related data, can be found on Ars Technica.

After Form 18 was eliminated, at least some patent owners appeared to include additional specificity in their complaints. For example, Motile Optics, LLC filed 34 lawsuits in November 2015 alleging that any optical disc player with a CPU and memory infringed the asserted patent. See, e.g., Motile Optics, LLC v. Pyle Audio, Inc., No. 6:15-cv-01047 (E.D. Tex. Nov. 25, 2015). After Dec. 1, 2105, Motile filed nine additional lawsuits asserting the same patent but providing more detail than its pre-Dec. 1, 2015 counterparts. See, e.g., Motile Optics, LLC v. Apex Digital Inc., No. 6:15-cv-01177 (E.D. Tex. Dec. 30, 2015)'(alleging why an exemplary accused product meets the limitations of, among others, claim 1 of the patent, and citing to several pages from a user manual for that product).'

Judicial Guidance Regarding the New Pleading Standard

As of the end of February, there do not yet appear to be any published decisions on motions to dismiss patent infringement claims filed on or after Dec. 1, 2015. But several motions have been filed and district court opinions should be forthcoming. For example, the first complaint filed in the Northern District of Illinois in December 2015 alleges infringement of three patents, but it does not include specific accused claims, specific products, or more than a cursory explanation of how the accused product lines practice the asserted patents. Endeavor Meshtech, Inc. v. S&C Electric Company, No. 1:15-cv-10772 (Dec. 1, 2015 N.D. Ill.). The defendant has moved to dismiss the complaint arguing that “[a]t the very least, Twombly and Iqbal require that a Complaint identify specific claims, specify the accused systems, and provide an element-by-element analysis of accused features of those systems.” Id., Motion to Dismiss at 8 (Jan. 25, 2016).

The Federal Circuit will almost certainly address the pleading standard for direct infringement without Form 18, but that guidance may still be several months away, if not longer. Until then, there may be a great deal of regional variance in the law as district court judges struggle to implement the appropriate standard.

In the interim, some guidance may be taken from the concurring and dissenting opinions of Federal Circuit opinions holding that Form 18 trumps the Iqbal/Twombly standard. In McZeal, for example, Judge Dyk recognized the practical implications of the lax pleading standard of Form 18. 501 F.3d at 1362. (“The consequence of allowing [] conclusory allegations to proceed is to expose the defendant to potentially extensive discovery before a motion for summary judgment may be filed. Thus the district court here must retain the power to insist upon some specificity in pleading before allowing a potentially massive factual controversy to proceed.”) (internal citation omitted). He therefore suggested that a revised Form 18 should “require allegations specifying which claims are infringed, and the features of the accused device that correspond to the claim limitations.” Id. at 1360. Similarly, in her concurrence in In re Bill of Lading, Judge Newman viewed the specific complaint at issue as adequate under the Iqbal/Twombly standard because it “provide[s] the defendants with information as to the patents and specific claims that are allegedly being infringed, and identify the activities alleged to constitute infringement.” 681 F.3d at 1351.

Conclusion

In sum, these opinions support that patent owners will at least have to specifically identify the asserted claims and accused products, and provide some level of explanation as to how the accused products meet the limitations of the asserted claims. Plaintiffs may have little difficulty identifying claims and products; the key issue may be how mush specificity is required with respect to the theory of infringement before the discovery gates are opened.

The early decisions over the coming months will be important. They will impact both how patent owners plead infringement, where patent owners file suit, and also frame the issue for ultimate resolution by the Federal Circuit.

Ben Smiley is an associate in Morrison and Foerster LLP's New York office.