In a series of recent cases purporting to clarify the pleading standards required under FRCP 8(a), the US Supreme Court renounced the liberal pleading standards that had guided the courts below for more than 50 years.1 In its place, the Court, in Bell Atlantic Corp. v. Twombly2 and again in Ashcroft v. Iqbal, announced that district courts considering whether a claim had been stated were required to evaluate whether particular claims were plausible, not simply possible, based on the facts alleged. In the wake of the Supreme Court’s clarifications, the courts have struggled to come to grips with the level of detail required in pleadings and whether particular claims rise to the level of plausibility articulated by the Court.
Lawsuits alleging patent infringement have not been spared from the uncertainty. Both courts and litigants have struggled to come to grips with what is required to state a claim for patent infringement. A review of district court rulings issued in patent cases in the wake of Twombly/Iqbal suggest application of the “plausibility” standard has been irregular and tends to vary from court to court. This article looks at how the district courts have applied the Twombly/Iqbal standard so that litigants (and potential litigants) can evaluate both the obligations as a pleader and the challenges they might face in challenging the pleadings.
Until recently, district courts interpreted the Supreme Court’s precedent to prohibit them from dismissing a claim unless it was clear that there was “no set of facts” that the plaintiff could prove to establish the claim.3 In Twombly, however, the Supreme Court retired the “no set of facts” standard and held that a pleading must allege enough facts, which if taken as true, give a district court “plausible grounds” to reasonably infer that the law will permit plaintiff a recovery. Although the plaintiff need not plead facts so detailed as to show probable success, it is not enough simply to show a possibility of the plaintiff’s entitlement to relief.4
This holding was echoed in Iqbal, where the Court explained that “unadorned, the-defendant-unlawfully-harmed-me accusation[s]” and “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements” will not satisfy the “plausibility” standard that the Court had articulated for compliance with Rule 8.5 Given what seemed to many to be a sea change in federal pleading standards, the Court’s pronouncements in Iqbal and Twombly created something of an uproar in the legal community and have resulted in the introduction of bills in both the House and Senate to nullify them.6
Effect on Patent Litigation
While Twombly requires the plaintiff to plead facts and not “legal conclusions,” the conclusory allegations found in the FRCP-approved Form 18 may be an exception.7 In McZeal v. Nextel Communications, Inc.,8 the Federal Circuit suggested that Twombly had clarified but not changed the requirements of Rule 8(a) and, therefore, the type of short, plain statements approved in the Federal Rules’ Appendix of Forms were consistent with Twombly. Form 18 provides a sample complaint for direct patent infringement requiring only (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.
Since McZeal, most district courts have since concluded that they are bound to accept allegations of direct infringement that fit within the framework of Form 18.9 Because FRCP 84 states that approved forms (like Form 18) “illustrate the simplicity and brevity that [Rule 8] requires,” the courts have reasoned they are not free to reject pleadings that comply with this standard.10 As one court put it, “[a]bsent an explicit abrogation of these forms by the Supreme Court, this court presumes that they are ‘sufficient to withstand attack under the rules under which they are drawn.’”11
Though Twombly was not supposed to have changed the pleading standard under Rule 8(a), a few district courts have expressed some bewilderment. In Elan Microelectronics, for example, the court stated that “[i]t is not easy to reconcile Form 18 with the guidance of the Supreme Court in Twombly and Iqbal; while the form undoubtedly provides a ‘short and plain statement,’ it offers little to ‘show’ that the pleader is entitled to relief.”12 Unfortunately, the only opinion from the Federal Circuit addressing these issues (Colida v. Nokia, Inc.13) is neither precedential nor helpful. In Colida, the court concluded that plaintiffs’ design patent infringement allegations were “facially implausible,” but at the same time noted that plaintiff had not argued that his complaint was sufficient under Form 18.14
Applying Twombly/Iqbal to Indirect Infringement, Divided Infringement and Affirmative Defenses
As the district court pointed out in Elan Microelectronics, Form 18 appears to apply only to allegations of direct infringement.15 Thus, in that case, the Court felt compelled by the competing dictates of Twombly/Iqbal on one hand and Rule 84 on the other to adopt different pleading standards for claims of direct and indirect infringement – even when both theories are asserted in the same case. The court held that a “bare assertion, made on ‘information and belief’” that the defendant “has been and is currently, directly and/or indirectly infringing” the specified patents “through its design, marketing, manufacture and/or sales of touch sensitive input devices or touchpads” was sufficient to state a claim for direct infringement, but insufficient to state a claim for indirect infringement.16 This, the court held, fell “plainly within the prohibition ‘threadbare recitals of the elements of a cause of action supported by mere conclusory statements.’”17
The precise level of detail required to assert a claim for indirect infringement remains unclear. To prevail on a claim of induced infringement, the Federal Circuit has held that the plaintiff must prove specific instances of direct infringement, and has the burden of showing that “the alleged infringer’s actions induced infringing acts and that he knew or should have known his actions would induce actual infringements.”18 Thus, in Mallinckrodt Inc. v. E-Z-EM Inc.,19 the court held that an inducement claim failed to meet the Twombly/Iqbal standard because the complaint “does not specifically allege that Defendants had knowledge of the [patent in suit] at the time they were committing the allegedly infringing activities” nor any intent to induce infringement. Although apparently not disputed in Mallinckrodt, one would expect that courts will require some level of detail as to the specific acts that allegedly induced infringement and how the defendants’ acts led to the underlying direct infringement.
Similarly, in contributory infringement cases, it seems likely that the courts will require the plaintiff at least to identify which of defendant’s products is a component of the patented invention along with the defendant’s knowledge of the patented invention.20 Whether it will be sufficient for a plaintiff simply to allege that there is no substantial noninfringing use for the component or whether it will have to allege facts to permit the district court to evaluate the plausibility of plaintiff’s position remains uncertain. In both inducement and contributory infringement cases, whether courts will require additional detail regarding the underlying direct infringement (above and beyond the basic allegations described in Form 18) remains to be seen.
In divided infringement cases (where a claimed method is or can be carried out by one or more actors), courts have held that plaintiffs do not meet the Twombly/Iqbal standard if they fail to allege facts sufficient to show “that any single defendant performed all of the steps of the method or that any defendant was the ‘mastermind’ behind the operation.”21 The kinds of facts necessary to make out a “plausible” showing that one party is the “mastermind behind the operations” are unclear. Presumably, to evaluate the plausibility of whether one party does, in fact, control all of the steps in a patented method, the courts will require an explanation of the specific circumstances through which the alleged control is exercised.
Given the difficulties the courts are having articulating an objective application of Twombly/Iqbal, it may be years before counsel have true certainty as to what will be required to plead patent infringement claims. For example, the courts are split as to whether affirmative defenses must meet the Twombly/Iqbal pleading standard.22 And although a few courts have concluded that direct willful infringement can be pleaded generally, none of them has explained why a court need not consider the facts underlying a willfulness allegation to determine whether it is plausible.23 As things now stand, litigants must do their best to illustrate each element of their claims or defenses with facts to show they are entitled to relief or they will almost certainly face a motion to dismiss.