K-Tech Telecommunications, Inc. v. Time Warner Cable, Inc.,

Addressing the pleading standard for alleging direct patent infringement, the U.S. Court of Appeals for the Federal Circuit reversed and remanded a lower court’s dismissal of a complaint, finding that any conflict between the Supreme Court’s decisions in Iqbal and Twombly, on the one hand, and Form 18 on the other, should be resolved in favor of Form 18. K-Tech Telecommunications, Inc. v. Time Warner Cable, Inc., Case No. 12-1425 (Fed. Cir., Apr. 18, 2013) (O’Malley, J.) (Wallach, J., concurring).

Plaintiff K-Tech filed separate lawsuits against Time Warner Cable and DirecTV for direct infringement of four patents covering systems and methods for modifying a major channel number, a minor channel number and/or a carrier frequency to identify a television program. The cases were later consolidated.

Time Warner and DirecTV moved to dismiss K-Tech’s original and amended complaints under Rule 12(b)(6). The district court found that K-Tech’s complaints failed to allege facts sufficient to state a plausible claim under the standards articulated in Iqbal and Twombly. K-Tech appealed.

On appeal, K-Tech argued that its amended complaints comply with Form 18, and that the district court applied the incorrect pleading standard. DirecTV and Time Warner argued that sufficiency of a complaint with respect to Form 18 must be interpreted consistently with Iqbal and Twombly.

The Federal Circuit analyzed the sufficiency of K-Tech’s pleadings under the standard of Rule 8, which “generally requires only a plausible ‘short and plan’ statement of the plaintiff’s claim,” and considered Form 18 in view of the Iqbal and Twombly cases.

In Twombly, the Supreme Court stated that the plausibility standard of Rule 8 is met when “the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Form 18 sets forth a sample complaint for direct patent infringement that includes five simple elements. According to the Federal Circuit, the touchstones of an appropriate analysis under Form 18 are notice and facial plausibility, noting that while these requirements serve as a bar against frivolous pleading, it is not an extraordinarily high one.

The Federal Circuit found that, to the extent that any conflict existed between Twombly and Iqbal and Form 18, the form controls. The Court noted that Rule 84, which states that the forms in the Appendix of the Federal Rules suffice under the rules, combined with the Advisory Committee Notes to the 1946 amendment of Rule 84, make clear that a proper use of an appendix form effectively immunizes a claimant from attack regarding sufficiency of pleading.

The Federal Circuit confirmed that, while Form 18 does not relax the clear principle of Rule 8 that a potential infringer be placed on notice of what activity or device is being accused of infringement, the district court applied the wrong standard. Plaintiffs are not required to preemptively identify and rebut potential non-infringing alternatives to practicing the claims of an asserted patent.

Regarding the argument that K-Tech’s complaint was still inadequate even under a Form 18 standard because it did not identify an infringing device by name, model number or otherwise, the Federal Circuit found that Form 18 does not require a plaintiff to identify an accused device by name. The fact that a plaintiff cannot point to a specific product should not bar the filing of a complaint.

While the Federal Circuit indicated that sufficiency of pleadings is procedural, and is an issue to be decided under applicable law of the regional circuit, the Court concluded that it made no difference what regional circuit’s law applied. Form 18, found the Court, is a national form and the issue would be decided the same under any circuit’s law.

Practice Note: The court’s finding that Form 18 controls pleading sufficiency is limited to direct infringement. The Federal Circuit’s 2012 decision In re Bill of Lading indicated that the form does not apply to infringement by inducement.