A frequently employed tool in patent litigation is a motion to dismiss the complaint under FRCP 12(b)(6) for failure to state a claim of infringement. These types of motions, often based on an argument that a plaintiff’s bare-bones allegations of both direct and indirect infringement fail to meet the pleading standards articulated in the Supreme Court’s Twombly and Iqbal decisions, have gained popularity in recent years. Anecdotally, it seems that they are most often used in response to complaints filed against multiple-defendants by non-practicing entities. In such cases, it is the rare group of defendants that does not include at least one party willing to take a crack at such a motion, even if only as a delay tactic.
Of course, despite the seemingly clear-cut requirements of Twombly and Iqbal, courts have shown a general unwillingness to outright dismiss even the skimpiest allegations of infringement. And the Federal Circuit, in its recent In Re Bill of Lading decision, recently reaffirmed that complaints alleging direct patent infringement that meet the requirements of Form 18 will survive such motions to dismiss. While the requirements for pleading indirect infringement are stiffer than for complaints of direct infringement that comply with the Form 18 requirements, the likelihood of success in getting such claims dismissed remains hit-or-miss, and frequently jurisdiction-specific. And even those courts that frequently dismiss bare-bones allegations typically grant patentees the opportunity to amend their claims. In this environment, it can be argued that the filing of these kinds of motions are motivated by an amorphous desire to “do something” in response to the barrage of NPE-brought patent lawsuits that many companies face over and over again. From that perspective, the motion serves as a means of acquiring the psychic benefit of irritating the patentee filing the case, rather than a true pathway to getting the case actually dismissed for good.
Thus irritated, it is not surprising that some patentees are looking to turn the tables on defendants. Recently, this author has seen a number of decisions trickling out of District Courts dealing with motions to dismiss filed by patentees seeking to strike counterclaims and affirmative defenses filed by defendants. One such decision, dated September 6, 2012, was issued by Judge William Alsup of the Northern District of California, in a case styled Pagemelding, Inc. v. ESPN, Inc., No. C 11-06263. The decision contains interesting statements by the Court regarding both the general motion to dismiss landscape and the sufficiency of the pleadings under review.
In his decision, Judge Alsup briefly lays out the procedural history, leading up to ESPN’s Answer and the plaintiff’s subsequent filing of a motion to dismiss ESPN’s affirmative defenses and counterclaims. Order at 1 and 2. Earlier action in the case ESPN’s prior attempts to have the plaintiff’s Complaint dismissed under Twombly and Iqbal. Now dealing with the plaintiff’s motion to dismiss the affirmative defenses and counterclaims, Judge Alsup notes that in his District, the Twombly and Iqbal inquiries had been applied not only to counterclaims, but affirmative defenses as well, even though the Ninth Circuit had not yet ruled on the issue. Order at 2-3. After ruling that ESPN’s one week delay in filing its Answer was excusable, the Court turned to the issue of whether ESPN’s counterclaims were adequately pled. Interestingly, the Court notes that at this point that “[i]t is very hard to reconcile Form 18 with Twombly and Iqbal,” even as he found that because ESPN’s counterclaims regarding direct non-infringement met the requirements of Form 18, they survived pursuant to In re Bill of Lading. Judge Alsup also noted that it would be “most unfair” to allow the plaintiff’s claims of direct infringement to survive under Form 18, while subjecting the inverse counterclaim to a more rigorous review standard.
In contrast, the Court found that ESPN’s counterclaims for both indirect non-infringement and invalidity could not rely on the Form 18 crutch, and were accordingly “subjected to the heightened pleading standard of Iqbal and Twombly.” And ESPN’s counterclaims failed under that standard. ESPN’s affirmative defenses met a similar fate, because of a lack of “facts explaining their basis.” Order at 4-5.
But rather than just end his decision at that point, Judge Alsup took the unusual additional step of reflecting on the “imbalance” in the current law, whereby patentees could both file cases based on “bare bones” Form 18 compliant allegations, and foreclose defendants from “pleading affirmative defenses with such brevity.” Recognizing the “bone-crushing burden” that being embroiled in patent litigation causes for defendants, Judge Alsup directly calls out the Federal Circuit’s decision to “permit Form 18 pleading despite the Supreme Court’s pronouncement in Iqbal and Twombly” as leading to “unfairness.” Order at 5. He ends by noting that “district judges are obliged to acquiesce,” while hoping that “this imbalance will perhaps be addressed by the Supreme Court.”
While Judge Alsup’s commentary is interesting, when it came to ruling, he abided by the controlling precedent – and that meant both bad news for ESPN here, and bad news for any other defendant hoping to get by with conclusory counterclaims (of indirect non-infringement and invalidity) and affirmative defenses. As a result, the “imbalance” bemoaned by Judge Alsup results in another arrow in a patentee’s quiver, one that is likely to be notched and fired at any defendant who dares to make themselves an even bigger target by filing a Twombly/Iqbal-based motion to dismiss.