On December 1, 2015, new Federal Rules of Civil Procedure (F.R.C.P.), approved earlier this year by the U.S. Supreme Court, went into effect. These amendments, discussed below, will impact patent infringement actions not only by way of the pleadings standard, but also in how discovery is conducted and discovery disputes are handled.  

New Pleading Standards for Patent Infringement Complaints

One issue of particular concern is the abolition of Rule 84, which provides model forms, including Form 18, a model patent infringement complaint. 

Per Model Form 18, a plaintiff should include in the complaint: (a) a statement of jurisdiction; (b) the patent number, subject matter and date of issuance of the patent; (c) that the plaintiff has owned the patent during the period of infringement, and still owns the patent; (d) that the defendant has infringed the patent by making, using and selling the claimed invention; (e) that the plaintiff has complied with the notice requirements; and, (f) the relief requested.  (Note: Model Form 18 did not apply to claims of induced, contributory or willful infringement, which require additional elements to be plead.)

The abrogation of Rule 84, in effect, overrules In re Bill of Lading Transmission, 681 F.3d 1323, 1333-35 (Fed. Cir. 2012), which held that a patent infringement complaint merely needed to provide the information required by Model Form 18, and not the enhanced pleading requirements set forth in the U.S. Supreme Court’s decisions in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009). Accordingly, all future pleadings in patent matters, will be required to meet the Twombly/Iqbal standard. 

The Twombly/Iqbal standard reflects F.R.C.P. Rule 8(a)(2), which requires a threshold pleading of facts sufficient to show that the plaintiff is entitled to relief.  Twombly, 550 U.S. at 557.  Pursuant toTwombly, “a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.”  Id. at 555.  In Iqbal, the Court provided a two-step framework for the application ofTwombly’s plausibility standard.  Iqbal, 556 U.S. at 679.  First, courts should “begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.”  Id.  Second, courts should examine whether the remaining “well-pleaded factual allegations ... plausibly give rise to an entitlement to relief.”  Id

Courts have not provided much guidance, however, as to the amount of factual specificity that must be included to satisfy the Twombly/Iqbal pleading standard in a complaint for patent infringement.  Nevertheless, The Federal Circuit has held that a plaintiff in a patent infringement suit is not required to plead “specifics of how [the accused product] . . . works” and is “not required to specifically include each element of the claims of the asserted patent.”  McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1357-58 (Fed. Cir. 2007). 

District courts are split as to whether general, conclusory allegations are sufficient to satisfy theTwombly/Iqbal pleading standard.  For example, in declaratory judgment counterclaims (to which Model Form 18 never applied) simply alleging that (1) a product does not infringe any valid or enforceable claims of a patent or that (2) the patent is invalid for failing to comply with one or more of the conditions of patentability set forth in 35 U.S.C § 101, § 102, § 103, etc., have been held to be sufficiently plead by these district court cases:

Pfizer, Inc. v. Apotex, Inc. 726 F.Supp. 2d 921, 937-938 (N.D. Ill, 2010), Elan Pharma Int. Ltd. v. Lupin Ltd., 2010 U.S. Dist. Lexis 32306, at *11-*19 (March 31, 2010, D.N.J.) andTeirstein v. AGA Medical Corp., 2009 U.S. Dist. LEXIS 125002, at *7-*17 (E.D. Tex. March 16, 2009).

But not sufficiently plead by these district court cases: 

Senju Pharm. Co., Ltd. v. Apotex, Inc. 921 F.Supp. 2d 297, 302-303 (D. Del. 2013), Xilinx, Inc. v. Invention Inv. Fund I LP, 2011 U.S. Dist. LEXIS 81986, at *15-*20 (N.D. Cal. July 27, 2011) and Duramed Pharms., Inc. v. Watson Labs., Inc. 2008 U.S. Dist. LEXIS 103389, at *10-*11 (D. Nev. December 12, 2008).

So, when drafting future complaints for patent infringement (or counterclaims), it would be prudent to first check the case law and local rules for pleading requirements in the district court at issue, and then err on the side of alleging more detailed facts regarding the accused product or process, and the patent claims alleged to be infringed - especially in cases where timing is critical, and the potential dismissal of the complaint can have untoward, negative consequences.  

Revisions to Discovery Procedures

1. What changes will speed up the litigation process?

Under the amended Rules, 16(b)(2), unless there exists good cause for delay, courts are now required to issue a scheduling order within 90 days of service of the complaint on the defendant(s) or within 60 days after the defendant(s) has made an appearance in the case.  This amendment represents a 30-day reduction in time (in either situation) from the prior Rule 16(b)(2).  

In addition, Rule 16(b)(3)(B)(v) now recites that the scheduling order issued by the court may include a provision to “direct that before moving for an order relating to discovery, the movant must request a conference with the court.”  While this may not be new to all forums, the inclusion of such a provision may push litigants to handle discovery disputes on their own or at a court conference, thus reducing the possibility of incurring expenses related to filing a formal motion. 

2. What is discoverable under amended Rule 26?

Rule 26(b)(1), which defines the scope of discovery, was amended to eliminate the standard inquiry of whether discovery sought is “reasonably calculated to lead to the discovery of admissible evidence.”  Instead, Rule 26(b)(1) now recites that the discovery sought must be “proportional to the needs of the case”:

Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.  Information within the scope of discovery need not be admissible in evidence to be discoverable.

Under amended Rule 26(b)(1), litigants will need to craft their discovery requests (and responses) in a narrower fashion so as to be “proportional” to what is needed in the litigation.  Nevertheless, so long as the party seeking discovery is able to establish that the requests are directed to materials needed for the litigation, the change to Rule 26(b)(1) may not alter the manner in which patent litigants draft discovery requests. This new standard however is likely to increase the number of discovery disputes.  

3. When may requests for production be served?

Amended Rule 26(d)(2)(A) now permits a party to serve requests for the production of documents and things more than 21 days after the complaint is served.  This means that such requests may now be served before the first Rule 26(f) conference takes place, whereas, under the prior rule, such requests were deemed premature.  Further, under amended Rule 26(d)(2)(B) and amended Rule 34(b)(2)(A), the party receiving the requests will still have 30 days to respond  triggered by the first Rule 26(f) conference.  

These amendments to Rule 26 and 34 will serve at least to streamline the discovery process by: (1) allowing for parties to get a “jump start” on document review and collection, and (2) opening up the possibility of discussion of the requests and scope thereof at the Rule 26(f) conference. 

4. How to respond to document requests? 

For many practitioners, responding to document requests followed an almost-universal template: objections to the requests and, if documents will be produced, identification of the scope of documents to be produced (subject to the objections, of course).  As of December 1, 2015, however, Rule 34(b)(2)(C) has been amended to now require that “[a]n objection must state whether any responsive materials are being withheld on the basis of that objection.”  

The amended rule is aimed at eliminating that back-and-forth between litigants by having the responding party state whether it is withholding any responsive documents based on the identified objection(s).  A goal of the amendment to Rule 34(b)(2)(C) is to reduce the likelihood of discovery disputes.   It is likely that the preparation of responses to document requests will now require more time and effort so as to ascertain what, if anything, is being withheld. But this may result in fewer disputes with respect to objections to requests for which nothing is being withheld. 

5. What happens if electronically stored information is not preserved?

Amended Rule 37(e) now expressly identifies the sanctions that a court may impose on a party who did not take reasonable steps preserve electronically stored information (ESI) in the anticipation or conduct of litigation.  Specifically, amended Rule 37(e) identifies two possible scenarios for when “reasonable steps to preserve” ESI have not been taken and the ESI “cannot be restored or replaced through additional discovery.”  

Under the first scenario, if the lack of preservation of ESI is found to cause prejudice to the requesting party, but was not done with the intent to deprive the requesting party of the information, the court “may order measures no greater than necessary to cure the prejudice.”  Under the second scenario, if the court finds that “the party acted with the intent to deprive another party of the information’s use in the litigation,” the court may:

  1. presume that the lost information was unfavorable to the party;
  2. instruct the jury that it may or must presume the information was unfavorable to the party; or
  3. dismiss the action or enter a default judgment. 

Thus, if a party fails to take reasonable steps to preserve ESI in the anticipation or conduct of litigation, and the ESI cannot be restored or replaced by way of other discovery, the court may impose sanctions of various levels of severity.  Accordingly,  amended Rule 37(e) imposes a duty to take reasonable steps to preserve ESI and identifies the potential consequences of failing to take those steps.

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While the goal of the recent amendments to the Federal Rules of Civil Procedure appears to be aimed at streamlining the earlier stages of litigation — i.e., initial pleadings and fact discovery — until these amendments are in practice for some time, the actual reduction in discovery and potential for disputes related thereto will not be known.  Attorneys and clients should be aware of these amended Rules and of the new requirements and level of detail required in  pleadings and discovery responses.