Judges: Michel, Archer (author), Dyk (concurring-in-part and dissenting-in-part)

[Appealed from S.D. Tex., Judge Hughes]

In McZeal v. Sprint Nextel Corp., No. 06-1548 (Fed. Cir. Sept. 14, 2007), the Federal Circuit vacated the district court’s dismissal of Alfred McZeal, Jr.’s complaint, finding that he had met the minimal pleading requirements for his patent and trademark infringement claims, and remanded for further proceedings. McZeal sued Sprint Nextel Corporation and Nextel Communications, Inc. (collectively “Sprint Nextel”) alleging, inter alia, patent and trademark infringement. His complaint was ninety-five pages long, not including additional exhibits, and contained twenty-four counts. Specifically,

McZeal alleged that Sprint Nextel infringed his service mark INTERNATIONAL WALKIE TALKIE and U.S. Patent No. 6,763,226 (“the ’226 patent”). As part of his complaint, McZeal filed a motion for a temporary restraining order, a preliminary injunction, a permanent injunction, and a request for an expedited hearing. The district court conducted a hearing shortly after the complaint was filed. During the hearing, the district court questioned McZeal on the exact nature of his claims and the nature of other lawsuits he had filed. Following the district court’s prompting, Sprint Nextel orally moved to dismiss for failure to state a claim. The district court concluded that McZeal’s complaint failed to state a claim and subsequently denied his request to amend the complaint. McZeal appealed.

On appeal, the Federal Circuit noted that a motion to dismiss for failure to state a claim upon which relief can be granted is a purely procedural question and applied the law of the regional circuit (here, the Fifth Circuit). The Court observed that under Fifth Circuit law, the central issue is whether, in a light most favorable to the plaintiff, the complaint states a valid claim for relief. It added that under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a claim may be dismissed when a plaintiff fails to allege any set of facts in support of his claim that would entitle him to relief.

The Court reasoned that “[w]here as here, a party appeared pro se before the trial court, the reviewing court may grant the pro se litigant leeway on procedural matters, such as pleading requirements.” Slip op. at 3. It explained that the Supreme Court has recognized this less demanding standard because “[a]n unrepresented litigant should not be punished for his failure to recognize subtle factual or legal deficiencies in his claims.” Id. at 4 (alteration in original) (citations omitted).  The Court noted that the Fifth Circuit echoes this standard, but that regardless of whether the plaintiff is proceeding pro se or is represented by counsel, “conclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss.” Id. (citation omitted).

The Federal Circuit noted that the Supreme Court has explained what is necessary for a claimant to state a claim: “Federal Rule of Civil Procedure 8(a)(2) requires only ‘a short and plain statement of the claim showing that the pleader is entitled to relief,’ in order to ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.’” Id. (citation omitted). The Court stated that it “logically follows that a patentee need only plead facts sufficient to place the alleged infringer on notice as to what he must defend,” and that “a plaintiff in a patent infringement suit is not required to specifically include each element of the claims of the asserted patent.” Id. at 5.

Applying these principles to the present case, the Federal Circuit noted that in his complaint, McZeal asserted ownership of the ’226 patent, named Sprint Nextel as defendants, alleged the ’226 patent as infringed, described the means by which Sprint Nextel allegedly infringed, and pointed to the specific parts of the patent law invoked. It held that McZeal’s complaint contained enough detail to allow the defendants to answer and, thus, met the notice pleading required to survive a Rule 12(b)(6) motion, and that nothing more was required.

In so holding, the Court noted that during the hearing before the district court, McZeal had conceded that he did not know what device, what mechanism, or what means Sprint Nextel used to transmit and connect its telephone customers to the rest of the world. However, noted the Court, the specifics of how Sprint Nextel’s purportedly infringing device works should be determined through discovery.

With respect to McZeal’s claim of trademark infringement, the Court noted that “a plaintiff must plead that a defendant uses a designation in interstate commerce and in connection with goods or services where the designation is likely to cause confusion, mistake, or deception as to the affiliation, connection, or association of the defendant with another person, and the plaintiff has been or is likely to be damaged by these acts.” Id. at 7. The Court observed that McZeal had alleged that Sprint Nextel uses and advertises INTERNATIONAL WALKIE TALKIE for “identical telecom services and products, which are confusingly similar to plaintiff’s,” that Sprint Nextel’s improper use of the INTERNATIONAL WALKIE TALKIE mark “has caused and is likely to continue to cause members of the public to believe that the Defendant’s telephone services are offered by way of a license or other agreement with Plaintiff, which in fact they are not,” and that Sprint Nextel’s services are “causing irreparable economic loss to the plaintiff and affiliates.” Id. at 7-8 (citations omitted). In view of these allegations, the Court ruled that McZeal had “indeed pled the required elements of a trademark infringement claim.” Id. at 8.

In addition, the Federal Circuit vacated as premature the district court’s holding that McZeal’s trademark was invalid as generic. It noted that at this stage in the litigation, this finding on its face was insufficient because whether a term is generic is a question of fact.

The Federal Circuit noted that by ruling in McZeal’s favor, it was not condoning his method of pleading. It explained that McZeal was no stranger to legal proceedings, having filed numerous complaints in the past and having many dismissed for failure to state a claim. It observed that in this case, McZeal had filed a voluminous complaint with multiple counts, many of which were baseless and frivolous. The remand, noted the Court, will provide an opportunity for the district court to require McZeal to delineate his patent and trademark infringement claims and the evidence supporting these claims. The Court added that the district court can then construe the claims and entertain SJ motions.

Finally, the Federal Circuit noted that McZeal’s complaint certainly did not contain enough facts for the temporary restraining order and injunctions that he sought with his complaint, and that any motion for this relief was properly denied by the district court. However, noted the Court, the district court should not have dismissed McZeal’s entire complaint because he met the low bar for pro se litigants to avoid dismissal on the basis of Fed. R. Civ. P. 12(b)(6). Accordingly, the Court vacated and remanded.

Judge Dyk agreed with the majority’s decision to vacate and remand with respect to the claim of trademark infringement, but dissented from the majority’s decision to vacate the dismissal of the patent infringement claim. Judge Dyk noted that McZeal’s complaint only appeared to assert infringement under the DOE and that McZeal failed to explain how the accused device infringed under the DOE in his complaint or at the hearing before the district court.

Judge Dyk noted that Federal Rule of Civil Procedure 8(a) requires litigants to set forth “a short and plain statement of the claim showing the pleader is entitled to relief” and that Form 16, entitled “Complaint for Infringement of Patent,” provides an example of a sufficient pleading in a patent infringement suit. In his view, a bare allegation of literal infringement using Form 16 is inadequate to provide sufficient notice to an accused infringer under a theory of literal infringement because the form fails to state which claims are asserted and which features of the accused device are alleged to infringe the limitations of those claims. However, he agreed that under Rule 84 of the Federal Rules of Civil Procedure, which provides that the forms contained in the Appendix of Forms are sufficient, the Court would be required to find that a bare allegation of literal infringement in accordance with Form 16 is sufficient under Rule 8 to state a claim. He opined, however, that “[o]ne can only hope that the rulemaking process will eventually result in eliminating the form, or at least in revising it to require allegations specifying which claims are infringed, and the features of the accused device that correspond to the claim limitations.” Dyk op. at 4.

Judge Dyk noted that the pertinent question here, however, was whether Form 16 should be read to apply to claims under the DOE. In his view, it should not be so read because Form 16 became effective in 1938, which is prior to the current DOE standard articulated by the Supreme Court in Graver Tank & Manufacturing Co. v. Linde Air Products Co., 339 U.S. 605 (1950), and that the Supreme Court in its recent decision in Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955 (2007), suggested that the forms should not be interpreted as extending beyond the fact situation described in the form. He noted that McZeal’s complaint utterly failed to provide any meaningful notice as to how Sprint Nextel infringed the claims under the DOE and that McZeal’s allegations were plainly insufficient to state a claim.

Judge Dyk wrote that “[u]nder the majority opinion it is now sufficient to simply allege in the complaint that the patent is infringed by the defendant’s sale of a particular product without even specifying which specific claims are alleged to be infringed or the features of the accused device that satisfy the limitations of these claims.” Dyk op. at 8. He noted that the Federal Circuit has consistently held that, under the DOE, to create an issue of material fact, a patentee must prove infringement on a limitation-by-limitation basis by submitting particularized testimony. While pleading requirements are less strict, noted Judge Dyk, this case underscored the need to supply some specificity in both alleging and proving a DOE claim.

Judge Dyk added that “[t]he majority’s remand [was] particularly puzzling since McZeal’s failure to investigate the accused device may indeed be sanctionable.” Id. at 9. Accordingly, in his view, McZeal failed to allege facts supporting a DOE claim and he would affirm the district court’s dismissal of McZeal’s DOE infringement claim.