The Age of Detailed Patent Pleadings
By Adam E. Lyons, Litigation News Contributing Editor – January 27, 2017

The U.S. Court of Appeals for the Federal Circuit issued a ruling explaining the proper standard for judging the sufficiency of patent claims filed since 2015 and instructs on how to treat a change in law between an underlying decision and an appeal. Claims of patent infringement are now required to set forth plausible facts to support their allegations or will be dismissed for a lack of specificity. The ruling means the "age of detailed pleadings in patent cases is upon us. That is certainly the message here. Even without this case, that is the message," says Michael P. Padden, Cleveland, OH, cochair of the Patent Litigation Subcommittee of the ABA Section of Litigation's Intellectual Property Litigation Committee.

Background
In Lyda v. CBS, the Federal Circuit determined the abrogation of Federal Rule of Civil Procedure 84 and the accompanying forms for civil complaints means that the sufficiency of a complaint drafted in accordance with those forms would nonetheless be judged according to the pleading standards of Ashcroft v. Iqbal and Bell Atlantic v. Twombly. The plaintiff alleged that the defendant and independent contractors under the defendant's control had jointly infringed patents concerning methods for obtaining participation by a television audience through the use of cell phones (related, in this case, to CBS's Big Brother television show). When the defendant threatened to move to dismiss the complaint, the plaintiff amended to try to resolve the perceived issue by filing an amended complaint that followed Federal Rule of Civil Procedure form 18.

The plaintiff used the form for patent complaints that the Federal Circuit had previously ruled "immunizes" a complaint from dismissal for failure to state a claim. These proceedings occurred in 2014 and early 2015, prior to the December 1, 2015, date on which the abrogation of Federal Rule of Civil Procedure 84 made the forms attached to the rules no longer controlling. The plaintiff nevertheless followed form 18 and alleged in each claim of his amended complaint that "'the participation of people under the control or direction of an independent contractor engaged by the defendant CBS Interactive to send votes using text messages.'"

Courts Reject Notice Pleading
The defendant moved to dismiss the amended complaint, and the district court decided the motion in July 2015, prior to the abrogation of Rule 84 at the end of that year. Considering the merits of the motion, the district court noted that the Federal Circuit had not ruled on whether Form 18 applied to claims of joint infringement but that the consensus among district courts was that it did not apply. Regardless, the court dismissed the complaint. Even under the liberal pleading standard obtained through following form 18, the amended complaint was insufficient because it left it "impossible to discern what actions, activities, services or products are infringing plaintiff's patents."

The abrogation of Rule 84 was effective by the time of the Federal Circuit took up the matter. Despite this, the court determined that the rule and forms would still apply in the case before it because the amended complaint and trial court decisions came while the rule was still in effect. The court then made that determination irrelevant by confirming the trial court opinions that had ruled that Form 18 did not apply to claims of joint infringement in any event.

Based upon that ruling, the Federal Circuit upheld the dismissal of the complaint, though for failing to sufficiently allege different facts than those the trial court determined were missing. Whereas the trial court found the complaint lacked factual assertions regarding the alleged infringing action, the appellate court, without commenting on a difference, found the amended complaint insufficient because it lacked allegations showing direction or control of the independent contractors, did not set forth any facts to support the allegation that the independent contractors directed or controlled the third-parties who were using the cell phones, and did not set forth facts to establish a relationship between the defendants and the third-parties.

Lyda Provides Guidance on Patent and Appellate Best Practices
In light of this decision, the prior practice under form 84 is no longer acceptable, but there is no new safe harbor upon which practitioners may rely. While it is now clear that more is required that what was in the abrogated form 84, which gave "just the barest allegations," it is "still not exactly determined what is the level of specificity required," opines Padden.

The decision does, however, provide some guidance on best appellate practices. The plaintiff's admission at oral argument that the complaint did not fulfill the Iqbal standard was a "really serious concession" that "put all of his eggs in one basket," opines Stephen D. Feldman, Raleigh, NC, cochair of the Section of Litigation's Appellate Practice Committee. That is not to say that it was incorrect to take that position, but, "from a practitioner's standpoint, there is value in having an alternative argument," he notes. At the same time, that the court pointed up this admission, citing not only the admission, but the very page and line in the transcript where it could be found, shows an important practice point regarding the value of oral argument: this is plainly "evidence that oral argument can really matter" he concludes.

Keywords: abrogation, CBS, patent, joint infringement

 
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