The Federal Circuit gave us a new case on pleading standards. While it provides some clarity and some definite warnings, does it provide any clarity? Or does it simply give judges the same discretion that they always had?
Wayne Stacy, Henry Huang
Wayne Stacy 00:00
Welcome, everyone to the Berkeley Center for Law and Technology’s expert series podcast. This is the first of 2022. I’m the Executive Director of BCLT and your host, Wayne Stacy. And today we’re here to talk about patent pleading forms. So 10 years ago, pleading forms for patent infringement, we’re an incredibly hot topic. Nearly every case involves someone filing a motion for insufficient pleadings. But that issue cooled off, and people really stopped talking about it. But for anyone practicing in the Northern District of California, you knew that judge also hadn’t forgotten about pleading forms, and he never stopped talking about it. So it’s no surprise that a case from his court made it to the Federal Circuit, and is providing us with some fresh guidance on this old topic. So here to guide us through the discussion today. And the decision and its aftermath is Henry Huang from White and Case. So Henry, thank you for joining us today.
Henry Huang 01:01
Thanks, Wayne, and Happy New Year to you and to everyone as well. And as he said, This is an interesting topic. And I think roughly today, we wanted to sort of go through the pot and made versus Sony decision, as you mentioned, when they came out in July of last year, the first talk a little bit about the background, patent infringement pleading standards and the forms, as we just alluded to go through the case itself and some of the highlights of the Federal Circuit’s decision. And then since it’s been about six months, look at what some district courts have done in patent cases in terms of citing and applying bottom maids and how they’ve dealt with motions to dismiss patent claims. Since then.
Wayne Stacy 01:41
Well, and for anybody that doesn’t think it’s relevant. Judge Albright out of Waco issued an opinion, just I guess, yesterday, on this this issue, so it’s, it’s a hot topic?
Henry Huang 01:56
Yes, definitely. And we’ll touch a little bit on that, then the decision that just that just came out as well. So if I may, I think I’ll start a little bit with some of the background as you were talking about weighing from about a decade or a decade and a half ago, at some of the prior pleading standards for patent infringement plans. So this all goes to the basic question of how much do you need to plead in your complaint in district court to get a claim for patent infringement, and avoid dismissal under Rule 12 B six. So that leads to a lot of other sort of individual sub questions such as whether you need to plead all elements of a claim? Well, you need to identify all your dependent clans as well. And then also different standards for indirect infringement claims or doctrine of equivalents. So by way of background, and some of the more senior audience members recall, there used to be rules in the Federal Rules of Civil Procedure that talk specifically about how you could plead a sufficient plan for various causes of action. So there used to be rule 84 in the federal rules, which said that the forms in the appendix suffice under these rules and illustrate the simplicity and brevity that these rules contemplate. And that was referring, of course, to the appendix, which did have a series of forms for different causes of action, one of which was an infringement. And so that takes us to what used to be for meeting and also previously form 16. And that appendix for the federal rules. So since it’s a podcast, we can show the form that we can go over very briefly. So you’re looking at the old form a team a complaint for patent infringement, there are really only four statements that you need to allege to suffice under Rule 84. First was the statement of jurisdiction. Second, was a simple allegation that says, on dates, United States letters patent number blank, were issued to the plaintiff for an invention in an electric motor, for example, the plaintiff on the patent throughout the period of the defendants, infringing acts, and so on. And then third, for the actual substance of allegation, the sample form just said, the defendant has infringed and is still infringing the letters patents by making selling and using electric motors that embody the patented invention, and the defendant will continue to do so in this enjoined by this court. And then the fourth paragraph simply says that the plaintiff comply with the marking requirements and the notice requirement. So you can see this the the form, of course, is very simple. It just says the defendant infringe it, identify the accused products, electric motors by example, and simply said the plaintiff had the patents and owned it, and issued on a certain date. So there is no identification of claims require no element by element analysis, and a theory under the rules and the forms at the time. That’s all he needed to do to state a claim for patent infringement. So then, that takes us to the 2007 2009 timeframe, when of course we got the Supreme Court’s guidance in Trombley. And then it All as well, not for patent claims, of course, but for pleading civil claims generally. So Twombly, though Atlantic versus totally, which came out in 2007. So, as everyone knows, address pleading standards in general, that address terminate claims, and it said that simple allegation of a conspiracy apparent allegation is not sufficient. So you had to do more than simply allege the conspiracy in that case, you had to state some facts to support that. And then, of course, there’s Ashcroft versus equality 2009, which dealt with the pains of a constitutional detention. And there we get the quote that the plausibility standard which is required for pleading is not akin to a probability requirement. But it asks for more than a sheer possibility that a defendant has acted unlawfully. And so since then, and as when you alluded to earlier, that led to a lot of litigation about what possibility really means, particularly in the patent infringement context, when there’s complex technology, and claim language involved. So next, I want to start briefly on a Federal Circuit case from 2007. Mike Ziele vs springton. Next town, which dealt with the 95 page complaint that a proceed filed an infringement. So they’re the majority that said, this was fine, because the specifics of how the accused products were to be determined through discovery. But Judge Dyck had dissented and in a way had said that their allegation of literal infringement using form a team, which was still enforced at the time, was inadequate to provide sufficient notice to accused infringer. And then he said, One can only hope that the rulemaking process will eventually result in eliminating that form. So sure enough, with the 2015 revision to the Federal Rules of Civil Procedure, rule 84, in the appendix reforms were abrogated. And the advisory committee said that the abrogation of rule 84 supposedly does not alter existing pleading standards, or otherwise changed the requirements of civil voyage. But nevertheless, the forms and the rule were abrogated. And so there was no longer any question that somebody’s pleading, according to the forum would be sufficient necessarily. And district courts had more freedom, supposedly to decide what was a sufficient pleading of a patent infringement claim. In court.
Wayne Stacy 07:18
And Henry, what we saw was that additional discretion resulted in pretty different standards for different courts, and people had a file of complaint forms to use if you’re going to court a or court B. If you’re going to some new court, you never knew what was going to be sufficient or not. People just relied on the fact that it would be dismissed without prejudice, and you could re re plead. But it seems like when we move a little bit further now, to the the bottom eight case, maybe we’re getting some good guidance on this.
Yeah, it does seem like the Federal Circuit is providing a little bit more guidance. And like you said, that does take us to the decision itself. So it’s bought and made versus Sony Corporation, issued on July 13. And it’s a panel of judges dying, Colin O’Malley, Judge Mouni wrote the opinion in this particular case. So it does address pleading standards. And as you mentioned, Wayne, it’s a case that originates from Joseph’s court here in the Northern District of California. And of course, in theory, the standards for motion to dismiss and pleading are based on regional circuit law. But of course, the Federal Circuit substantive guidance on infringement plans, is going to be followed by district courts and have a lot of influence on on practitioners as well. So briefly, to go into the case, support ma plaintiff asserted six patents related to video game machines against the PlayStation four Sony’s ps4. And the case was ultimately transferred from New York to the Northern District of California. And their judge also dismissed for the patents for failure to state a claim after a motion to dismiss. So one issue that came up at the hearings, apparently was this idea of reverse engineering for the complaint. And there’s also had asked, Why can’t you buy one of these products, a ps4, take whatever code is on their off and analyze it. So the body apparently said that it could do that, and would do that to supplement the complaint, but then it claimed that it could not actually do that, and reverse engineer the ps4 without permission, in part, because that would violate the DMCA. So that became an issue in terms of sufficiency of pleading and what kind of investigation a plaintiff needs to do in this particular kind of case. So ultimately, the judge, also, as we said, dismiss for the patents and then it went up on appeal to the Federal Circuit. So two of the patents were for are meant to were reversed. On one of them that the Federal Circuit affirmed, they said that there is an inconsistency in pleading which has always been an issue right? If you if you plead one thing and then feed something that’s the opposite later on in the same complaint, that’s always been a problem and makes your complaint non plausible. So in this case, that patent required that a game program and an authentication program be stored as separate from a motherboard. And the Federal Circuit noted that the plaintiff alleged that the PlayStation four as authentication program was stored on the motherboard. And according to them, quote unquote, that allegation renders Ma Ma its infringement claim not even possible, much less plausible, so that disposed at one time. The second patent, the Federal Circuit affirms dismissal, because there was a lack of factual allegations. Supposedly, the complaint identified four different storage components for a particular aspect of the program, but never stated which one of them was the one that actually stored this claim your mutual authentication program. So that was another ground for affirmance in that particular case. That brings us to the last few patents, which are probably the most interesting because the Federal Circuit reversed on these two particular issues. So the claims here required execution of a quote unquote fault inspection program before a game starts on the machine. In this case, the ps4. The Federal Circuit noted that bot ma did identify 12 different error codes that are displayed upon boot up and prior to the game starting. So here, the Federal Circuit thought this is enough to plead to plead infringement to show that to raise a reasonable inference that this fault inspection program executes and completes before the game starts. And also disagreed with the way judge also required an element by element analysis. They said that they know to the judge also had instructed the plaintiff that they must explain in the complaints. Every element of every claim that you say is infringed and or explain why can’t be done. And the panel said we disagree with a district courts approach and reiterate that a plaintiff need not prove its case of pleadings. The Federal Circuit went on and said to the extent this district court and others have adopted a blanket element by element pleading standard for patent infringement. That approach is unsupported and goes beyond the standard the Supreme Court articulated in equal and Trombley. So the…
Wayne Stacy 12:21
–I gotta say it’s interesting, the the weasel words, they’re adopted a blanket element by element pleading standard. They didn’t even put that word blanket in there that feels like a word that was negotiated into a draft. Because it seems that in some instances, element by element might be appropriate.
Henry Huang 12:42
Certainly seems to leave open that possibility, as you say, when the ad putting in the attitude, there does seem to suggest that maybe in some complex cases, or where there needs to be more explanation that you do need to go element by element to establish patent infringement in your particular complaint. And as we’ll see, we’ll we’ll summarize later some of the key quotes from the case, but I think there’s the there’s also that sentiment that it depends to some degree on the technology, of course, and the sophistication of the products and what’s being alleged and how much needs to be eliminated particular case, although this one, yeah, this one involves memory, and storage storage components. And, you know, arguably some some complex technology. And the Federal Circuit did say that you saw didn’t need to do element by element analysis, or engage in this reverse engineering to at least survive the pleading stage in this particular case. So I think that that brings us to probably the the third part of the discussion today, which is just looking at how some district courts have applied bottom eight since then, since July, and whether there really any trends based on the cases that have come out since then. And we know something you’d mentioned offline, that you might expect that people are falling more motions to dismiss, now that they’ve gotten this extra decision that seems to make it easier to plead, but also might provide some grounds for challenging some complaints as well. So that’ll be interesting to see as well. So at least as of this morning, there have been eight decisions that are out that are applied by them, H. Four of them are done denials, and motions to dismiss and patent cases. Three are grants of motions to dismiss. And one is a partial grant and partial denial. So I don’t want to go through all these in detail. We don’t have time for that, but maybe touch on a few of these briefly as we go through. And as an initial observation. These are from a wide variety of ports, a wide variety of technologies and patents and products. So it’s interesting to see how courts have dealt with painting standards since then. So in terms of First we’ll go through the the ones there that granted motions to dismiss, and so found that the pleading allegations were insufficient in those particular cases. First, there’s a Ocado innovation versus out of store, which is a decision from the District of New Hampshire and There, the court found that the patent which dealt with a container retrieval system, and the corresponding complaint was sufficient to state claim for infringement because the court could infer that certain elements were met by the accused product. So there’s an invocation of the inference standard that if you plead it enough facts for which you can infer infringement, that’s sufficient to survive. Next, there’s barrier one systems versus RSA that’s from the district of Delaware, and their judge. Noriega also found that these infringement counter plans provide a sufficient notice about what the products where the accused products were. And they did go through the specific limitations of the independent fans. So that was enough to provide notice to the defendant. And she also said that there was a claim construction issue that needed to be resolved later on, which is a common basis for denying the motion to dismiss. That’s a similar ground that was used in EZ dog versus snapped off a decision from the Middle District of Florida, where the judge said that the court cannot resolve this dispute on a 12 B six motion without the benefit of claim construction. If anything, we get to another interesting case, which is Nova plastic versus implant from the District of New Jersey, that dealt with an insertion for our prosthetic implants, or specifically on an implant funnel for breast augmentation surgery procedures. So in an amended complaint, the district court judge said that the claim shirt that was provided was sufficient and it had pictures and arrows drawn. And the judge said that this device is a physical apparatus, and therefore a visual comparison in such a case, may provide a sufficient factual basis for the claims of infringement. But the judge also noted that if the invention were an electronic device or medication, then a photograph with arrows might well fall short of the Guam league ball standard. So I think this one’s interesting when because it does talk about how the technology matters. If it’s complicated, my need to read more, you might need to move a chair down and some be having pictures and arrows might not be enough, something relatively simple, like a funnel, anyone can understand. And then a few pictures in a claim chart might be enough in that particular case.
Wayne Stacy 17:21
So it seems to come down to the how easy Can you explain it in an oral argument. And if it’s a head scratcher, you may lose and get a chance to replete at least once. Right, unfortunately, is where we’ve been for the last decade. So be interesting to see long term whether with our bot inmate clarifies many things. But I do think when you’ve got these decisions, where the dismissal is granted, I think there’s some pretty clear lessons and nos.
Henry Huang 17:57
Right. And that brings us to the three decisions were the word motions to dismiss having granted, citing pardon me. So in to these one is CS, check us check us vs northern soon. I’m saying that correctly. That’s from the Southern District of California. And another is Gardner vs. eNGenius. designs, that one’s from the district of Kansas, two different courts. Both dealt with pleading based on upon information and belief or on information and belief. And in both those cases, the district court judge just said that’s not enough. The allegations in those cases are actually more like what was used in form 18 simply saying, there’s a patent. Here’s the accused product, defendants infringe with the addition of saying upon information and belief, we’re on information and belief, which was always sort of a dubious thing beforehand, and district courts to handle that differently. So it seems like even after Bata made as in theory made it a little bit easier to plead putting in these sort of wishy washy statements, again, upon information and belief might still not cut the mustard in front of these district courts. So that’s one of the lessons I believe you’re alluding to when, yeah,
Wayne Stacy 19:09
…definitely seems like on information belief was always the, the easy way out. And it was permissible 15 years ago, but it seems like it may be an immediate red flag now. If people are pleading on information belief, file the motion to dismiss and you and I talked about the you know, rule 11 has a mechanism for handling this properly under 11 B three, but you have to use the magic language and talk about what could be discoverable. And, you know, made that may be the path going forward that people need to follow but if I was reviewing any complaint on information belief would definitely definitely get my attention and may justify emotion.
Henry Huang 20:01
Right, and where to see as you say where they’re bought and made really changes that if district courts would be more and more forgiving of that of that kind of language, given that element by element analysis is not required, or there still has to be some sort of statement, that information is going to likely turn up in discovery if they’re given a chance to proceed. So in terms of decisions that they granted dismissal, one one we want to we want to touch on and that we did earlier was one out of the Western District of Texas, Judge Albright for just yesterday on January 3, that actually granted a dismissal of a complaint without prejudice. But it’s cited by the maid and discussed it to some degree. So here, there have been several limitations that the defendant challenged in this case, it’s vervain versus micron. And in the motion to dismiss, these limitations were challenged and JoJo boy found that most of them were insufficiently pleaded in this particular case. So one of them was this was so called heart blocks limitation, deals with a sort of a system for managing memory blocks. And there he found that the allegations, including citations to exhibits attached to the complaint were insufficient. So judge Aubrey noted that, in his words, that technology is not simple. And the limitations At issue are material. And in particular, he said that the Hotbox limitations are material to practicing the asserted claim, at least because the relevant prosecution history and the complaints suggest that these limitations captured the point of novelty, which is interesting, because it refers to that point of novelty test, which has come up in the validity context. But also suggests that the relative importance of the limitation based on his interpretation of bought me sort of affects the level of specificity you need to put into your complaint. And there’s also a portion of the of the opinion that topspot Bob bought me where he says, the bottom eight opinion does not elaborate on what, quote unquote, the materiality of any given elements to practicing the asserted claims means, and he says in the context of the rule infringement every claim elements material, which makes sense, but in his view, he says, a higher level of detail in pleading infringement may, depending on the complexity of the technology, the demand for elements clearly material to novelty and non obviousness. So he’s looking at the materiality of a particular limitation, and also looking at things like the prosecution history to make that as to make the determination, even at the pleading stage. So that’s an interesting data point there in terms of how bought and made is being interpreted and applied. In this particular situation.
Wayne Stacy 22:45
It seems that Judge Albright may be filling in the idea of what is a blanket rule versus a very specific rule for a particular case, kind of filling in what the Federal Circuit left as a potential ambiguity.
Henry Huang 23:02
Right, and I guess that’s a good point you picked up on them, maybe you know, the term blanket will be something that just has to be litigated out that both sides, we use both medicine defendants to address a particular situation.
Wayne Stacy 23:15
When it comes back on on a lot of these cases, you at least get one free shot to try to fix your problem. So nearly all of these are dismissed without prejudice, not all of them, but most all of them. And you can you can replete if you have made a mistake. So we kind of see some iterations is going forward to see how people correct these mistakes.
Henry Huang 23:41
Sadly, sadly, the last decision well, we’ll be in touch on today is one that’s a split decision. It’s a granted part, it’s nine part, it’s GG technologies versus the United States. So it’s in the Court of Federal plans. And for some claims, the the the judge found that there are sufficient pleading in including citation to exhibits attached to clean charts. And in particular, the identification of the accused products, that picture and name through those exhibits were sufficient. So there’s there’s one data point where you’re using claim charts, and then use the exhibits to them can be enough to establish the what you need to show for the accused products in that particular case. But then for other plans, the court found that there’s deficient pleading, and that there needs to be more factual support the time to use products, in this case, systems on cars to whether the defendant in this case the government was doing with those cars and whether they were using all the models, or whether the accused system was actually installed on all the cars that the government had bought in that particular case. So another interesting data point there.
Wayne Stacy 24:48
In just a reminder, you’ve got to move beyond the technology and make sure you get the rest of 271 pled properly if you’re going to file a complaint
Henry Huang 25:00
Right, right. So sort of close, I just wanted to touch on three, three, sort of key quotes from the father made decision that may affect litigation going forward. So one of them is the statement that a plaintiff is not required to plead infringement on an element by element basis. And we went over that. And that’s been discussed in some of the district court cases to that that’s a quote that will no doubt turn up in future motions practice. A second key statement is that the level of detail required in any given case will vary depending upon a number of factors, including the complexity of the technology, the materiality of any given elements, practicing the asserted claims, and the nature of the allegedly infringing device. And as we just saw judge Albright and seized upon the second factor there the materiality of the elements, in assessing the sufficiency of the complaint in one recent case. And then through the Federal Circuit also said that, whereas here, the factual allegations are actually inconsistent with and contradict infringement, they’re likewise insufficient to say the plausible plan. And that is probably, of course, always been the rule that if you plead x, and then you also plead not x, at the same time, you might have pleaded yourself out of court. So there’s another example of that, and the bottom made decision?
Wayne Stacy 26:17
Well, I think the the interesting thing to see going forward is going to be based on that word, blanket. So whether the idea that a plaintiff is not required to plead infringement on an element by element basis, applies to every case applies to some cases, applies to most cases or just a few. I think there’s a lot of wiggle room in that statement. In and I don’t know that, like I said, that word blanket was negotiated into that opinion for a reason in my, in my experience.
Henry Huang 26:57
Yeah, so that makes a lot of sense. And I agree, that’s probably going to be a source of a lot of interesting litigation going forward.
Wayne Stacy 27:04
Well, my guess is that we’ll get an opportunity to talk about several follow up cases here within the next six to nine months.
Henry Huang 27:13
Yeah, and it’ll be definitely interesting to follow that, and maybe some of these issues would go up to the Federal Circuit again, and the next year or so. And maybe we’ll get some more guidance. And there’ll be they’ll be further interesting statements about of course, we’re judgmental Malians retirements coming up soon, they may be someone else who takes the takes the mantle on addressing the pleading standards of the Federal Circuit, but that’ll be interesting to see as well.
Wayne Stacy 27:37
We should know more soon. Well, thank you for your time and happy new year.
Henry Huang 27:42
Yes, thank you ain’t happy new to you and to all the listeners, and thanks again.