Former Form 18 was a sample complaint for patent infringement, which set forth only the following elements: "1) an allegation of jurisdiction; 2) a statement that the plaintiff owns the patent; 3) a statement that defendant has been infringing the patent 'by making, selling, and using [the device] embodying the patent'; 4) a statement that the plaintiff has given the defendant notice of its infringement; and 5) a demand for an injunction and damages." McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1356–57 (Fed. Cir. 2007) (summarizing the requirements of then Form 16, which was later renumbered to Form 18). The form did not require a plaintiff to identify the asserted patent claims, much less provide any details of the exact allegations of infringement by a product, process, or otherwise. As such, a complaint for direct patent infringement that simply adhered to Form 18 would appear to lack the "facial plausibility" required by the Twiqbal standard.
Prior to the most recent Federal Rules amendments, the Federal Circuit had held that the Twiqbal standard was effectively inapplicable to allegations of direct patent infringement. Beginning in 2007 with McZeal, a case involving a pro se patentee, the court held that a patent plaintiff pleading direct infringement need only satisfy the requirements of Form 18. 501 F.3d at 1357. In 2012, in In re Bill of Lading Transmission & Processing System Patent Litigation, 681 F.3d 1323, 1334–35 (Fed. Cir. 2012), the Federal Circuit explained that its reasoning rested on former Rule 84, which had stated that the forms provided in the appendix to the rule—including Form 18—illustrated the simplicity that the rules contemplate and "suffice under these rules." There, the court also acknowledged that Form 18 applies only to allegations of direct infringement and not to indirect infringement claims. In re Bill of Lading, 681 F.3d at 1336–37. One year later, in K-Tech Telecommunications, Inc. v. Time Warner Cable, Inc., 714 F.3d 1277, 1284 (Fed. Cir. 2013), the court maintained that Form 18 "would control in the event of a conflict between the form and [Twiqbal]" but emphasized that courts should not "seek to create conflict where none exists." Despite the Federal Circuit's admonition that "Form 18 in no way relaxes the clear principle of Rule 8, that a potential infringer be placed on notice of what activity or device is being accused of infringement," K-Tech, 714 F.3d at 1284, direct infringement claims were rarely dismissed for failure to satisfy Form 18's threshold and, consequently, patent defendants have generally not challenged direct infringement allegations in the pleadings. See Joao Control & Monitoring Sys., LLC v. Protect Am., Inc., No. 1:14-cv-134-LY, 2015 WL 3513151, at *4 (W.D. Tex. Mar. 24, 2015) (ruling that the plaintiff's allegation that "one or more" of its 900+ claims asserted were infringed by the defendant was sufficient under Form 18, but reminding the plaintiff "that a sprawling resource-depleting approach to this case, which ultimately proves to be unduly wasteful, may factor into a finding that this case is an 'exceptional' case that justifies fee shifting").
Abrogation of Form 18
The amendments to the Federal Rules of Civil Procedure that went into effect on December 1, 2015, changed this pleading landscape. Chief among the amendments is the abrogation of Rule 84 and its accompanying forms, including Form 18. The advisory committee note explaining this amendment indicates that "there are many excellent alternative sources for forms," and that the forms' original purpose of providing illustrations for the rules had been fulfilled. In transmitting the proposed amendments to the Supreme Court for review, the Rules Committee also suggested that the forms were rarely used. Little else is said on the subject. However, at the Supreme Court's behest, the committee added the following sentence to the end of the official committee note: "The abrogation of Rule 84 does not alter existing pleading standards or otherwise change the requirements of Civil Rule 8." (Chief Justice Roberts, Transmittal Memo and Exhibits (April 29, 2015), entire packet submitted to Congress reflecting the changes made to the Committee Note, available at http://www.uscourts.gov/file/document/congress-materials (link automatically downloads file).)
Now, litigants—and the courts—are left to grapple with what this all means. With the elimination of Rule 84, the Twiqbal pleading standard may be argued to apply to all pleadings, including those alleging direct patent infringement. Assuming acceptance of this applicability argument as a threshold matter, two follow-on questions of implementation arise: (1) should the Twiqbal standard apply retroactively to complaints filed before December 1, 2015, when Rule 84 and Form 18 were still available; and (2) what level of detail is required to plausibly plead direct patent infringement under the Twiqbal standard?
Retroactivity of Twiqbal. The first question of retroactivity appears to be a matter of debate in the record. In transmitting the rule amendments to Congress, the Supreme Court's April 29, 2015, letter indicated that the new rules "shall take effect on December 1, 2015, and shall govern in all proceedings in civil cases thereafter commenced and, insofar as just and practicable, all proceedings then pending." District courts have already begun applying the amended discovery rules to pending cases, and it is not clear why it would not be just and practicable to apply the Twiqbal pleading standard in pending cases as well, particularly where a complaint is filed close enough to December 1 that the plaintiff would have been on notice of the impending rule change. Indeed, at least one district court has hinted that existing pleadings could no longer be immunized by compliance with Form 18. See Rembrandt Patent Innovations LLC v. Apple Inc., No. 14-cv-05093-WHA, 2015 WL 8607390, at *2 (N.D. Cal. Dec. 13, 2015).
However, in rushing to the courthouse on November 30, 2015, patent plaintiffs and their counsel may have believed that their pleadings of direct infringement would be better defended from attack by virtue of the filing date. Such plaintiffs may argue that the abrogation of Rule 84 should not apply retroactively to complaints filed before December 1. A court's resolution of this retroactivity issue may depend, in part, on how simplistic the challenged pleadings are and how well a defendant can articulate the lack of injustice and impracticability from requiring a patentee to plead direct infringement with greater specificity under the Twiqbal standard. Defendants may therefore consider filing motions to dismiss complaints filed before December 1, 2015, in appropriate cases, such as those involving large numbers of asserted patents having large numbers of claims, patents directed to more straightforward inventions, or accused products for which there is ample public information.
Plausibly pleading direct infringement under Twiqbal. Complaints filed on or after December 1, 2015—including amended complaints—may be argued to be governed by the Twiqbal pleading standard and the generally applicable standards under Rule 8: the argument could be that the pleadings should contain sufficient factual matter to support a reasonable inference that the defendant has infringed the asserted patent(s) and sufficiently place a defendant on notice of the infringing conduct. Defendants seeking to attack patent complaints going forward may therefore contend that Twiqbal requires a patent plaintiff to identify the specific claims alleged to be infringed and why those claims are alleged to be infringed by the defendant's products and/or services. By contrast, it would be expected that patent plaintiffs may argue that the Federal Circuit has previously rejected an across-the-board requirement that a complaint for patent infringement include every element of the claims of the asserted patent(s), see, e.g., McZeal, 501 F.3d at 1357, and may further rely on the Rule 84 committee note's statement that the abrogation of the forms should not alter existing pleading standards to advocate for a lesser degree of specificity.
Due to the current paucity of case law, until the Federal Circuit clarifies the standard, the district courts are likely to articulate varying requirements for pleading direct patent infringement. Some recent examples suggest that district courts will require plaintiffs to provide some factual enhancement regarding a defendant's allegedly infringing conduct. For example, even before Rule 84 was abrogated, some district courts disagreed with the McZeal line of cases. One such court in the Eastern District of Virginia required the plaintiff to satisfy Twiqbal (and not merely former Form 18) and indicated that the plaintiff must allege how the offending products infringe the claims recited in the complaint. Macronix Int'l Co. v. Spansion Inc., 4 F. Supp. 3d 797, 804 (E.D. Va. 2014). Similarly, in a post-abrogation case out of the Northern District of Illinois, the court required a patent plaintiff to plead more than former Form 18 to support a claim under the "offer to sell" prong of 35 U.S.C. section 271(a), reasoning that Twiqbal required more than pleading mere attendance at a trade show and displaying a prototype to support an inference that the defendant had "offered to sell" an allegedly infringing product. INDAG GmbH & Co. v. IMA S.P.A, No. 15-cv-4973, 2015 WL 8331278, at *15 (N.D. Ill. Dec. 9, 2015) (applying the Twiqbal standard to the pleading without discussing the retroactivity of the rule change abrogating Rule 84).
In contrast to these decisions, however, a court in the District of Nevada recently cited the Rule 84 committee note's statement that the rule's abrogation "does not alter existing pleading standards" in reasoning that the "previously existing standards" set forth in Form 18 should continue to control its analysis. Hologram USA, Inc. vs. Pulse Evolution Corp., No. 2:14-cv-0772-GMN-NJK, 2016 WL 199417, at *2 n.1 (D. Nev. Jan. 15, 2016). It would appear that a split in district court decisions could lead eventually to Federal Circuit guidance on the impact of the committee note.
The level of specificity that a district judge requires may also depend on other factors, such as whether that district has patent local rules requiring early disclosure of contentions. In the Northern District of California, for example, in considering challenges to insufficient allegations of infringement or invalidity, courts have reasoned that the early disclosure of theories required by the patent local rules already fulfill the function of the Twiqbal pleading standard. See, e.g., LSI Corp. v. Funai Elec. Co., Ltd., No. 15-cv-04307-EMC, 2015 WL 8178869, at *1 (N.D. Cal. Dec. 8, 2015) ("While [the defendant] may have had a fair contention that the accused products needed to be identified with more specificity (even under the lax regime of Form 18), that problem has effectively been cured because [the plaintiff] has served infringement contentions in which it identifies with more specificity the accused products."); ASUSTeK Computer Inc. v. AFTG-TG LLC, No. 5:11-cv-00192-EJD, 2011 WL 6845791, at *13 (N.D. Cal. Dec. 29, 2011). Those courts may therefore require less detailed direct infringement allegations depending on the timing of the required local rule disclosures.
Conclusion
Although the abrogation of Rule 84 raises unanswered questions of implementation, it will likely lead to an increase in early pleading challenges, particularly in cases filed by nonpracticing entities. A successful motion to dismiss would impose a higher burden of investigation on the patent plaintiff, challenging the patentee to articulate its infringement theory and more specifically define the contours of the case. Even an unsuccessful motion may, at a minimum, instruct a court regarding the potential breadth of the case and lay a foundation for later arguments to limit discovery proportionally to the needs of the case (taking into account the proportionality amendment to Rule 26 that also went into effect on December 1, 2015). Practitioners considering aggressive motions to dismiss should note, however, that tactics in a particular case may cause unintended consequences. For example, the Twiqbal standard may also apply to counterclaims and, potentially in some districts, affirmative defenses. See, e.g., PageMelding, Inc. v. ESPN, Inc., No. 11-cv-06263-WHA, 2012 WL 3877686, at *3 (N.D. Cal. Sept. 6, 2012) (applying Twiqbal to affirmative defenses); Qarbon.com Inc. v. eHelp Corp., 315 F. Supp. 2d 1046, 1049 (N.D. Cal. 2004) (same); cf. Info. Planning & Mgmt. Serv. Inc. v. Dollar Gen. Corp., No. 2:15-cv-206, 2016 WL 69902, at *4 (E.D. Va. Jan. 5, 2016) (recognizing disagreement in the Eastern District of Virginia).
The fundamental practice of evaluating the specific factual context of each case before filing motions to dismiss should be more prudently applied, especially in an area where the rules have been recently amended and the case law guidance is still developing. One thing is certain: this will be a highly interesting area of law until the standards are fully clarified by the courts.
Keywords: litigation, minorities, Federal Rules amendments, Rule 84, Form 18, patents, plausible infringement, Twiqbal