Proposed Changes to FRCP Likely to Lead to Heightened Pleading Standard in Patent Suits

Authored by Jason E. Stach and Jeff T. Watson

In September 2014, the Judicial Conference of the United States approved several amendments to the Federal Rules of Civil Procedure (FRCP). These amendments seek to "improve early and active case management through amendments to Rules 4(m) and 16; enhance the means of keeping discovery proportional to the action through amendments to Rules 26, 30, 31, 33, 34, and 36; and encourage increased cooperation among the parties through an amendment to Rule 1."¹ The Judicial Conference also approved amendments to Rule 37 regarding the loss of Electronically Stored Information (ESI) and Rule 55 about setting aside a default judgment. Additionally, in an amendment that will have a more significant impact on patent litigation than most other types of litigation, the Judicial Conference approved abrogating Rule 84 and the Appendix of Forms, including Form 18 that applies to patent litigation.

The Appendix of Forms includes 36 forms for various litigation documents, such as summonses, complaints, and answers. Rule 84 provides that the forms "suffice under these rules and illustrate the simplicity and brevity that these rules contemplate." According to the Advisory Committee on Federal Rules of Civil Procedure, many of the forms are out of date and amending the forms is cumbersome.² It believes the forms are used rarely and many alternative sources of civil forms are available.³ The Advisory Committee also observed that it received very few public comments on the proposed amendments addressing the abrogation of Rule 84, which reinforced the Advisory Committee's view that the forms are seldom used.⁴ While an Advisory Committee memorandum provides substantial discussion of some of the amendments, it dedicates relatively little discussion to abrogating Rule 84 and the Appendix of Forms.⁵

For patent litigators, the biggest change will come from eliminating Form 18, which sets forth this sample complaint for patent infringement:

1. <Statement of Jurisdiction>
2. On <Date>, United States Letters Patent No. <__________________> were issued to the plaintiff for an invention in an electric motor. The plaintiff owned the patent throughout the period of the defendant's infringing acts and still owns the patent.
3. The defendant has infringed and is still infringing the Letters Patent by making, selling, and using electric motors that embody the patented invention, and the defendant will continue to do so unless enjoined by this court.
4. The plaintiff has complied with the statutory requirement of placing a notice of the Letters Patent on all electric motors it manufactures and sells and has given the defendant written notice of the infringement.

Therefore, the plaintiff demands:

(a) a preliminary and final injunction against the continuing infringement;
(b) an accounting for damages; and
(c) interest and costs.

Form 18 sets a pleading standard that some argue falls below the standard set by the US Supreme Court in Bell Atlantic Corp. v. Twombly⁶ and Ashcroft v. Iqbal.⁷ In those cases, the Court found that "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' "⁸ The Court clarified that "[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."⁹ Form 18, however, appears to suggest that little factual matter is needed to plead a case for patent infringement. For example, Form 18 does not require a plaintiff to identify any asserted patent claim, nor does it require the plaintiff to identify any accused product by name.

When confronted with the question of whether complying with Form 18 is sufficient to survive a motion to dismiss in light of Twombly and Iqbal, the Court of Appeals for the Federal Circuit answered yes. In K-Tech Telecommunications, Inc. v. Time Warner Cable, Inc., the Federal Circuit found that "a proper use of a form contained in the Appendix of Forms effectively immunizes a claimant from attack regarding the sufficiency of the pleading."¹⁰ The court further explained that "to the extent any conflict exists between Twombly (and its progeny) and the Forms regarding pleadings requirements, the Forms control."¹¹

With the abrogation of Form 18, however, the reasoning of K-Tech no longer applies, and some have questioned whether a complaint that includes only the information in that form will suffice. Even under the current rules, not all judges agree that complying with Form 18 saves a complaint from dismissal. In Macronix International Co. v. Spansion Inc., Judge Payne of the Eastern District of Virginia applied Fourth Circuit law to hold that Twombly and Iqbal impose a stricter pleading standard than embodied in Form 18.¹² He found that "before filing a complaint, counsel must ascertain exactly what claims should allege[ ] to be infringed and how they are infringed."¹³ According to Judge Payne, "to file a Form 18 complaint and then, using claim charts, prior art charts, discovery, and motions, to pare claims that ought not to have been brought or that cannot withstand careful scrutiny" has "proven to be an increasingly expensive proposition for the parties and one that takes a tremendous toll on already strained judicial resources."¹⁴

According to the Advisory Committee, most of those who submitted comments against abrogating Rule 84 and the Appendix of Forms asserted that eliminating them "would be viewed as an indirect endorsement of the Twombly and Iqbal pleading standards."¹⁵ The American Intellectual Property Law Association was in favor of the change, characterizing Form 18 as an anachronism that "conflicts with evolving legal precedent."¹⁶ It believes that "elimination of the form would produce greater certainty and eliminate confusion."¹⁷ The Intellectual Property Owners Association supports retaining Form 18, but suggests modifying the form to require "the identification of at least one patent claim that is infringed, a statement explaining such infringement, and a statement addressing indirect infringement, if alleged."¹⁸ In light of the comments both in favor of and opposed to abrogating the forms, the Advisory Committee noted that it would continue "to review the effects of Twombly and Iqbal," and, "if it decides action is needed in this area, the more direct approach will be to amend the rules, not the forms."¹⁹

If approved by the Supreme Court, the proposed amendments will go into effect December 1, 2015, absent intervention by Congress. Although it is difficult to predict the precise impact that abrogating Form 18 would have on patent litigation, it appears likely that patent infringement plaintiffs will need to provide more factual detail supporting their infringement allegations than is currently required by that form and under the Federal Circuit's K-Tech decision.

Endnotes

¹ Judicial Conference of the United States, "Summary of the Report of the Judicial Conference Committee on Rules of Practice and Procedure 14," (Sept. 2014), http://www.uscourts.gov/uscourts/RulesAndPolicies/rules/Reports/ST09-2014.pdf [hereinafter Summary].

² Id., Appendix B at 19.

³ Id.

⁴ Id., Appendix B at 20.

⁵ Id., Appendix B.

⁶ Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007).

⁷ Ashcroft v. Iqbal, 556 U.S. 662 (2009).

⁸ Id. at 678 (citing Twombly, 550 U.S. at 570).

⁹ Id. (citing Twombly, 550 U.S. at 556).

¹⁰ K-Tech Telecommunications, Inc. v. Time Warner Cable, Inc., 714 F.3d 1277, 1283 (Fed. Cir. 2013).

¹¹ Id.

¹² Macronix Int'l Co. v. Spansion Inc., No. 3:13-CV-00679, 2014 WL 934505, at *3-6 (E.D. Va. Mar. 10, 2014).

¹³ Id. at *6.

¹⁴ Id.

¹⁵ Summary, supra n.1, Appendix B at 20.

¹⁶ American Intellectual Property Law Association, "Comments of the American Intellectual Property Law Association on the Proposed Amendments to the Federal Rules of Civil Procedure at 9" (Feb. 18, 2014), http://admin.aipla.org/advocacy/executive/Documents/AIPLA%20 Comments%20on%20FRCP%20Proposed%20Amendments-2-18-14.pdf. (Last reviewed December 2014.)

¹⁷ Id.

¹⁸ Intellectual Property Owners Association, "Comments on Proposed Rules and Forms Amendments 3" (Feb. 14, 2014), http://www.ipo.org/wp-content/uploads/2014/02/IPO-Letter-to-Judicial-Conference-.pdf.

¹⁹ Summary, supra n.1, Appendix B at 20.

Reprinted with permission from the IP Litigator, published by Aspen Law and Business. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.