May 2013
Complaints That Comply with Form 18 and Are Plausible Need Not Identify a Specific Accused Product to Satisfy Rule 8(a)
| Judges: Moore, O’Malley (author), Wallach (concurring) |
| [Appealed from C.D. Cal., Judge Klausner] |
In K-Tech Telecommunications, Inc. v. Time Warner Cable, Inc., Nos. 12-1425, -1446 (Fed. Cir. Apr. 18, 2013), the Federal Circuit held that the district court in two separate but related actions applied the incorrect legal standard in granting the defendants’ motions to dismiss under Fed. R. Civ. P. 12(b)(6). In both cases, the Federal Circuit found that the complaint complied with the applicable standard and reversed the district court’s dismissal.
In 2011, K-Tech Telecommunications, Inc. (“K-Tech”) brought separate cases against Time Warner Cable, Inc. (“TWC”) and DirecTV, alleging infringement of four patents. The asserted patents, owned by K-Tech, are generally directed to modifying channel numbers or carrier frequencies to identify television programs. Each defendant moved to dismiss K-Tech’s complaint under Fed. R. Civ. P. 12(b)(6) on the ground that K-Tech failed to plead sufficient factual content. The district court consolidated the two actions and then granted the motions, dismissing K-Tech’s complaints and allowing K-Tech leave to amend. After K-Tech amended the complaints, TWC and DirecTV moved to dismiss the amended complaints on the same ground. The district court granted the motions, dismissing the amended complaints with prejudice.
On appeal, K-Tech argued that its amended complaints complied with Form 18 of the Appendix of Forms to the Federal Rules of Civil Procedure (“Form 18”) and thus were sufficient under Fed. R. Civ. P. 8(a). According to K-Tech, the district court erred by focusing on the Supreme Court’s decisions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), rather than Form 18. TWC and DirecTV argued that whether a complaint complies with Form 18 must be determined in light of Twombly and Iqbal, as well as regional circuit law applying those decisions (here, Ninth Circuit law). Consequently, according to TWC and DirecTV, what Form 18 requires should differ depending on the law of the regional circuit in which the case arises. TWC and DirecTV also argued that the amended complaints failed to comply with the plain language of Form 18.
“That K-Tech cannot point to the specific device or product within TWC’s or DirecTV’s systems that translates the digital television signals each receives—especially when the operation of those systems is not ascertainable without discovery—should not bar K-Tech’s filing of a complaint.” Slip op. at 17.
The Federal Circuit held that Form 18 sets forth the applicable pleading standard for patent infringement cases. Quoting its recent decision in R+L Carriers, Inc. v. DriverTech LLC, 681 F.3d 1323 (Fed. Cir. 2012), the court noted that “the forms in the Appendix suffice under these rules and illustrate the simplicity and brevity that these rules contemplate,” as stated in Fed. R. Civ. P. 84. Slip op. at 10. According to the Court, to the extent that there is any conflict between Form 18 and the framework of Twombly and Iqbal, Form 18 controls. Nevertheless, the Court did not find that there necessarily was a conflict. As the Court explained, “we think it clear that an implausible claim for patent infringement rightly should be dismissed.” Id. at 12. The Court also rejected TWC and DirecTV’s argument that the requirements of Form 18 could differ from circuit to circuit, since “Form 18 is a national form” and the Court’s analysis was driven by Supreme Court precedent. Id. at 11 n.1.
The Federal Circuit also rejected TWC and DirecTV’s argument that the amended complaints failed to satisfy Form 18. In particular, TWC and DirecTV argued that the amended complaints were deficient because they did not identify an allegedly infringing device or connect any allegedly infringing activity to the asserted patents. The Federal Circuit noted that, in the amended complaints, K-Tech alleged that its patents covered “systems and methods for modifying a major channel number, a minor channel number, and/or a carrier frequency to identify a television program,” and alleged that TWC and DirecTV infringed the patents by doing the same. Id. at 5. The amended complaints also described a regulatory scheme that allegedly required the use of major channel numbers, minor channel numbers, and a carrier frequency, as claimed in the asserted patents. Further, the amended complaints referred to a DirecTV patent that allegedly described how DirecTV received its broadcast signals, presuit communications with DirecTV, and an example of a television program showing a channel assignment in both over-the-air form and with a different channel assignment as broadcasted by TWC. According to the Federal Circuit, these allegations were sufficient.
Even though K-Tech did not identify any specific accused products by name or model number, Form 18 does not require that level of specificity. “That K-Tech cannot point to the specific device or product within TWC’s or DirecTV’s systems that translates the digital television signals each receives—especially when the operation of those systems is not ascertainable without discovery—should not bar K-Tech’s filing of a complaint.” Id. at 17.
Judge Wallach filed a concurring opinion. He agreed with the majority’s outcome and analysis regarding compliance with Form 18. Nevertheless, he disagreed with the majority’s statement that the Forms appended to the Federal Rules of Civil Procedure, including Form 18, control over the Supreme Court’s plausibility standard set forth in Twombly and Iqbal. According to Judge Wallach, “plausibility is always required to survive a Rule 12(b)(6) motion.” Wallach Concurrence at 2. Further, as Twombly and Iqbal require, plausibility must be grounded in allegations of fact. Judge Wallach explained that, because Form 18 and Twombly and Iqbal are reconcilable, there is no need to state that Form 18 controls over those decisions.
