United States: Northern District Of California Moves Quickly In Response To Rules Change To Apply Full Weight Of Twombly And Iqbal To Patent Cases

Last month, the U.S. District Court in the Northern District of California ruled that the Federal Circuit's somewhat bare pleading standard for direct patent infringement is no longer sufficient following recent amendments to the Federal Rules of Civil Procedure, which went into effect on December 1, 2015. The court ruled that the plausibility pleading standard under Bell Atlantic Corp. v. Twombly and Ascroft v. Iqbal now applies to direct patent infringement claims.

Background

Prior to the recent amendments, Rule 84 of the Federal Rules of Civil Procedure incorporated an appendix of forms into the rules and read, "The forms in the Appendix suffice under these rules and illustrate the simplicity and brevity that these rules contemplate." Accordingly, the Federal Circuit adopted a pleading standard for direct infringement based on Form 18, which gave a short and simple example of a complaint for patent infringement. Under this standard, the party pleading infringement was not required to identify which patent claims it was asserting had been infringed. The pleading party also was not always required to list the specific names of accused products.

The Form 18 standard did not apply, however, to pleading any other cause of action in patent cases, such as indirect infringement; instead, the generally applicable Twombly/Iqbal standard applied. Some lower courts rejected the Federal Circuit's Form 18 standard all together and applied the Twombly/Iqbal standard to direct infringement claims, and in doing so, required more detail in the complaint about how the claims asserted by the patents had been infringed by the accused products. Because the Twombly/Iqbal standard is stricter than the Form 18 standard, the patent litigation bar has anticipated that the December 1, 2015 elimination of Rule 84 and Form 18 will result in a higher pleading standard for direct infringement claims.

Rembrandt Patent Innovations LLC v. Apple Inc.

Weeks after the rules change, Judge Alsup in the Northern District of California ruled that the abrogation of Rule 84 also eliminated the Federal Circuit's Form 18 pleading standard in an order denying the plaintiffs' motion to make a sixth amendment to its disclosure of asserted claims and infringement contentions. Plaintiffs Rembrandt Patent Innovations, LLC and Rembrandt Secure Computing, LP (collectively, "Rembrandt") brought infringement claims against Apple, accusing Apple's then-existing iPhone, iPod Touch, iPad models and related iOS operating systems. In addition to itemizing the infringing product models, Rembrandt also accused "all reasonably similar products." As the case progressed, Rembrandt served amended infringement contentions five times—two of those times adding new iPhones, iPods, iPads, and operating systems as Apple released them. Apple did not oppose these amendments but did ask whether Rembrandt's fifth amendment would be the last. Rembrandt responded that they would not agree to refrain from further amendments, especially in light of Apple's upcoming fall release of new products.

In October 2015, Rembrandt sought leave to amend their infringement contentions for a sixth time to add the iPhone 6s and 6s Plus models, the iPad mini 4th Generation and iPad Pro models. Apple opposed the motion. Neither party raised the possibility that Rembrandt, by adding additional products, would need to amend its complaint. Nevertheless the court ordered supplemental briefing on the issue of amending the complaint, "particularly in light of the elimination of Form 18" under the amendments to the federal rules.

Following briefing on the issue, the district court denied the motion to amend the infringement contentions. In doing so, it reasoned that the new Apple products Rembrandt sought to include were not covered by the existing complaint. The existing complaint listed similar Apple products and included the phrase "all reasonably similar products." The court ruled, however, that even if that phrase would have been sufficient to cover the new products under the Form 18 standard, the Form 18 standard no longer applied following the adoption of the new federal rules. The court acknowledged that the rule change applied only in pending cases "insofar as just and practicable," but applied the rule change nevertheless. Consequently, the court found that an amendment to the infringement contentions also would have required a supplemental complaint—which the court did not want to entertain given the extensive discovery already conducted and fast-approaching trial dates.

Conclusion and Strategy

Two aspects of this decision appear to be notable. The first is that the district court applied the Twombly/Iqbal standard in a case where the complaint had been filed, in the first instance, almost two years prior to the rule change, and did so in the context of a motion to amend infringement contentions that had been filed a month before the change. The second is that neither party raised the issue in its briefing. Instead, the court sua sponte decided an issue it did not have to decide.

Judge Alsup's decision shows that district courts have been waiting to apply Twombly/Iqbal as a way to reign in what they see as wasteful and expensive litigation. This sentiment was best expressed by Judge Payne in the Eastern District of Virginia. Even before the abrogation of Rule 84, Judge Payne refused to adopt the Federal Circuit's Form 18 standard by noting the value Twombly/Iqbal would have in "winnow[ing] out weak (or even baseless) claims" and the strain on resources weak patent claims cause.

Despite the rule change and Judge Payne's criticisms, some courts appear less eager to apply the Twombly/Iqbal standard. The District of Nevada recently denied a motion to dismiss infringement claims after applying the Form 18 standard. The court simply could have refused to apply Twombly/Iqbal on the ground that applying the rule change to a pending case would not be just. Yet, the court applied the Rule 18 standard because of an Advisory Committee note that states, "The abrogation of Rule 84 does not alter existing pleading standards or otherwise change the requirements of Civil Rule 8." It is not anticipated that other courts will interpret this note in a similar fashion, but the District of Nevada decision signals some disagreement will continue concerning which pleading standard is the correct one.

For courts that welcome the elimination of the Form 18 standard, it remains to be seen what the Twombly/Iqbal standard will require from plaintiffs pleading direct patent infringement. The Rembrandt case suggests that specific product names or model numbers may be necessary. Other cases suggest more. For example, despite a complaint that recited the details of infringement of each asserted claim, Judge Payne found that the complaint was insufficiently pled under Twombly/Iqbal. In contrast, a decision from the Southern District of New York found Twombly/Iqbal satisfied by a complaint that did not list out each asserted claim because the complaint "alleged a specific patent and a specific product that allegedly infringes that patent by virtue of certain specific characteristics." So far, these cases suggest a range of detail may be required in direct infringement complaints going forward—anywhere from reasonable identification of specific products in relation to the asserted patent claims, to the level of detail seen in well-developed infringement contention charts.

Given the fact-intensive and context-heavy nature of the Twombly/Iqbal standard, for now, plaintiffs are well advised to identify specific claims alleged to be infringed and specific accused products, as well as an explanation of how the accused products read on the asserted claims. Stay tuned to Nutter's IP Law Bulletin blog for further updates on the impact of the abrogation of Rule 84.

Originally published January 28, 2016

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.

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