District Judge Payne Holds That Form 18's "Talismanic" Pleading Is Superseded by Iqbal/Twombly

In a March 10, 2014 opinion in Macronix Int’l Co. v. Spansion Inc., District Judge Robert E. Payne held that the sufficiency of patent infringement pleadings should be governed by the Supreme Court’s rulings in Iqbal and Twombly rather than the widely-used standard of Fed. R. Civ. P. Appx. Form 18 (“Form 18”), which Judge Payne characterized as “conclusory” and “talismanic.”  No. 13-679, 2014 U.S. Dist. LEXIS 31465 (E.D. Va. Mar. 10, 2014). While Judge Payne’s decision may be an outlier, the reality is that even courts that apply Form 18 often now require patent holders to identify the allegedly infringing technology with greater particularity in case-initiating pleadings. Macronix may lend further support to accused infringers seeking to dismiss infringement claims under Rule 12(b)(6).

Form 18 and In re Bill of Lading

Form 18’s basic infringement pleading example reads: “[t]he defendant has infringed and is still infringing the Letters Patent by making, selling, and using electric motors that embody the patented invention.” Form 18 is given effect through Federal Rule of Civil Procedure 84, which states that “[t]he forms in the Appendix suffice under these rules…” For years, courts and litigants construed Form 18 to require no more than a simple, one-line identification of the accused technology, which was often reduced to “products and services.” Many defendants, however, felt that such pleadings did not do enough to put them on notice of what to defend, particularly if they had a wide variety of potentially relevant devices and systems, or if the asserted patents were complex and had a large number of claims. When the Supreme Court’s decisions in Iqbal and Twombly cast a shadow on the sufficiency of Form 18, the Federal Circuit stepped in to clarify that “[w]hile there may be criticism of the text of Form 18, it is not within our power to rewrite it; only an act of Congress can revise the Federal Rules.” In re Bill of Lading Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 1335 (Fed. Cir. 2012).

Varying Standards Among the Courts

Determining the sufficiency of a pleading is a matter of regional circuit law, and district courts – even within the same district – have gone in different directions with regard to what they believe Form 18 requires. Some courts have taken the literal view that a simple one-line descriptor will suffice to identify the allegedly infringing technology. For example, in Phoenix Licensing, L.L.C. v. Allstate Corp., No. 09-255, 2011 U.S. Dist. LEXIS 29088 (E.D. Tex. Mar. 10, 2011), the court held that a complaint that identified the allegedly infringing technology as “Plaintiffs’ patented marketing technology” was sufficient under Form 18.

Many other courts, however, have adopted a sliding scale approach, requiring ever greater levels of detail depending on the complexity of the patents-in-suit and the degree of variety among the accused infringer’s products and methods. For example, in Effectively Illuminated Pathways LLC v. Aston Martin Lagonda of N. Am., Inc., No. 6:11-CV-34, 2011 U.S. Dist. LEXIS 155952, *14 (E.D. Tex. Sept. 29, 2011), the court held that “cases involving more nebulous, less tangible inventions such as computer software methods require a greater degree of specificity to put the defendant on notice.”

In Prism Techs., LLC v. AT&T Mobility, LLC, No. 12-122, 2012 U.S. Dist. LEXIS 126630, *3 (D. Neb. Sept. 6, 2012), the plaintiff’s complaint alleged infringement of AT&T’s “wireless products and data services that implement authentication systems and methods for controlling access to protected computer resources.” The court held that “the term ‘wireless products’ is considerably more generic than the term ‘electric motor’ as identified in Form 18 … This allegation is so vague that it encompasses essentially AT&T’s entire business, leaving AT&T with no notice as to how it allegedly infringes … The Court agrees that Prism’s accusation is too broad, such that it does not satisfy Form 18 standards.”

A year after In re Bill of Lading, the Federal Circuit addressed the pleading standard again in K-Tech Telecomms., Inc. v. Time Warner Cable, Inc., 714 F.3d 1277 (Fed. Cir. 2013). This time, although the court reaffirmed that Form 18 supersedes Iqbal and Twombly, it expressly endorsed the sliding scale approach to Form 18 pleading, holding that “[t]he adequacy of the [patent infringement] facts pled depends on the breadth and complexity of both the asserted patent and the accused product or system and on the nature of the defendant’s business activities.” Id. at 1286.

Judge Payne: No Act of Congress Needed to “Nullify” Form 18

In Macronix, Judge Payne took a dramatically different approach than the Federal Circuit in In re Bill of Lading and K-Tech. Rather than assuming that Form 18 was written in stone by Congress through Rule 84, Judge Payne stated that Rule 84 merely echoes the pleading standard of Rule 8(a). Because the pleading standard under Rule 8(a) was reinterpreted by Iqbal and Twombly, Judge Payne concluded, Form 18 itself should be superseded by Iqbal and Twombly, “even if the effect of doing so is to nullify the form.” 2014 U.S. Dist. LEXIS 31465 at *13.

While it might be argued that the Federal Circuit’s “sliding scale” approach to Form 18 already addresses many of the concerns of Iqbal and Twombly, the Macronix decision goes even further, and demands nothing less than a complete re-thinking of how patent cases are litigated (id. at *16-18):

Satisfying the requirements of Twombly and Iqbal, of course, will require counsel to focus complaints only on viable claims. Thus, before filing a complaint, counsel must ascertain exactly what claims should alleged to be infringed and how they are infringed … Indeed, it is high time that counsel in patent cases do all of that work before filing a complaint. That, of course, will serve to winnow out weak (or even baseless) claims and will protect defendants from the need to prepare defenses for the many claims that inevitably fall by the way side in patent cases. That also will serve to reduce the expense and burden of this kind of litigation to both parties which, like the antitrust litigation in Twombly, is onerous. The current practice is 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. That process has proven to be an increasingly expensive proposition for the parties and one that takes a tremendous toll on already strained judicial resources. There is no logical reason to exempt patent complaints from the plausibility requirements that apply to all other federal complaints. If counsel will but accept the task, the expense of patent litigation and the burden on the courts will be reduced. If they will not, their cases will be dismissed and they may face sanctions. But neither is necessary.

Whether Judge Payne’s ruling will be more widely adopted remains to be seen. Patent counsel would do well to monitor developments as the dispute over the sufficiency of infringement pleadings unfolds.