Induced Infringement Pleadings Explained--May Impact Hatch-Waxman Cases
On June 7, the Federal Circuit in In re Bill of Lading Transmission & Processing System Patent Litigation clarified the standards necessary to plead a claim of patent infringement. Notably, the Federal Circuit (O'Malley, J.) discussed the differences between stating a claim for direct patent infringement versus indirect patent infringement (i.e., induced infringement or contributory infringement). The case involves a patent directed to "a method in which documents are scanned on board vehicles for use by dispatchers in preparing manifests dictating which shipments should be consolidated and shipped on which trucks heading to which location." Slip op. at 28. The District Court dismissed the plaintiff's complaints under Rule 12(b)(6). Among other things, the District Court found that the complaints were based upon conclusory allegations of direct infringement that were based upon unreasonable inferences. The plaintiff then appealed to the Federal Circuit.
Regarding direct infringement, the Federal Circuit concluded that the District Court had improperly required too high of a standard to meet the pleading requirements for direct infringement. Specifically, the Federal Circuit pointed to Form 18 in the Appendix of Forms to the Federal Rules of Civil Procedure, which lays out a sample complaint for direct patent infringement. Form 18 requires: (1) an allegation of jurisdiction; (2) a statement that the plaintiff owns the patent; (3) a statement that the 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. The Federal Circuit explained that under Rule 84, the forms are deemed sufficient. Accordingly, the Federal Circuit concluded, in the event of a conflict between the forms and the Supreme Court's pleading standards set forth in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009), the forms control. Therefore, for claims of direct patent infringement, the question of whether a complaint contains sufficient specificity must be measured by the specificity required by Form 18.
Regarding indirect infringement, however, the Federal Circuit found that Form 18 is of no assistance. This is because the complaint in Form 18 only involves a claim of direct infringement. Accordingly, for claims of induced and contributory infringement, the standards outlined in Twombly and Iqbal apply. Therefore, the Federal Circuit explained, to state a claim for contributory infringement, the plaintiff must, "among other things, plead facts that allow an inference that the components sold or offered for sale have no substantial non-infringing uses." Slip op. at 21. More particularly, the Federal Circuit found it insufficient simply to set forth an infringing use and then baldly conclude that there is no other substantial non-infringing use. As for induced infringement, the Federal Circuit concluded that a complaint must contain facts plausibly showing that the accused infringer specifically intended its customers to infringe the patent and knew that the direct infringer's acts constituted infringement.
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