IP Alert: Federal Circuit Reaffirms Patent Owners Need Not Prove Infringement at the Pleading Stage

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On July 13, in Bot M8 LLC v. Sony Corporation of America, the Federal Circuit reaffirmed the pleading standards for patent owners. A complaint does not need to set forth facts proving infringement; instead it is sufficient if it puts the alleged infringer on notice of what activity is accused of infringement. Notably, this does not require an element-by-element pleading of infringement. The relevant inquiry is whether the factual allegations are sufficient to show a plausible claim for relief. Even where proof of the facts pled is improbable or a recovery unlikely, a pleading may still be sufficient. Applying this standard, the Federal Circuit reversed the dismissal of two of the patent owner’s four causes of action alleging patent infringement.

Patent owner Bot M8 LLC originally brought suit against Sony in the Southern District of New York, alleging infringement of five patents. The action was transferred to the Northern District of California, where the district court, of its own volition, ordered Bot M8 to amend its complaint. Upon receiving the amended complaint, Sony moved to dismiss for failure to state a claim, alleging that the amended allegations were conclusory and unsupported by factual allegations sufficient to show a plausible claim for relief. The district court granted the motion regarding four of the patents and denied Bot M8 a second opportunity to supplement its allegations. On the fifth patent, the district court granted summary judgment after finding it directed to an abstract idea and thus invalid under 35 U.S.C. § 101.

On appeal, the Federal Circuit affirmed the district court’s dismissal on two of Bot M8’s asserted patents but reversed as to the other two. In reversing, the Federal Circuit found the district court erred by requiring Bot M8 to “explain in [the] complaint every element of every claim” for which Bot M8 alleged infringement, or to otherwise explain why such an element-by-element explanation could not be done. The Federal Circuit reiterated that the Federal Rules of Civil Procedure do not require a plaintiff to “plead facts establishing that each element of an asserted claim is met.” Instead, a plaintiff must provide sufficient notice of the activity accused of infringing and support its grounds with sufficient factual content. While this requires more than reciting claim elements and concluding the accused method or device meets such elements, the factual content need not rise to the level of demonstrating infringement by a probability. The court acknowledged that the level of detail required for such allegations will vary based upon factors such as the complexity of the technology, the materiality of any given element to practicing the asserted claims, and the nature of the allegedly infringing device.

Applying these standards, the Federal Circuit held that the district court properly dismissed two of the plaintiff’s causes of action but required “too much” with respect to the remaining two.

The Federal Circuit upheld dismissal of the first cause of action, finding that Bot M8’s allegations were inconsistent with its infringement theories. The court noted that Bot M8’s amended complaint contained “too much rather than too little” detail such that it had “essentially pleaded itself out of court.” In particular, the court found inconsistencies in Bot M8’s “kitchen sink” approach that rendered Bot M8’s infringement claim impossible, holding that “factual allegations [that] are actually inconsistent with and contradict infringement are . . . insufficient to state a plausible claim.”

For the second cause of action, the Federal Circuit upheld dismissal even though Bot M8 had argued that the district court erred by requiring it to provide source code in support of its allegations. The Federal Circuit agreed that source code is not required at the pleading stage and that it would have been error to dismiss on this basis. However, it nonetheless found the dismissal proper because Bot M8 had merely recited the claim elements and corresponding conclusions without supporting factual allegations. It is unclear whether factual allegations other than source code could have been provided in support of the claims.

The Federal Circuit reversed as to the remaining two causes of action, rejecting the district court’s finding that Bot M8’s allegations “track the claim language too closely” to support a plausible inference of infringement. The Federal Circuit found the amended complaint plausibly alleged infringement in a manner that put Sony on sufficient notice, reiterating that Bot M8 was not required to prove its case at the pleading stage.

Patent owners preparing complaints, or alleged infringers assessing the sufficiency of a complaint filed against them, should take careful note of the guideposts reiterated by the Federal Circuit in this case. Patent owners need to walk the line between parroting claim language with conclusory allegations that the accused method or device meets a particular claim and providing over-inclusive contentions that could be held inconsistent with their infringement allegations. For their part, alleged infringers should take a close look at the complaint for any allegations that remain conclusory or that could be inconsistent with the claim requirements.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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