Litigator’s Perspective- I’ve a Hunch You’re Stealing My Invention: Low Standard Prevails for Alleging Patent Infringement

Joel R. Leeman

By Joel Leeman. A member of our Litigation Practice Group

May 2013 IP Update

The Federal Circuit, the appeals court for all patent litigations, has given its blessing to the no-frills complaint that has become standard in infringement lawsuits.  The court bucks recent judicial trends of mandating more detailed pleadings in support of claims for relief.

Patent litigation, for all its knotty complexities and notoriously high cost, is typically launched with a complaint of surprising spareness.  The patent owner need only say he owns a specific patent and that the defendant is infringing it by making, selling and/or using a device or method that practices the patent.

Indeed, an appendix to the rules of civil procedure includes a sampler of complaints for a dozen different situations, all intended, in the words of Rule 84, to “illustrate the simplicity and brevity that these rules contemplate.”  Form 18 is a complaint for patent infringement laid out in a mere four paragraphs.

Sometimes, parties on the receiving end of an infringement complaint feel frustration when the lack of detail leaves them wondering how precisely they are thought to be infringing. Two such defendants, Time Warner and DirecTV, persuaded a federal judge in Los Angeles to dismiss an infringement complaint from K-Tech Telecommunications for failure to state a claim.

It’s not enough, said the judge, that K-Tech thinks the defendants “must” be infringing.  Even though the complaint met the bare-bones criteria of Form 18, the judge faulted K-Tech for not explaining why it believed the two defendants were practicing K-Tech’s patented method rather than some alternative method that did not infringe.

In K-Tech Telecommunications v. Time Warner Cable, the Federal Circuit stood up for traditional modes of pleading, holding that the law does not require a patent owner to identify the devices or methods that are believed to be infringing. It follows that a plaintiff need not exclude the possibility that the defendant is using a noninfringing alternative.

This ruling was essential to K-Tech’s ability to sue, because the company in fact did not know where Time Warner and DirecTV’s infringement was happening or through what devices.  K-Tech’s patent protected a method of translating digital television signals, and the Federal Circuit was sensitive to the fact that the defendants’ manner of translating signals was not discernible. “A defendant cannot shield itself from a complaint for direct infringement,” said the court, “by operating in such secrecy that the filing of a complaint is impossible.”

The court’s ruling has significant implications.  It is fair play for a patent owner who has a solid hunch that someone is infringing his patent to sue that party, even if he does not know exactly how infringement is occurring.  He can try to substantiate his hunch by investigating the defendant’s practices in pretrial discovery.

Patent owners have often felt hemmed in by Rule 11 of the rules of civil procedure, which requires a plaintiff to have an evidentiary basis for bringing suit.  Going off half-cocked exposes a plaintiff or its attorney to sanctions.  The K-Tech opinion, along with other precedents, emboldens patent owners to shoot first and ask questions later.  The court warns only that a patentee can still be liable for violating Rule 11 if he ignores “easily ascertainable evidence of noninfringement through appropriate pre-suit investigation.”

K-Tech also resolves some uncertainty that had lingered in the wake of two U.S. Supreme Court cases that established new rules for the sufficiency of pleadings.  In Bell Atlantic v. Twombly (2007) and Ashcroft v. Iqbal (2009), the Supreme Court authorized federal trial judges to throw out a complaint if it does not set out a claim to relief that is “plausible on its face.”

This development has widely been interpreted to require a more detailed recitation of facts, lest the plaintiff see his complaint dismissed. Many commentators worried (or rejoiced) that plaintiffs must now invest resources in pre-lawsuit investigations rather than acquire necessary facts through pretrial discovery.

In K-Tech, the Federal Circuit flatly states that, if any conflict exists between the Supreme Court’s pleading guidelines and the minimalistic forms authorized by the rules of procedure, “the Forms control.”

The court acknowledges that a patentee remains obligated to alert the defendant to what activity or device is accused of infringement. However, if the patentee has a good-faith reason for believing that infringement has occurred, but does not know how, he can file his lawsuit and search for answers afterwards.

K-Tech should lower a patent owner’s inhibition over the adequacy of his complaint. A patent owner will now feel freer to forge ahead with a lawsuit under circumstances where once he might have held back because he could not say for sure how the patent was being infringed.