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Chicago IP Litigation Tracking Northern District of Illinois IP Cases

Tag Archives: Twombly

Court Does Not Dismiss “Me Too” Patent Counterclaims

Posted in Pleading Requirements

Trading Techs. Int’l., v. CQG, No. 05 C 4811, Slip Op. (N.D. Ill. Oct. 31, 2012) (Coleman, J.).

Judge Coleman granted in part plaintiff Trading Technologies’ (“TT”) Fed. R. Civ. P. 12(b)(6) motion to dismiss defendant CQG’s affirmative defenses and declaratory judgment counterclaim.  The Court dismissed CQG’s bare-bones defenses which stated in their entirety:

  •  “Plaintiff’s claims are barred by the doctrines of estoppels, acquiescence, implied license, and/or unclean hands.”
  • “Plaintiff is not entitled to any damages for the time period that it was not in compliance with the marking requirements under 35 U.S.C. § 287.”

The Court, however, gave CQG twenty-one days to amend the defenses to include sufficient factual support.

The Court denied TT’s motion to dismiss CQG’s declaratory judgment counterclaims as redundant.  While some judges in the Northern District dismiss such claims, the Court held that CQG’s counterclaims would allow the Court to retain jurisdiction if TT dismissed its claims and, therefore, were not redundant.

Lack of Detailed Allegations Dooms Patent Complaint

Posted in Pleading Requirements

Gharb v. Mitsubishi Elec. Automation, Inc., No. 10 C 7204, Slip Op. (N.D. Ill. June 4, 2012) (Chang, J.).

Judge Chang granted defendant Mitsubishi Electric Automation’s (“Mitsubishi”) Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiff’s patent complaint.  With respect to direct infringement, plaintiff only accused Mitsubishi’s programmable logic controller (“PLC”), but in a previous suit on the patents-in-suit, the Federal Circuit held that a PLC alone could not infringe the patents.

The Court also dismissed plaintiff’s contributory infringement claims because plaintiff did not make sufficient allegations to show that Mitsubishi’s PLC was not a staple article.  And plaintiff’s various exhibits showed that the PLC had multiple non-infringing uses.

Finally, the Court dismissed the inducement claims.  Plaintiff only identified Mitsubishi’s PLC, not an entire security system to show direct infringement.  And the PLC’s non-infringing uses called into question the necessary intent claims.

 

Conclusory Allegations in Patent Warrant Dismissal

Posted in Pleading Requirements

Addiction & Detoxification Institute, LLC v. Epperly, No. 11 C 5947, Slip Op. (N.D. Ill. May 23, 2012) (Dow, J.).

Judge Dow granted defendants’ Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiff’s patent infringement suit without prejudice to refile within twenty one days.  Plaintiff’s complaint was “woefully deficient” asserting only that defendants “practiced one or more inventions” claimed in the patents, that defendants benefitted from the infringement and that plaintiff was harmed.  These conclusory allegations did not meet the Twombly/Iqbal pleading standard.  Plaintiff was given twenty one days to replead with facts.  And defendant’s sanctions motion was denied with leave to refile if an amended complaint was filed and remained deficient.

Knowledge for Indirect Infringement May be Pled Based Upon Original Complaint

Posted in Pleading Requirements

Cascades Computer Innovations, LLC v. Sony-Ericsson Mobile Comms. (USA) Inc., No. 11 C 7223, Slip Op. (N.D. Ill. Apr. 18, 2012) (Darrah, J.).

Judge Darrah denied defendant’s Fed. R. Civ. P. 12(b)(6) motion to dismiss in this patent case involving simplifying the process by which computer software deals with errors or exceptions.  Defendant agreed that plaintiff Cascades Computer Innovations (“Cascades”) did not sufficiently plead infringement of independent claim 15 of the patent in suit.  Cascades’ allegations that defendant used “the code in the manner required by claim 15” were sufficient.  It both complied with Form 18 (the form patent complaint accompanying the Federal Rules of Civil Procedure) and with the Twombly/Iqbal plausible pleading standard, which is satisfied by Form 18.

Regarding Cascades’ contributory infringement claims, defendant sought to hold Cascades to too high a standard.  Whether or not defendant’s accused products in fact have non-infringing use, at the pleading stage it was sufficient that Cascades pled that there were no infringing uses.  And Cascades’ allegations that defendant had knowledge of its patent in suit at least since filing of the original complaint was sufficient to show intent.

Patent Complaint Must Identify Accused Product at Least Generally

Posted in Pleading Requirements

Trading Techs. Int’l., Inc. v. BCG Partners, Inc., No. 10 C 715, Slip Op. (N.D. Ill. May 5, 2011) (Kendall, J.).

Judge Kendall granted the FuturePath defendants’ and denied the SunGuard defendants’ Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiff Trading Technologies’ ("TT") patent claims regarding trading software.

FuturePath:  The Court dismissed TT’s direct infringement claims against FuturePath because TT did not accuse a specific FuturePath product or even category of product. TT’s reference to unspecified "products" did not meet the Twomby or Iqbal standards, nor did it meet the Federal Circuit’s requirements in McZel v. Spring Nextel Corp., 501 F. 3d 1354 (Fed. Cir. 2007). Identification of an accused product in TT’s briefing and reference to FuturePath’s website in TT’s indirect infringement claims were insufficient.

TT did not allege that FuturePath had knowledge of TT’s patents. Without an allegation of knowledge, TT’s claims were deficient. The Court, therefore, dismissed all of TT’s claims against FuturePath with leave to replead correcting the deficiencies.

SunGuard:  TT alleged that SunGuard had constructive knowledge of TT’s patents, but not actual knowledge. Constructive knowledge was sufficient to maintain TT’s claims, regardless of whether the Federal Circuit might later hold constructive knowledge insufficient.

Local Patent Rules Do Not Trump Rule 8 Pleading Requirements

Posted in Pleading Requirements

Groupon Inc. v. MobGob LLC, No. 10 C 7456, Slip Op. (N.D. Ill. May 25, 2011) (Hibbler, Sen. J.).

Judge Hibbler granted plaintiff Groupon’s motion to strike defendant MobGob’s affirmative defenses and to dismiss MobGob’s counterclaims, and denied MobGob’s motion to dismiss Groupon’s claim in this patent dispute involving online marketing systems.

MobGob’s Motion to Dismiss

Groupon pled the intent elements of its indirect infringement claims upon information and belief. And that pleading was sufficient even though intent is governed by Fed. R. Civ. P. 9(b) because even pursuant to Rule 9(b), intent and knowledge can be pled generally. Additionally, it was reasonable to infer from Groupon’s allegations that MobGob created or had someone create the accused system and the public nature of Groupon’s patent that MobGob had actually knowledge of its accused infringement.

Groupon’s Motions to Strike and Dismiss

First, Groupon sought to strike MobGob’s affirmative defense of invalidity. The Court initially noted that motions to strike are disfavored because they are unlikely to streamline a case or make resolving the case more efficient. But the Court still struck MobGob’s invalidity defense. MobGob’s invalidity defense did nothing more than identify the relevant statutory sections, offering not a single fact, upon information and belief or otherwise. While the Court noted there were some policy reasons for not holding affirmative defenses and counterclaims to the Twombly/Iqbal standards, the Seventh Circuit required that they be met for any pleading. The Court, therefore, struck MobGob’s invalidity defense. And for the same reason, the Court dismissed MobGob’s invalidity counterclaim because it also offered no facts. The Court also noted that it would not excuse inadequate pleading because of the Local Patent Rule 2.3(b) invalidity contentions that MobGob would be required to serve shortly after answering. The LPR 2.3(b) disclosures require significantly more detail than Fed. R. Civ. P. 8 notice pleading. So, MobGob could meet its Rule 8 obligations without providing the level of detail required by LPR 2.3(b).

The Court also struck MobGob’s affirmative defense regarding ownership of Groupon’s patent because it also lacked factual support, and because it did not accept Groupon’s facts as true, as required by an affirmative defense, instead challenging Groupon’s facts.

Plaintiff Need Not Attach Copyright Registration to Complaint

Posted in Pleading Requirements

Golden v. Nadler Pritikin & Mirabelli, No. 05 C 283, Slip Op. (N.D. Ill. Dec. 21, 2010) (Gottschall, J.).

Judge Gottschall denied plaintiff Golden’s motion to dismiss or for a more definite statement pursuant to Fed. R. Civ. P. 12(b)(6) & (e) in this copyright dispute over real estate listings. Golden was not required to attach a copy of its copyright registration to its complaint. And while it was an "extraordinarily close question whether Golden’s "bare-bones" amended complaint satisfied Twombly, it did plead ownership of a registered copyright and it did plead that defendant allegedly copied the work without consent. Because Golden’s complaint was so bare-bones, defendant’s motion to dismiss was not in bad faith. The Court, therefore, denied Golden’s Fed. R. Civ. P. 11 motion regarding the motion to dismiss.

Answer and Counterclaims Struck Sua Sponte

Posted in Pleading Requirements

Trading Techs. Int’l., Inc. v. CQG, Inc., No. 10 C 718, Slip Op. (N.D. Ill. Aug. 12, 2010) (Shadur, Sen. J.).

Judge Shadur sua sponte struck defendants’ answer and counterclaim with leave to file an amended answer and counterclaim based upon a variety of pleading deficiencies. First, the Court struck statements that the patents-in-suit "speak for [themselves]" and related answers citing State Farm Mut. Auto Ins. Co. v. Riley, 199 F.R.D. 276, 279 (N.D. Ill. 2001). But the Court granted CQG leave to replead those answers.

The Court also struck several affirmative defenses. CQG’s Fed. R. Civ. P. 12(b)(6) defense was struck because it was not an affirmative defense. And no leave to replead was granted because when plaintiff Trading Technologies’ ("TT") allegations were accepted as true CQG’s defense was "simply dead wrong." The Court also struck various affirmative defenses that were only "skeletal recitals" of legal doctrines, with leave to replead if CQG could. Finally, the Court struck CQG’s noninfringement defense because denials in the answer already brought infringement into issue.

The Court also struck CQG’s counterclaim with leave to replead for failure to meet the Twombly/Iqbal pleading standards. Finally, the Court ordered that CGQ’s counsel should not charge CQG for preparing CGQ’s amended answer and counterclaim and should send CQG a copy of the Court’s Order.

Northern District of Illinois Practice Tips Nos. 11-15

Posted in Legal News

This is the third installment of my twenty five tips for Northern District of Illinois litigation practice, with a focus on IP litigation. The tips are gleaned from my practice in the Northern District, my time as a law clerk for the Hon. Gordon J. Quist in the Western District of Michigan, and my reading of all of the Northern District of Illinois intellectual property opinions over the last four years. As you read them, let me know if you come up with others. I will be glad to include them as I go. Here are tips eleven through fifteen:

11.  Respect Twombly / Iqbal pleading standards.  The Northern District is no different than the rest of the country’s district courts — patent infringement requirements have not changed from the form in the Federal Rules. But that is not necessarily the case for Lanham Act, copyright or trade secret claims. There are numerous decisions dismissing, often with leave to amend, these more fact-specific intellectual property claims. And even in the patent context plaintiffs benefit from pleading with more particularlity. The more detail a defendant has the more information they should disclose about their accused products or systems as part of their Local Patent Rule 2.1(b) initial disclosure document production requirements. That means that the plaintiff will have more material with which to prepare its Local Patent Rule 2.2 intial infringement contentions. Finally, regardless of the type of claim, many and perhaps most judges rely upon Twombly / Iqbal to require more than a bare recitation of the elements of affirmative defenses. So, it is especially important to add some facts to your affirmative defenses.

12.  Prepare Local Rule 56.1 statements with care.  This is probably the most frequent Local Rule hang up in Northern District of Illinois opinions. It is critical that movants meet the Local Rule 56.1 requirements, among others, a numbered statement of undisputed material facts supported by admissible evidence. If the facts are not supported or if they are legal conclusions, judges routinely strike or disregard them.

13.  Respond to Local Rule 56.1 statements with evidence.  Far too often, parties respond to Local Rule 56.1 statements without evidence. Those responses are almost always deemed admissions. Without admissibile evidence to counter statements of fact they are almost always admitted.

14.  Watch your judge’s webpage.  Each judge maintains the equivalents of standing orders on their webpage, often in multiple places and links across the page. It is critical that you read them at the beginning of your case and that you recheck them regularly. At a minimum, check them before you file anything with the Court. I find that the website instructions change with much greater frequency than the old, paper standing orders did. And while judges try to make it easy to see what they change, if you are not looking you will miss it.

15.  Always file notices of motion.  In some districts, notices of motions are not required or even discouraged. In the Northern District of Illinois, they are required of every motion. If you fail to file one, you will likely hear from the Clerk’s office. Also, make sure to file the notice after the motion, not before. If you file the notice before the motion, you will generally have to refile it.

State Tort Claim Preempted by Patent Claim Where Pleading of Bad Faith Did Not Meet Iqbal Standards

Posted in Pleading Requirements

Viskase Companies, Inc. v. World Pac Int’l AG, No. 09 C 5022, Slip Op. (N.D. Ill. May 10, 2010) (Bucklo, J.).

Judge Bucklo granted declaratory judgment defendants’ (collectively "World Pac") motion to dismiss declaratory judgment plaintiff Viskase’s state law tort claims as preempted by Viskase’s declaratory judgment patent claims. Patent holders have a basis right to assert their patents. In order to make tort claims based upon patent assertions, therefore, Viskase had to show that defendants acted in bad faith in asserting their patents, and the bad faith had both objective and subjective components. Viskase’s general statement of bad faith did not meet the Twombly/Iqbal pleading standards. Furthermore, defendants need not have stated in their assertion letters to third parties that Viskase objected to defendants’ claims.

The Court had specific jurisdiction over foreign defendant World Pac. World Pac’s filing for U.S. patents and its enforcement letters regarding the patents-in-suite created specific jurisdiction.

Tort Claims Preempted by Patent Claims Absent Objective & Subjective Bad Faith

Posted in Jurisdiction

Viskase Companies, Inc. v. World Pac Int’l AG, No. 09 C 5022, Slip Op. (N.D. Ill. May 10, 2010) (Bucklo, J.).

Judge Bucklo granted declaratory judgment defendants’ (collectively "World Pac") motion to dismiss declaratory judgment plaintiff Viskase’s state law tort claims as preempted by Viskase’s declaratory judgment patent claims. Patent holders have a basic right to assert their patents. In order to make tort claims based upon patent assertions, therefore, Viskase had to show that defendants acted in bad faith in asserting their patents, both objectively and subjectively. Viskase’s general statement of bad faith did not meet the Twombly/Iqbal pleading standards. Furthermore, defendants need not have stated in their assertion letters to third parties that Viskase objected to defendants’ claims.

The Court had specific jurisdiction over foreign defendant World Pac. World Pac’s filing for U.S. patents and its enforcement letters regarding the patents-in-suite created specific jurisdiction.

Google AdWords Purchase May be a Lanham Act “Use”

Posted in Legal News

Morningware v. Hearthware Home Prods., Inc., No. 09 C 4348, Slip. Op. (N.D. Ill. Nov. 16, 2009) (St. Eve, J.).

Judge St. Eve denied defendant Hearthware’s Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiff Morningware’s Lanham Act unfair competition and product disparagement claims, as well as related state law claims.  Hearthware allegedly bought Morningware’s trademarks as Google AdWord keywords so that when a Google user searched for Morningware’s trademarks, a Hearthware "sponsored link" showed up above the standard search results, along with the following text written by Hearthware:

        The Real NuWave® Oven Pro Why Buy an Imitation?  90 Day Gty.

Hearthware did not dispute that the MORNINGWARE mark was protectible or that it was owned by Morningware.  Instead, Hearthware argued that purchasing "Morningware" as an AdWord keyword was not a "use" in commerce.  The Court noted that although the Seventh Circuit had not decided the issue, courts have largely adopted a broad reading of "use" that included AdWords purchases.  But in this case, the Court could not decide the issue without fact-finding which was not appropriate in a Rule 12(b)(6) motion.  The Court, therefore, denied the motion to dismiss.

Hearthware also argued that purchasing AdWords could not create customer confusion.  But the Court held that Morningware pled sufficient facts to show initial interest confusion which is actionable pursuant to the Lanham Act, even if the confusion is only brief and the customer is aware of the true source of the goods by the time a purchase is made.

The Court also held that Hearthware’s alleged "Why Buy an Imitation" advertisement text was sufficient for a disparagement case as a fact-finder could determine that the text could lead a consumer to believe that Morningware’s product was an imitation of Hearthware.  Morningware’s state law claims survived the motion to dismiss for the same reasons as the Lanham Act claims. 

Patentability at the Supreme Court: Bilski Oral Arguments

Posted in Legal News

The Supreme Court hears oral argument today in Bilski v. Kappos.  The Court will decide the proper test for Section 101 patentability and will either decide or at least significantly impact the patentability of software and business method patents.  Here are the questions presented:

  1. Whether the Federal Circuit erred by holding that a "process" must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing ("machine-or-transformation" test), to be eligible for patenting under 35 U.S.C. § 101, despite this Court’s precedent declining to limit the broad statutory grant of patent eligibility for "any" new and useful process beyond excluding patents for "laws of nature, physical phenomena, and abstract ideas." 
  2. Whether the Federal Circuit’s "machine-or-transformation" test for patent eligibility, which effectively forecloses meaningful patent protection to many business methods, contradicts the clear Congressional intent that patents protect "method[s] of doing or conducting business." 35 U.S.C. § 273.

For more on the history of both the Bilski case, check out my recent article with my colleague Mike Grill in the Northwestern Journal of Technology and Intellectual Property.  Patently-O has compiled the amicus briefs — click here for the briefs supporting Bilski or neither party, and here for the briefs supporting the government.  The briefs supporting the government include a brief by a group of Internet Retailers that, I am proud to say, cites my law review article arguing for an even application of the Twombly pleading standard as to both patent plaintiffs and patent defendants — click here for the amicus brief and here for my article from the John Marshall Review of Intellectual Property Law.

Click here for the SCOTUSBlog’s preview of the argument.  For post-argument CLE options, click here for a list of courses compiled by Patent Docs and here for information on a CLE from IPWatchdog’s Gene Quinn, who plans to attend oral arguments.

N.D. Illinois’s Local Patent Rules Will Drive Patent Cases to Chicago

Posted in Local Rules

While the Northern District has made clear that it is not transforming itself into a rocket docket like the Eastern District of Virginia or the Western District of Wisconsin, the newly enacted Local Patent Rules (“Rules” or “LPR”)* are going to have a significant impact on patent litigation filings in Chicago. The cases will not proceed to trial faster than the Northern District’s average for all cases of slightly more than two years, but the path to trial will be significantly different. The changes are even-handed, benefiting both patentholders and accused infringers.  One might expect even-handed Rules to have little impact on filings, but in this case patentholders will likely decide that the Rules provide enough value to overcome the portions of the Rules that benefit accused infringers.  The Rules, therefore, will draw patent cases to the Northern District. Here are the particular elements of the Rules that will attract patent plaintiffs to the Northern District:

1.      Substantive Initial Disclosures & Document Production.

LPR 2.1 requires both parties to exchange substantive, non-evasive Rule 26(a) Initial Disclosures. Furthermore, LPR 2.1(b) requires that along with its Initial Disclosures, an accused infringer produce: 1) documents sufficient to show the operation and construction of each element of any product or process specifically accused in the Complaint; and 2) copies of all known prior art. This early document production, which is generally contemplated by Rule 26 but almost never done in practice, will be a major draw for patentholders. The ability to get immediate technical information in discovery, without the expense of serving document requests, is significant. It allows patentholders to have information before preparing their Initial Infringement Contentions. It also allows patentholders to evaluate the strength of their cases early using the technical information produced by the accused infringers, before incurring significant discovery expenses.

But while LPR 2.1 will attract patent plaintiffs, it also benefits accused infringers. LPR 2.1 also requires patentholders to make an initial document production, and patentholders have a more significant obligation. They must produce not just documents sufficient to show, but all documents regarding: 1) any sale, offer for sale or use of the patented invention before filing; 2) design, reduction to practice or invention of the patented technology generally; 3) all communications with the PTO (the prosecution history) for the patents in suit and any patents from which they claim priority; and 4) ownership of the patent. Additionally, as with accused infringers, patentholders must identify which documents correspond to each of the four categories. Having this early information will allow accused infringers to evaluate their defenses early in the case and prepare for early dispositive motions such as motions challenging ownership or validity based upon a bar date. And the documents will allow accused infringers to update affirmative defenses or add counterclaims before there could be any prejudice.

Finally, the accused infringers’ production obligation regarding its products is only triggered if the patentholder specifically identifies the accused products in its complaint. This will strongly encourage plaintiffs to identify the accused products in the complaint. A standard which comports with the Twombly/Iqbal pleading standards – click here to read my article on the uneven application of the Twombly standard between patentholders and accused infringers.

2.      Defendant opens and closes Markman briefing.

Most Districts either have two rounds of concurrent claim construction briefing or a traditional opening-response-reply schedule with the patentholder opening and replying. Significantly, the Rules provide for a single set of briefs with the accused infringer—not the patent holder—submitting the initial and final briefs. Writing first and last benefits the accused infringer. But economically, the patentholder saves money by only writing one brief and can make any follow up arguments during a hearing or seek a sur-reply if the Court does not hold a hearing.

3.      Late Claim Construction briefing.

The final major draw for patentholders is the late claim construction proceedings. In addition to cost savings in the briefing process, the claim construction is scheduled during the later portion of a discovery period that is scheduled to end forty-five days after the Court rules on claim construction. Maintaining pre-claim construction uncertainty through most of discovery benefits patentholders. Furthermore, the Rules make clear that a judge can disregard early dispositive motions that would require claim construction before the claim construction contemplated by the Rules. So, patentholders may face fewer early summary judgment motions.

Conclusion

The Rules are evenhanded, benefiting both patentholders and accused infringers. But the specific benefits afforded patentholders will still drive patentholders to file in the Northern District of Illinois over other courts, some that may have faster times to trial, with different rules.

* Click here for my post analyzing the Rules and here for my post analyzing the differences between the Rules and the Proposed Rules.

Piercing the Corporate Veil & Patent Infringement Does Not Meet Twombly/Iqbal Pleading

Posted in Pleading Requirements

SourceOne Global Partners LLC v. KGK Synergize, Inc., No. 08 C 7403, Slip Op. (N.D. Ill. Jul. 21, 2009) (Schenkier, Mag J.).

Judge Schenkier dismissed declaratory judgment defendant/counter-plaintiff KGK Synergize’s ("KGK") patent, trademark, Lanham Act and related state law claims against declaratory judgment plaintiff/counter-defendant SourceOne’s President for failure to meet the Twombly/Iqbal pleading standards.*  The Court held that KGK had not sufficiently pled allegations to support the factors in the veil piercing analysis, in particular:

  • Allegations of episodes of "subpar record keeping" was not sufficient to prove SourceOne’s failure to observe corporate formalities;
  • Conclusory statements that SourceOne’s corporate officers were allegedly not given autonomy to make decisions were not sufficient to show that officers or directors were non-functioning;
  • The President and his family borrowing against a home equity loan to support SourceOne was not sufficient to show SourceOne was a "mere ‘dummy or sham.’"; and
  • the allegation that the President exerted significant control over SourceOne and personified the company was not sufficient to show a failure to maintain arm’s-length relationships among related entities.

The Court also held that KGK’s direct patent infringement claims against the President did not meet the Twombly/Iqbal pleading standards.  KGK’s only allegations about the President were conclusory and tied to SourceOne’s alleged infringing actions.  KGK did not plead sufficient facts about the President independent of SourceOne to support direct patent infringement claims.

*  For more on the application of the Twombly pleading standards to patent cases, click here in the Blog’s archives.

Blawg Review #222 on Twombly & the Power of IP Bloggers

Posted in Legal News

Blawg Review #222 was hosted this week by Duncan Bucknell’s IP Think Tankclick here to read it.  The Review is themed around Australian community festivals, which sound much like American community festivals.  Of particular interest, are links to the following IP-related posts:

  • Drug & Device Law and Point of Law posts discussing the Twombly/Iqbal pleading requirements, a subject I have discussed on this blog here and here.  These posts suggest that Twombly-style pleading is spreading to most substantive legal areas, as the Supreme Court required in Iqbal.
  • Spicy IP’s post highlighting the fact that Managing Intellectual Property magazine named IP bloggers generically as one of the fifty most influential people in IP — click here for the post.

Patent Pleading Standards: A Response

Posted in Pleading Requirements

Niro Scavone’s Joe Hosteny recently responded to my John Marshall Review of Intellectual Property article, The Uneven Application of Twombly in Patent Cases: An Argument for Leveling the Playing Field (click here to read it).  In the article, I argued that Twombly’s increased pleading standard should be applied to patent cases, but that it was being applied unevenly to patent plaintiffs and defendants.  To fix that, I argued that plaintiffs should be required to identify the asserted claims and the products accused of infringing those claims in their complaints. 

Hosteny responded in his February 2009 IP Today column, the Litigator’s Corner — click here to read it — contending that increasing pleading standards, in his experience, has either wrongly streamlined cases, where a defendant attempted to limit plaintiff to its original complaint regardless of what discovery later showed, or has increased the cost of discovery when plaintiff was required to move to compel after defendant unreasonably limited the scope of discovery defendant would provide based upon a more detailed complaint.

Hosteny admits his argument is based upon anecdotal evidence, and I do not fault him for that.  As litigators, we constantly rely upon our own anecdotal evidence to make decisions about our cases.  But I do disagree with Hosteny’s conclusion.  If the Federal Circuit adopted rules requiring more detailed pleadings, or even if just an individual district court did it, just like with other rules a body of law would be created guiding litigants in future cases.  Over time Hosteny’s anecdotal examples would stop recurring as defendants relied upon prior opinions telling them how much discovery beyond the claims was required.  And plaintiffs would learn how long they generally had to amend their complaints to add new claims or products.  So, while increased patent pleading standards might briefly increase the scope of discovery in patent cases, over time increased pleading standards would significantly reduce the cost and scope of patent cases.

Blawg Review #189

Posted in Legal News

Blawg Review #189 is up at Colin Samuels’ Infamy or Praise Blogclick here to read it.  As would be expected of a Blawg Review Sherpa, Samuels’ provided an epic Review, centered around The Rime of the Ancient Mariner.  In addition to excellent writing focused around a strong theme, Samuels features some excellent IP content, including my post about the unequal application of Twombly pleading standards in patent cases:

Maya Richard suggested four tactics to preemptively protect patent assets from patent trolls: monitoring patent filings for applications related to your portfolio; hedging risk with patent infringement insurance; retaining skilled IP counsel to build a case for major patent assets; and joining an industry protection group. Also writing on a patent-related topic was R. David Donoghue, who noted that despite the Twombly decision, "many district courts are requiring that patent defendants plead affirmative defenses and, in some cases, counterclaims to the higher plausibility standard." He suggests remedies for this uneven application of the Twombly standards.

And as an encore, after seeing Twitter driving traffic to his Review, Samuels posted a list of the Twitter accounts of the bloggers featured in Blawg Review #189 — click here to read it.

Uneven Application of Twombly Pleading Standards in Patent Cases

Posted in Legal News

I published an article  in the most recent edition of the John Marshall Review of Intellectual Property Law surveying the application of the Twombly "plausibility" pleading standard, in place of the former any set of facts regime, to patent cases – The Uneven Application of Twombly in Patent Cases: An Argument for Leveling the Playing Field (click here to read it).  I found that district courts have largely followed the Federal Circuit’s one case addressing Twombly, which unfortunately involved a pro se plaintiff, and held that Twombly did not change the pleading standards for patent plaintiffs.  But despite that ruling, many district courts are requiring that patent defendants plead affirmative defenses and, in some cases, counterclaims to the higher plausibility standard.  This creates a harmful dichotomy which can be remedied in two ways:  1) as some courts already do, use strict Local Patent Rules to require early disclosures of plaintiff’s claims followed in short order by defendant’s defenses; or 2) as at least the Western District of Wisconsin already does, require patent plaintiffs to identify the asserted claims and the accused products.  Either or both level the playing field for the parties and come at little cost to plaintiffs who already have a Fed. R. Civ. P. 11 pre-suit investigation requirement.

In addition to my article, there are several excellent pieces in Volume 8, Issue 1 of Review of Intellectual Property Law, including:

  • European IP attorney Paul Cole provides a Eurpoean view of the KSR obviousness standard — click here to read the article;
  • Timothy Trainer looks at inconsistent international application of TRIPS and discusses what can be done to better protect intellectual property worldwide — click here to read the article.
  • Lawrence Ebert (of IPBiz fame) draws lessons from the patenting and licensing of the transistor — click here to read the article;

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Nike v. Wal-Mart: Complaint May Show Future of Twombly Pleading

Posted in Pleading Requirements

Nike, Inc. v. Wal-Mart Stores, Inc., No. 08 C 5840 (N.D. Ill.) (Hibbler, J.).

As I have said before, I generally do not discuss complaints, but Nike’s design patent suit against Wal-Mart last week has drawn significant blog coverage  — click here for the complaint.  And most of that coverage has missed the most interesting element of the complaint, from a legal procedure perspective (and yes, legal procedure is interesting, at least to me):  Nike’s detailed pleadings.  Instead of simply identifying its design patents (related to its Nike Shox product line) and Wal-Mart’s allegedly infringing shoes, Nike put detailed design patent claim charts in its complaint showing an accused product from the same angle as each figure in the design patent.  Here is a portion of one of the charts:

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Jursidictional Effects Test Doctrine Still Requires Some Connection to the Forum

Posted in Jurisdiction

Medallion Products, Inc. v. H.C.T.V., Inc., No. 06 C 2597, 2007 WL 3085913 (N.D. Ill. Oct. 18, 2007) (Darrah, J.).

Judge Darrah dismissed defendant Broadcast Arts Group (“BAG”) for lack of personal jurisdiction, but held that the Court had personal jurisdiction over defendant ICC, Woodridge Specialty Products Corp. and an individual defendant (collectively “ICC Defendants”). Plaintiffs argued that BAG’s tortious acts against plaintiffs, all Illinois residents, created personal jurisdiction based upon the effects test doctrine. But the Court held that the alleged tortious acts against were not sufficient for jurisdiction because BAG was a Florida resident and all of its allegedly tortious acts were performed in Florida or Pennsylvania, at the request of non-Illinois residents. 

The alleged tortious acts of the ICC Defendants, however, did create personal jurisdiction pursuant to the effects test doctrine. The ICC Defendants allegedly entered an agreement to develop, market and sell a counterfeit pet-stain removal product that was packaged in bottles using plaintiff’s “Urine Gone” logo. The alleged acts and resulting injury would have occurred in Illinois.

The Court also held that plaintiffs met the Fed. R. Civ. P. 8 pleading standards as clarified in Atlantic Corp. v. Twombly, ____ U.S. ____, 127 S. Ct. 1955 (2007). So, the Court denied defendant’s motion to dismiss plaintiffs’ state law claims.

Plaintiff Not Required to Plead Trademark’s Secondary Meaning

Posted in Pleading Requirements

Sotelo v. Suburban 171, Inc., No. 07 C 2447, 2007 WL 2570355 (N.D. Ill. Aug. 29, 2007) (Der-Yeghiayan, J.).

Judge Der-Yeghiayan denied defendants’ Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiffs’ Lanham Act unfair competition claim. Plaintiffs operated a salon called “Studio 171.” Defendants took over the location of plaintiffs’ salon and operated their own salon using all of the Studio 171 signage and marks. Defendants argued that plaintiffs’ unfair competition claim should be dismissed because the Studio 171 mark was either descriptive or generic and plaintiff did not plead secondary meaning. But the Court held that the argument was premature. A plaintiff need not plead secondary meaning.* And furthermore, plaintiffs did plead secondary meaning, stating that the Studio 171 mark had developed “considerable value” and become “uniquely associated” with plaintiffs’ business. The Court did, however, dismiss plaintiffs’ RICO claim for failing to plead their fraud allegations with particularity pursuant to Fed. R. Civ. P. 9(b).

* The Court did not cite the Supreme Court’s recent decision in Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955 (2007) (read more about the decision at the University of Chicago Faculty Blog).  But based on other recent opinions citing Twombly for heightened pleading requirements, I wonder if plaintiffs at least should plead secondary meaning now.