Key for IP Practitioners: Preparation, Preparation, Preparation!

Two recent decisions highlight the importance of proper preparation during patent litigation, from the perspective of both plaintiffs and defendants.

In In re Bill of Lading, No. 2010-1493, 2012 U.S. App. LEXIS 11519 (Fed. Cir. June 7, 2012), the Court held that direct infringement only needs the same level of pleading as that outlined in Form 18 (which is a sample complaint for direct infringement) of the Appendix of Forms to the Federal Rules of Civil Procedure, while in contrast, indirect infringement needs to be pled in accordance with the higher standard delineated in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009). In re Bill of Lading, 2012 U.S. App. LEXIS 11519, at *17-27.

Applying these legal standards, the Court found that the plaintiff properly pled direct infringement and inducement, but failed to plead contributory infringement because the plaintiff did not state why the defendants’ products have no substantial non-infringing uses. Id. at *27-37. Rather, the plaintiff actually pled allegations from which the Court determined there were substantial non-infringing uses. Id. at *35. In re Bill of Lading is a reminder to plaintiffs that boilerplate allegations of indirect infringement will not suffice, and that plaintiffs will have to ensure they conduct the proper fact gathering before asserting this type of infringement.

We previously reported on decisions that scrutinized the sufficiency of various pleadings at the District Court level. Please see here and here.

An investigation from the International Trade Commission also provides another important caution, but this time for defendants. In Certain Dynamic Random Access Memory and NAND Flash Memory Devices and Products Containing Same, 337-TA-803 (April 11, 2012, Order No. 36) , the Court held that the respondents (which are the defendants in an ITC investigation) could not amend their notice of prior art because they failed to show why they “could not have uncovered publicly available patents and articles from widely known journals prior to” the deadline.

This ITC investigation shows that defendants–especially in the ITC where investigations move quickly–must promptly locate prior art or run the risk of eventually being precluded. The difference though between this investigation and In re Bill of Lading is that in the former the defendants had a limited amount of time to research prior art, while in the latter, the plaintiff possibly had the option of filing at a later date. Moreover, because the invalidity defense is of course critical to any defendant’s case, the loss of potentially explosive prior art will significantly alter each party’s strategic position whereas allegations of indirect infringement may be amended at a later date depending on the procedural posture of the case.

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