Tuesday, January 29, 2008

N.D. Ga.: Supreme Court's Twombly Decision Doesn't Affect Pleadings in Patent Cases

CBT Flint Partners v. Goodmail Systems, Inc. (1:07-CV-1822-TWT) December 14, 2007

CBT filed its complaint against Goodmail Systems and other parties alleging infringement of patents relating to methods for billing a fee to a party initiating an e-mail communication when the party is not on an authorization list. In the complaint, CBT alleged that

“[o]n information and belief, Goodmail makes, uses, offers to sell, and/or sells within the United States and this judicial district products and/or services, including but not limited to email certification services, which include and/or practice one or more of the inventions claims in the ‘114 Patent and/or ‘550 Patent.”
CBT also alleged that
“[o]n information and belief, Goodmail has infringed and continues to infringe, has actively and knowingly induced and continues to actively and knowingly induce infringement of, and/or has contributed to and continues to contribute to acts of infringement of one or more claims of the ‘114 Patent, all in violation of 35 U.S.C. §§ 271 (a), (b), and (c).”
In response, Goodmail moved to dismiss the case on the grounds that CBT failed to state a claim upon which relief can be granted. Specifically, the response contended that the Supreme Court’s recent decision in Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955 (2007) (link), altered the pleading requirements, and asked the Court to extend Twombly’s reasoning from the § 1 Sherman Act antitrust context to the patent context. Prior to this case, the 11th Circuit has not decided whether Twombly has altered pleading standards in the patent context.

From Judge Thomas Thrash's opinion:
Here, the parties have two very different views of Twombly’s effect upon pleading standards. The Defendant’s view is that Twombly demands that litigants provide more factual detail than before, especially in the patent context. The Defendant further argues that the allegations of infringement, inducement of infringement, contributory infringement, and willful infringement are insufficiently plead. The Plaintiff contends that the Complaint adequately sets out the patent infringement claims even in a post Twombly world.

In my view, Twombly did not radically alter the elemntary rules of civil procedure that have governed litigation in the federal courts for the past seventy years. The Court’s forced retirement of Conley v. Gibson’s “no set of facts” language does not change the fundamental command of Rule 8 as to what a valid complaint must look like. Indeed, the Court made clear that it was not imposing a heightened pleading standard . . . As a general matter, I am loath to assume that the Supreme Court circumvented the normal channels for amending the Federal Rules . . . Second, to the extent that Twombly might be plausibly read to alter the requirements for the sufficiency of a complaint, there should be a strong presumption in favor of narrowly confining the decision to its facts.

Third, my view that Twombly did not alter pleading standards - especially in the patent context - is bolstered by looking to the language of Rule 84 of the Federal Rules . . . Fed. R. Civ. P. 84 Form 16 provides a model for stating a claim in a patent infringement case, and contains extremely barebones factual allegations identifying the patent and the infringing product. The form is not appreciably different from the allegations contained in the Complaint.

[N]arrowly understood, the Court’s language merely forecloses litigants from answering motions to dismiss by responding, “Although I can’t make a good faith allegation of illegal conduct now, I bet I’ll find something good during discovery.” In the Sherman Act § 1 context, this means that where independent, parallel behavior is the only basis for an assertion of “agreement,” that is not a ticket for admission to the discovery process. The Court’s plausibility requirement in this context was designed to ensure that the plaintiffs had a reason to move the case along to the discovery phase beyond allegations of lawful behavior. But this is nothing new. The retirement of the “no set of facts” language, however, should not be confused with a requirement that the complaint contain more factual specificity than was required before the Court decided Twombly.
Motion to Dismiss DENIED

Read/Download the opinion here (link)

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