14th Annual Eastern District Bench Bar Conference

Patent Litigation Track

TWOMBLY & RULE 11 DUE DILIGENCE – EAST TEXAS STYLE

October 21, 2010 4:00 p.m.

Panel Discussion

Max Ciccarelli (Moderator) Thompson & Knight

max.ciccarelli@tklaw.com

Jennifer Parker Ainsworth Wilson, Robertson & Cornelius, P.C.

JAinsworth@WilsonLawfirm.com

Allen Gardner Potter Minton

allengardner@potterminton.com

Carl Roth Roth Law Firm

cr@rothfirm.com

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TWOMBLY & RULE 11 DUE DILIGENCE - EAST TEXAS STYLE

DISCUSSION OUTLINE I. Twombly Rule: A pleading must state sufficient factual matter, accepted as

true, to state a claim to relief that is plausible on its face. A claim is plausible on its face when the pleaded factual content allows the court to reasonably infer that the defendant is liable for the misconduct alleged. Ashcroft v. Iqbal et al., 129 S.Ct. 1937, 1940 (2009).

A. When engaging in a Twombly review, courts use a two part analysis:

1. Identify and reject allegations that are legal conclusions. Id. 2. Draw on court experience and common sense to determine

whether a claim is plausible on its face. Id.

B. Identify and Reject Allegations That Are Legal Conclusions.

1. The first step in this analysis leaves some, but very little, room for interpretation because, on balance, there is a difference between factual allegations and legal conclusions. Eastern District Courts have identified some examples:

a) Tune Hunter Inc. v. Samsung Telecommunications

America, No. 2:09 CV 148-TJW 2010 WL 1409245 at *3 (E.D. Tex. April 1, 2010)(stating that “Defendants are each liable for infringement of the ‘275 patent…” is a legal conclusion).

b) Also id. (“defendants’ acts of infringement have caused

damage” and “Tune Hunter has been irreparably damaged” are legal conclusions).

C. Draw on Court Experience and Common Sense To Determine Whether a

Claim Is Plausible On Its Face.

1. See Clear With Computers, LLC v. Hyundai Motor America, Inc., No. 6:09 CV 479 2010 WL 3155885 at *3 (E.D. Tex. March 29, 2010)(where parties had litigated the same patents in the past, the Court stated, “[i]n this context of the parties’ litigation history common sense defies [defendant’s] arguments that it cannot ascertain the alleged infringement.”).

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II. Has Twombly Affected the Requirements For Pleading Direct Infringement?

A. Maybe. Second part of the Twombly analysis leaves much discretion to judges to decide whether a pleading is sufficient.

B. Moreover, Form 18, which is an example of a direct infringement

pleading, has room for interpretation in the description of the accused product.

C. Courts in the Eastern District have examined almost identical language

describing accused products, and concluded that some were sufficient under Twombly and some were not.

1. Cases where language was sufficient:

a) See generally Wiav Networks, LLC v. 3COM Corporation,

No. 5:09 CV 101 2009 WL 6048922 (E.D. Tex., Dec. 15, 2009)(describing accused products as “methods and systems” was sufficient).

b) Tune Hunter Inc. v. Samsung Telecommunications

America, LLC, et al, No. 2:09 CV 148-TJW 2010 WL 1409245 at *4 (E.D. Tex., April 1, 2010)(describing accused products as “music identification systems, devices, products, and/or components thereof” was sufficient).

c) Celltrace LLC v. MetroPCS Communications, Inc., et al.,

No. 6:09 CV 371 (E.D. Tex. March 29, 2010)(denying motion to dismiss where plaintiff’s claim stated, “Each Defendant infringes the ‘933 [patent] by making, using, selling and/or offering to sell a network for communicating with cellular phones, said network comprising base stations and cellular phones”).

d) Clear With Computers, LLC v. Hyundai Motor America,

Inc., No. 6:09 CV 479 2010 WL 3155885 (E.D. Tex. March 29, 2010)(describing accused systems as, “supply chain methods, supply chain systems, sales methods, sales systems, marketing methods, marketing systems, inventory methods and/or and inventory websites” was sufficient).

e) Charles E. Hill & Associates, Inc. v. ABT Electronics, Inc.,

No. 2:09 CV 00313-TJW-CE 2010 WL 3749514 (E.D. Tex. Aug. 31, 2010)(complaint accusing “electronic catalogs” of patent infringement was sufficient).

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f) Fotomedia Technologies, LLC v. AOL, LLC, No. 2:07 CV 255 2008 WL 4135906 (E.D. Tex. Aug. 29, 2008)(accusing “photosharing web site services alone or in combination with personal computers, as well as related services covered by one or more claims of the [patents]” was sufficient).

2. Cases where the language was not sufficient:

a) Realtime Data v. Morgan Stanley, No. 6:09 CV 326 2010 WL 2403779 at *1 (E.D. Tex. June 10, 2010)(granting motion to dismiss where plaintiff’s claims that defendant was “making, using, selling, and or offering for sale, one ore more data compression products and/or services, covered by at least one claim of the [Realtime patent]” was not a sufficient factual allegation).

b) Landmark Tech. LLC v. Aeropostale, No. 6:09 CV 262, slip

op. at 5 (E.D. Tex., March 29, 2010)(unpublished) (accusing “electronic commerce systems” was insufficient).

c) Joao Bock Transaction Sys. Of Texas, LLC v. AT & T, Inc.,

No. 6:09 CV 208 (E.D. Tex., March 29, 2010)(complaint stating that defendant’s “products and services” infringe was insufficient).

d) Bedrock Computer Tech., LLC v. Softlayer Tech., Inc., No.

6:09 CV 269 (E.D. Tex., March 29, 2010)(complaint accusing defendant’s use “of the claimed method and apparatus of the [patent]” was insufficient).

e) I2 Technologies, Inc. v. Oracle Corp., No. 6:09 CV 194

(E.D. Tex., March 29, 2010)(motion to dismiss granted because Plaintiff’s direct infringement claim did not identify accused products or services for each patent in suit).

D. Other District Courts have dismissed claims where the description of the

accused product was much more specific:

1. See Elan Microelectronics Corp. v. Apple, Inc., No. C 09-01531 RS 2009 WL 2972374 at *4 (N.D. Cal. Sept. 14, 2009) (describing accused products as “touch sensitive input devices including, but not limited to, the Smart-Pad” was not enough).

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III. Has Twombly Affected Pleadings for Indirect Infringement?

A. Indirect infringement may be predicated on either infringement by inducement or contributory infringement.

1. Infringement by inducement requires showing:

a) Direct infringement; b) That the alleged inducer knew of the patent; c) The inducer knowingly induced the infringing acts;

d) The inducer possessed a specific intent to encourage

another’s infringement of the patent. Vita-Mix Corp. v. Basic Holding, Inc., 581 F.3d 1317, 1328 (Fed. Cir. 2009); also, Alloc, Inc. v. Int’l Trade Comm’n, 342 F.3d 1361, 1374 (Fed. Cir. 2003).

2. Contributory infringement requires showing:

a) Direct infringement; b) That the defendant knew that the combination for which its

components were especially made was both patented and infringing; and

c) That defendant’s components have no substantial non-

infringing uses. Cross Med. Prods., Inc. v. Medtronic Sofamor Danek, Inc., 424 F.3d 1293, 1312 (Fed. Cir. 2005); also, Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1320 (Fed. Cir. 2009).

B. What is required in a pleading for indirect infringement after Twombly?

1. Each element of a claim for indirect infringement need NOT be plead. See Charles E. Hill & Associates, Inc. v. ABT Electronics, Inc., No. 2:09 CV 00313-TJW-CE 2010 WL 3749514 at *2 (E.D. Tex. Aug. 31, 2010). Also, Fotomedia Technologies, LLC v. AOL, LLC, No. 2:07 CV 255 2008 WL 4135906 (E.D. Tex. Aug. 29, 2008).

2. Which elements of indirect infringement must be plead?

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a) Direct infringement; and b) The identity of direct infringers. See PA Advisors, LLC v.

Google, Inc., et al., No. 2:07 CV 480 2010 WL 4136426 at *8 (E.D. Tex. Aug. 8, 2008).

c) But see Sharafabadi v. Univ. of Idaho, et al., No. C09-

1043JLR 2009 WL 4432367 (W.D. Wash. Nov. 27, 2009)(indirect infringement claim dismissed because Plaintiff did not allege how defendant induced or contributed to another party’s direct infringement or defendant’s knowledge).

3. How specific must the pleadings be regarding direct

infringement and the identity of the infringers?

a) See II, C. above. Also PA Advisors, 2010 WL 4136426 at *8 (Iden tifying direct infringers as “users” was insufficient, but could be cured by indentifying a generic group of end users.).

IV. Has Twombly Affected Pleadings for Inequitable Conduct?

A. Pleadings of inequitable conduct are governed by Rule 9(b) dealing with allegations of fraud. Thus, the elements must be plead with particularity. See Exegen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1326 (Fed. Cir. 2009).

B. Specifically, the “who, what, when, where, and how” of the material

misrepresentation or omission must be averred. Acqis LLC v. Appro International, Inc., et al., No. 6:09 CV 148 2010 WL 3155259 at *2 (E.D. Tex. July 22, 2010).

C. If any one element is missing, the claim may be dismissed. See id. (Where

“what” element was not identified in the pleading, the inequitable conduct claim was dismissed.).

V. Is Twombly the End of Rule 11(b)(3) Pleadings Based on “Information and

Belief”?

A. Under Twombly, would claims based solely on “information and belief” survive? See Elan Microelectronics Corp. v. Apple, Inc., No. C 09-01531 RS 2009 WL 2972374 at *4 (N.D. Cal. Sept. 14, 2009)(“To the extent [defendant] is suggesting that a litigant may avail itself of Rule 11(b)(3) when there are no factual circumstances known to it that would constitute a ‘good reason to believe’ a claim exists, it is reading the rule too

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liberally…regardless of what knowledge may lie exclusively in the possession of [plaintiffs], [defendant] should be able to articulate at least some facts as to why it is reasonable to believe there is infringement.”).

B. How does the language of Rule 11(b)(3) accord with the new requirements

under Twombly?

1. Excerpted from Elan, 2009 WL 2972374 at *4: “Rule 8 requires factual allegations sufficient to show entitlement to relief. Under Rule 11, an attorney or unrepresented party ordinarily is deemed to be representing, under penalty of Rule 11 sanctions, that ‘the factual contentions have evidentiary support.’…Rule 11(b)(3)…merely relieves the attorney or unrepresented party from certifying that he or she already possesses evidentiary support for the factual contentions, it does not release the party from the obligation to advance sufficient factual allegations to satisfy Rule 8.”

VI. Has Twombly Shifted or Increased The Pre-Filing Investigation Burden?

A. Perhaps Twombly has increased the pre-filing burden to plaintiffs. Twombly requires more detailed factual allegations. Requiring more detailed factual allegations requires more information which, theoretically, would require more pre-filing investigation.

B. But see Bender v. LG Electronics U.S.A. Inc., 2010 WL 889541 at *5

(N.D. Cal. Mar. 11, 2010)(Defendants argued that Plaintiff’s failure to provide more specific identification would shift the pre-filing investigation burden, “which would effectively require them to “scour through thousands –if not millions-of circuits in huge devices such as cable modes and mobile phones to try to identify which devices” the Plaintiffs might be accusing)(emphasis added).

VII. Are Motions To Dismiss Moot After Rule 3-1 Disclosures Are Made?

A. Perhaps. See Realtime Data v. Morgan Stanley, No. 6:09 CV 326 2010 WL 2403779 at *1 (E.D. Tex. June 10, 2010)(stating, “A plaintiff’s Patent Rule 3-1 disclosures are far more specific than Rule 8’s pleading requirements. Thus, motions [to dismiss] become moot on a practical level once Rule 3-1 disclosures are made.”).

VIII. Do Twombly or Rule 9(b) Levels of Pleading Apply to False Marking Cases?

A. Elements of a False Marking Claim:

1. Marking an unpatented article; and

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2. Intent to deceive the public. Forest Group, Inc. v. Bon Tool Co.,

590 F.3d 1295, 1300 (Fed. Cir. 2009).

B. The Court of Appeals for the Federal Circuit has indicated, without specifically holding, that Rule 9(b)’s pleading requirements may apply to false marking cases. See Stauffer v. Brooks Brothers, Inc., No. 2009-1428 2010 WL 3397419 at *6 (Fed. Cir. Aug. 31, 2010)(remanding to the district court to consider the merits of defendant’s motion to dismiss which contended that plaintiff’s “complaint fails to allege an ‘intent to deceive’ the public-a critical element of a section 292 claim with sufficient specificity to meet the heightened pleading requirements for claims of fraud imposed by Rule 9(b).”)(quoting from Stauffer v. Brooks Bros., Inc., 615 F.Supp.2d 248, 251 (S.D. N.Y. May 14, 2009).

1. See also Josephs v. Federal-Mogul Corp., No. 10-10617 2010

WL 3803779 at *2 (E.D. Mich. Sept. 23, 2010)(citing Brooks Bros., 2010 WL 3397419 (Fed. Cir. Aug. 31, 2010), stating that the Federal Circuit has indicated that Rule 9(b) applies to false marking claims, then proceeding to apply Rule 9(b)).

C. Other courts are split as to whether Twombly or Rule 9(b)’s pleading

requirements apply to false marking cases.

1. Districts that have held that Rule 9(b) applies to false marking:

a) Eastern District of Pennsylvania in Hollander v. Etymotic Research, Inc., Civ. No. 10-526, 2010 WL 2813015 at *7 (E.D. Pa. July 14, 2010)(“The Court is persuaded by the law of the other district courts holding that false marking claims are fraud-based claims subject to Rule 9(b)’s heightened pleading standards.).

b) Northern District of California in Juniper Networks v.

Shipley, No. 09-0696 2009 WL 1381873 at *4 (N.D. Cal. May 14, 2009)(“The false marking statute is a fraud-based claim, which is subject to the pleading requirements of Federal Rule of Civil Procedure 9(b).”).

c) Northern District of Illinois in Simonian v. Cisco Sys.,

Inc., Civ. No. 1306, 2010 WL 252311 at *3 (N.D. Ill. June 17, 2010)(“Accordingly, the Rule 9(b) pleading standards applies to [defendant’s] false marking claim.”).

2. Districts that have declined to apply Rule 9(b) to false marking

cases:

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a) Eastern District of Texas in Astec Am., Inc. v. Power-One,

Inc., Civ. No. 6:07 CV 464, 2008 WL1734833 at *9 (E.D. Tex. Apr. 11, 2008)(denying a motion to dismiss a false marking claim for failure to plead facts with particularity).

b) Middle District of Florida in Third Party Verification,

Inc. v. Signaturelink, Inc., 492 F.Supp.2d 1314, 1327 (M.D. Fla. 2007)(“There is no case law that has required Rule 9 level of pleading to claims for false marking.”).

3. Case law seems to be trending toward applying Rule 9(b) to

False Marking claims because the second element is akin to a fraud-based claim.

D. In the Eastern District of Texas, how specific do allegations of false

marking need to be?

1. See Astec, 2008 WL1734833 at *11 (E.D. Tex. Apr. 11, 2008)(Claim that defendant “marked its products with an intent to deceive the public” was a sufficient factual allegation).

2. Accord Tune Hunter, 2010 WL 1409245, (E.D. Tex. April 1,

2010)(Sec. I(B) above)(Where similar statements were held to be legal conclusions.).

3. The Eastern District seems to be inclined toward general levels

of pleading and leaning more on discovery to allow parties to harvest facts to develop claims and defenses. See Astec, 2008 WL1734833 at *11 (E.D. Tex. Apr. 11, 2008)(stating “substantive development of a patent case in this district receives appropriate attention soon enough, as the Local Patent Rules and discovery rules are designed to facilitate an efficient and effective exchange of the parties’ claims and defenses).

IX. Does Twombly Only Apply to Plaintiff’s Pleadings, or Does It Also Apply to

Affirmative Defenses?

A. Courts are split on this issue, yet most extend Twombly’s requirements to affirmative defenses. Courts in the following states have done so:

1. Texas – See Teirstein v. AGA Medical Corp., 2009 WL 704138

(E.D. Tex. March 16, 2009)(stating that affirmative defenses are subject to the same pleading standards as complaints and counter claims)(emphasis added).

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2. New York – See Tracey ex rel. v. NVR, Inc., No. 04-CV-6541L 2009 WL 3153150 at *7 (W.D. N.Y. Sept. 30, 2009).

3. California – CTF Development, Inc. v. Penta Hospitality, LLC,

No. C 09-02429-WHA 2009 WL 3517617, at *8 (N.D. Cal. Oct. 26, 2009).

4. Also, in Wisconsin, Illinois, Louisiana, Minnesota, Vermont,

Missouri, Kansas, and Florida. See Brian Robinson and Alithea Z. Sullivan, District Courts Extend Twombly to Affirmative Defenses (October 14, 2010, 7:15 PM), http://www.abanet.org/litigation/litigationnews/trial_skills/082710-trial-evidence-Twombly-district-courts.html.

B. Courts in a few states have declined to apply Twombly’s standards to

affirmative defenses:

1. Pennsylvania – See Romantine v. CH2M Hill Eng’rs, Inc., No. 09-973 2009 WL 3417469, at *1 (W.D. Pa. Oct. 23, 2009)(stating that Twombly only applied to pleadings under Rule 8(a)(2) and not Rule 8(b) regarding affirmative defenses).

2. Alabama – See Westbrook v. Paragon Sys., Inc., No. 07-0714-

WS-C, 2007 U.S. Dist. LEXIS 88490, at *1-2 (S.D. Ala. Nov. 29, 2007)(also declining to extend Twombly from Rule 8(a) to 8(b)).

3. Colorado – See Holdbrook v. SAIA Motor Freight Line, LLC,

No. 09 CV 02870-LTB-BNB, 2010 WL 865380, at *2 (D. Colo. Mar. 8, 2010)(stating, “it is reasonable to impose stricter pleading requirements on a plaintiff who has significantly more time to develop factual support for his claims than a defendant who is only given 20 days to respond to a complaint and assert its affirmative defenses.”).

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Twombly & Rule 11 Due Diligence – East Texas Style

Max Ciccarelli (Moderator)Thompson & Knight

Jennifer Parker AinsworthWilson, Robertson & Cornelius, P.C.

Allen GardnerPotter Minton

Carl RothRoth Law Firm

14th Annual Eastern District Bench Bar Conference

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Some of the Issues

• The Twombly Rule

• Facts vs. Legal Conclusions

• Court’s Role / Discretion

• Naming Accused Products

• Direct vs. Indirect Infringement

• Inequitable Conduct

• “Upon information and belief”

• Has Twombly Increased Pre-Filing Investigations?

• Are Motion to Dismiss Moot After PICs?

• Impact on False Marking Cases

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The Twombly Rule

To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” (Citations omitted). A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. (Citations omitted)

Iqbal (citing Twombly)

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Rule 8(a)

A pleading that states a claim for relief must contain:

(1) a short and plain statement of the grounds for the court’s jurisdiction, unless the court already has jurisdiction and the claim needs no new jurisdictional support;

(2) a short and plain statement of the claim showing that the pleader is entitled to relief; and

(3) a demand for the relief sought, which may include relief in the alternative or different types of relief.

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Form 18

COMPLAINT FOR PATENT INFRINGEMENT

1. <Statement of Jurisdiction. See Form 7.>

2. On <Date>, United States Letters Patent No. <__________________> were issued to the plaintiff for an invention in an electric motor. The plaintiff owned the patent throughout the period of the defendant's infringing acts and still owns the patent.

3. The defendant has infringed and is still infringing the Letters Patent by making, selling, and using electric motors that embody the patented invention, and the defendant will continue to do so unless enjoined by this court.

4. The plaintiff has complied with the statutory requirement of placing a notice of the Letters Patent on all electric motors it manufactures and sells and has given the defendant written notice of the infringement.

Therefore, the plaintiff demands:

(a) a preliminary and final injunction against the continuing infringement;(b) an accounting for damages; and

(c) interest and costs.

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The Twombly Two Part Analysis

Two part analysis:

(1) Identify and reject allegations that are legal conclusions

(2) Draw on court experience and common sense to determine whether a claim is plausible on its face

Iqbal

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Legal Conclusion vs. Fact(Tune Hunter v. Samsung) (Ward)

• The ’275 patent is presumed valid.

• Defendants are each liable for infringement of the ’275 patent pursuant to 35 U.S.C. § 271.

• [D]efendants’ acts of infringement have caused damage.

• Tune Hunter has been irreparably damaged.

• Tune Hunter owns the ’275 patent.

• Defendants had knowledge of the ’275 patent.

• “[B]y making, using, selling, offering to sell and/or importing and/or causing others to make, use, sell, offer to sell and/or import, … music identification systems, devices, products, and/or components thereof that embody, are made by and/or are covered by, in whole or in part, one or more of the claims of the '275 patent.”

FactsLegal Conclusions

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The Twombly Two Part Analysis

Two part analysis:

(1) Identify and reject allegations that are legal conclusions

(2) Draw on court experience and common sense to determine whether a claim is plausible on its face

Iqbal

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Drawing on Court’s Experience (Naming Accused Products)(Clear With Computers v. Hyundai) (Davis)

Court:

In the context of the parties' litigation history, common sense defies Hyundai's arguments that it cannot ascertain the alleged infringement.

Assertion in complaint:

“sales methods, sales systems, marketing methods and/or marketing systemscovered by one or more claims of the '342 Patent, including making and/or using methods and/or apparatuses related to various websites (including, but not limited to, www.hyundaiusa.com www.hyundaiusa.com, www.hyundaigenesis.com and/or www.elantratouring.com)”

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Drawing on Court’s Experience (Naming Accused Products)(Clear with Computers v. Bergdorf) (Davis)

Court:

Direct Infringement: Plaintiff’s direct infringement claims conform to Form 18 and therefore are sufficient.

Assertion in complaint:

“Upon information and belief, Defendant BERGDORF has been and now is directly, jointly and/or and indirectly infringing, by way of inducing infringement and/or contributing to the infringement of the [patent]…by, among other things, methods practiced on various websites (including, but not limited to, www.bergdorfgoodman.com), making and using supply chain methods, sales methods, sales systems, marketing methods, marketing systems, and inventory systems covered by one or more claims of the ‘739 Patent to the injury of CWC.”

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Drawing on Court’s Experience (Naming Accused Products)(Tune Hunter v. Samsung) (Ward)

Court:

Defendants further argue that Tune Hunter's complaint “makes no mention of any product-or even a class of products-sold by any Defendant.” (Citation omitted). As mentioned above, each of the Defendants provide different products and services. Tune Hunter's complaint accuses “music identification systems, devices, products, and/or components thereof,” which Defendants argue lacks sufficient specificity to give notice. In light of the technology at issue, the Court is of the opinion that Defendants have sufficient notice as to what they must defend.

Assertion in complaint:

“music identification systems, devices, products, and/or components thereofthat embody, are made by and/or are covered by, in whole or in part, one or more of the claims of the '275 patent”

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Drawing on Court’s Experience (Naming Accused Products)(Wiav Networks v. 3COM) (Folsom)

Court:

“Taking all facts pled in the complaint as true, the Court finds that WIAV has sufficiently pled factual allegations that would raise a right to relief that is ‘plausible on its face.’”

Assertion in complaint:

“[E]ach Defendant has used and continues to use the technology claimed by the ‘497 Patent and the ‘338 Patent in systems and methods that it makes, ... [etc.]”

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Drawing on Court’s Experience (Naming Accused Products)(Charles Hill v. ABT) (Ward / Everingham)

Court:

Direct Infringement: Describing the accused products as “electronic catalogs” “is sufficient for the pleading stage.”

Assertion in complaint:

Each of the Defendants is infringing the [patent] directly, and/or jointly with other entities, by, without authority, importing into the United States, and/or making, using, selling, and/or offering for sale in the United States, including within the State of Texas and the Eastern District of Texas, their respective electronic catalogs, which electronic catalogs embody the patented inventions…

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Drawing on Court’s Experience (Naming Accused Products)(FotoMedia v. AOL) (Ward / Everingham)

Court:

“The level of detail provided by FotoMedia in its allegations of indirect infringement are similar to those approved by Form 16, the Federal Circuit, and the courts in this district.”

Assertion in complaint:

“[Defendants] have been and are now directly infringing and indirectly infringing by way of inducing infringement and/or contributing to the infringement of the [patents] in the State of Texas, in this judicial district, and elsewhere in the United States by, among other things, making, using, selling, offering for sale, or importing photosharing web site services alone or in combination with personal computers, as well as related services covered by one or more claims of the [patents].”

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Drawing on Court’s Experience (Naming Accused Products)(Celltrace v. MetroPCS) (Davis)

Court:

Direct Infringement: “Celltrace’s direct infringement allegations comply with the examples set forth in Form 18 and therefore satisfy Rule 8.”

Assertion in complaint:

“Each Defendant infringes the ‘933 [patent] by making, using, selling and/or offering to sell a network for communicating with cellular phones, said network comprising base stations and cellular phones… “

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Drawing on Court’s Experience (Naming Accused Products)(Realtime Data v. Morgan Stanley) (Davis)

Court:

Direct Infringement: “While Realtime accuses Defendants’ ‘data compression products and/or services,’ the Court find this to be a vague identification and without further context it is unclear as to what ‘data compression products and/or services’ refers…. [W]hile a complaint need not specify P.R. 3-1 disclosures, some greater specificity is required here to give Defendants sufficient notice of the claims alleged.”

Assertion in complaint:

“Defendants have been and are now directing infringing and/or indirectly infringing by inducement and/or contributing to infringement of the [Realtime patent] in this District and elsewhere in violation of 35 U.S.C. § 271 including making, using, selling, and/or offering for sale, one or more data compression products and/or services, covered by at least one claim of the [Realtime patent].”

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Drawing on Court’s Experience (Naming Accused Products)(Landmark v. Aeropostale) (Davis)

Court:

Direct Infringement: “While Landmark accuses Defendants’ ‘electronic commerce systems,’ this is an extremely vague identification. Without further context, it is unclear as to what ‘electronic commerce systems’ refers. Additionally, the identification is not specific to any particular Defendant…. While Form 18 does not set a high bar for what must be alleged, Landmark has not met that bar.”

Assertion in complaint:

“Defendants have been and are now infringing the '951 Patent, the '319 Patent, and the '508 Patent, in this judicial district and elsewhere, by selling and distributing their products and services using electronic commerce systems, which, individually or in combination, incorporate and/or use subject matter claimed by the '951 Patent, the '319 Patent, and the '508 Patent.”

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Drawing on Court’s Experience (Naming Accused Products)(I2 Technologies v. Oracle) (Davis)

Court:

Direct Infringement: “Plaintiff’s direct infringement claims do not conform to Form 18 because it does not identify any accused products or services for each patent in suit.”

Assertion in complaint:

“Oracle has infringed and/or continues to infringe the Patents-in-Suit. Oracle is liable for direct infringement, as well as indirect infringement by way of inducement or contributory infringement, of the Patents-in-Suit…”

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Drawing on Court’s Experience (Naming Accused Products)(Joao Bock v. AT & T) (Davis)

Court:

Direct Infringement: “Plaintiff’s direct infringement claims do not conform to Form 18 because it does not identify any accused products or services.”

Assertion in complaint:

“Upon information and belief, the Defendants have infringed and continue to infringe one or more claims of the ‘003 patent by making, using importing, providing, offering to sell, advertising and/or selling (directly or through intermediaries), in this District and elsewhere in the United States, infringing products and services….Upon information and belief, the Defendants have also contributed to the infringement of one or more claims of the [patent]…”

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Drawing on Court’s Experience (Naming Accused Products)(Bedrock v. Softlayer) (Davis)

Court:

Direct Infringement: “Plaintiff’s direct infringement claims do not conform to Form 18 because it does not identify any accused products, services, or methods or other infringing acts for the patent-in-suit.”

Assertion in complaint:

“Defendants infringe the Patent-in-Suit directly, contributorily and/or by active inducement by importing, manufacturing, using, marketing, distributing, selling, and/or supporting products and/or services that fall within one or more claims of the [patent].”

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Direct Infringement – Naming Accused ProductsSummary

• sales methods, sales systems, marketing methods and/or marketing systems

– Clear With Computers v. Hyundai (Davis)

• methods practiced on various websites (including, but not limited to, www.bergdorfgoodman.com), making and using supply chain methods, sales methods, sales systems, marketing methods, marketing systems, and inventory systems

– Clear With Computers v. Bergdorf (Davis)

• music identification systems, devices, products, and/or components thereof

– Tune Hunter v. Samsung (Ward)

• systems and methods that it makes– Wiav Networks v. 3COM (Folsom)

• their respective electronic catalogs– Charles Hill v. ABT (Ward / Everingham)

• photosharing web site services alone or in combination with personal computers, as well as related services

– FotoMedia v. AOL (Ward / Everingham)

• a network for communicating with cellular phones, said network comprising base stations and cellular phones

– Celltrace v. MetroPCS (Davis)

• one or more data compression products and/or services– Realtime Data v. Morgan Stanley (Davis)

• by selling and distributing their products and services using electronic commerce systems

– Landmark v. Aeropostale (Davis)

• has infringed and/or continues to infringe – I2 Technologies v. Oracle (Davis)

• infringing products and services– Joao Bock v. AT&T (Davis)

• products and/or services – Bedrock v. Softlayer (Davis)

Sufficient Insufficient

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Indirect Infringement –The Elements

• Inducement

– Direct infringement

– Inducer knew about the patent

– Inducer knowingly induced the infringing acts

– Inducer possessed a specific intent to encourage another’s infringing of the patent

• Contributory

– Direct infringement

– Defendant knew that the combination for which its components were especially made was both patented and infringing

– Defendant’s components have no substantial non-infringing uses

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Indirect Infringement –Do Not Need To Plead Every Element

“[N]either the patent infringement pleading form nor the holdings from the Federal Circuit require the pleading of each individual element of a claim for indirect infringement.”

Fotomedia v. AOL (Ward/Everingham); Charles E. Hill & Associates v. ABT Electronics (Ward/Everingham)

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Indirect Infringement –What Must Be Plead

• Identity of the direct infringer

Complaint: “that comprise systems and methods for automatically generating personalized user profiles.”

Court: “The Court finds that the reference to users is not sufficient. However, the Court also notes that the pleading does not require much beyond the amended complaint other than identifying the generic group of end users. As to the “material elements,” the Court finds that no cases have required any further details for inducement of infringement or contributory infringement other than the identification of users that directly [infringe].”

– PA Advisors v. Google (Folsom)

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Indirect Infringement(Charles Hill v. ABT) (Ward / Everingham)

Court:

Indirect Infringement: Claims of indirect infringement do not require the pleading of each individual element of a claim for indirect infringement.

Assertion in complaint:

Each of the Defendants is infringing the [patent] directly, and/or jointly with other entities, by, without authority, importing into the United States, and/or making, using, selling, and/or offering for sale in the United States, including within the State of Texas and the Eastern District of Texas, their respective electronic catalogs, which electronic catalogs embody the patented inventions…

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Indirect Infringement(Celltrace v. MetroPCS) (Davis)

Court:

Indirect Infringement: “Celltrace indentifies the alleged direct infringers as Defendants’ customers. Celltrace has identified accused instrumentalities. Celltrace’s claims are plausible without further factual specificity and further facts are not required. Rule 8 does not require detailed factual support for each element of indirect infringement.”

Assertion in complaint:

“Each Defendant has contributed to the infringement of, and/or induced the infringement of, one or more claims … by making, using, selling, and offering to sell a network comprised of base stations and cellular phone to customers ….”

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Indirect Infringement(PA Advisors v. Google) (Folsom)

Court:

Indirect Infringement: These accusations are sufficient to make out a claim for indirect infringement because each individual element need not be pled. Moreover, Defendant’s co-defendants were able to answer the complaint.

Assertion in complaint:

“Upon information and belief, Defendant Yahoo has been and now is directly, literally and/or, upon information and belief, jointly, equivalently and/or indirectly infringing by way of inducing infringement by others and/or contributing to the infringement by others of the [patents]…providing, among other things, methods and systems (including, but not limited to, Yahoo! Search Marketing…) that comprise systems and methods for automatically generating personalized user profilesand for utilizing the generated profiles to perform adaptive Internet or computer data searches as covered by one or more claims of the [patent].”

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Indirect Infringement(I2 Technologies v. Oracle) (Davis)

Court:

Indirect Infringement: “I2’s indirect infringement claims do not identify any accused products or services, nor does i2 expressly identify a direct infringer, nor does i2 specify which patents are allegedly indirectly infringed.”

Assertion in complaint:

“Oracle has infringed and/or continues to infringe the Patents-in-Suit. Oracle is liable for direct infringement, as well as indirect infringement by way of inducement or contributory infringement, of the Patents-in-Suit…”

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Indirect infringement(Joao Bock v. AT & T) (Davis)

Court:

Indirect Infringement: “Plaintiff’s indirect infringement claims do not identify any accused products or services, nor do they expressly identify a direct infringer.”

Assertion in complaint:

“Upon information and belief, the Defendants have infringed and continue to infringe one or more claims of the ‘003 patent by making, using importing, providing, offering to sell, advertising and/or selling (directly or through intermediaries), in this District and elsewhere in the United States, infringing products and services….Upon information and belief, the Defendants have also contributed to the infringement of one or more claims of the [patent]….”

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Indirect Infringement(Bedrock v. Softlayer) (Davis)

Court:

Indirect Infringement: “Plaintiff’s indirect infringement claims do not identify any accused products or services, nor do they expressly identify a direct infringer.”

Assertion in complaint:

“Defendants infringe the Patent-in-Suit directly, contributorily and/or by active inducement by importing, manufacturing, using, marketing, distributing, selling, and/or supporting products and/or services that fall within one or more claims of the [patent].”

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Indirect Infringement(Clear with Computers v. Bergdorf) (Davis)

Court:

Indirect Infringement: Plaintiff’s indirect infringement claims are insufficient because they do not “identify which claims are indirectly infringed, fail to identify which methods or systems indirectly infringe, and fail to identify a direct infringer.”

Assertion in complaint:

“Upon information and belief, Defendant BERGDORF has been and now is directly, jointly and/or and indirectly infringing, by way of inducing infringement and/or contributing to the infringement of the [patent]…by, among other things, methods practiced on various websites (including, but not limited to, www.bergdorfgoodman.com), making and using supply chain methods, sales methods, sales systems, marketing methods, marketing systems, and inventory systems covered by one or more claims of the ‘739 Patent to the injury of CWC.”

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Twombly & Rule 11 Due Diligence – East Texas Style

Max Ciccarelli (Moderator)Thompson & Knight

Jennifer Parker AinsworthWilson, Robertson & Cornelius, P.C.

Allen GardnerPotter Minton

Carl RothRoth Law Firm

14th Annual Eastern District Bench Bar Conference