EDVA Court Sets Low Bar for Indirect Patent Infringement Claims Under Twombly/Iqbal
For the first time, an Eastern District of Virginia judge has addressed claims of indirect patent infringement claims under Twombly and Iqbal, and it appears that a plaintiff needs only to recite the elements of induced or contributory infringement to defeat a motion to dismiss. The Nielsen Co. v. comScore, Inc., Case No. 2:11CV168 (E.D.Va. Aug. 19, 2011) (Davis, J.).
As we have posted here and here, the Eastern District of Virginia has followed the Federal Circuit’s decision in McZeal v. Sprint Nextel Corp., 501 F.3d 1354 (Fed. Cir. 2007), which held that allegations of direct patent infringement must only meet the requirements of Form 18 of the Federal Rules. See Adiscov, LLC v. Autonomy Corp., 762 F.Supp.2d 826 (E.D.Va. 2011) (Smith, J.) and Taltwell, LLC v. Zonet USA Corp., 2007 U.S. Dist. LEXIS 93465 (E.D. Va. Dec. 20, 2007) (Payne, J.). Nielsen agreed with these rulings and held that the Amended Complaint met the requirements for a claim of direct infringement.
Form 18, however, only addresses direct infringement, and courts around the country have held that McZeal and Form 18 do not apply to indirect infringement. Nielsen likewise held that claims of indirect infringement must be evaluated under the standards set forth in Twombly and Iqbal.
In analyzing the claims of indirect infringement in Nielsen, however, the Court did not look beyond the conclusory allegations of the Amended Complaint. With regard to induced infringement, Nielsen alleged that:
- comScore’s customers “used” the allegedly infringing products;
- comScore had “actual knowledge and constructive notice” of the patent at issue and provided a concrete example of an occasion on which comScore would have received such notice;
The Court’s analysis of the induced infringement allegations is probably correct. The claim of direct infringement by the customers satisfies McZeal just as the direct infringement claim does. Moreover, while Nielsen alleged little regarding the necessary intent, it did provide a factual example of notice of the patent to comScore.
Nielsen’s allegations of contributory infringement, however, were much thinner, consisting only of a recitation of the statutory elements of contributory infringement. Nielsen simply alleged that:
- comScore sells software components that have no substantial noninfringing use;
- these software components were a material part of the patented invention; and
- these software components were specially made or adapted for use in an infringement of the patent.
The Court held that these allegations were sufficient because “it is difficult to imagine a manner in which they could have been pled with greater factual detail.” “A component either is or is not material to a system … a component either has or does not have a substantial noninfringing use.” Moreover, the necessarily negative nature of the element of substantial noninfringing use, the Court held, made it “difficult to conceive how such an allegation could have been more factually detailed.”
But Nielsen’s contributory infringement allegations contained no specificity whatsoever and appear to be just the kind of “threadbare recitals of the elements of a cause of action supported by mere conclusory statements” that the Supreme Court rejected in Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). It’s difficult to argue that Nielsen did anything more than list the elements set forth in the statute along with a conclusory assertion that comScore met those elements.
Moreover, Nielsen's rationale – that Nielsen could not make more detailed allegations of materiality or substantial noninfringing use – is quite broad and may not hold up under scrutiny.
First, the Court’s ruling is not fact specific. The Court does not cite any reason that Nielsen, in particular, could not have provided more detailed allegations. Rather, the Court appears to hold that the elements of materiality and noninfringing use are never susceptible to detailed factual allegations.
Second, that an element of a cause of action is binary (a component is material or not material) or expressed in the negative (substantial noninfringing use) should not necessarily prevent a plaintiff from articulating the basis for its claim. A plaintiff can always explain how or why the defendant meets the elements of a cause of action. Thus, for example, Nielsen could have identified the software components it accused of contributory infringement, explained why they were material to the invention and why they had no substantial noninfringing use.
It’s unclear whether the Court intended to make such a broad ruling, but as it stands, Nielsen decision would allow a plaintiff to overcome a motion to dismiss a contributory infringement claim if an accompanying claim of direct infringement met the lenient standard in McZeal.
As a result, while the impact of Twombly and Iqbal on patent litigation will continue to evolve, it appears that those cases will not pose much of an obstacle in patent litigation in the Eastern District of Virginia.
