Form Over Substance?

Today, in In re Bill of Lading Transmission and Processing System Patent Litigation (linked here and reproduced below), the Federal Circuit Court of Appeals gave a divided answer to an arcane question of civil procedure that has real–world consequences to businesses defending patent lawsuits. How much does the plaintiff have to say to state a claim of direct patent infringement?

When we addressed this question a few months back, we put the question this way: When two rules collide, what gives? On the one hand, the Supreme Court in its two recent opinions in Bell Atlantic v. Twombly (2007) and Ashcroft v. Iqbal (2009) ratcheted up the requirements for stating a civil claim in federal court. On the other hand, Form 18 of the Federal Rules of Civil Procedure requires very little of a patent plaintiff to state a claim for direct patent infringement. Indeed, the form requires so little and is so dated that this blog’s authors proposed their own reform of Form 18 in early 2011.

In the In re Bill of Lading opinion, the majority (Judges O’Malley and Prost) give precedence to Form 18. They argue that Federal Rule of Civil Procedure 84 is clear that a pleading that follows a sanctioned form by definition satisfies the requirements of the federal rules. “Accordingly, to the extent the parties argue that Twombly and its progeny conflict with the Forms and create different pleadings requirements, the Forms control.” Whatever the problems with Form 18, the court continues, “it is not within our power to rewrite it; only an act of Congress can revise the Federal Rules.”

Writing in dissent on the majority’s legal analysis (although concurring that the complaints in this instance were adequate), Judge Newman sees the majority’s opinion as creating a separate pleading regime for patent cases in violation of the Supreme Court’s holdings in Twombly and Iqbal. Under this separate regime, “the complaint need state only the patent number and date, the general subject matter, and that the marking requirement was met.” Judge Newman notes the December 2011 Report of the Advisory Committee on the Federal Rules of Civil Procedure, which concluded, “The Form 18 complaint for patent infringement has created particular difficulties for lower courts.” Quoting the Report’s discussion of our own proposal to amend Form 18, she writes, “The report states that a proposed, ‘more detailed substitute,’ ‘echoes the common lament that the Form 18 model of a complaint for patent infringement is woefully inadequate.’” Compounding the problem, Judge Newman notes that adherence to Form 18 in the face of Twombly and Iqbal means that two different pleading standards apply to different counts of the same patent infringement complaint, one for claims of direct infringement (Form 18) and another for claims of indirect infringement (Twombly and Iqbal). In a conflict between Supreme Court authority and the forms attached to the Federal Rules, Judge Newman would follow the Supreme Court.

Given this divided outcome—and the potential stakes for litigants—we might well see a petition for rehearing en banc as the next stage of this debate.

In Re Bill of Lading (Fed Cir June 7, 2012)

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Posted by David Swetnam-Burland