Both Houses of Congress have proposed bills – neither of which have been enacted – aimed at undoing two recent Supreme Court decisions that generally require plaintiffs to plead more than conclusory allegations in complaints. On November 19, 2009, Representative Jerrold Nadler (D-NY) introduced the Open Access to Courts Act of 2009.[1] The bill proposes an amendment to Title 28 of the United States Code to effectively prohibit a court from dismissing a complaint under Rule 12 on the basis that the complaint “does not show the plaintiff’s claim to be plausible” or is “insufficient to warrant a reasonable inference that the defendant is liable for the misconduct alleged.”[2] According to Rep. Nadler, the bill will allow the judicial system to return to “settled procedural law in order to ensure that all have an opportunity to enforce their rights in court.”[3]

This bill has the same goal as a bill Senator Arlen Specter (D-PA) introduced in the Senate a few months earlier, on July 22, 2009. The Senate bill, the Notice Pleading Restoration Act of 2009,[4] provides that Federal courts shall not dismiss complaints under rule 12(b)(6) or (e) of the Federal Rules of Civil Procedure, except under the standards set forth by the Supreme Court of the United States in Conley v. Gibson.[5] The Conley v. Gibson case has, until recently, set the standard of what a court considers necessary in a complaint.

Determining the sufficiency of pleadings changed when the Supreme Court rendered its decision in Ashcroft v. Iqbal.[6] That decision modified existing law that a complaint must simply give the defendant fair notice of a claim and the grounds upon which it rests. After Iqbal, a complaint may be challenged for the lack of “plausibility” of the claim based on articulated facts in the complaint.[7] That is, factual allegations must be sufficient to show that the pleader is entitled to relief and not that there be a mere possibility that the defendant acted unlawfully.[8] Without having to accept conclusory allegations as true, a court is required to determine whether the factual allegations “give rise to an entitlement to relief.”[9]

Iqbal reinforced the Supreme Court’s decision in an earlier antitrust case, Bell Atlantic Corp. v. Twombly,[10] where the Court ruled that to properly state a claim of conspiracy, a complaint must allege facts that suggest the existence of a conspiracy.[11] It is not enough to allege the elements of a claim – a plaintiff must allege “enough facts to state a claim to relief that is plausible on its face,” the Court stated.[12]

Although Iqbal and Twombly do not address patent litigation, their holdings affect the level of sufficiency of facts that a complaint may need to allege in a patent suit. It could be argued that those holdings seem at odds with the current Form 18 of the Federal Rules of Civil Procedure,[13] which simply identifies a general allegation of infringement and a general identification of an allegedly infringing device. The level of detail included in Form 18 does not necessarily exhort the disclosure of facts supporting the plausibility of the claim of infringement.

The Federal Circuit addressed the sufficiency of a complaint for patent infringement in the context of Twombly in McZeal v. Sprint Nextel Corp.[14] In McZeal, the Federal Circuit vacated a Rule 12(b)(6) dismissal stating that a “plaintiff in a patent infringement suit does not have to specifically include each element of the claims of the asserted patent.”[15] More recently, however, the Federal Circuit addressed the sufficiency of pleadings in view of Iqbal and Twombly in Colida v. Nokia Inc.[16] The court stated that according to the recent Supreme Court clarification, the plaintiff’s factual allegations must “‘raise a right to relief above the speculative level’ and cross ‘the line from conceivable to plausible.”’[17] In support of the district court’s decision to dismiss the complaint, the Federal Circuit reasoned that an ordinary observer would not confuse the defendant’s accused product with the pleaded patented designs.[18] After a substantive comparison of the patent claims with the accused product, the Federal Circuit found proper the finding that plaintiff stated “nothing about how the accused [device] bears [the patented] design or anything remotely similar to it.”[19] The Federal Circuit’s apparent departure from McZeal in Colida shows that district courts may require additional specificity in complaints for patent infringement.

While parties and the courts are wrangling with these issues, both Congressional bills are making their way through the legislative process. The Senate Judiciary Committee recently heard testimony on these issues. At that hearing, a witness testified that there is not enough information to conclude that the Iqbal and Twombly decisions unfairly restrict plaintiffs.[20] Senator Patrick Leahy (D-Vt) expressed concern that there are reports of more than 1,600 cases before the lower federal courts that have cited the Supreme Court rulings.[21] While it is too early to tell how the bills will fare in Congress, whatever the outcome, judicial decisions citing the Iqbal and Twombly standard are increasing, and litigants should be aware that, for now, these decisions are the law of the land.

This article was prepared by Miriam L. Quinn (mquinn@fulbright.com or 214 855 7176) from Fulbright's Intellectual Property and Technology Practice Group. For additional information, please feel free to contact Miriam Quinn or Michael C. Barrett (mbarrett@fulbright.com or 512 536 3018).