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Complaint Dismissed: Paul Allen’s Patent Trolling Complaint Against Apple, Google, Facebook, Yahoo and Others Hits Snag


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: December 13, 2010 @ 3:36 pm
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On Friday, August 27, 2010, Interval Research Corporation (a Paul Allen non-practicing entity) brought a patent infringement lawsuit against a who’s who of tech companies in the United States District Court for the Western District of Washington at Seattle, specifically suing AOL, Inc., Apple, Inc., eBay, Inc., Facebook, Inc., Google Inc., Netflix, Inc., Office Depot, Inc., OfficeMax Inc., Staples, Inc., Yahoo! Inc. and YouTube, LLC. The complaint alleged infringement of United States Patent Nos. 6,263,507, 6,034,652, 6,788,314 and 6,757,682, but provided no useful information or detail as to the theory of infringement, did not identify the allegedly infringing devices and did not mention which claims were believed to be infringed. In short, it was a typical patent infringement complaint that offered absolutely no useful information and initiated a complaint by ambush, which is not what is supposed to be allowed. Thankfully, on Friday, December 10, 2010, District Court Judge Marsha Pechman took a stand and dismissed Mr. Allen’s woefully inadequate complaint. Perhaps it will no longer be business as usual for patent trolls; only time will tell.

In her ruling, Judge Pechman explained:

Plaintiff’s complaint does not satisfy Rule 8 or Form 18 because Plaintiff has failed to identify the infringing products or devices with any specificity. The Court and defendants are left to guess what devices infringe on the four patents. Plaintiff only indicates that Defendants have websites, hardware, and software that infringe on the patents or that they are encouraging third parties to use products that infringe on the patents. This fails to indicate to Defendants which of their myriad products or devices may be at issue. These allegations are insufficient to put Defendants on “notice as to what [they] must defend.” McZeal, 501 F.3d at 1357 (citing Twombly, 550 U.S. at 565 n.10). They are also too generic to satisfy Form 18. Plaintiff urges the Court and Defendants to have patience and simply await delivery of the infringement contentions as required by Local Rule. This ignores that Local Rules do not trump the Federal Rules of Civil Procedure or the Supreme Court’s mandate in Twombly and Iqbal. Fed. R. Civ. P. 83(a)(1); Iqbal, 129 S. Ct. at 1950, 1953. Plaintiff’s complaint is little more than labels and conclusions, which are inadequate under Twombly, Iqbal, and even Form 18. The Court GRANTS the motions to dismiss.

The complaint filed was indeed extremely sparse, basing the asserted claims of liability off only the title of the asserted patents. See Microsoft Co-Founder Paul Allen Sues Apple, Google, Facebook, Yahoo and Others for Patent Infringement.

Unfortunately, the motion to dismiss was not granted with prejudice.  I realize that granting the motion to dismiss with prejudice would have been the nuclear option, but it is clear that this and virtually all other troll complaints violate the Federal Rules of Civil Procedure as the Supreme Court has interpreted them most recently in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) and Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). So while it is unrealistic to expect a District Court Judge to implement the nuclear option, unless and until some judge somewhere does institute the nuclear option complaints in patent infringement cases will be inadequate. While that might be acceptable when Ultra-mega Big Company is suing Colossal Giant Incorporated, the truth is that patent trolls are increasingly suing small and medium size companies based on nothing more than the title of their patent generally relating to the industry the defendant is engaged in. The defendants are placed in the position of having to figure out what they have done wrong, if anything, without any information. In most cases these small and medium size companies have never been contacted before being sued, and we all know that this is a tactic to get them to roll and pay something, anything, so the patent troll can wave about examples of licenses that start to set the floor for damage calculations later.

In any event, with respect to the dismissal without prejudice, Judge Pechman explained:

The Court gives Plaintiff leave to file an amended complaint within 15 days of the scheduling conference, which is set to take place on December 13, 2010. This is the same date by which Plaintiff contends it will file its purportedly curative and detailed infringement contentions. See Local Patent Rule 120 (requiring disclosure of asserted claims and infringement contentions within 15 days of a scheduling conference); (Dkt. No. 123 at 10.) Thus, the task of amending the complaint with the necessary detail should not be onerous.

So now Mr. Allen and Interval Research Corporation need to file an amended complaint to include the type of information that should have been present in the first place. Obviously, given that they would have had to do this pursuant to Local Patent Rule 120 there can be no legitimate argument of hardship.  Talk about being backed into a corner and being told to put up or shut up!  Score one for Judge Pechman!

In terms of the type of information Judge Pechman will be expecting in the amended complaint, she explained:

In amending the complaint, Plaintiff must identify which of Defendants’ products, devices, or schemes allegedly infringe on Plaintiff’s patents. Plaintiff need not describe how the accused devices satisfy each limitation of each asserted claim. See McZeal, 501 F.3d at 1357. Plaintiffs should, where possible, set forth the specific websites that are at issue and identify the hardware and software with adequate detail for Defendants to know what portions of their business operations are in play in this litigation. Where possible, the Court urges Plaintiff to identify the infringing hardware and software with any relevant product identifiers (e.g., SKUs, barcodes, or other identifiers) and descriptions. Plaintiff must also add greater factual detail as to the conduct or devices that make or encourage Defendants’ customers to “use products that display information in a way that occupies the peripheral attention of the user” (See, e.g., Compl. ¶¶ 33, 39.) This is consistent with Twombly and Iqbal, which require Plaintiff to identify the factual basis for its claims. See, e.g., Bender v. L.G. Elecs. U.S.A., Inc., No. C09-02114 JF (PVT), 2010 WL 889541, at *3 (N.D. Cal. Mar. 11, 2010). This is also consistent with Form 18, which requires identification of the product or device alleged to infringe on the patent.

So how does all of this manage to be so confusing?  There is a model complaint for patent infringement actions that is attached to the Federal Rules of Civil Procedure.  It was obviously created by someone who knows nothing about patents or patent infringement, because all that is required is that the plaintiff assert the title of the patent and authorizes the provision of no useful information.  It is said to be deemed appropriate.  Notwithstanding, it is the Supreme Court that will be the final arbiter of whether the model complaint is appropriate, and given its recent jurisprudence it seems pretty clear that the Supreme Court is less than thrilled with the lack of substance in federal complaints, which necessarily makes it easier to bring a lawsuit and shift the burden of due diligence onto the defendant without any reasonable or articulable belief there has been any wrongdoing on the part of the defendant.

In any event, Judge Pechman did not find it necessary to rule whether the Supreme Court’s recent cases have rendered the model complaint for patent infringement inadequate.  She wrote:

The Court does not find it necessary to determine whether Form 18 is no longer adequate under Twombly and Iqbal because Plaintiff’s complaint fails to satisfy either the Supreme Court’s interpretation of Rule 8 or Form 18.

If the remainder of her decision is any evidence as to what she was thinking, it seems pretty clear to me that if she were forced to have addressed that issue she would have said that as a result of Twombly and Iqbal the model patent infringement complaint no longer satisfies the requirements of Federal Rule of Civil Procedure 8.  She also found unpersuasive the argument that since Twombly and Iqbal are not patent infringement cases they offer no appropriate guidance or insight.

If you ask me, it is only a matter of time before some district court says just that, but for now Judge Pechman has taken a significant step forward toward ending this abusive practice.  Other steps will be necessary, and I suspect will soon come.

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Posted in: Gene Quinn, IP News, IPWatchdog.com Articles, Patent Litigation, Patent Trolls, Patents

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

8 comments
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  1. Thanks Gene.

    By the way, the rules at the ITC strongly “encourage” the patentee to include with its Complaint claim charts showing the alleged correspondence between the claim limitations and the accused product. Also, the Chief ALJ expects that the description in the chart of the accused product to be substantive, not just a repetition of the claim wording. This approach gets ITC investigations off to a faster start than would otherwise be the case.

    Scott Daniels
    Westerman Hattori Daniels & Adrian

  2. Thanks for the information Scott. What a difference it would be if that were required in Federal District Court!

    -Gene

  3. What needs to be fixed is FRCP Form 18 itself, which is the source of the problem., and the source of the split between District Courts on this issue of the acceptability of vague and indefinite complaints against companies with numerous different products each.

  4. Great analysis. I have long advocated that the model patent complaint is inconsistent with recent Supreme Court jurisprudence on the minimal requirements for notice pleading. In my view, the plaintiff should be required to identify the infringing product with specificity. Further, plaintiff should identify which patent claims are allegedly infringed. If the claim is for inducement, the complaint should at the very least identify specific acts which induce infringement–a general allegation of inducement should not suffice.

    In essence, plaintiffs should be required to include standard patent claim charts in their pleadings. Any plaintiff who is unable to provide basic claim charts in initial pleadings should be barred from bringing suit. This would significantly limit the ability of NPE’s (“trolls”) to bring frivolous suits.

  5. I can’t help but wonder what they were thinking of when they filed a *complaint* like this. Just throw the whole plate of food at the wall, and see what sticks? Surely Paul can afford competent legal counsel, so I am a bit intrigued about why they left things so vague. Maybe just a fishing expedition to see what the others might be developing at that particular moment? Perhaps even a sort of pre-discovery setup, for use later. In any event, Paul Allen probably won’t suffer too much, as he will probably go flying in his personal WWII fighter plane collection at Paine Field next spring irregardless. He might just have to sell his early model Mitsubishi Zero, that has been meticulously maintained for decades.

    Regards,
    Stan~

  6. Even so, I expect Allen either to file an amended complaint or to appeal the ruling on this case. Someone like him doesn’t tend to bring a suit like this unless he thinks he has a reasonable chance of winning. At the very least, he can use his billions to harass the tech companies via endless patent litigation, until the two sides work out some kind of settlement.
    http://www.ipdigit.eu/?p=552

  7. Gene,
    Inoticed a press blurb (Seattle Times) that the complaint has been refiled. Do you have any updates?

  8. Gene,

    It’s back. It looks like Interval Licensing is trying to appear to comply with the judge’s wishes, but not provide enough information for anyone to understand what they are talking about.

    At least that’s what it looks like to me, I also would like to see your evaluation.