Before Dyk, Linn, and O’Malley. Appeal from the United States District Court for the Northern District of California
Summary: The district court’s conclusion that allegations of infringement were not plausible because they tracked the claim language too closely presented an overly burdensome pleading standard.
Bot M8 LLC (“Bot M8”) asserted a series of patents related to gaming machines against Sony Corporation of America, Sony Corporation, and Sony Interactive Entertainment LLC (“Sony”) and their PS4 gaming console. The asserted patents included U.S. Patent Nos. 8,078,540 (“the ’540 patent”), 8,095,990 (“the ’990 patent”), 7,664,988 (“the ’988 patent”), and 8,112,670 (“the ’670 patent”). At a case management conference, the district court suggested Bot M8 should file an amended complaint with specific factual allegations related to infringement. Bot M8 agreed, and filed a first amendment complaint. Sony moved to dismiss the amended complaint for failing to state a claim, and the district court granted Sony’s motion because, in the court’s view, the allegations tracked the claim language too closely without sufficiently pleading factual support. The court denied Bot M8’s motion for leave to submit a second amended complaint. Bot M8 appealed.
On appeal the Federal Circuit affirmed-in-part and reversed-in-part the district court’s dismissal of Bot M8’s amended complaint. The Federal Circuit explained that a plaintiff cannot assert a plausible claim for infringement by reciting the claim elements and merely concluding that the accused product has those elements. Instead, there must be some factual allegations that articulate why it is plausible that the accused product infringes the patent claim. Regarding the ’540 patent the Federal Circuit agreed with the district court that Bot M8’s conflicting allegations rendered infringement of certain claim limitations impossible, and thus did not state a claim for infringement. Likewise, for the ’990 patent the Federal Circuit affirmed dismissal because Bot M8’s allegations merely recited claim elements without sufficient supporting factual allegations. The Federal Circuit, however, disagreed that Bot M8’s allegations for the ’988 and ’670 patents were so conclusory as to justify dismissal. Instead, the Federal Circuit cautioned that Bot M8 need not prove its case at the pleading stage. While recognizing Bot M8’s pleadings closely tracked the claim language, the Federal Circuit held the pleadings were supported by sufficient plausible factual allegations to survive a motion to dismiss. The Federal Circuit also held the district court did not err by suggesting that Bot M8 file an amended complaint during the case management conference when no motion to dismiss was pending, because a court can dismiss an inadequate complaint on its own initiative. The Federal Circuit also upheld the district court’s denial of Bot M8’s motion for leave to file a second amended complaint because Bot M8’s reasons for delay—that anti-hacking statutes restrained its earlier reverse engineering efforts—conflicted with Bot M8’s prior representation to the court that it had already “torn down” the accused product and was “happy to” include its reverse engineering results in its first amended complaint. Because Bot M8 did not do so, the Federal Circuit agreed a second amended complaint would be untimely.