The patent landscape has been shaken drastically over the last few years starting with the America Invents Act and then more recently with Supreme Court decisions in such cases as Alice Corp. Another tremor is stirring in the pre-trial realm as the fallout from Alice is being felt in full. With the two-step framework of Alice in hand, defendants in patent infringement actions are increasingly relying on motions on the pleadings, such as 12(b)(6) motions to dismiss, to invalidate the plaintiffs’ patents early and avoid costly discovery.
Since the June 2014 decision in Alice, courts in the Federal Circuit and various district courts have increasingly been bombarded with motions on the pleadings. In the bottom half of 2014 alone, more pleadings stage motions were filed and decided than were ruled on in the years 2008 to 2012 combined. Surveys indicate that 68 patents out of 89 were held invalid with 1,832 claims being struck down. Furthermore, this trend has so far continued in 2015 with annual totals expected to exceed even 2014 levels.
Proponents of this new motions strategy argue for it most strongly in regard to costs saved. Prior to the courts’ willingness to entertain pleadings on the motion, there were very few mechanisms to allow defendants to resolve cases at an early stage. In most cases, defendants were forced to enter discovery and claim construction before a resolution could be reached; even when faced with some highly suspicious claims. Unsatisfactory settlements were common where discovery costs would far exceed the settlement. The new strategy of filing early-stage motions seems to be a godsend for many defendants. By filing and arguing motions on the pleadings, litigants are able to avoid some of the high costs traditionally associated with patent litigation.
However, critics of this new trend say that courts are impermissibly looking outside of the complaint, in violation of the Federal Rules of Civil Procedure, to adjudicate the motions to dismiss. On a 12(b)(6) motion to dismiss (and similarly with other early-stage motions), the court should like at all the well-pleaded facts in the complaint and draw all reasonable inferences in favor of the non-moving party. As applied to infringement actions, the court should only grant the motion if, based solely on the complaint, there is no plausible interpretation of the claims that would find patent eligible material. However, many courts are not following this standard and are looking beyond the documents to external sources. For example, in a recent Texas case, the judge used “general historical observations that come to mind” as justification for invalidating a patent on an early-stage motion. See Affinity Labs of Texas v. Amazon.com (June 12, 2015). Critics argue that trends like the one demonstrated in Affinity are dangerous for prejudicing the system against the patent holder without allowing him/her to submit extrinsic evidence in support of a well pled claim.
Are motions on the pleadings regarding patent-eligible subject matter good or bad? Will they save defendants time and expense or unfairly bias the system against the patent holders? As the ground continues to shake and settle, courts will continue to wrestle with these questions. Courts, even those within the same circuits, are already split on the issue; and there is unlikely to be a uniform, national resolution without the intervention of the Supreme Court.