From The Field

February 5, 2019

The Federal Circuit issued a decision on February 1st in Prism Techs. LLC v. Sprint Spectrum L.P., 2019 U.S. App. LEXIS 3281 (Fed. Cir. Feb. 1, 2019), that reads like a primer on civil procedure. The case is noteworthy because it presents a thicket of procedural issues that would be worthy of any Civil Procedure exam. It also is an example of the Federal Circuit’s reluctance to definitively articulate how Iqbal and Twombly have impacted federal pleading standards in patent cases.

The patentee Prism brought suits in 2012 against several cellphone carriers, including Sprint and T-Mobile. Prism’s case against Sprint went to trial in 2015. Prism prevailed and the Federal Circuit affirmed. But, in Prism’s suit against T-Mobile – which went up on appeal later – the Federal Circuit held that Prism’s claims were patent ineligible under Section 101.

Sprint then asked the district court to set aside the judgment of infringement against it because any claims it infringed were now invalid. The dispute hinged on whether the claims held invalid by the Federal Circuit in the T-Mobile case included the claims that the jury in the Sprint case held that Sprint infringed. This question did not have a clear-cut answer.

The critical issue was whether the Federal Circuit in T-Mobile was considering T-Mobile’s counterclaims for declaratory judgements of invalidity, or affirmative defenses asserted in response to Prism’s charges of infringement. If counterclaims were at issue, then all the claims from the patents were invalid and this holding would apply to any claims Sprint had infringed. But, if affirmative defenses were at issue, the Federal Circuit’s ruling would have applied to the narrower set of claims that Prism had asserted against T-Mobile. That would mean that some of the claims Sprint infringed were still valid.

T-Mobile’s pleading was vague and the Federal Circuit noted that “it is possible that T-Mobile’s responsive pleading may not have sufficiently pleaded a counterclaim.” But the court decided “not [to] consider whether T-Mobile’s pleading would be adequate under … the standards applicable today.” The Federal Circuit nevertheless held that its ruling in T-Mobile “is properly understood as covering, and invalidating, all the claims … on which Sprint was held liable to Prism[.]” Sprint was off the hook.

This case continues a trend in which the Federal Circuit has, by and large, declined to announce precisely how Iqbal and Twombly changed the federal pleading standards for patent infringement or invalidity. See Disc Disease Sols. Inc. v. VGH Sols., Inc., 888 F.3d 1256, 1259-60 n.3 (Fed. Cir. 2018) (“We do not address the question of whether the Form 18 or the Iqbal/Twombly pleading standard applies in this case….”); Lifetime Indus., Inc. v. Trim-Lok, Inc., 869 F.3d 1372, 1377 (Fed. Cir. 2017) (“The parties assume that there is a difference between the requirements of Form 18 and Iqbal/Twombly; however, we have never recognized such a distinction. In any event, we need not resolve th[at] question….”).

Author: Marc J. Pernick