The Software IP Report

What is the Pleading Standard for Invalidity Counterclaims?

Bare-bones counterclaims alleging invalidity of patents-in-suit were held sufficient to survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6) and 8(a).  Helferich Patent Licensing, LLC v. J.C. Penney Corporation, Inc., No. 11 CV 9143 (N.D. Ill. Aug. 28, 2012).  J.C. Penney had pled six nearly identical invalidity counterclaims.  Helferich, the plaintiff, “argue[d] J.C. Penney’s counterclaims fail to meet the requirements of Fed. R. Civ. P. 8(a) as they ‘consist solely of bald averments of broad defenses, wholly lacking in any factual support or specific legal theories.’” The court disagreed that J.C. Penney’s counterclaims were insufficient, because even if they were factually bare, Helferich had been provided sufficient notice of the counterclaims.

A representative one of the counterclaims, reproduced by the court, stated:

One or more of the claims of the ‘757 Patent are invalid for failure to comply with one or more of the statutory  provisions of 35 U.S.C. §§ 101, et seq., including without limitation §§ 102, 103, and/or 112.

More specifically and without limitation, the ‘757 Patent is invalid as anticipated pursuant to 35 U.S.C. § 102 or as obvious pursuant to 35 U.S.C. § 103 based upon prior art including but not necessarily limited to systems and methods used by content providers to create, store, and cause delivery of electronic messages and related content to mobile phones, SMS and MMS technology, link shortening, dynamic content, and internet redirection technology, and other similar internet-based and/or mobile sales, marketing, and advertising systems and methods.

For example, and without limitation, upon information and belief the patents-in-suit are invalid pursuant to 35 U.S.C. sections 102 and 103 based upon some or all of the prior art cited in the following ex partes and inter partes reexamination proceedings: 90/009,800, 95/001,738, 90/009,882, 95/001,739, 90/009,883, and 95/001,740. This case is only at the pleading stage, and J.C. Penney’s investigation of the prior art is ongoing. J.C. Penney reserves the right to rely upon additional prior art, consistent with the Local Patent Rules of the Northern District of Illinois.

The court here began its analysis by noting that notice pleading standards are governed by Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009).  Under those cases, a defendant must have fair notice of the basis of a claim; detailed factual allegations are not required but a “naked assertion” is not sufficient.

Reviewing the cases from the Northern District of Illinois, the court noted that “[m]otions to dismiss factually bare invalidity counter-claims have been both granted and denied.”  The court here was persuaded by the reasoning in Pfizer Inc. v. Apotex Inc., 726 F.Supp.2d. 921 (N.D. Ill. 2010), where the court stated that “a dismissal of the counterclaims at the pleading stage would thwart the purposes of the Local Patent Rules, which require more particularized information to be disclosed during the Invalidity Contentions stage.”

Here, the invalidity counterclaims, though brief, “provide[d] Helferich sufficient notice that J.C. Penney seeks a declaration of invalidity of their patents on the basis of anticipation or obviousness.”  Helferich had sufficient notice of the counterclaims even though J.C. Penney had not identified specific articles of prior art; these specifics would be developed during discovery as contemplated by the Local Rules.

In light of the fact that the Federal Circuit has made clear that bare-bones pleadings of direct patent infringement suffice under the Federal Rules of Civil Procedure, it seems only right that invalidity counterclaims should be held to no higher standard. As the saying goes, what is good for the goose is good for the gander.