Holding: When determining sufficiency of a pleading, a trial court’s characterization of an allegation in a complaint as either factual and assumed to be true, or merely conclusory and not needed to be taken as true, is to be reviewed de novo.
AlexSam owns US Pat. No. 6,000,608 which is directed to a debit/credit card that is capable of performing multiple functions, such as acting as a health savings account card, as well as a processing center for managing the multifunction card system. AlexSam had licensed the ‘608 Patent to Mastercard, allowing Mastercard to activate or add value to the multifunction card. This license extended to any bank, processor, merchant, card vendor, and third-party marketing firms that may be involved in the activation or the value adding process. AlexSam brought suit against Aetna for infringement of the ‘608 Patent for Aetna’s Visa and Mastercard products. The district court granted Aetna’s motion to dismiss, finding that the Aetna Mastercard products fell under the license agreement and concluding that AlexSam failed to state a claim for direct and indirect infringement based on the Visa products due to pleading deficiencies.
The Federal Circuit found that the district court erred in granting the motion to dismiss with regard to the Aetna Mastercard products. The district court ruled that if the Mastercard products practiced the claims of the ‘608 Patent, then they must be a licensed product. However, the Federal Circuit found the scope of the license to be narrower than the scope considered by the district court. The license only pertains to processes of activation or adding value to an account. The claims of the ‘608 Patent are not limited only to transactions of activation or adding value, but also include other transactions in the value chain that may not fall within the scope of the license.
The Federal Circuit also found that the district court erred in its dismissal of the claims of patent infringement based on the Aetna Visa products. Under the Iqbal and Twombly pleading standards, when determining the sufficiency of a pleading, a complaint must contain sufficient facts to state a claim to relief that is plausible on its face. All well-pled factual allegations must be taken to be true when considering whether the plausibility standard has been met, but the same deference does not apply to legal conclusions supported only by conclusory statements. The Federal Circuit recognized that an explicit standard for reviewing a trial court’s characterization of a complaint’s allegations as either well-pled and factual or legal conclusion has not yet been set out, but should be reviewed de novo. In coming to this decision, the Court relied on the fact that the evaluation of motion to dismiss is a legal matter not requiring factual determinations and that courts have already implicitly applied de novo review to trial court determinations that allegations of a complaint are conclusory.
Under its de novo review, the Federal Circuit found AlexSam’s pleading with regard to direct infringement and indirect infringement of the ‘608 Patent by the Aetna Visa products to be sufficient. Sufficiency of pleading requires that a complaint put an alleged infringer on notice of what activity is accused of infringement and the level of detail required depends on the complexity of the technology and the nature of the alleged infringing device. AlexSam’s complaint included claim charts that mapped each claim limitation to the Visa product and included an expert declaration further illustrating its infringement contention. AlexSam’s allegations of induced and contributory infringement were supported by Aetna’s website, brochures, and other promotional material that provide a plausible inference that induced and/or contributory infringement exists. Therefore, the Federal Circuit found AlexSam’s complaint to be sufficiently pled and vacated the district court’s dismissal for failure to state a claim.
Citation: AlexSam, Inc. v. Aetna, Inc., 199 F.4th 27 (Fed. Cir. 2024)
Federal Circuit Precedential 
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