Intellectual Property Law Representation

Federal Circuit Countenances Claim Construction at the Pleading Stage

by | Oct 25, 2024 | Case Updates

The Federal Circuit recently held that a trial court is permitted to construe claims in deciding a Rule 12(b)(6) motion.  In UTTO Inc. v. Metrotech Corp., Appeal No. 2023-1435 (Fed. Cir. Oct. 18, 2024), the Court rejected the plaintiff’s argument that claim construction is categorically forbidden in ruling on a motion to dismiss.

The UTTO case came to the Federal Circuit after the district court granted a series of motions to dismiss for failure to state a claim.  In the district court’s view, UTTO’s successive complaints failed to plead a plausible infringement claim because the claims recited, among other things, generating a two dimensional area based on a “group” of data points while Metrotech employed a process that used only a single data point.  In an earlier decision denying UTTO’s motion for a preliminary injunction, the district court found that under the “ordinary and customary” meaning of “group” more than one data point is necessary.  The district court maintained that interpretation in deciding Metrotech’s motions to dismiss.

On appeal, UTTO argued that claim construction is inappropriate at the pleading stage and that Federal Circuit authority—specifically Nalco Co. v. Chem-Mod, LLC, 883 F.3d 1337 (Fed. Cir. 2018)—established such a proscription.  The UTTO court disagreed.  The court first noted that claim construction often may be decided on intrinsic evidence alone and in such circumstances “a decision on claim construction is not different in kind from the interpretation of other legal standards, which is proper and routine in ruling on a motion under Rule 12(b)(6).”  The court also drew parallels with the precedent of entertaining § 101 challenges at the motion to dismiss stage.  Deciding those motions requires the court to interpret the claims.  Further, the court noted that district courts have wide latitude in how to conduct proceedings before them, and so long as they construe the claims to the extent necessary to resolve the question of infringement, “the court may approach the task in any way that it deems best.”  In response to UTTO’s invocation of Nalco, the court found that case is not to the contrary.  Rather, Nalco is only as an example of where particular claim construction issues may require further proceedings.

In sum, the Federal Circuit held that a district court does not err simply by construing claims without conducting a separate Markman set of proceedings or by not hearing extrinsic evidence or expert testimony.

Although the Federal Circuit held that the district court was free to engage in claim construction at the pleading stage, the court found that the trial court’s analysis of the disputed “group” term was inadequate.  Specifically, the district court too readily assigned the “ordinary and customary” meaning to “group” as recited in the claim.  The court found that UTTO raised “at least a question” as to whether a mathematical understanding of “group” (which means one or more, not two or more) was appropriate.  Further, two passages from the specification provided some support for UTTO’s proposed interpretation, and the district court did not adequately address those passages.  Thus, while stopping short of holding that the district court’s construction was erroneous, the court vacated the district court’s dismissal and remanded for a more fulsome claim construction analysis.