On October 18, 2024, the U.S. Court of Appeals for the Federal Circuit issued a precedential decision addressing claim construction at the Rule 12(b)(6) stage. In UTTO Inc. v. Metrotech Corp., No. 2023-145 (Fed. Cir. Oct. 18, 2024), the Federal Circuit rejected a categorical claim construction bar at the Rule 12(b)(6) stage and clarified that the standard allows a court to arrive at a sufficient claim construction at the Rule 12(b)(6) stage without a formal Markman hearing.

Background

UTTO Inc.’s U.S. Patent No. 9,086,441 claims processes for detecting and identifying buried assets, such as lines for telephones, electricity, natural gas, internet, or wastewater pipes. The claims require “a group of buried asset data points” to locate, and generate a buffer zone around, a buried asset. Id.

On March 25, 2022, UTTO sued Metrotech, alleging, inter alia, patent infringement of the ’441 Patent. Metrotech moved to dismiss UTTO’s complaint under Rule 12(b)(6) for failure to state a claim on which relief could be granted.

In its decision, the District Court construed “group of buried asset data points” to require two or more buried asset data points for each buried asset, adopting that construction as reflecting the ordinary and customary meaning. Metrotech’s accused device, however, requires only a single data point. The District Court, therefore, found no plausible infringement claim and granted Metrotech’s Rule 12(b)(6) motion to dismiss. Notably, the court reached this construction without conducting a Markman hearing.

Claim Construction At The Rule 12(b)(6) Stage

On appeal, UTTO argued, in part, that claim construction is never appropriate at the motion to dismiss stage. UTTO cited the Federal Circuit’s opinion in Nalco. v. Chem-Mod, LLC, 883 F.3d 1337 (Fed. Cir. 2018) for the proposition that a district court may never engage in claim construction in deciding a motion to dismiss.

The Federal Circuit disagreed, holding that claim construction is not categorically forbidden at the pleading stage. Indeed, claim construction at the Rule 12(b)(6) stage may be appropriate where a claim’s meaning is so clear on the only point that is ultimately material to deciding the dismissal motion that no additional process is needed. For example, claim construction at this stage may be appropriate when construction relies solely on intrinsic evidence. In such a case, courts have wide latitude to resolve such issues on a motion to dismiss.

Need For Markman Hearing

The Federal Circuit further held that, while claim construction is not categorically forbidden at the pleading stage, a formal Markman hearing may sometimes be required to adequately support claim construction. This is a case-specific standard that depends on the specific disputed terms and surrounding evidence.

Under that case-specific standard, the Federal Circuit found that, in the instant case, claim construction was not appropriate at the pleadings stage because the district court’s analysis in this case was insufficient. UTTO had raised credible arguments that the term “group” could have a specialized mathematical meaning encompassing a single data point. Additionally, the district court did not sufficiently consider the prosecution history, specification, and the role of extrinsic evidence in assessing UTTO’s assertion that the claimed invention can work using an individual data point. For example, the specification contained passages that suggested single-point embodiments might be covered. The Federal Circuit, therefore, concluded in this case that the disputed term lacked such an unambiguously clear meaning as to permit construction at the Rule 12(b)(6) stage and that claim construction would benefit from a fuller exploration by the parties and the district court in a Markman hearing. The Federal Circuit, therefore, vacated the dismissal of UTTO’s infringement claim and remanded for further claim construction proceedings.

The Federal Circuit explained that the Nalco decision cited by UTTO should be read in the same way. The Federal Circuit explained that Nalco should not be read as stating a categorical ban against a district court’s adoption of a claim construction for a motion to dismiss. Instead, Nalco should be read in a case-specific way, i.e., that there was only a need for further claim construction to resolve the particular claim construction issues in that case.

Implications And Future Proceedings

This opinion confirms that district courts retain discretion to construe claims at the pleading stage. But the opinion also cautions that claim construction sometimes requires further analysis and may benefit from fuller exploration by the parties and the district court. This decision provides important guidance for counsel preparing to file or defend against a Rule 12(b)(6) motion in patent infringement cases.

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