On October 18, 2024, the Federal Circuit issued a precedential decision in UTTO Inc. v. Metrotech Corp., No. 2023-145 (Fed. Cir. Oct. 18, 2024), addressing, in relevant part, the propriety of claim construction at the Rule 12 stage. The issue reached the Federal Circuit on appeal from the Northern District of California after a denied motion for a preliminary injunction (UTTO Inc. v. Metrotech Corp., No. 22-cv-01904-WHO, 2022 WL 1814145, at *6 (N.D. Cal. June 2, 2022)) and three dismissed iterations of the Complaint.

UTTO’s patent covers a process for detecting and identifying underground utility lines and the like, and in denying UTTO’s motion for a preliminary injunction and dismissing the complaints thereafter, the district court construed claim language “group of buried asset data points” in accordance with its ordinary meaning. On appeal, UTTO argued this was improper, relying on Nalco Co. 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 says otherwise.

The Nalco decision includes language that, in essence, states that the defendants’ claim construction disputes are “not suitable for resolution on a motion to dismiss.” 883 F.3d at 1349. As the Federal Circuit now holds, that language is case-specific – there is no “categorical rule against a district court’s adoption of a claim construction in adjudicating a motion to dismiss.” UTTO, slip op. at 11. In fact, “[w]here claims are construed based on intrinsic evidence alone, 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).” Id. at 12.

The Federal Circuit has previously addressed the scope of necessary claim construction. For example in Realtime Data, LLC v. Iancu, 912 F.3d 1368 (Fed. Cir. 2019), the Court explaining that a district court does not need to construe all claims in dispute, only those necessary to adjudicate the issue. District courts enjoy deference in how they conduct proceedings, including at the Rule 12 stage, and therefore there is nothing procedurally improper where a district court construes claims without a separate Markman hearing. However, the Federal Circuit has also now made clear that there is no blanket rule that such claim construction is appropriate: “Some case-specific circumstances can make it improper for a district court to resolve a claim construction dispute in the context of adjudicating a Rule 12(b)(6) motion.” UTTO, slip op. at 14-15. However, “sometimes a claim’s meaning may be so clear on the only point that is ultimately material to deciding the dismissal motion that no additional process is needed.” Id. at 15.