Alexsam, Inc. v. Aetna, Inc.

United States Court of Appeals
for the Federal Circuit
______________________
ALEXSAM, INC.,
Plaintiff-Appellant
v.
AETNA, INC.,
Defendant-Appellee
______________________
2022-2036
______________________
Appeal from the United States District Court for the
District of Connecticut in No. 3:19-cv-01025-VAB, Judge
Victor A. Bolden.
______________________
Decided: October 8, 2024
______________________
STEVEN RITCHESON, Insight, PLC, Marina del Rey, CA,
argued for plaintiff-appellant. Also represented by
J ACQUELINE K NAPP B URT , Heninger Garrison Davis, LLC,
Atlanta, GA; T IMOTHY C. D AVIS , W. L EE G RESHAM , III, Bir-
mingham, AL.
T HOMAS ROHBACK , Axinn, Veltrop & Harkrider LLP,
Hartford, CT, argued for defendant-appellee. Also repre-
sented by MATTHEW S. MURPHY .
______________________
Before L OURIE, BRYSON, and STARK, Circuit Judges.
Case: 22-2036 Document: 49 Page: 1 Filed: 10/08/2024

-- 1 of 33 --

ALEXSAM , INC. v. AETNA, INC. 2
STARK, Circuit Judge
AlexSam, Inc. (“AlexSam”) appeals the dismissal of its
complaint by the U.S. District Court for the District of Con-
necticut based on what the court found to be its failure to
state plausible claims of patent infringement. AlexSam’s
complaint alleged that Aetna Inc. (“Aetna”) marketed Mas-
tercard-branded products (“Mastercard Products”) as well
as VISA-branded products (“VISA Products”) that directly
and indirectly infringe two claims of AlexSam’s U.S. Patent
No. 6,000,608 (“’608 patent”). Because the district court
erred in its review of a license agreement and failed to take
all of the complaint’s well-pled factual allegations as true,
we vacate and remand portions of the district court’s dis-
missal.
I
A
The ’608 patent is entitled “Multifunction Card Sys-
tem.” It issued on December 14, 1999 and expired in 2017,
before this suit was filed.
The ’608 patent is directed to “a debit/credit card capa-
ble of performing a plurality of functions” and a “processing
center which can manage such a multifunction card sys-
tem.” ’608 patent 1:26-35. Unlike past card systems, the
multifunction card system of the ’608 patent uses a central
“processing hub” to conduct specialized card functions
through an existing banking network. One embodiment of
the multifunction card allows a cardholder “to keep track
of medical savings accounts or various other means for pay-
ing for medical services” by accessing a “database which
maintains the medical funds for the cardholder.” ’608 pa-
tent 10:40-44. This information is stored in a remote data-
base that is maintained by a “processing hub,” which is
described as “the nerve center” of the multifunction card
system. ’608 patent 4:22-23. The multifunction card
Case: 22-2036 Document: 49 Page: 2 Filed: 10/08/2024

-- 2 of 33 --

ALEXSAM , INC. v. AETNA, INC. 3
system accesses the processing hub through standard point
of sale (“POS”) devices interfacing with an existing bank
network. When a card is swiped at a POS device, the POS
device recognizes the card’s unique banking identification
number (“BIN”); then a local transaction processor con-
nects to the processing hub through the existing banking
network. The processing hub then performs the desired
functionality, such as providing database access or re-
motely authorizing, rejecting, or transferring money from
the cardholder’s medical funds.
At issue in this litigation are claims 32 and 33. Claim
32 recites:
A multifunction card system comprising:
a. at least one debit/medical ser-
vices card having a unique
identification number en-
coded on it comprising a bank
identification number ap-
proved by the American Bank-
ing Association for use in a
banking network;
b. a transaction processor receiv-
ing card data from an unmod-
ified existing standard point-
of-sale device, said card data
including a unique identifica-
tion number;
c. a processing hub receiving di-
rectly or indirectly said card
data from said transaction
processor; and
d. said processing hub accessing
a first database when the card
functions as a debit card and
Case: 22-2036 Document: 49 Page: 3 Filed: 10/08/2024

-- 3 of 33 --

ALEXSAM , INC. v. AETNA, INC. 4
said processing hub accessing
a second database when the
card functions as a medical
card.
’608 patent 15:65-16:11. Claim 33 depends from claim 32
and requires that “the unique identification number fur-
ther comprises a medical identification number.” Id. at
16:12-14.
B
Also pertinent to this appeal is a May 2005 license
agreement (“License Agreement” or “Agreement”) between
AlexSam and Mastercard International Inc. (“Master-
card”). The License Agreement grants Mastercard a “li-
cense under the Licensed Patents,” including the ’608
patent, “to process and enable others to process Licensed
Transactions.” J.A. 655-56 ¶¶ 1.1, 2.1. A “Licensed Trans-
action” is defined in the Agreement as “each process of ac-
tivating or adding value to an account or subaccount which
is associated with a transaction that utilizes MasterCard’s
network or brands wherein data is transmitted between a
POI Device [i.e., “Point-Of-Interaction Device,” which in-
cludes a POS terminal] and MasterCard’s financial net-
work or reversing such process, provided that such process
is covered by one of the Licensed Patents.” J.A. 656 ¶ 1.3
(emphasis added).1 The Agreement additionally provided
that “[s]uch Licensed Transaction includes the entire value
chain and all parts of the transaction and may involve
other parties including but not limited to: issuing banks,
1 There is no dispute that “activating” in this context
means turning on a card or making it functional, while
“adding value” means associating an increased amount of
funds with the card.
Case: 22-2036 Document: 49 Page: 4 Filed: 10/08/2024

-- 4 of 33 --

ALEXSAM , INC. v. AETNA, INC. 5
acquiring banks, processors, merchants, card vendors and
third party marketing firms.” Id.
The License Agreement contains a covenant-not-to-sue
provision, whereby AlexSam agreed it would not bring suit
against Mastercard “for any claim or alleged liabilities . . .
relating to Licensed Transactions” occurring before or dur-
ing the term of the Agreement. J.A. 657 ¶ 2.2. Another
relevant provision is labelled “Term and Termination,”
which provides, in relevant part:
[T]his Agreement shall remain in full force and ef-
fect for the life of the Licensed Patents unless
[events unrelated to the issues on appeal occur]
. . . . The provisions of paragraphs 4 [considera-
tion, including royalties] . . ., 8-10 [warranties, rep-
resentations, indemnity, government approvals],
12 [entire agreement], 14 [severability] and 15 [dis-
claimer of warranties] shall survive the termina-
tion of this Agreement.
J.A. 662-64 ¶ 7 (emphasis added).
AlexSam and Mastercard agreed in 2007 to amend the
License Agreement. Specifically, they modified the “Li-
censed Transaction” provision to “encompass each process
of exchanging information related to an information card
between a POI Device and MasterCard’s financial network,
provided that such process is covered by one of the Licensed
Patents.” J.A. 675 (emphasis added).
C
This is not the only case in which AlexSam’s ’608 pa-
tent and the AlexSam-Mastercard License Agreement
have been litigated. AlexSam sued Mastercard for patent
infringement in the Eastern District of New York. See
AlexSam Inc. v. Mastercard Int’l Inc., No. 22-2046, 2024
WL 825658 (Fed. Cir. Feb. 28, 2024), rev’g and remanding
No. 15-CV-2799, 2022 WL 2541433 (E.D.N.Y. July 7, 2022)
Case: 22-2036 Document: 49 Page: 5 Filed: 10/08/2024

-- 5 of 33 --

ALEXSAM , INC. v. AETNA, INC. 6
(“Mastercard Case”). An appeal in the Mastercard Case
was resolved by another panel of this court during the pen-
dency of this AlexSam-Aetna case. See id. As relevant
here, the Mastercard Case determined that the “License
Agreement has terminated” and that its “covenant not to
sue does not survive the termination of the License Agree-
ment.” 2024 WL 825658 at *1.
D
AlexSam filed its initial complaint against Aetna on
June 28, 2019 (“Original Complaint”). In the Original
Complaint, AlexSam alleged that Aetna’s VISA Products
directly and indirectly infringed claims of the ’608 patent.
AlexSam filed an amended complaint (“First Amended
Complaint”) on October 4, 2019, adding allegations that
Aetna’s Mastercard Products also directly and indirectly
infringed the ’608 patent.
Shortly thereafter, the parties filed a joint report with
the district court, advising it, among other things, that
Aetna “asserts that AlexSam’s claims are barred in whole
or in part by the doctrine[] of prior license.” J.A. 2525.
Aetna then filed a motion to dismiss the First Amended
Complaint, on the grounds that “Alex[S]am’s claim of in-
fringement against the [Mastercard Products] fails as a
matter of law because if [those products] practiced Claim
32 or Claim 33 of the ’608 patent using the MasterCard
network then [any infringing product] was necessarily a li-
censed product under the [License Agreement].” J.A. 470;
see also J.A. 90. AlexSam mooted the motion by amending
its complaint once again, filing a Second Amended Com-
plaint that added a claim seeking a declaratory judgment
that the Mastercard Products were not licensed, which
would defeat Aetna’s license defense. On January 10,
2020, Aetna moved to dismiss AlexSam’s Second Amended
Complaint.
Case: 22-2036 Document: 49 Page: 6 Filed: 10/08/2024

-- 6 of 33 --

ALEXSAM , INC. v. AETNA, INC. 7
Before AlexSam could file its opposition to Aetna’s mo-
tion, the district court stayed the case pending the Judicial
Panel on Multidistrict Litigation’s (“JPML”) consideration
of AlexSam’s request to consolidate this case with other
proceedings in which AlexSam was asserting the ’608 pa-
tent against other defendants, including Mastercard. After
the JPML denied AlexSam’s request, the parties agreed to
continue to defer discovery in view of the then-ongoing
COVID-19 global pandemic. They further agreed that
briefing on Aetna’s motion to dismiss the Second Amended
Complaint should be completed. AlexSam attached to its
opposition brief a proposed Third Amended Complaint.
On September 11, 2020, the district court granted
Aetna’s motion to dismiss the Second Amended Complaint
and dismissed all of AlexSam’s claims. The district court
found that AlexSam could not prevail on its claims based
on the Mastercard Products because Aetna had an express
license via the License Agreement to market those prod-
ucts. The court further concluded that AlexSam failed to
state a claim of direct infringement based on the VISA
Products because only third-party customers, and not
Aetna itself, could have directly infringed. It appeared to
the district court that AlexSam’s accusations were largely
targeted at Aetna’s subsidiaries, who were not defendants,
and that “AlexSam fail[ed] to allege control or direction by
Aetna which would warrant disregarding the corporate
form.” J.A. 39. The court found additional pleading defi-
ciencies in connection with AlexSam’s claims of indirect in-
fringement. Lastly, the court dismissed AlexSam’s
declaratory judgment claim for being duplicative of Aetna’s
licensing defense.
In dismissing the Second Amended Complaint, the dis-
trict court also denied AlexSam’s request to file the pro-
posed Third Amended Complaint it had attached to its
briefing. The court reasoned that because AlexSam had
drafted its Third Amended Complaint without having the
Case: 22-2036 Document: 49 Page: 7 Filed: 10/08/2024

-- 7 of 33 --

ALEXSAM , INC. v. AETNA, INC. 8
benefit of the court’s identification of its pleading failures,
the best way forward was to permit AlexSam to seek leave
to file another version of a Third Amended Complaint, “to
the extent the deficiencies identified in [the trial court’s]
ruling can be addressed.” J.A. 47. AlexSam then moved
for reconsideration of the dismissal and also sought leave
to amend or correct its complaint. The district court denied
these motions, as well as subsequent requests to file an
amended complaint, because they did not, in the court’s
view, cure the pleading defects. It further faulted AlexSam
for seeking to expand the case “well beyond the scope of
[correcting] the deficiencies identified in the Court’s rul-
ing,” including by belatedly seeking to add other Aetna en-
tities as defendants. J.A. 68. Eventually, after AlexSam
had filed or sought to file six separate versions of its com-
plaint, the district court dismissed all of AlexSam’s claims
with prejudice.
AlexSam timely appealed. We have jurisdiction under
28 U.S.C. § 1295(a).
II
We review district court grants of motions to dismiss
for failure to state a claim, brought under Federal Rule of
Civil Procedure 12(b)(6), according to the law of the appli-
cable regional circuit, here the Second Circuit. See Fair
Warning IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1092
(Fed. Cir. 2016). “In the Second Circuit, grant of a motion
to dismiss is reviewed de novo to determine whether the
claim is plausible on its face, accepting the material factual
allegations in the complaint and drawing all reasonable in-
ferences in favor of the plaintiff.” Ottah v. Fiat Chrysler,
884 F.3d 1135, 1141 (Fed. Cir. 2018). Review of a motion
to dismiss under Rule 12(b)(6) is generally limited “to the
facts as asserted within the four corners of the complaint,
the documents attached to the complaint as exhibits, and
any documents incorporated in the complaint by
Case: 22-2036 Document: 49 Page: 8 Filed: 10/08/2024

-- 8 of 33 --

ALEXSAM , INC. v. AETNA, INC. 9
reference.” McCarthy v. Dun & Bradstreet Corp., 482 F.3d
184, 191 (2d Cir. 2007). A court may also consider “matters
of which judicial notice may be taken” and “documents ei-
ther in plaintiffs’ possession or of which plaintiffs had
knowledge,” if the plaintiffs “relied on [them] in bringing
suit.” Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d
Cir. 1993); see also Chambers v. Time Warner, Inc., 282
F.3d 147, 153 (2d Cir. 2002) (“[A] plaintiff’s reliance on the
terms and effect of a document in drafting the complaint is
a necessary prerequisite to the court’s consideration of the
document on a dismissal motion; mere notice or possession
is not enough.”) (internal emphasis omitted).
We apply our own law to the specific question of
whether a complaint states a claim of patent infringement
on which relief may be granted. See generally Flex-Foot,
Inc. v. CRP, Inc., 238 F.3d 1362, 1365 (Fed. Cir. 2001)
(“[W]e will apply our own law to both substantive and pro-
cedural issues intimately involved in the substance of en-
forcement of the patent right.”) (internal quotation marks
omitted). As we explained recently in Bot M8 LLC v. Sony
Corporation of America, 4 F.4th 1342, 1346 (Fed. Cir.
2021), “patentees need not prove their case at the pleading
stage.” To the contrary, an adequate complaint need only
contain “some factual allegations that, when taken as true,
articulate why it is plausible that the accused product in-
fringes the patent claim.” Id. at 1353. More particularly:
“[a] plaintiff is not required to plead infringement on an
element-by-element basis. Instead, it is enough that a com-
plaint place the alleged infringer on notice of what activ-
ity . . . is being accused of infringement.” Id. at 1352
(internal citations and quotation marks omitted; altera-
tions in original). “[W]hile a patentee’s pleading obliga-
tions are not insurmountable, a patentee may subject its
claims to early dismissal by pleading facts that are incon-
sistent with the requirements of its claims.” Id. at 1346.
Case: 22-2036 Document: 49 Page: 9 Filed: 10/08/2024

-- 9 of 33 --

ALEXSAM , INC. v. AETNA, INC. 10
III
The district court dismissed the entirety of AlexSam’s
Second Amended Complaint and later denied each of its ef-
forts to amend. On appeal, AlexSam asks us to review the
following conclusions of the district court: (i) that Aetna’s
Mastercard Products are licensed and, therefore, cannot di-
rectly or indirectly infringe claims 32 and 33 of the ’608 pa-
tent, and (ii) that it is implausible to believe that Aetna
itself “makes” or “uses” the VISA Products. Undertaking
de novo review, we reach different conclusions than the dis-
trict court, and, thus, vacate and remand portions of its
judgment of dismissal.
A
We begin with AlexSam’s claims of patent infringe-
ment directed at Aetna’s Mastercard Products. The district
court dismissed these claims based on Aetna’s license de-
fense.2 In particular, Aetna argued before the district court
that AlexSam’s “claim of infringement against the PayFlex
MasterCard card fails as a matter of law because if the Pay-
Flex MasterCard card practiced Claim 33 of the ’608 patent
using the MasterCard network then it was necessarily a
licensed product” under the License Agreement. J.A. 746
(internal emphasis omitted). The district court agreed with
Aetna, holding that the Mastercard Products came within
the scope of the license and that Aetna was a sublicensee.
2 There is no dispute that, for those transactions for
which AlexSam granted Mastercard an express license,
Aetna has a sublicense by virtue of the terms of the License
Agreement. See Alexsam, Inc. v. IDT Corp., 715 F.3d 1336,
1346 (Fed. Cir. 2013) (“[A]ny activation transaction covered
. . . and taking place over the MasterCard network was au-
tomatically deemed sublicensed.”) (internal quotation
marks omitted).
Case: 22-2036 Document: 49 Page: 10 Filed: 10/08/2024

-- 10 of 33 --

ALEXSAM , INC. v. AETNA, INC. 11
We agree, instead, with AlexSam that the district court
erred by resolving the Mastercard licensing issues “on the
limited information provided” in the Second Amended
Complaint, its attachments, and the motion to dismiss
briefing. Open. Br. at 10.3 Not only is the scope of the li-
cense narrower than the district court seems to have un-
derstood, but there are also open issues remaining that
need to be resolved before the impact of the license on
AlexSam’s allegations can be fully assessed.4
3 Contrary to Aetna’s contention, AlexSam did not
waive and abandon its Mastercard Products infringement
claims by seeking leave to file a proposed Third Amended
Complaint that would have limited the case only to VISA
Products. See Response Br. at 52-53. As AlexSam ex-
plains, it proposed to delete the Mastercard claims only af-
ter, and because, the district court had dismissed those
claims as licensed. See Reply Br. at 22-23. AlexSam chose
to proceed on its remaining claims in order to obtain a final
judgment from which it could appeal. See id.
4 One place we do not agree with AlexSam is on its
contention that the district court required AlexSam to over-
come Aetna’s license defense by pleading facts related to
the defense in its complaint. The sentence on which
AlexSam bases this argument seems to us instead to be
nothing more than a general criticism of AlexSam’s brief-
ing and arguments. See generally Whiteside v. Hover-Da-
vis, Inc., 995 F.3d 315, 321 (2d Cir. 2021) (“[A] plaintiff
ordinarily need neither anticipate, nor plead facts to avoid,
a defendant’s affirmative defenses at the pleadings
stage.”); CODA Dev. S.R.O. v. Goodyear Tire & Rubber Co.,
916 F.3d 1350, 1361–62 (Fed. Cir. 2019) (“[A] plaintiff gen-
erally need not plead the lack of affirmative defenses to
state a valid claim . . . .”) (internal quotation marks omit-
ted).
Case: 22-2036 Document: 49 Page: 11 Filed: 10/08/2024

-- 11 of 33 --

ALEXSAM , INC. v. AETNA, INC. 12
As patent infringement is the practice of a patent claim
without consent of the patentee, the existence of a license,
express or implied, provides an affirmative defense to in-
fringement. See, e.g., McCoy v. Mitsuboshi Cutlery, Inc., 67
F.3d 917, 920 (Fed. Cir. 1995) (“A licensee, of course, has
an affirmative defense to a claim of patent infringement.”);
Macom Tech. Sols. Holdings, Inc. v. Infineon Techs. AG,
881 F.3d 1323, 1329 (Fed. Cir. 2018) (describing license as
“in essence nothing more than a promise by the licensor not
to sue the licensee”) (internal citations omitted); Carborun-
dum Co. v. Molten Metal Equip. Innovations, Inc., 72 F.3d
872, 878 (Fed. Cir. 1995) (“[T]he alleged infringer . . . had
the burden of establishing the existence of an implied li-
cense as an affirmative defense.”). In the Second Circuit,
“[a]n affirmative defense may be raised by a pre-answer
motion to dismiss under Rule 12(b)(6), without resort to
summary judgment procedure, if the defense appears on
the face of the complaint.” Pani v. Empire Blue Cross Blue
Shield, 152 F.3d 67, 74 (2d Cir. 1998). The “face of the com-
plaint” is construed for these purposes as also including
documents in plaintiff’s possession on which it relies in
stating its claims or which it incorporates in the complaint.
See ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87,
98 (2d Cir. 2007) (“[W]e may consider any written instru-
ment attached to the complaint, statements or documents
incorporated into the complaint by reference, legally re-
quired public disclosure documents filed with the SEC, and
documents possessed by or known to the plaintiff and upon
which it relied in bringing the suit.”).
Considering these materials, we reach a different con-
clusion than the district court did as to the scope of the li-
cense. We further see material open questions that the
district court does not appear to have resolved.
First, we conclude that the license granted by the Li-
cense Agreement extends only to transactions involving ac-
tivation of, or adding value to, an account. The pertinent
Case: 22-2036 Document: 49 Page: 12 Filed: 10/08/2024

-- 12 of 33 --

ALEXSAM , INC. v. AETNA, INC. 13
language of the License Agreement is clear: the license be-
ing granted by AlexSam to Mastercard is “to process and
enable others to process Licensed Transactions,” with a
“Licensed Transaction” defined as “each process of activat-
ing or adding value to an account or subaccount which is
associated with a transaction that utilizes MasterCard’s
network or brands where data is transmitted between a
POI Device [i.e., “Point-Of-Interaction Device,” which in-
cludes a Point of Service (“POS”) terminal] and Master-
Card’s financial network or reversing such process,
provided that such process is covered by one of the Licensed
Patents.” J.A. 656 ¶ 1.3 (emphasis added).
That the Agreement goes on to clarify that “[s]uch Li-
censed Transaction includes the entire value chain and all
parts of the transaction and may involve other parties in-
cluding but not limited to: issuing banks, acquiring banks,
processors, merchants, card vendors and third party mar-
keting firms,” J.A. 656 ¶ 1.3 (emphasis added), does not
eliminate the requirement that a licensed “chain” of trans-
actions must include an activation or adding value trans-
action. The plain language of the License Agreement
establishes, then, that no portion of a “value chain” that
does not include an activation or adding value component
is licensed.
The patent claims asserted by AlexSam in the Second
Amended Complaint, claims 32 and 33, are not limited to
transactions involving activation or adding value. Thus,
the scope of the asserted claims is broader than the scope
of the license granted to Mastercard in the License Agree-
ment. Consequently, not every act that infringes these
claims will necessarily be licensed. It remains possible –
and, as alleged in the Second Amended Complaint, plausi-
ble – that transactions involving Aetna’s Mastercard Prod-
ucts are both within the scope of AlexSam’s asserted claims
and outside the scope of the license.
Case: 22-2036 Document: 49 Page: 13 Filed: 10/08/2024

-- 13 of 33 --

ALEXSAM , INC. v. AETNA, INC. 14
The district court’s conclusion to the contrary is incor-
rect. The district court’s view seems to have been that any
transaction in the Mastercard value chain is licensed, even
if that transaction did not include an activation or adding
value step. J.A. 20. As support, the district court relied on
our decision in Alexsam, Inc. v. IDT Corp., 715 F.3d at
1346. There we affirmed a district court determination
that the same License Agreement we are construing today
creates a license that extends to any “activation” transac-
tion carried out on the Mastercard network. Our state-
ments in IDT were made in the context of a case in which
the patent claims asserted by AlexSam were also limited to
“activation transactions.” Id. at 1339 (“The claims at issue
in this appeal are drawn to a system for activating multi-
function cards using a point-of-sale (‘POS’) terminal, such
as a cash register or a free-standing credit card reader.”)
(emphasis added). Therefore, the license provided a full
defense to patent infringement, since “any activation
transaction covered by the patents in suit and taking place
over the MasterCard network was automatically ‘deemed
sublicensed.’” Id. at 1346.
The holding in IDT does not result in the license
providing a full defense to Aetna here. This is because, as
we have observed, claims 32 and 33 of the ’608 patent are
not themselves limited to activation or adding value trans-
actions, and the operative complaint alleges that the ac-
cused Mastercard Products are “medical cards and do not
require an activation transaction,” unlike, for instance,
claims 57 and 58 that had been asserted against IDT. J.A.
477. Just because all of the alleged activity at issue in IDT
was licensed does not make all of the allegedly infringing
activity in this case also licensed.
In objecting to AlexSam’s interpretation of the License
Agreement, Aetna points to the Second Amended Com-
plaint’s allegation that “[a]cts by [Aetna] that contribute to
the infringement of these retailers include providing the
Case: 22-2036 Document: 49 Page: 14 Filed: 10/08/2024

-- 14 of 33 --

ALEXSAM , INC. v. AETNA, INC. 15
POS devices and bank Processing Hub computers which
are capable of initiating the activation and loyalty point
crediting processes.” Response Br. at 46 (citing J.A. 485;
emphasis added by Aetna). This allegation – if it remains
in the operative complaint on remand and, therefore, must
be taken as true5 – may support a determination that some
of the alleged infringement involving the Mastercard Prod-
ucts is licensed, i.e., those transactions involving an activa-
tion or adding value step. It does not, however, expand the
scope of the license to reach transactions that do not in-
volve an activation of adding value step. Nor does it re-
strict AlexSam’s allegations to only such transactions.
Accordingly, the district court erred by finding that a
license covered all of the alleged infringement involving the
Mastercard Products.6 Because the district court miscon-
strued the scope of the license, we must vacate the portion
of its judgment dismissing the claims that Aetna infringes
with respect to the Mastercard Products.
Additionally, on remand, the district court may find it
necessary to resolve other issues it did not need to address
given its now-vacated interpretation of the scope of the li-
cense. These issues may include whether the License
5 AlexSam insists that this allegation appeared in
the Second Amended Complaint by “mistake.” Reply Br. at
25 n.8. We are not in a position to evaluate this unusual
contention. We note, however, that the requirement to
take as true all well-pled factual allegations in the course
of evaluating a motion to dismiss extends to all such alle-
gations in a complaint.
6 Aetna does not contend that it enjoys an implied
license with a scope any broader than its express license.
It follows that our analysis of the express license applies
equally to any implied license that may also exist.
Case: 22-2036 Document: 49 Page: 15 Filed: 10/08/2024

-- 15 of 33 --

ALEXSAM , INC. v. AETNA, INC. 16
Agreement terminated before the expiration of the ’608 pa-
tent7 and the impact, if any, of the 2007 amendment to the
Agreement.8 We leave it to the district court to decide
these issues, if needed, on remand.
Thus, we vacate the district court’s dismissal of these
infringement claims and remand for further proceedings.
B
We turn next to AlexSam’s claims of patent infringe-
ment based on Aetna’s VISA Products. Here, too, we find
the district court erred in its dismissal order, in connection
with AlexSam’s claims of both direct and indirect infringe-
ment.
7 AlexSam contends that the license expired prior to
the ’608 patent terminating. J.A. 1026. Aetna disagrees.
J.A. 1185. In the MasterCard Case, 2024 WL 825658, at
*1, we considered the same License Agreement and held
that “the covenant not to sue does not survive the termina-
tion of the License Agreement,” but we were not required
to decide whether the License Agreement terminated at
the same time as the ’608 patent expired. The district court
may need to resolve this dispute on remand.
8 The 2007 amendment altered the definition of Li-
censed Transaction “to further encompass each process of
exchanging information related to an information card be-
tween a POI Device and MasterCard’s financial network,
provided that such process is covered by one of the Licensed
Patents.” J.A. 675 (emphasis added). Aetna interprets the
amendment as broadening the original license, while
AlexSam argues the amendment is irrelevant because the
accused products are not information cards. We leave this
issue for the district court to decide, if necessary.
Case: 22-2036 Document: 49 Page: 16 Filed: 10/08/2024

-- 16 of 33 --

ALEXSAM , INC. v. AETNA, INC. 17
1
Before we address the district court’s reasoning for dis-
missing the VISA Products claims, we reiterate the frame-
work for a sufficient pleading of patent infringement.
Although we have done so on multiple previous occasions,
see, e.g., Bot M8, 4 F.4th 1342; Disc Disease Sols. Inc.
v. VGH Sols., Inc., 888 F.3d 1256, 1260 (Fed. Cir. 2018), the
standard bears repeating.
Federal Rule of Civil Procedure 8(a)(2) “generally re-
quires only a plausible short and plain statement of the
plaintiff’s claim,” showing that the plaintiff is entitled to
relief. Skinner v. Switzer, 562 U.S. 521, 530 (2011) (inter-
nal quotation marks omitted). Rule 8 “does not require de-
tailed factual allegations.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (internal quotation marks omitted). Thus, in
order to survive a motion to dismiss under Rule 12(b)(6), “a
complaint must contain sufficient factual matter, accepted
as true, to ‘state a claim to relief that is plausible on its
face.’” Id. (quoting Bell v. Twombly, 550 U.S. 544, 570
(2007)). “A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Id. While the “plausibility standard
is not akin to a ‘probability requirement,’” it does “ask[] for
more than a sheer possibility that a defendant has acted
unlawfully.” Id. Thus, a plausible claim must do more
than merely allege entitlement to relief; it must support
the grounds for that entitlement with sufficient factual
content. See id.
“Factual allegations must be enough to raise a right to
relief above the speculative level.” Twombly, 550 U.S. at
555. However, because a complaint “need only ‘give the de-
fendant fair notice of what the . . . claim is and the grounds
upon which it rests,’” it follows that “[s]pecific facts are not
necessary” to support every allegation in the complaint.
Case: 22-2036 Document: 49 Page: 17 Filed: 10/08/2024

-- 17 of 33 --

ALEXSAM , INC. v. AETNA, INC. 18
Erickson v. Pardus, 551 U.S. 89, 93 (2007) (alteration in
original; quoting Twombly, 550 U.S. at 555). We have
added that “[t]he level of detail required in any given [pa-
tent] case will vary depending upon a number of factors,
including the complexity of the technology, the materiality
of any given element to practicing the asserted claim(s),
and the nature of the allegedly infringing device.” Bot M8,
4 F.4th at 1353. Thus, the amount of detail required to
provide a defendant the requisite fair notice of the plain-
tiff’s claims will also vary.
In the Second Circuit, a court evaluating whether a
complaint has met the plausibility standard and, hence,
stated a claim on which relief may be granted, must take
all well-pled factual allegations as true. See Littlejohn
v. City of New York, 795 F.3d 297, 306-07 (2d Cir. 2015).
This concept, however, is “inapplicable to legal conclu-
sions.” Iqbal, 556 U.S. at 678. “Threadbare recitals of the
elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Id. Furthermore, pleadings
that “are no more than conclusions[] are not entitled to the
assumption of truth.” Id. at 679.
Whether a particular allegation in a complaint is well-
pled and factual, and therefore accorded a presumption of
truth, or is instead a legal conclusion or in other respects
merely conclusory – and, hence, not credited at the motion
to dismiss stage – can be a crucial issue. Yet we have not
explicitly set out the standard of review applicable to a trial
court’s categorization of a complaint’s allegations. That is,
we have not said whether we accord deferential or non-def-
erential review to a trial court’s decision that an allegation
is factual or legal, well-pled or merely conclusory. We hold
today that our review of trial court determinations on these
matters is de novo.
We reach this conclusion for several reasons. First, the
overall endeavor of evaluating a motion to dismiss, both in
Case: 22-2036 Document: 49 Page: 18 Filed: 10/08/2024

-- 18 of 33 --

ALEXSAM , INC. v. AETNA, INC. 19
a trial court and on appeal, is a matter of law, not requiring
any factual determinations or exercises of discretion. See
generally Bell v. Hood, 327 U.S. 678, 682 (1946) (“Whether
the complaint states a cause of action on which relief could
be granted is a question of law.”). It is well-settled that
appellate review of a district court decision to grant a mo-
tion to dismiss for failure to state a claim on which relief
may be granted is de novo. See Johnson v. Priceline.com,
Inc., 711 F.3d 271, 275 (2d Cir. 2013); see also Ottah, 884
F.3d at 1141.
Second, although neither the Supreme Court nor our
court has expressly analyzed what standard of review is
applicable in the context we are considering today, we have
both consistently – albeit implicitly – applied de novo re-
view to trial court determinations that certain complaint
allegations are conclusory.9 This is illustrated in the sem-
inal cases of Ashcroft v. Iqbal and Bell Atlantic v. Twombly.
Their analyses strongly imply that appellate review ac-
cords no deference to a trial court’s view that a complaint
allegation is merely conclusory.
In Iqbal, 556 U.S. at 674, the Court stated that “[d]eter-
mining whether a complaint states a plausible claim for re-
lief will . . . be a context-specific task that requires the
9 While we have not found any of our sister circuits
explicitly analyzing this question, it appears that they, too,
apply de novo review to a district court determination that
a complaint’s allegation is merely conclusory. See, e.g., Es-
pinoza ex rel. JPMorgan Chase & Co. v. Dimon, 797 F.3d
229, 237 (2d Cir. 2015) (“We respectfully part ways with
the able district court’s analysis on this point. As an initial
matter, we do not believe that Espinoza’s allegations were
‘conclusory.’”); Rahim v. Morgan, 30 F.3d 142 (10th Cir.
1994) (unpublished table decision) (reviewing dismissal
under Rule 12(b)(6), which turned on whether pro se com-
plaint was too conclusory, without deference).
Case: 22-2036 Document: 49 Page: 19 Filed: 10/08/2024

-- 19 of 33 --

ALEXSAM , INC. v. AETNA, INC. 20
reviewing court to draw on its judicial experience and com-
mon sense,” id. at 679 (emphasis added), suggesting that
appellate review is based on the appellate court’s own in-
dependent view and is not at all deferential to the district
court. The Court elsewhere added that “determining
whether respondent’s complaint has the ‘heft’ to state a
claim is a task well within an appellate court’s core compe-
tency,” a formulation suggesting, again, that an appellate
court makes its own de novo determination. Id. at 674.
In Twombly, 550 U.S. at 564-70, the Court determined
that while the plaintiff had pointed to parallel conduct by
defendants, the plaintiff had also failed to allege sufficient
facts to make out a plausible case that this conduct was the
result of unlawful collusion. While the Court “agree[d]
with the [d]istrict [c]ourt’s assessment that antitrust con-
spiracy was not suggested by the facts adduced,” it ap-
peared to reach this conclusion without deferring to the
district court’s decision. Id. at 569.
Likewise, in Samish Indian Nation v. United States,
419 F.3d 1355, 1364 (Fed. Cir. 2005), we equated our eval-
uation of the complaint with that undertaken by the Court
of Federal Claims, stating, “[l]ike the trial court, this court
tests the sufficiency of the complaint as a matter of law,
accepting as true all non-conclusory allegations of fact, con-
strued in the light most favorable to the plaintiff.” We un-
dertook an independent review and reached the opposite
conclusion from that of the trial court, reversing in part the
Court of Federal Claims’ dismissal of the Samish Indian
Nation’s complaint.
Third, we find additional support for our decision to ap-
ply de novo review when we look to the factors the Supreme
Court has relied on in deciding, in other contexts, unsettled
questions of what standard of review to apply to a district
court decision. See Pierce v. Underwood, 487 U.S. 552, 557-
63 (1988) (deciding to apply abuse of discretion review to
district court analysis of whether government position was
Case: 22-2036 Document: 49 Page: 20 Filed: 10/08/2024

-- 20 of 33 --

ALEXSAM , INC. v. AETNA, INC. 21
substantially justified); Cooter & Gell v. Hartmarx Corp.,
496 U.S. 384, 408-09 (1990) (same for review of imposition
of sanctions under Fed. R. Civ. P. 11); see also Hall v. Sec’y
of Health & Hum. Servs., 640 F.3d 1351, 1356-57 (Fed. Cir.
2011) (relying on Pierce in deciding to apply abuse of dis-
cretion review to special master award of attorney’s fees in
vaccine case).
For instance, in Pierce, 487 U.S. at 557-63, the Court
confronted the question of which standard of review to ap-
ply to a district court’s award of attorney’s fees under the
Equal Access to Justice Act, 28 U.S.C. § 2412(d). It began
its discussion by noting it had not previously established a
definitive test for deciding appellate standard of review
questions and would not do so in Pierce. “No more today
than in the past shall we attempt to discern or to create a
comprehensive test,” the Court wrote, although it went on
to helpfully identify “significant relevant factors” useful to
the task. Id. at 559.
Each of Pierce’s “significant relevant factors” impli-
cated here favors de novo review. As articulated by the
Court, these factors begin with whether “as a matter of the
sound administration of justice, one judicial actor is better
positioned than another to decide the issue in question.”
Id. at 559-60 (internal quotation marks omitted). Here, be-
cause review of a complaint calls only for review and inter-
pretation of documents, tasks appellate courts take up on
a daily basis, de novo appellate review is entirely con-
sistent with sound judicial administration. The next appli-
cable factor is whether there are components to the
analysis that are “known only to the district court” that
may somehow not be apparent to an appellate court from
its review of a closed record. Id. at 560. Here, there are
not. Evaluating the sufficiency of a complaint does not in-
volve, for example, observing witness testimony, making
credibility determinations, or exercising discretion. Nor,
turning to another Pierce factor, are there any “untoward
consequences,” such as misuse of scarce appellate judicial
Case: 22-2036 Document: 49 Page: 21 Filed: 10/08/2024

-- 21 of 33 --

ALEXSAM , INC. v. AETNA, INC. 22
resources, that flow from applying de novo review to the
question of whether an allegation is merely conclusory. See
id. at 561.
The remaining factors identified by the Court in Pierce
are not applicable, although neither do they in any way un-
dermine our decision to apply de novo review. The “lan-
guage and structure of the governing statute” is not
relevant here, nor is there a “substantial amount of [] lia-
bility” being imposed. Id. at 559, 563. We also do not con-
front circumstances, like those described in Pierce, where
“the district judge’s full knowledge of the factual setting
[could only] be acquired by the appellate court . . . at unu-
sual expense.” Id. at 560. Neither do we face a situation
presenting “a multifarious and novel question, little sus-
ceptible, for the time being at least, of useful generaliza-
tion, and likely to profit from the experience that an abuse-
of-discretion rule will permit to develop.” Id. at 562. While
reasonable minds may certainly differ as to whether any
particular allegation in a complaint is merely conclusory,
the “needed flexibility” envisioned by the Court can be ac-
complished without deferential review of a district court’s
characterization of a complaint’s allegation. Id.
Therefore, we hold that review of a trial court’s deter-
mination that an allegation in a complaint attempting to
state a claim for patent infringement is merely “conclu-
sory,” and need not to be taken as true when evaluating a
motion to dismiss, is de novo.
2
With these principles in mind, we address the district
court’s dismissal of AlexSam’s claims based on Aetna’s
VISA Products. We first consider the allegation that Aetna
directly infringes through its own actions in connection
with making and using the VISA Products. Then we turn
to AlexSam’s allegations that Aetna induces and contrib-
utes to others’ direct infringement of the asserted claims.
Case: 22-2036 Document: 49 Page: 22 Filed: 10/08/2024

-- 22 of 33 --

ALEXSAM , INC. v. AETNA, INC. 23
a
First, the district court erred by concluding that
AlexSam failed to allege a plausible claim of direct in-
fringement by Aetna’s making and using the VISA Prod-
ucts.10
“A plaintiff is not required to plead infringement on an
element-by-element basis.” Bot M8, 4 F.4th at 1352. In-
stead, it is enough “that a complaint place the alleged in-
fringer on notice of what activity . . . is being accused of
infringement.” Id. (internal quotation marks omitted; al-
teration in original). As we noted above, “[t]he level of de-
tail required in any given case will vary depending upon a
number of factors, including the complexity of the technol-
ogy, the materiality of any given element to practicing the
asserted claim(s), and the nature of the allegedly infringing
device.” Id. at 1353.
AlexSam’s Second Amended Complaint meets these re-
quirements, particularly given the simplicity of the tech-
nology involved. Although not required to do so to avoid
dismissal under Rule 12(b)(6), the complaint expressly
maps each claim limitation to the accused VISA Products,
10 AlexSam alleged that Aetna “ships, distributes,
makes, uses, imports, offers for sale, sells, and/or adver-
tises” the VISA Products. J.A. 477. AlexSam challenges
only the dismissal of the infringement claims based on
making and using the VISA Products. Therefore, we affirm
the dismissal order to the extent it applies to the other al-
leged bases for direct infringement in connection with the
VISA Products. AlexSam has also not appealed the district
court’s finding that it failed to sufficiently plead divided in-
fringement or willful infringement or its dismissal of
AlexSam’s declaratory judgment claim. We affirm these
unchallenged aspects of the district court’s judgment as
well.
Case: 22-2036 Document: 49 Page: 23 Filed: 10/08/2024

-- 23 of 33 --

ALEXSAM , INC. v. AETNA, INC. 24
including by attaching claim charts. J.A. 537-42. The Sec-
ond Amended Complaint also uses photographs, and incor-
porates by reference an expert declaration, to further
illustrate how, in AlexSam’s not unreasonable view,
Aetna’s VISA Products infringe.
For example, AlexSam’s contention that Aetna in-
fringes by “making” the VISA Products begins with the al-
legation that Aetna offers its customers a Health Savings
Account (“HSA”) VISA card. This VISA card has multiple
functions, including serving as a debit card and accessing
“a processing hub for medical data supported by one of
Aetna’s medical plans.” J.A. 541. The card has a unique
identification number located on it: a bank identification
number (“BIN”) approved for use in a banking network by
the American Banking Association. J.A. 540. The Second
Amended Complaint alleges that Aetna provides and/or
uses a transaction processor that receives card data, in-
cluding the bank identification number, from an unmodi-
fied, existing, standard POS device. J.A. 541.
The Second Amended Complaint also states that Aetna
provides, uses, or contracts with third parties to provide or
use a processing hub to receive the card data from a trans-
action processor. Aetna alleges that “all Visa . . . Cards ac-
cess a processing hub when used” and that the processing
hub must access a first database when the card functions
as a debit card, “to process the debit” transaction, and also
“accesses a second database” when the card is serving “the
medical services function.” J.A. 541. The above allegations
are sufficient to state a claim that Aetna infringes by “mak-
ing” the infringing system. The Second Amended Com-
plaint also adequately alleges that Aetna infringes by
“using” such a system. “[T]o ‘use’ a system for purposes of
infringement, a party must put the invention into service,
i.e., control the system as a whole and obtain benefit from
it.” Centillion Data Sys., LLC v. Qwest Commc’ns. Int’l,
Inc., 631 F.3d 1279, 1284 (Fed. Cir. 2011); see also Intell.
Case: 22-2036 Document: 49 Page: 24 Filed: 10/08/2024

-- 24 of 33 --

ALEXSAM , INC. v. AETNA, INC. 25
Ventures I LLC v. Motorola Mobility LLC, 870 F.3d 1320,
1329 (Fed. Cir. 2017) (same).
AlexSam adequately alleges that Aetna controls the
system since the complaint states that Aetna “owns, oper-
ates, or leases all equipment in the infringing system, or
alternatively exercises direction and control over the oper-
ation of all equipment in the infringing system.” J.A. 477.
It further alleges that Aetna provides “debit/medical ser-
vices card[s]” having BINs and “employs staff (e.g., an IT
department) to operate the Processing Hub in order to in-
terface with, install, configure, manage, monitor, test, and
control the debit/medical services cards and other equip-
ment in the infringing multifunction card system.” J.A.
477-78. These are sufficient allegations of Aetna’s control.
With respect to “benefit,” we find sufficient the Second
Amended Complaint’s attached expert declaration, which
is incorporated into the complaint by reference, and which
identifies the technical benefits derived by Aetna from use
of the elements of the asserted claims. See, e.g., J.A. 518
(expert opining that benefits include “[i]nitiating multi-
function card transactions from any standard point of sale
device (i.e. a regular credit card reader),” “[t]ransmitting
transactions utilizing the standard banking network
(which does not normally allow any non-standard transac-
tions),” and “[a]llowing third parties (e.g.[,] non-banks and
non-financial institutions) to participate in, and in some
cases control, card transactions to provide functionality be-
yond simple credit and debit card transactions”); see also
J.A. 521-27 (expert describing each element of claim and
how they work together to achieve intended purpose of pa-
tent).
In urging us to affirm the district court’s conclusion
that the Second Amended Complaint’s direct infringement
allegations are inadequate, Aetna raises three principal ar-
guments. Aetna contends that the Second Amended Com-
plaint is: (i) conclusory, making allegations that are
Case: 22-2036 Document: 49 Page: 25 Filed: 10/08/2024

-- 25 of 33 --

ALEXSAM , INC. v. AETNA, INC. 26
undeserving of the presumption of truth; (ii) implausible,
because its allegations are contradicted by documents at-
tached to it; and (iii) insufficient to provide Aetna notice of
what it must defend against in this litigation. We are not
persuaded.
Considering the matter de novo, we disagree with the
district court that many of the allegations we have de-
scribed just above are conclusory and thus need not be
taken as true. Instead, in the context of the relevant tech-
nology and the overall detail provided as to AlexSam’s the-
ory of infringement, including in claim charts and
elaborated on by the incorporated expert report, these alle-
gations are sufficiently specific and factual to constitute
well-pled allegations. In evaluating Aetna’s motion to dis-
miss, then, these allegations must be credited, here making
it improper to dismiss the Second Amended Complaint.
Aetna additionally attacks the Second Amended Com-
plaint for being “absurd on its face,” given its repeated al-
legations that Aetna itself “owns, operates, or leases” point-
of-sale devices. Response Br. at 33. Aetna insists that, in
truth, “[t]hese are the types of devices that are commonly
seen at merchants’ stores, pharmacies, and medical offices
– not at holding company corporate offices.” Id. In Aetna’s
telling, “Aetna Inc.,” the sole named defendant, is nothing
more than “a non-operating parent holding company,” and
it is “other entities” – related to but distinct from Aetna –
that “actually provided health insurance, administered
benefit plans, or provided health debit cards.” Id. at 3.
Aetna asserts that its own non-operating status is con-
firmed by documents attached to the Second Amended
Complaint, which it contends directly contradict the com-
plaint. In Aetna’s view, because all of AlexSam’s direct in-
fringement claims are predicated on Aetna’s own actions,
but the documents attached to the Second Amended Com-
plaint show Aetna does not itself take these actions,
AlexSam’s infringement claims are implausible, requiring
dismissal.
Case: 22-2036 Document: 49 Page: 26 Filed: 10/08/2024

-- 26 of 33 --

ALEXSAM , INC. v. AETNA, INC. 27
The district court agreed with Aetna that “[i]t is fa-
cially implausible that Aetna Inc. controls all banks and
retailers, plus Mastercard and Visa.” J.A. 31 (internal quo-
tation marks omitted; alteration in original). We disagree.
Instead, as AlexSam rightly notes, “Aetna’s operational
role is a contested issue of fact,” one that the district court
was not free to decide on a motion to dismiss. Reply Br. at
13; see also Indust. Bankers Secs. Corp. v. Higgins, 104
F.2d 177, 181 (2nd Cir. 1939) (observing that “whether [a
party] is shown to be a mere holding or investment com-
pany” is question of fact) (internal quotation marks omit-
ted). The Second Amended Complaint, after defining
“Aetna Inc.” as “Aetna,” J.A. 457, alleges that “Aetna owns,
operates, advertises, and/or controls the website,
www.aetna.com, as well as various office locations and rep-
resentatives across the country, through which Aetna sells,
advertises, offers for sale, uses, or otherwise provides, in-
cluding but not limited to, the [accused] products.” Id. at
468. It further alleges that Aetna “owns, operates, or
leases all equipment in the infringing system” and Aetna
“employs staff (e.g., an IT department) to operate the Pro-
cessing Hub in order to interface with, install, configure,
manage, monitor, test, and control the debit/medical ser-
vices cards and other equipment in the infringing multi-
function card system.” Id. at 477-78. In other words, the
operative complaint expressly alleges that Aetna is not
merely a holding company but, instead, an operating com-
pany that itself engages in infringing conduct.
Each of these allegations must be taken as true, unless
they are directly contradicted by documents incorporated
in the Second Amended Complaint. There are no such con-
tradictions here. Neither in its briefing nor at oral argu-
ment has Aetna identified a single statement in a
document attached to the Second Amended Complaint that
actually contradicts the complaint’s allegations about
Aetna’s own actions. For example, when we asked counsel
to point us to any evidence of a direct contradiction, it
Case: 22-2036 Document: 49 Page: 27 Filed: 10/08/2024

-- 27 of 33 --

ALEXSAM , INC. v. AETNA, INC. 28
responded by directing us to Exhibit C, which states that
“Aetna is the brand name for products and services pro-
vided by one or more of the Aetna group of subsidiary com-
panies,” id. at 572, and which also shows debit cards and
billing statements labeled with the name of Aetna’s subsid-
iary, Aetna Life Insurance Company. See Oral Arg. at
17:37-20:01, available at https://oralarguments.cafc.
uscourts.gov/default.aspx?fl=22-2036_01092024.mp3 (cit-
ing J.A. 555-56). Counsel also referred to sections of the
complaint describing how PayFlex provides the cards at is-
sue, suggesting PayFlex is not Aetna itself. See Oral Arg.
at 28:24-29:52. While Aetna succeeds in showing there is
tension between the complaint’s repeated allegations that
Aetna itself, and not just its subsidiaries, engages in in-
fringing activities, none of them – nor any others we have
been able to identify – actually contradicts the allegations
that Aetna itself, perhaps in addition to its subsidiaries,
undertakes infringing conduct. Viewed in the light most
favorable to AlexSam, as we must at this preliminary
stage, all that the exhibits establish is that Aetna Inc.’s
subsidiaries are responsible for allegedly infringing ac-
tions. This is not the same thing as establishing that Aetna
Inc. is not responsible for such actions. The latter is the
conclusion Aetna would need us to reach to sustain the dis-
trict court’s dismissal. On the record before us, at the pro-
cedural stage this case is at, we are unable to do so.11
11 Given our conclusions that AlexSam has ade-
quately pled a plausible theory of direct infringement
based on Aetna “making” and “using” the VISA Products,
we need not resolve the parties’ related dispute as to
whether AlexSam waived the particular theory that Aetna,
as the “final assembler” of an infringing system, made the
system. We also need not decide if AlexSam adequately
pled that Aetna may be held liable as the alter ego of its
Case: 22-2036 Document: 49 Page: 28 Filed: 10/08/2024

-- 28 of 33 --

ALEXSAM , INC. v. AETNA, INC. 29
Finally, Aetna argues that the Second Amended Com-
plaint “fails to provide Aetna Inc. notice of what activ-
ity . . . is being accused of infringement.” Response Br. at
28 (internal quotation marks omitted). Again, we disagree.
Aetna has fair notice of the allegations against which it
must defend itself. It knows from the complaint that, with
respect to direct infringement, it will have to counter
AlexSam’s contention that, for example, Aetna Inc., itself,
owns, operates, leases or otherwise directs or controls all
equipment in the infringing system, and employs staff to
run and control the debit/medical services cards and equip-
ment in the infringing system. And it knows from the at-
tached claim charts and incorporated expert report how
AlexSam maps each of the limitations of the asserted
claims to Aetna’s VISA Products.
Therefore, we conclude that the district court erred by
granting Aetna’s motion to dismiss the Second Amended
Complaint’s claims that Aetna directly infringes AlexSam’s
patent claims by making and using the VISA Products.12
allegedly infringing subsidiaries. If AlexSam wishes to
pursue these contentions, it will be for the district court to
decide whether to permit it to do so.
12 As is clear from our discussion, AlexSam’s direct
infringement theories are reliant on the contention that
Aetna itself performs each step of the asserted claims, a
contention Aetna insists is entirely untrue. That we are
required to reject Aetna’s position in connection with a mo-
tion to dismiss should not be mistaken for a belief that
AlexSam will actually be able to prove this fundamental
premise of its claims. On remand, the district court may
wish to consider prioritizing the issue of whether Aetna
Inc. can be proven to be an operating company as opposed
to a non-operating holding company. The district court has
Case: 22-2036 Document: 49 Page: 29 Filed: 10/08/2024

-- 29 of 33 --

ALEXSAM , INC. v. AETNA, INC. 30
b
Next, we turn to AlexSam’s claims of induced and con-
tributory infringement.
“Whoever actively induces infringement of a patent
shall be liable as an infringer.” 35 U.S.C. § 271(b). “For an
allegation of induced infringement to survive a motion to
dismiss, a complaint must plead facts plausibly showing
that the accused infringer specifically intended [another
party] to infringe [the patent] and knew that the [other
party’s] acts constituted infringement.” Lifetime Indus.,
Inc. v. Trim-Lok, Inc., 869 F.3d 1372, 1379 (Fed. Cir. 2017)
(internal quotation marks omitted; alterations in original).
Circumstantial evidence may suffice to prove specific in-
tent. See MEMC Electr. Materials, Inc. v. Mitsubishi Ma-
terials Silicon Corp., 420 F.3d 1369, 1378 (Fed. Cir. 2005).
AlexSam alleges that Aetna knew and intended that its
customers would infringe AlexSam’s patent claims by us-
ing the VISA Products. See, e.g., J.A. 479 (Second
Amended Complaint alleging that “Defendant knew that
its actions, including, but not limited to any of the VISA
Accused Products, would induce, have induced and will
continue to induce infringement by its customers by con-
tinuing to sell, support, and instruct its customers on using
the VISA Accused Products”). Contrary to Aetna’s conten-
tion, AlexSam was not required to identify a specific cus-
tomer. “Given that a plaintiff’s indirect infringement
claims can succeed at trial absent direct evidence of a spe-
cific direct infringer, we cannot establish a pleading stand-
ard that requires something more.” In re Bill of Lading
Transmission & Processing Sys. Pat. Litig., 681 F.3d 1323,
discretion, for instance, to stay all other portions of the case
and allow the parties to take discovery on, and brief a case-
dispositive motion, limited to the issue of Aetna Inc.’s al-
legedly directly infringing acts.
Case: 22-2036 Document: 49 Page: 30 Filed: 10/08/2024

-- 30 of 33 --

ALEXSAM , INC. v. AETNA, INC. 31
1336 (Fed. Cir. 2012). The Second Amended Complaint ref-
erences brochures and other promotional material suffi-
cient to support a plausible inference that at least one
directly infringing customer – for example, a recipient of
one of these brochures or promotional materials – exists.
AlexSam plausibly alleges that Aetna had knowledge
of its infringement based on a notice letter AlexSam sent
to Aetna. This letter, which is incorporated into the Second
Amended Complaint, identified the ’608 patent and noti-
fied Aetna of AlexSam’s view that Aetna’s covered “health
savings account and flexible spending account debit card
systems” infringe claims of this patent. J.A. 640. Contrary
to Aetna’s suggestion, we do not require patentees to plead
that an alleged inducer of infringement had knowledge of
the specific patent claims a patentee later asserts in litiga-
tion. See Bot M8, 4 F.4th at 1352 (finding that plausible
claim may be stated, and avoid dismissal, without pleading
“on an element-by-element basis”).
With respect to the “intent” prong, AlexSam alleged
that Aetna, notwithstanding its knowledge of the ’608 pa-
tent and that its customers infringed it, “continue[d] to en-
courage, instruct, enable, and otherwise cause its
customers to sell” the Accused Products. J.A. 479.
AlexSam further alleges that “Defendant has specifically
intended its customers to use the VISA Accused Products
in its infringing systems in such a way that infringes the
Asserted Claims by, at a minimum, providing and support-
ing the VISA Accused Products and instructing its custom-
ers on how to use them in an infringing manner, at least
through information available on Defendant’s website in-
cluding information brochures, promotional material, and
contact information.” Id.; see also J.A. 549 (“Using Your
HSA: . . . The debit card will be sent to you prior to your
health plan taking effect and can be used by any health
care provider that accepts Visa.”). Taken together, these
allegations, which must be taken as true, are sufficient at
Case: 22-2036 Document: 49 Page: 31 Filed: 10/08/2024

-- 31 of 33 --

ALEXSAM , INC. v. AETNA, INC. 32
the pleadings stage to make it plausible that Aetna indeed
intended that its customers infringe AlexSam’s patent.
Accordingly, AlexSam sufficiently pled induced in-
fringement based on the VISA Products. Thus, we vacate
the district court’s dismissal of these claims.
AlexSam also sufficiently alleged a claim of contribu-
tory infringement. To state a claim for contributory in-
fringement, a complaint must adequately allege: “(1) the
defendant had ‘knowledge of the patent in suit,’ (2) the de-
fendant had ‘knowledge of patent infringement,’ and (3) the
accused product is not a staple article or commodity of com-
merce suitable for a substantial non-infringing use.” Bio-
Rad Lab’ys., Inc. v. Int’l Trade Comm’n, 998 F.3d 1320,
1335 (Fed. Cir. 2021) (quoting Commil USA, LLC v. Cisco
Sys., Inc., 575 U.S. 632, 639 (2015)). Further, the compo-
nent must constitute “‘a material part of the invention.’”
Commil, 575 U.S. at 639 (quoting 35 U.S.C. § 271(c)).
The same allegations that adequately plead knowledge
of the patent and knowledge of the patent infringement for
purposes of induced infringement suffice for purposes of
AlexSam’s contributory infringement claim as well. See
Bio-Rad Laby’s, 998 F.3d at 1335-36 (evaluating both con-
tributory and induced infringement simultaneously). With
respect to whether the Aetna-supplied component is a sta-
ple with substantial non-infringing uses, the Second
Amended Complaint alleges that Aetna provides a “Pro-
cessing Hub,” which it describes as a “special-purpose com-
puter,” J.A. 461, “especially adapted for use in the
infringing systems, and it has no substantial non-infring-
ing uses,” J.A. 479. AlexSam further alleges that the “Pro-
cessing Hub” is the “nerve center” and “primary component
of the patented system.” J.A. 463-65. Each of these allega-
tions was supported by an expert declaration attached to
the complaint. Together, and taking these well-pled fac-
tual allegations as true, AlexSam has sufficiently alleged
Case: 22-2036 Document: 49 Page: 32 Filed: 10/08/2024

-- 32 of 33 --

ALEXSAM , INC. v. AETNA, INC. 33
there are no substantial non-infringing uses of Aetna’s
“Processing Hub” component of the accused system.
Accordingly, AlexSam sufficiently pled its claim of con-
tributory infringement based on the VISA Products. Thus,
we vacate the district court’s dismissal of this claim.13
IV
We have considered the parties’ remaining arguments
and find them unpersuasive. Because we find the district
court erred by dismissing the entirety of AlexSam’s Second
Amended Complaint, its judgment is affirmed in part, va-
cated in part, and remanded for further proceedings con-
sistent with this opinion.
AFFIRMED-IN-PART, VACATED-IN-PART, AND
REMANDED
COSTS
No costs.
13 Because we have found that the portions of the Sec-
ond Amended Complaint on which AlexSam wishes to pro-
ceed are sufficient to state claims on which relief may be
granted, AlexSam’s challenge to the district court’s denial
of its requests to amend the operative complaint is moot.
Case: 22-2036 Document: 49 Page: 33 Filed: 10/08/2024

-- 33 of 33 --