The U.S. Court of Appeals for the Federal Circuit confirmed that the service and filing of a motion for sanctions under Rule 11 must occur prior to final judgment or judicial rejection of the offending motion in order to prevail. Orenshteyn v. Citrix Systems, Inc., Case Nos. 03-1427, 08-1378, -1400 (Fed. Cir., July 24, 2009) (Lourie, J.) (non-precedential).

Alexander Orenshteyn sued Citrix System (Citrix) for patent infringement on April 9, 2002. On March 6, 2003, after the close of discovery, Citrix moved for summary judgment of non-infringement and invalidity. Citrix presented its motion for Rule 11 sanctions to Orenshteyn’s counsel on May 16, 2003. Four days later, the district court entered final judgment of non-infringement. On June 19, 2003, 35 days after presenting its motion to counsel, Citrix filed its motion for Rule 11 sanctions with the district court. Rule 11 requires that a motion for sanctions “must not be filed … if the challenged … claim … is withdrawn within 21 days after service.” The district court found Orenshteyn liable for sanctions under Rule 11 and his attorneys both liable under both Rule 11.

Orenshteyn and his counsel appealed. The Court reviewed the construction of the term “controller” and determined the district court erred by improperly limiting the term to exclude CPUs. Thus the Court held that summary judgment based on the district court’s construction was erroneous.

While addressing the award of the Rule 11 sanctions, the Court looked to the U.S. Court of Appeals for the Eleventh Circuit, which had interpreted the safe harbor provision as requiring a motion for Rule 11 sanctions to be filed prior to final judgment. In doing so, the Eleventh Circuit sided with the with the U.S. Court of Appeals for the Second, Fourth and Sixth Circuits, which had previously determined that “the service and filing of a motion for sanctions must occur prior to final judgment or judicial rejection of the offending motion. Any argument to the contrary renders the safe harbor provision a mere formality. The provision cannot have any effect if the court has already denied the motion; it is too late for the offending party to withdraw the challenged contention.”

Here, the district court entered its final judgment of non-infringement four days after Citrix presents its motion to Orenshteyn’s counsel. Citrix did not file its motion with the court until after the final judgment was entered. Therefore, Orenshteyn was unable to avail himself of the 21-day safe harbor provision. Thus, the Court determined that the “district court awarded Rule 11 sanctions in circumstances where Orenshteyn was deprived of a benefit provided by the rule, in effect, on an erroneous view of the law.”

Practice Note: When Rule 11 sanctions may be at issue, be sure to pay particular attention to the timing of the filing of your motion.