A patentee’s proposed claim construction was found to be objectively baseless as a matter of law, justifying Rule 11 sanctions and potentially a fee award under 35 U.S.C. § 285.
A patentee brought three actions for infringement of its patent for a hand-held identification-investigating and ticket-issuing system. The patent referred to the exterior of the device as the “housing” and claimed two things relevant to this appeal: a “display being pivotally mounted on said housing” and “a printer assembly being mounted in said interior of said housing.” The patentee argued that the accused devices, which had fixed-mounted displays, infringed that claim because they could be pivoted by the user’s own joints. Additionally, the patentee argued that an external printer attached to a separate housing could infringe the patent. The defendants moved for Rule 11 sanctions and for attorneys’ fees and costs under 35 U.S.C. § 285. The district court rejected the patentee’s claim construction, but found that the patentee’s subjective motivations did not warrant sanctions. The defendants appealed.
The Federal Circuit reversed. Applying Fifth Circuit law, the court employed an objective rather than subjective standard, and held that the patentee’s claim construction was frivolous. The court went so far as to call it “a prime example of a construction that falls below” the Rule 11 threshold, as the proposed construction “encompasses any portable device with a display, regardless of how it is mounted to the housing.” The court further noted that “[t]here is nothing arcane about the location of the printer assembly in the claimed invention,” and the patentee’s argument that a device could infringe despite the lack of a printer was an independent violation of Rule 11. The court remanded for determination of an appropriate sanction. The court vacated the district court’s Section 285 holding—which had relied on the district court’s Rule 11 holding—and remanded that issue for full reconsideration as well.
Judge Reyna concurred, making two central points. First, he stressed the connection between Rule 11 and Section 285, emphasizing that “when a court finds a Rule 11 sanction based on conduct involving the allegation and pursuit of patent infringement claims that have been found objectively unreasonable, the court is compelled, if so moved by a party, to undertake a detailed and thorough Section 285 analysis.” Second, Judge Reyna explained that unlike the majority, he would declare this an exceptional case, and limit the Section 285 portion of the remand to determination of the appropriate sanction.
A copy of the opinion can be found here.