The Federal Circuit Court of Appeals has determined that a district court correctly awarded litigation costs and attorney’s fees to the defendant in an infringement action found to be an “exceptional case” and had sufficient grounds to impose Rule 11 sanctions against the plaintiff, a company in the business of filing infringement actions to extract nuisance value settlements. Eon-Net LP v. Flagstar Bancorp., No. 2009-1308 (Fed. Cir., decided July 29, 2011). So ruling, the court upheld an award of $631,000 to the defendant.
Among other matters, the court determined that the evidence supported findings that Eon-Net filed a baseless infringement action, destroyed relevant documents, failed to engage in the claim construction process in good faith, and displayed a lack of regard for the judicial system. According to the court, Eon-Net and its related entities had filed more than 100 similar lawsuits against a number of diverse defendants, when the district court made its exceptional case finding. “Each complaint was followed by a ‘demand for a quick settlement at a price far lower than the cost of litigation, a demand to which most defendants have apparently agreed.’” At issue were patents for processing information from hard copy documents.