On June 5, 2014, the Federal Circuit affirmed the Southern District of New York’s decision to sanction Appellant and its attorneys for bringing a frivolous patent infringement lawsuit. Appellant was sanctioned for making frivolous legal claims in its submissions to the court and for failing to conduct an adequate investigation before filing its complaint. Specifically, the district court found that Appellant offered a proposed construction for an important claim limitation that was unreasonable. The proposed construction was contradicted by the patent’s specification and did not follow “standard canons of claim construction,” as it attempted to add words to otherwise unambiguous claim language.

The Federal Circuit concluded that the district court did not abuse its discretion in imposing Rule 11 sanctions because Appellant—in asserting frivolous claim construction arguments that ignored the canons of claim construction—did not meet its obligation to perform an objective pre-suit evaluation of the claim terms. The Federal Circuit also affirmed the district court’s finding that there was no reasonable basis for alleging Appellee infringed. Appellant failed to offer any evidence to demonstrate why it believed, before filing the lawsuit, that it had a chance of proving infringement. 

Because of Appellant’s untenable claim construction arguments and failure to demonstrate that a pre-suit analysis regarding infringement was performed, the Federal Circuit affirmed the district court’s order of Rule 11 sanctions.

Source Vagabond Sys. Ltd. v. Hydrapak, Inc., Case No. 2013-1270, 1387 (Fed. Cir. June 5, 2014) [Wallach (opinion), Moore, and Reyna]