Chapter §20.07 Rule 11 Sanctions

• Jurisdiction: United States

§20.07 Rule 11 Sanctions

Section (b) of Federal Rule of Civil Procedure 11, titled "Signing Pleadings, Motions, and Other Papers; Representations to the Court; Sanctions" provides that by presenting to a federal court a pleading, motion, or other paper, whether "by signing, filing, submitting, or later advocating it," an attorney certifies that to the best of her "knowledge, information, and belief, formed after an inquiry reasonable under the circumstances" . . . "(2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law. . . ."¹¹⁵² Hence, Rule 11(b)(2) sanctions may be imposed for frivolous legal arguments.

In the context of patent litigation, Rule 11 sanctions may be awarded against, inter alia, a party proffering a frivolous claim interpretation argument (even though patent claim construction outcomes are considered highly uncertain by many). For example, in Raylon LLC v. Complus Data Innovations, Inc.,¹¹⁵³ the Federal Circuit explained that "[c]laim construction is a matter of law, so that an attorney's proposed claim construction is subject to Rule 11(b)(2)'s requirement that all legal arguments be nonfrivolous."¹¹⁵⁴ Although the Federal Circuit in Raylon admitted that "[r]easonable minds can differ as to claim construction positions and losing constructions can nevertheless be nonfrivolous," the court emphasized that there still exists "a threshold below which a claim construction is 'so unreasonable that no reasonable litigant could believe it would succeed,'. . . . and thus warrants Rule 11 sanctions."¹¹⁵⁵

The patentee exceeded this threshold in Raylon, a case in which the Federal Circuit reversed a district court's denial of Rule 11 sanctions. Raylon's patent in suit was directed to a handheld device for use by law enforcement personnel to issue tickets. The device reduced the amount of time a user spent identifying and issuing tickets to individuals and allowed the user to maintain visual contact with the individual throughout the identification and ticketing process. Notably, all claims required that the device include "a display for displaying data entered into said input assembly, said display being pivotally mounted on said housing." In contrast, all the accused devices had flatly fixed displays that did not pivot in relation to their housings. The claimed and accused devices are depicted in Figure 20-4:

FIGURE 20-4. Illustrative Claimed and Accused Devices in Raylon v. Complus Data Innovations

Patentee Raylon took the position that the "pivotally mounted" display limitation was satisfied in the accused devices, both literally and under the doctrine of equivalents, because each accused device had a "display that is mounted on the housing and can be pivoted relative to the viewer's or user's angle of visual orientation." In other words, the Federal Circuit explained, Raylon's theory of infringement was that the accused displays with fixed-mounted screens met the "pivotally mounted on said housing" claim limitation when the user manually pivoted the device by moving his or her elbow, wrist, or other joint.¹¹⁵⁶ Although the district court found that the patentee's claim construction " 'stretch[ed] the bounds of reasonableness beyond what [the court was] willing to accept' "¹¹⁵⁷ and granted the accused infringers' motions for summary judgment of noninfringement, the district court nevertheless denied their motions for Rule 11 sanctions.

Applying regional circuit law (in this case the law of the Fifth Circuit),¹¹⁵⁸ the Federal Circuit reversed the district court in Raylon, holding that the lower court had abused its discretion in denying Rule 11 sanctions. First, the district court abused its discretion by erroneously evaluating patentee Raylon's subjective...