Patent Law Practice Center

Rule 11 Sanctions for Failure to Investigate?

Recently, the United States Court of Appeals for the Federal Circuit addressed an issue that I can only characterize as bizarre.  Among the issues addressed in a somewhat typical patent litigation was whether the district court should have awarded sanctions against the plaintiff for failure to reasonably and adequately investigate the issue of whether the defendant’s product infringed prior to bringing a lawsuit.  This type of Rule 11 failure to investigate issue is one that piqued my interest because failure to investigate infringement is a tell-tale sign of bad actors — the worst actors — in the patent litigation space.

Those who simply don’t care about whether there is infringement engage in what the Federal Circuit has at times referred to as “extortion like” practices, which shakedown those who aren’t infringing for a few thousand dollars, much like the old protection rackets.  It was this mindset that I dove into the Federal Circuit decision in Woods v. DeAngelo Marine Exhaust, Inc. (Fed. Cir., August 28, 2012).

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Congress Considers Changes to Rule 11 Sanctions

We are pleased to announce the addition of  R. David Donoghue to our list of distinguished Contributors.  He is a Partner in Holland & Knight’s Intellectual Property Group focusing upon intellectual property litigation and particularly upon patent disputes.  Dave just sent along this article he recently posted on his blog, Chicago IP Litigation, discussing the changes to Rule 11 sanctions being considered by Congress.  The article details the proposed amendments and the testimony supporting and opposing the H.R. 966 Bill.

Congress is currently considering revision Rule 11 sanctions, including:

1. Removing the existing 21 day “safe harbor” provision which requires that you send your motion to the opposing party and give them 21 days to remedy the alleged Rule 11 violation before filing the motion with the Court; and
2. Making an award of fees and costs related to a winning Rule 11 motion automatic, instead of discretionary.

The Federal Bar Association (of which I am a member) has published a call for comment that sets out both sides of the issue well.  It follows below.  I can understand the inclination to make fees and costs automatic, but the 21 day “safe harbor” serves a valuable gatekeeping role.  It avoid clogging the federal courts with Rule 11 motions that could be fixed with notice of the alleged deficiency.

Click here to read Donoghue’s full article.