AN AUSTIN PATENT ATTORNEYS OVERVIEW OF RAYLON v. COMPLUS DATA

OVERVIEW:

This case deals with the standards for Rule 11 sanctions for patent cases.

Rule 11(b) states by presenting to the court a pleading, written motion, or other paper—whether by signing, filing, submitting, or later advocating it—an attorney or unrepresented party certifies that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:

(1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation;

(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;

(3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery; and

(4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on belief or a lack of information.

If Rule 11(b) is violated additional sanctions may be filed on the lawyer, the law firm and/or the party.

In this case, Raylon is the assignee of U.S. Patent No. 6,655,589 (“589”), which is directed to hand-held identification investigating and ticket issuing systems as shown below in FIGURE 1 of the ‘589 patent.

This type of system may be used by an officer of the law when issuing tickets. The claims require that a display be “pivotally mounted on housing 12 and may be positioned adjacent to the first end 13 of housing 12.”

In 2009, Raylon filed three suits against software integrators and product component manufacturers of various ticket-writing and enforcement handheld devices including Complus, Casio and Symbol.

In response, these companies expressed their concerns that Raylon’s complaint violated Rule 11(b) because Raylon’s claim construction positions were not supported by the specification and other evidence. Raylon contended that because the accused devices had a display mounted on a housing and could be pivoted by a using moving a user’s elbow, wrist, or other joint, the accused products literally infringed their claims.

The district court rejected Raylon’s claim construction suggestions stating that the specification did not support its overly broad claim construction, and such claim construction “Stretches the bounds of reasonableness beyond what they are willing to accept.” Further, the district court rejected Raylon’s theory of infringement but found that Raylon’s suits were not objectively baseless based on Raylon’s previous settlement cases for minor amounts, concluding that “this was not a situation where the cost of litigation is more of a driving force than the merits of the patent-in-suit.”

On appeal, the defendants successful challenged the district court’s denial of Rule 11 sanctions and of attorneys’ fees. The court of appeals stated that the standard under which an attorney is measured is an objective standard, not a subjective standard of reasonableness under the circumstances. Whitehead, 332 F.3d at 803.

The court of appeals stated that the district court evaluated Raylon’s damages model and early settlements to determine whether it brought its suits in good faith or merely obtain nuisance value settlements. Whitehead, 332 F.3d at 803. The court opined that “in some situations, a plaintiff asserting a large damages model while making very low offers in the case may indicate that the plaintiff realizes its case is very weak or even frivolous” and that the amount of damages “may be indicative of the good-faith nature with which the case is brought.” J.A. 4.

The court of appeals stated that the proper analysis for Rule 11 sanctions is a strictly objective inquirly and expressely rejected any inquiries into the motivation behind a filing.” Maxxam, 523 F.3d at 580; Jenkins v. Methodist Hosp. of Dallas, 478 F.3d 255, 264 (5th Circuit 2007).

Therefore, the court stated that Raylon’s motives to bring suit has no place in a Rule 11 analysis, and applying an objective reasonableness standard that Raylon’s claim construction and thus infringement contentions were frivolous.

PATENT ATTORNEY TAKE-A-WAYS

1)      One obvious takeaway in this case, is as a patent attorney do not bring agree to take on a litigation case if you believe the case is frivolous. In this case, no one could extend the claim construction of pivotally mounted display on a housing to be able to read on the housing is a person’s body. Courts have previously held that 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).

2)      This case shows a good reason why it may be beneficial to keep a patent family alive. Because most of the claim limitations were met by the accused devices, if Raylon was able to amend their claims to include a fixed display, they might have been able to win on infringement suits.

3)      The standard for Rule 11 sanctions is an object standard of reasonableness and not a subjective standard.

4)      If you are going to hire an attorney for patent related ligation case, make sure that attorney is experienced in both patent prosecution and litigation. In this case, it appears that the plaintiff’s lawyers had minimal experience with claim construction, and possibly claim drafting.  Patent prosecution and patent litigation are two niche areas of the law, that make it hard for attorneys who are not experienced in patent law to adequately support a client’s patent related legal matters.

By | 2012-12-07T23:09:31+00:00 December 7th, 2012|Patent Attorney Takeaways|Comments Off on AN AUSTIN PATENT ATTORNEYS OVERVIEW OF RAYLON v. COMPLUS DATA