Federal Court Sanctions a Patent-Holding Company and Its Attorneys for Bad- Faith Litigation

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Sometimes accused patent infringers face a painful dilemma: either pursue a costly litigation against a baseless complaint or pay a nuisance settlement. A recent case in the Federal Circuit may help curtail these baseless infringement actions, for the court sanctioned both the plaintiff and its attorneys for engaging in bad-faith litigation.

Section 285 of the Patent Act provides that, in "exceptional cases," a court may award reasonable attorneys' fees to the prevailing party in a patent litigation. Although rare, cases can be found "exceptional" based on inequitable conduct, litigation misconduct, badfaith litigation, filing a frivolous suit, or willful infringement. Furthermore, Rule 11 of the Federal Rules of Civil Procedure—which applies to all federal civil litigation—allows courts to sanction attorneys who have made misrepresentations to the court.

In Eon-Net LP v. Flagstar Bancorp., No. 09-1308 (Fed. Cir. July 29, 2011)1, the Federal Circuit affirmed an exceptional-case finding by the District Court for the Western District of Washington as well as that court's imposition of Rule 11 sanctions against plaintiff Eon-Net LP; its attorneys, Zimmerman & Levi, L.L.P.; and the law firm's principal, Jean-Marc Zimmerman.

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