34 Fed. Cl. 483 | Fed. Cl. | 1995
OPINION
This is an action for alleged patent infringement.
BACKGROUND
Plaintiff filed the complaint in this matter on October 23, 1989, based on the alleged infringement of three of his patents. The complaint was signed by plaintiffs first attorney-of-record (hereinafter “signing attorney”) and certified by plaintiff. The claims based on two of the patents were dropped from the amended complaint on June 8,1990. The remaining claim concerned United States Patent No. 3,656,832 (“the ’6,832 patent”), which pertains to a method of micro-optical imaging. Plaintiff alleged that the Government, through the use of bar code scanners purchased by the United States Postal Service, infringed the ’6,832 patent.
Plaintiff presented his observations to the signing attorney. This attorney also viewed the accused devices from a distance at the Postal Service, but otherwise conducted no investigation of his own. Neither he nor plaintiff attempted to contact the Postal Service, or any manufacturer, in order to gain access to the accused devices or to ask questions about their operation.
During oral argument on the motions, the signing attorney explained that he relied completely on Mr. Judin with respect to the factual bases for an infringement claim, stating: “I had no reason to doubt the facts that were very strongly asserted by Judin, because of his experience, his credentials, and his time in the industry.” Tr. p. 40. Continuing, he stated, “Judin believed and strongly advocated that the fiber optics source was interchangeable with other sources of light.” Tr. p. 41. Insofar as his role as legal counselor, the signing attorney merely stated that he and Mr. Judin “examined” the claim, and he (the signing attorney) “just saw no problem with it.” Id. Suit was filed on October 23, 1989.
On February 28,1990, the signing attorney provided a list of infringing products and their manufacturers to the Government, presumably based on input from the plaintiff, and solicited' procurement records for those products. The Government filed, on April 18, 1990, a Motion to Notice Third Parties Under [RCFC] 14(a)(1). The motion stated:
The above listed corporations are the manufacturers and/or sellers on plaintiff’s list that have been identified, in so far as defendant is presently able to ascertain, as manufacturers and/or suppliers of bar code reading devices which have been procured by the United States.
Def.’s Mot. to Notice Third-Parties Under [RCFC] 14(a)(1) at 3. HP voluntarily appeared in July, 1990, in response to the Government’s motion. A number of the other third-party defendants appeared as well.
In the summer of 1991, plaintiff consulted with. George Wolken, Jr., Ph.D., J.D., an expert, who conducted an analysis of the patent involved and the contentions of infringement.
On November 20, 1991, the court allowed plaintiffs motion to substitute counsel. Thereafter, plaintiff has been represented by counsel of record, and another attorney, of counsel (hereinafter “current counsel”).
On June 30, 1992, a Joint Motion for Partial Summary Judgment on the Issue of Non-Infringement was filed by the Government and HP. Before the court ruled on the first dispositive motion, HP filed another motion for partial summary judgment directed to the issue of invalidity. On February 17, 1993, the court granted, in part, the first dispositive motion with respect to optical communications transmitters and wands. Judin v. United States, 27 Fed.Cl. 759, 791 (1993). The court held that, with respect to wands with ball tips and optical communications transmitters, there was no infringement of plaintiffs patent. The court also held that a genuine issue of material fact still existed as to whether optical communications receivers infringed.
Pursuant to the court’s order of April 2, 1993, plaintiff later stipulated that the Gov-
On July 14, 1993, HP moved for sanctions against plaintiff and plaintiffs attorneys, both the signing attorney and current counsel, seeking its reasonable expenses incurred in the litigation. That motion was stayed by order of July 20, 1993, pending resolution of the remaining issues between the plaintiff and the Government. On April 15, 1994, at the request of the remaining parties, the court suspended this case pending settlement negotiations.
HP’s motion of May 20,1994, to renew its Motion for Sanctions was denied by the court on July 18,1994. On February 16,1995, HP petitioned the Court of Appeals for the Federal Circuit for a writ of mandamus to direct this court to rule on HP’s Motion for Sanctions. The petition was denied on February 28,1995. On March 27,1995, after extended settlement negotiations between the Government and plaintiff, a Joint Stipulation of Dismissal with prejudice was filed for the remaining claims and subsequently entered by the Clerk. On March 31, 1995, the court dismissed the complaint and reactivated HP’s Motion for Sanctions.
On June 6, 1995, plaintiff filed a Cross-Motion for an Award of Sanctions Against Third-Party Defendant Hewlett-Packard which also contained its response to HP’s Motion for Sanctions. HP subsequently filed a Motion to Strike Plaintiffs Cross-Motion for Sanctions Against HP on June 8, 1995. Oral argument was held on all three pending motions on August 24, 1995.
HP argues that plaintiff and his counsel failed to meet the standard set by RCFC 11. It contends that a reasonable pre-filing inquiry would have revealed that HP’s products either did not infringe the ’6,832 patent or that the Court of Federal Claims did not have jurisdiction because HP did not sell to the Government. It argues, in the alternative, that plaintiff and the signing attorney negligently filed and maintained this action based on an invalid and unenforceable patent and are thus responsible for fees and costs under both RCFC 11 and section 285 of title 35.
In response, the sanction defendants argue that HP’s motion is untimely because it was brought after HP had been dismissed from the suit and outside of the time period suggested by RCFC 81(e), pertaining to application for attorney’s fees. They contend that HP lacks standing to file a motion for sanctions after being dismissed. The sanction defendants also argue that their pre-filing inquiry is in accord with the RCFC 11 standard and that no exceptional circumstances exist which would permit an award of attorney’s fees under section 285. They further contend that the invalidity issue was declared moot by the court and is thus precluded from reconsideration.
DISCUSSION
Preliminary Matters
1. Discovery; the Patent Validity Question
Before examining the merits of HP’s motion, the court will address some preliminary matters. The first concerns limitations the court placed on HP’s right to discoveiy in support of its motion for sanctions, and second, limitations on the grounds that the court would consider as a basis for sanctions. The matters are intertwined.
In the underlying action, it was unnecessary to resolve the issue of validity in order to rule on most of Judin’s complaint. It was enough to find that there was no infringement. The motion for summary judgment based on non-validity was brought at a later time and deemed to be moot. While sanctions are a legitimate litigation tool, they run the risk of overwhelming the underlying action. If the court permitted the issue of validity to have been litigated purely for the purpose of resolving the sanctions motion, the result clearly would have been to allow “the tail to wag the dog.” Rule 11 sanctions, as well as an award of costs and fees under section 285, are premised, in part, on the desire to minimize fruitless litigation. Nothing would have been more fruitless than to keep this lawsuit alive on a difficult substantive matter, generating substantially more attorney fees, just for purpose of deciding if the prior litigation was a waste of time.
Another discovery issue arose in connection with statements made by Judin’s present and former counsel at oral argument describing their actions before and after filing the complaint. It is not clear whether counsel for HP waived any right to respond to those statements or to further discovery regarding the asserted conduct during oral argument. The court would not, in any event, have permitted further discovery. First, those assertions were not substantially different from the representations made to the court in affidavits. Second, to the extent plaintiffs counsels’ representations were relevant, they consisted of statements that HP would not be able to challenge easily. They relate to what the attorneys said, saw or heard. Absent a withdrawal of the representations by counsel, depositions likely would have been no more than an extension of oral argument concerning what is adequate inquiry. Discovery from attorneys is always problematic under the best circumstances. The court concludes that the likelihood of HP gathering information useful to the court in this closed action is minimal in contrast to the certainty that the litigation would be extended at cost to the court and the parties.
2. Timeliness of HP’s Motion for Sanctions
Plaintiff argues that HP’s motion for sanctions was untimely because it was filed after HP was dismissed from the case. This court anticipated the issue of timeliness in its opinion of July 18, 1994, in which it deferred consideration of HP’s motion for sanctions pending resolution of the case-in-chief, stating:
Nor is the motion for sanctions untimely in view of HP’s prior dismissal. The Court in Cooler & Gell declined to set a fixed time within which motions for sanctions must be brought, but clearly suggested that it would not be untimely to file a Rule 11 challenge to the complaint before the end of litigation.
Judin v. United States, 31 Fed.Cl. 582, 584 (1994) (citing Cooler & Gell v. Hartmarx Corp., 496 U.S. 384, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990)). At the time of HP’s filing, the case in chief had not yet been dismissed.
The court’s further consideration of the issue indicates no new evidence or change in controlling law, clear error or potential manifest injustice, to warrant the court’s reconsideration of its ruling. White v. Murtha, 377 F.2d 428, 431-32, reh’g denied, 381 F.2d 34 (5th Cir.1967). While the result might be different under the 1993 amendments to the
HP’s Motion for Sanctions
HP alleges that the first violation of Rule 11 occurred when the complaint was filed. While HP was not made a party by the complaint itself, the court holds that it has standing to question plaintiffs initial filing. While the Government moved to bring in HP and the other third parties, that step would have been unnecessary if the complaint had not forced the Government to exercise its rights to indemnification. The Government was confronted with an allegation of patent infringement that, on the surface, would seem plausible. Moreover, the list of accused products came from the plaintiff. The Government’s choice of which parties to notify was directed only to determining from which companies it had' purchased. The court holds that the Government had no independent obligation under the circumstances to investigate further before bringing in HP.
Rule 11
It is not permissible to file suit and use discovery as the sole means of finding out whether you have a case____ Rule 11 requires independent inquiry. The amount of investigation required by Rule 11 depends on both the time available to investigate and on the probability that more investigation will turn up important evidence____
Szabo Food Serv., Inc. v. Canteen Corp., 823 F.2d 1073, 1083 (7th Cir.1987) (citations omitted), cert. dismissed, 485 U.S. 901, 108 S.Ct. 1101, 99 L.Ed.2d 229 (1988).
In patent infringement cases, the fact that the plaintiff does or does not undertake reverse engineering is plainly relevant. See Cambridge Prod., Ltd. v. Penn Nutrients, Inc., 962 F.2d 1048, 1050 (Fed.Cir. 1992) (citing plaintiffs testing of sample of infringing product as support for district court’s denial of defendant’s motion for fees under Rule 11 and section 285); Refac Int'l Ltd. v. Hitachi Ltd., 141 F.R.D. 281, 286 (C.D.Cal.1991) (magistrate judge citing “total lack of reverse engineering” as partial basis for ruling that inquiry was not reasonable). However, consideration of documentary evidence has been held sufficient to meet the pre-filing inquiry requirement. Vista Mfg., 131 F.R.D. at 139. In Vista Mfg., plaintiff had evidence suggesting the defendant was marketing or preparing to market an infringing product. The court found that the damage to the plaintiff had already begun and would continue to mount unless an action was brought to help mitigate the losses in market share. Id. The court concluded that the absence of pre-filing reverse engineering was not conclusive on the question of whether an adequate inquiry was undertaken. Id. at 140. We agree that the absence of a detañed pre-filing examination of a product is not conclusive of a violation, however, such an examination would obviously go a long way toward dispelling a claim that the suit was ifi-eonsidered.
What information did the plaintiff and his attorney have before filing the complaint here? We begin with the fact that Mr. Judin is obviously very knowledgeable about the field of optical scanners and kept informed of the latest product developments. That intimate knowledge makes it more likely that Judin could look at the wands used at the Postal Service, or at devices described in literature, and draw informed conclusions. This also makes the signing attorney’s deference to Mr. Judin understandable with respect to the physics of light scanners and the mechanics of the accused devices. After viewing the hand-held wands in use at the Postal Service, they knew that there was a light source within the apparatus, that at the tip there was a rounded piece of glass or plastic through which the light passed, and they observed that the light was in a pinpoint, either due to the focusing effect of the tip or something inside, or because the light originated in a pinpoint.
Judin provided material, which presumably had been part of his pre-filing investigation, as part of his response to HP’s motion for sanctions. After reviewing this material, the court does not believe this could have provided plaintiff, or his counsel, with much useful information. Although it suggested that many government agencies were using bar code technology, the devices were not described in detañ. Moreover, it appears that several of the described devices made use of light emitting diodes (“LED”) as the light source, rather than a fiber optical source, as caüed for in the patent. Only one document suggests the possibility that the tip of the wand acts to focus fight.
What did the plaintiff and the signing attorney not know? Without repeating the prior claims analysis, see Judin, 27 Fed.Cl. at 783-91, the court notes that, at a minimum, they would not have known whether there was a fiber optic source, literally or by equivalents, or whether the lens was aspherical
Plaintiff could have been much better informed. Judin or the signing attorney could have asked the Postal Service for a device to take apart. In his defense, plaintiff asserts, with no real support, that the subject scanners are made to government specifications and are in use at government installations and thus, are not readily accessible for disas-sembly. This explanation for not obtaining, or even attempting to obtain, a sample, either from the Postal Service or a vendor, is lame. Plaintiff made no effort to contact the Postal Service in order to confirm or deny such an assumption, to ask for information about the devices, nor to seek the names of vendors so that he could purchase a machine directly from a vendor. Even if plaintiff had to purchase a machine, the price would have been minuscule compared to the amount spent on this litigation. In addition, the documentary material available to Judin, for aught that appears in this record, consisted of generalized descriptions of devices commercially available. In sum, the court is greatly troubled by the quality of the plaintiffs pre-filing examination, as well as the signing attorney’s undue deference to Mr. Judin. Clearly, more could have been done. Moreover, although the court denied the motion for summary judgment with respect to receivers, the inquiry as to those devices was no less desultory. The test with respect to the initial filing relates to the reasonableness of the inquiry, not whether the plaintiff got lucky.
Under the present circumstances, however, to hold that sanctions are appropriate would require the court to find that knowledge of how the wands, or other devices for that matter, were constructed would have made a difference to Mr. Judin. The court is persuaded that it would not. Mr. Judin, and his counsel, labored throughout under the same erroneous assumption of the breadth of the claims in his patent. This view was strengthened in mid-1991 by Dr. Wolken, who advised plaintiff that a point source of light could reasonably be found to be the substantial equivalent of a fiber optic source of light and that a substantially spherical ball could be the equivalent of an aspherical lens. Although foolishly clinging to a misconception would be no defense, here, that misconception was translated into a colorable, albeit unsuccessful, response to a motion for summary judgment. While the court found that there was a clear lack of literal infringement on a number of elements of the patent, it gave sufficient credence to plaintiffs alternative arguments with respect to possible infringement through the doctrine of equivalents to undertake a lengthy examination on summary judgment. The court is not prepared to say that the arguments it rejected on summary judgment were uniformly frivolous. Accordingly, a more thoughtful pre-filing examination would not, in all likelihood, have deterred Judin’s interest in the lawsuit. From observation and the trade materials plaintiff knew enough to make his ultimate argument. Even though the pre-filing examination was minimal, it is no more sanctiona-ble than the subsequent maintenance of the suit. While the sanction defendants’ enthusiasm for the suit is remarkable, it is not sanctionable.
The reasonableness of Mr. Judin’s actions are, of course, in part demonstrated by his consultation of patent counsel. The signing attorney is obligated to bring his legal expertise to bear on the facts presented. Claim construction is a question of law. Markman v. Westview Instruments, Inc., 52 F.3d 967, 970 (Fed.Cir.), cert. granted, - U.S. -, 116 S.Ct. 40, 132 L.E.2d. 921 (1995). As a result, the signing attorney had a duty to analyze the patent claims and determine whether plaintiff’s assertions were plausible. While the signing attorney could defer to Mr. Judin’s expertise in some areas, he still had the obligation of satisfying himself that a proper construction of the claims, in light of the facts brought to him by the client, permits argument that each element of the patent appears in the accused device. The court has very little to go on in this regard, but during oral argument, the sign
Neither of the two other attorneys that represented the plaintiff signed either the original or amended complaints. Rule 11 creates obligations with respect to other filings as well, however. While the thrust of HP’s argument was directed at the complaint, as amended, it extended to plaintiffs filings in connection with the motion for summary judgment. Having declined to order sanctions in connection with the initial filings, it would be inconsistent for the court to order sanctions in connection with the motion briefing. Before the bulk of the expenses prompted by this action were incurred, plaintiff had consulted George Wolken, a physicist with a law degree. Dr. Wolken has expertise in optical physics and light diffraction. He advised plaintiff that his patent arguably covered the wands and transmitters. In retrospect this was bad counsel, but it gives some color to the validity of proceeding with the suit.
Although not pressed at oral argument, HP’s motion also makes the point that Judin demonstrated sanetionable conduct when he failed to drop HP as a party upon the third-party’s demonstration that it had not sold any receivers to the Government. This could only have occurred after the court’s ruling on the initial dispositive motion, however. Apparently HP did sell wands and transmitters to the Government. The record does not permit a finding that Judin delayed unduly in agreeing to dismiss HP after the lawsuit was limited to receivers.
From what has been said, it follows that fees should not be shifted under section 285. As HP candidly admits, the “exceptional cases” contemplated by the statute are limited. The relevant ground relied on by HP, and recognized by the Federal Circuit, is the bad faith prosecution of litigation by the patent holder. See Rohm & Haas Co. v. Crystal Chem. Co., 736 F.2d 688, 691-92 (Fed.Cir.1984). The Federal Circuit has inferred bad faith when a patent holder pursues an infringement action recklessly or with wrongful intent or when he knew or should have known the patent was invalid. See Eltech Sys. Corp. v. PPG Indus., Inc., 903 F.2d 805, 811 (Fed.Cir.1990); Hughes v. Novi American, Inc., 724 F.2d 122, 124-25 (Fed.Cir.1984). The standard under this section is more difficult to meet, under the present set of facts, than it would be under Rule 11. Moreover, for the reasons already outlined, the court will not address for the first time the substantive question of validity in the context of a motion for sanctions. Therefore, attorney fees are not warranted under section 285.
Judin’s Motion for Sanctions
Plaintiffs cross motion for sanctions is directed to HP’s supposed violation of Rule 11. Plaintiff asserts five violations. They will be dealt with individually. First, plaintiff states:
H-P’s fact arguments about inquiry and device inspection are contradicted by documents emanating from it own counsel. HP failed to provide information on sales to respond to a specific request. Its present complaints are matters of its own doing.
The first sentence is, at best, argument responsive to HP’s motion. The second sentence might, earlier, have been the proper subject of a motion to compel, but it is not grounds for sanctions, even if true. The last sentence is fluff.
The next point is that,
On litigated issues, H-P clearly engaged in disproportionate effort, far exceeding the effort expended by any other party. For H-P to have served at least 162 separate discovery requests in addition to depositions, in [a] case it now calls unsupported shows no sense of proportion whatever.
The third point is that “H-P pressed unilateral discovery on moot issues in which no other party joined, disregarding the urging and Orders of this Court regulating the conduct of the action.” No details are offered for the assertion that HP pressed discovery against the expressed wishes of the court, and the court is aware of no support for it. The fact that HP by itself sought discovery is irrelevant.
The fourth point is that HP filed unsuccessful motions before this court, and the Federal Circuit, challenging what has been determined to be proper procedure by this court. Presumably the plaintiff is referring to HP’s effort to reopen its Motion for Sanctions after this court had stayed the matter pending outcome of the settlement negotiations between the parties in chief. HP’s concern about its rights in view of the pending settlement was understandable, as was its effort to preserve its right by attempting to obtain an extraordinary writ from the Federal Circuit. Lack of success does not mean those steps were taken in violation of Rule 11, and plaintiffs suggestion that they were is patently devoid of explanation or support. The court notes, moreover, that it is plaintiff that has resurrected the question of the timeliness of HP’s request for sanctions, something that the court has previously ruled on, as explained above.
Finally, plaintiff contends that HP neglected to “appeal or otherwise timely move to preserve its standing.” Plaintiff does not explain what HP was supposed to appeal from, considering that it was completely successful in defeating Judin’s claim. Moreover, it did “otherwise timely move to preserve its standing,” although this court and the Federal Circuit thought it unnecessary for HP to do so, by seeking a writ of mandamus from the Federal Circuit.
Plaintiffs motion for sanctions was not pressed at oral argument. In short, it is totally groundless. Under RCFC 11, the court must impose sanctions on parties or counsel if it finds that a pleading was not well-grounded in fact or was interposed for an improper purpose. The court finds that Judin’s Cross-Motion for Sanctions was not well-grounded in fact, that Judin and his current counsel knew or must have known that it was not well grounded in fact, and that the motion was filed solely as a litigation tactic and, therefore, had the effect of unnecessarily confusing consideration of the real issues. The version of Rule 11 enforced in this court requires the imposition of sanctions upon making such a finding, even sua sponte. While the motion took up very little effort, it was so frivolous that the court is persuaded it has no choice but to order the plaintiff to pay HP for its cost in defending it.
CONCLUSION
While the plaintiffs and signing attorney’s inquiry into the facts surrounding the complaint, as amended, can hardly be characterized as exhaustive, the court finds that it minimally met the requirements of Rule 11. Nor was there a violation with respect to filings after the complaint. The court also declines to award costs or fees under section
. An opinion entered on February 17, 1993, resulted in the dismissal of key elements of plaintiff’s claim. Judin v. United States, 27 Fed.Cl. 759 (1993). Subsequent orders dismissed all third-party defendants. The remainder of the case was settled and judgment was entered on March 31, 1995, dismissing the complaint.
. Dr. Wolken is a physicist who is also an attorney and member of the patent bar.
. Section 285 permits the court, “in exceptional cases” to award reasonable attorney fees to the prevailing party in patent infringement cases. 35 U.S.C. § 285 (1988).
. Section 102(b) prohibits the issuance of a patent if “the invention was ... in public use ... more than one year prior to the date of the application for patent____" 35 U.S.C. i 102(b) (1988). HP specifically contends that the subject of the patent was in such public use.
. Some of the changes are explained infra at note 6. One of the new requirements is that the party bringing a motion for sanctions must have given the accused party an opportunity to withdraw the offending document. See Fed.RXiv. Proc. 11(c)(1)(A). This may have the practical effect of preventing post-dismissal motions for sanctions.
. RCFC 11 is patterned after Rule 11 of the Federal Rules of Civil Procedure. However, while the latter Rule was changed in 1993 to make the imposition of sanctions discretionary, RCFC 11 has not been similarly amended. RCFC 11 assigns an affirmative duty to attorneys and parties to understand and support any papers signed by themselves or their representatives:
The signature of an attorney or party constitutes a certificate by the attorney or party that the attorney or party has read the pleading, motion, or other paper; that to the best of the attorney’s or party’s knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.
RCFC 11. The central purpose of the rule is to deter baseless filings in court and streamline the administration and procedure of the federal courts. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393, 110 S.Ct. 2447, 2454, 110 L.Ed.2d 359 (1989). Rule 11 sanctions are warranted only when "it appears that a pleading has been interposed for any improper purpose, or where, after reasonable inquiry, a competent attorney could not form a reasonable belief that the pleading is well grounded in fact and is warranted by existing law____" Eastway Constr. Corp. v. City of New York, 762 F.2d 243, 254 (2d Cir.1985). Thus, the rule creates an objective standard. The imposition of sanctions under the rule is mandatory where a party’s or attorney’s conduct falls below the requisite standard. Refac Int’l, Ltd. v. Hitachi Ltd., 921 F.2d 1247, 1257 (Fed. Cir. 1990); United States v. International Bhd. of Teamsters, 948 F.2d 1338, 1344 (2d Cir.1991).
. Plaintiff's counsel cited one example from the literature, a brochure from Intermec, a manufacturer of bar code scanners, that described its product in part as follows: "The ruby tip acts as a lens to focus a photo detector to a spot on the label surface. The low power, long life LED light source above the ruby ball irradiates the label.”
. The court disagrees with HP’s assertion that Judin’s agreement to dismiss voluntarily third parly defendant, Hand Held Products, demonstrates that continued pursuit of the action was undertaken in bad faith. The signing attorney agreed to the dismissal when he was persuaded by Hand Held’s attorney that the file wrapper history estopped plaintiff from arguing that a fiber optic source was not literally required. After Dr. Wolken got involved, his advice persuaded plaintiff and his counsel that there was room to argue the presence of a fiber optic source through equivalents.
. The court would have made the same determination under the standards established in the 1993 changes to Rule 11. See R.Fed.Civ.Proc. 11(b)(1) & (3). The procedural requirements added by the 1993 amendments, see R.Fed.Civ. Proc. 11(c)(2)(B), would not be applicable here, but the court notes that the facts underlying the ordering of sanctions are drawn from the same circumstances as those supporting HP’s motion for sanctions.