The Federal Circuit’s decision in Epic Tech, LLC v. Pen-Tech Associates, Inc., Case No. 2025-1624 (Fed. Cir. September 30, 2026), examines the relationship between the statutory presumption of patent validity and Rule 11’s requirement that litigants have a reasonable basis for asserting their claims. The court did not impose a general obligation to conduct a new validity investigation before filing a patent infringement suit. It held, however, that the district court had failed to adequately consider substantial indications of potential invalidity when evaluating whether the patentee and its counsel had acted reasonably.
The decision raises an important question for patent owners enforcing older software patents: when do developments in patent eligibility law and related prosecution proceedings make reliance on an issued patent insufficient? Although the Federal Circuit left that question unresolved, its analysis provides guidance on circumstances in which known validity concerns may warrant further investigation.
A Pre-Alice Patent Meets a Post-Alice Enforcement Record
Epic Tech owns U.S. Patent No. 8,545,317, directed to an electronic sweepstakes system connecting gaming terminals through a server network. The patent issued in October 2013, before the Supreme Court’s decision in Alice Corp. v. CLS Bank International, 573 U.S. 208 (2014). Following Alice, the Patent Office rejected claims in three related applications under 35 U.S.C. § 101. In two applications, the Office also found certain claims patentably indistinct from claims of the ‘317 patent for purposes of nonstatutory double patenting. Epic Tech abandoned all three applications without overcoming the eligibility rejections.
Despite those developments, Epic Tech sued Pen-Tech in June 2020. The Northern District of Georgia granted summary judgment to Pen-Tech, holding the asserted claims ineligible under § 101. Pen-Tech subsequently sought Rule 11 sanctions and attorney fees, arguing that Epic Tech had ignored substantial indications that its patent was vulnerable under Alice.
Pen-Tech relied on the intervening eligibility framework, the PTO’s repeated rejections of related claims, and a separate district court ruling in Epic Tech, LLC v. Fusion Skill, Inc., finding claims of a related patent ineligible. The district court denied sanctions and fees, emphasizing the presumption of validity and Epic Tech’s reasonable infringement investigation. The Federal Circuit vacated those rulings because the district court had not meaningfully addressed Pen-Tech’s validity-based theory.
The Presumption of Validity Does Not Resolve Every Rule 11 Inquiry
The central doctrinal tension becomes clearer when Epic Tech is compared with Q-Pharma, Inc. v. Andrew Jergens Co., 360 F.3d 1295 (Fed. Cir. 2004). There, the Federal Circuit affirmed the denial of Rule 11 sanctions where the patentee had conducted a reasonable infringement investigation and relied on the presumption of validity under 35 U.S.C. § 282. The patentee’s position was also supported by licenses taken by other companies, while challenges to validity from accused infringers did not establish that the lawsuit was frivolous.
Although Epic Tech does not cite Q-Pharma, the cases provide a useful comparison. The warning signs in Epic Tech extended beyond an accused infringer’s assertions of invalidity. They included a substantial change in Supreme Court eligibility doctrine and repeated PTO rejections involving related claims, some of which the Office had found patentably indistinct from claims of the asserted patent.
The distinction matters because those PTO determinations were relevant not necessarily to the legal scope or validity of the issued patent, but to what Epic Tech knew about its potential vulnerability. The district court had treated the prosecution history principally as a claim-scope issue, without adequately addressing its significance as evidence of notice.
The Federal Circuit did not establish a categorical duty to obtain a validity opinion before filing suit. Its narrower conclusion was that the presumption of validity could not, without further analysis, dispose of Pen-Tech’s argument that Epic Tech had substantial reasons to question the legal viability of its claims.
A Reasonable Infringement Investigation May Not Be Enough
The district court also relied on Epic Tech’s pre-suit investigation, including a claim chart and cease-and-desist letter prepared by its counsel, Baker Donelson. Those steps supported the factual basis for Epic Tech’s infringement allegations but did not answer whether the patent claims remained reasonably assertable under § 101.
That distinction is significant under the established standards for patent pre-filing investigations. As discussed in Q-Pharma and Future Link Systems, LLC v. Realtek Semiconductor Corp., a reasonable infringement investigation ordinarily involves interpreting the asserted claims and comparing them with the accused products. Those steps, however, do not necessarily address independent legal concerns regarding patent validity.
Applying Eleventh Circuit Rule 11 law, including Baker v. Alderman, 158 F.3d 516 (11th Cir. 1998), the Federal Circuit required the district court to consider whether Epic Tech had a reasonable legal basis for proceeding despite the identified eligibility warnings. The practical lesson is not that patent owners must routinely reexamine validity, but that a conventional infringement analysis may be insufficient when counsel already possesses substantial, claim-related information calling validity into question.
Pre-Suit Notice and the Duty to Reassess During Litigation
The timing of the warning signs presents a separate issue. Alice and the related PTO rejections preceded Epic Tech’s June 2020 complaint. The Fusion Skill decision, which issued in 2021 and was subsequently vacated as part of a settlement, did not. It therefore could not have informed Epic Tech’s original filing decision.
Nevertheless, later developments may affect the reasonableness of continuing litigation. The Fusion Skill ruling potentially raised additional concerns about claims involving related technology, although the Federal Circuit did not determine whether the claims addressed there were sufficiently similar to those of the ‘317 patent.
The distinction separates two questions: whether the information available before suit warranted additional investigation and whether subsequent developments should have prompted reassessment. The Federal Circuit expressly declined to establish when notice of potential invalidity renders continued assertion of a presumptively valid patent unreasonable. That question remains for further consideration on remand.
Attorney Fees and the Limits of the Decision
The Federal Circuit also vacated the district court’s denial of attorney fees under 35 U.S.C. § 285. Under Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014), a case may be exceptional based on the substantive weakness of a party’s position or the unreasonable manner in which it was litigated. Consistent with AGI SureTrack LLC v. Farmers Edge Inc., the court required a sufficient explanation of the district court’s determination to permit meaningful appellate review.
The Federal Circuit likewise vacated the rulings concerning 28 U.S.C. § 1927 and the district court’s inherent authority, without determining that sanctions or fees were appropriate under any of the asserted grounds. As illustrated by mCom IP, LLC v. City National Bank of Florida, an adverse validity determination does not itself establish that a patent action was unreasonable or exceptional. The relevant inquiry concerns the circumstances surrounding the litigation, not merely its ultimate outcome.
Practical Implications for Patent Enforcement
For patent owners, Epic Tech underscores the importance of evaluating known validity concerns before asserting a patent. Adverse PTO determinations involving related applications, intervening eligibility precedent, and rulings involving closely related claims may warrant additional investigation even where the asserted patent remains presumptively valid.
The decision also highlights the importance of coordination between patent prosecution and enforcement. Later prosecution developments may not alter an issued patent’s scope, but they can provide evidence that the patent owner was aware of particular legal vulnerabilities. Patent owners should therefore consider relevant developments across a patent family when evaluating enforcement decisions.
For accused infringers, the decision illustrates why sanctions and fee requests should focus on specific evidence of notice rather than the eventual invalidity finding. The timing, substance, and relationship of prior adverse determinations to the asserted claims will be central to assessing whether the patentee’s position was reasonable.
Conclusion
Epic Tech v. Pen-Tech does not establish a general duty to reinvestigate patent validity before filing suit. Its significance lies in recognizing that the presumption of validity and a reasonable infringement investigation do not necessarily answer a Rule 11 challenge based on substantial, claim-related indications of invalidity.
The Federal Circuit left unresolved when such warnings make filing or continuing an infringement action unreasonable. For patent owners, the practical lesson is that significant developments in eligibility law and related prosecution proceedings should inform enforcement decisions rather than be treated as matters separate from litigation strategy.
Key Takeaways
- The presumption of patent validity does not necessarily resolve a Rule 11 challenge based on substantial, claim-related indications of invalidity.
- A reasonable infringement investigation may not adequately address known legal concerns about the validity of asserted claims.
- PTO rejections in related applications may provide relevant notice even when they do not alter an issued patent’s scope.
- The timing of validity warnings matters when evaluating both the initial filing and the continued assertion of a patent.
- The Federal Circuit did not find sanctions or fees warranted, but required the district court to meaningfully evaluate the identified concerns.
Related Analysis
- mCom v. City National Bank: Federal Circuit Reins in Patent Fee Awards After Post-IPR Dismissal. This decision provides a counterpoint to Epic Tech, illustrating why an adverse validity outcome does not automatically establish exceptionality or sanctionable litigation conduct.
- AGI SureTrack v. Farmers Edge: Federal Circuit Rejects Data-Collection Claims Under Section 101. This article addresses both software-patent eligibility under Alice and the requirement that district courts adequately explain their § 285 determinations.
- Future Link Systems v. Realtek Semiconductor: When Sanctions Convert a Dismissal Into Prevailing Party Status. The discussion of Rule 11 and reasonable pre-filing patent investigations provides useful context for understanding the distinction between infringement diligence and validity-related concerns in Epic Tech.
- PS Products v. Panther Trading: Federal Circuit Upholds Sanctions for Frivolous Patent Lawsuit. This case illustrates circumstances in which the objective weakness of patent assertions and deficiencies in pre-filing investigation supported the imposition of sanctions.