The Federal Circuit has affirmed a district court’s sanctions against PS Products (PSP) and its attorney for filing a meritless design patent infringement case, reinforcing courts’ authority to penalize frivolous litigation. The case underscores the importance of proper venue selection, valid infringement claims, and adherence to litigation ethics.
litigation. The case underscores the importance of proper venue selection, valid infringement claims, and adherence to litigation ethics.
Case Background: Design Patent for Stun Device
PS Products owns U.S. Design Patent No. D680,188, which covers a long-spiked electrode for a stun device. In May 2022, PSP sued Panther Trading Co. in the Eastern District of Arkansas, alleging that Panther’s product infringed the D’188 patent.
However, from the outset, PSP’s case had serious defects:
- The accused product and the patented design were “plainly dissimilar”, making infringement implausible.
- PSP filed suit in the wrong venue, citing general venue rules instead of the patent-specific 28 U.S.C. § 1400.
- Panther provided PSP with a prior art brochure showing a nearly identical design, raising validity concerns.
- PSP ignored multiple warnings from Panther about the suit’s lack of merit.
After receiving Panther’s Rule 11 sanctions warning, PSP voluntarily dismissed the case with prejudice—but refused to reimburse Panther’s legal fees.
Panther then sought:
- Attorney fees under 35 U.S.C. § 285 (for exceptional cases).
- $100,000 in sanctions under the court’s inherent power (to deter future frivolous lawsuits).
The district court ruled against PSP, awarding:
- $43,344.88 in attorney fees and costs under § 285.
- $25,000 in deterrence sanctions under its inherent authority.
PSP appealed the sanctions to the Federal Circuit, but the court upheld the ruling.
Key Patent Law Issues Addressed
1. Can Courts Impose Sanctions Beyond Attorney Fees in Patent Cases?
Yes. PSP argued that once a court grants attorney fees under § 285, it cannot impose additional sanctions under its inherent power.
The Federal Circuit rejected this argument, citing prior cases where courts have:
- Awarded both attorney fees and Rule 11 sanctions (Eon-Net v. Flagstar Bancorp).
- Imposed expert witness fees in addition to attorney fees (Takeda v. Mylan).
Key takeaway: Courts can impose multiple penalties—attorney fees plus additional sanctions—if a party engages in bad faith litigation.
2. What Constitutes “Bad Faith” in Patent Litigation?
The district court found PSP acted in bad faith, citing:
- Frivolous infringement claim: The designs were “plainly dissimilar”, making the lawsuit objectively unreasonable.
- Repeated venue violations: PSP filed 25 lawsuits in Arkansas using incorrect venue rules.
- Pattern of meritless filings: PSP dismissed over half of its past cases early, suggesting a litigation abuse strategy.
The Federal Circuit upheld these findings, emphasizing that courts can infer bad faith from a history of filing meritless lawsuits.
Key takeaway: A pattern of weak lawsuits can justify sanctions—especially when a party ignores procedural rules.
3. Can Sanctions Be Imposed if Rule 11 Was Not Formally Triggered?
Yes. PSP claimed that since Panther never formally filed a Rule 11 motion, sanctions should not apply.
However, Rule 11 was unavailable because PSP dismissed the case before the 21-day safe harbor period expired. The district court instead used its inherent power to issue sanctions.
The Federal Circuit ruled this was proper, citing Chambers v. NASCO:
“When bad faith conduct occurs that cannot be adequately sanctioned under procedural rules, courts may rely on their inherent authority.”
Key takeaway: Courts can issue sanctions under inherent authority when procedural rules don’t provide an adequate remedy.
Final Ruling and Implications
| Issue | Federal Circuit Decision |
|---|---|
| Attorney fees under § 285 | Affirmed ($43,344.88 awarded) |
| Additional sanctions ($25,000) | Affirmed—courts can impose both |
| Pattern of meritless lawsuits | Supports bad faith finding |
| Improper venue claim | Strengthened case for sanctions |
| Panther’s request for appeal sanctions | Denied—appeal was weak but not “frivolous as argued” |
The Federal Circuit upheld all sanctions, reinforcing courts’ ability to penalize abusive litigation tactics.
Key Takeaways for Patent Litigants
- Repeatedly filing weak lawsuits can backfire.
- If a pattern emerges, courts can infer bad faith and issue sanctions.
- Attorney fees don’t preclude additional penalties.
- Sanctions under Rule 11 or inherent authority can be stacked on top of § 285 attorney fees.
- Ignoring venue rules is risky.
- Filing in improper venues repeatedly supports sanctions.
- Courts can impose sanctions even if Rule 11 is avoided.
- Voluntarily dismissing a case before a Rule 11 motion is filed won’t necessarily protect against other penalties.
- Frivolous design patent claims won’t be tolerated.
- If two designs are “plainly dissimilar”, infringement claims will likely fail fast.
For companies dealing with aggressive litigation tactics, this ruling provides a roadmap for defending against and penalizing abusive lawsuits.