United States: How Far Is Too Far? Unreasonable Claim Constructions Can Lead To Sanctions

Once a patent infringement lawsuit is filed, much time and effort is devoted by the parties and the court to arrive at the appropriate interpretation of the claims.  But how important is it to think about claim construction arguments before filing suit?  In Source Vagabond Systems Ltd., v. Hydrapak, Inc., the Federal Circuit recently reiterated that it is very important for counsel—and the patent owner—to ensure that all infringement arguments raised are based on claim construction positions that are reasonable and legally sound.  753 F.3d 1291, 1301 (Fed. Cir. 2014).  Failure do so, which can also amount to a failure to perform a reasonable prefiling investigation, can lead to a violation of Rule 11 that may result in sanctions including expenses and attorney fees. 

Because it is not uncommon for prosecution or counseling attorneys to engage in the early development of potential infringement positions, knowing the basic framework of Rule 11 is helpful.  Rule 11 was drafted to curtail meritless claims that "burden[] courts and individuals alike with needless expense and delay."  Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 398 (1990).  Generally, Rule 11 requires an attorney to make an objectively reasonable inquiry into the facts and law prior to filing and to refrain from pursuing an action that is not objectively reasonable based on the facts.  Failure to meet these requirements can trigger sanctions against the offending parties and their attorneys.  More particularly, Rule 11(b)(2), mandates that in any filing the attorney certifies that the attorney made a reasonable inquiry that the claims, defenses, and other legal contentions are warranted by existing law.  Source Vagabond, 753 F.3d at 1292 (citing  Fed. R. Civ. P. 11(b)(2)).  In addition, Rule 11(b)(3) also requires attorneys to certify that they have made a reasonable inquiry into whether their factual contentions have evidentiary support.  Id.  The Federal Circuit has held that in the context of patent infringement cases, Rule 11 requires an attorney, among other things, to interpret the patent claims at issue before filing a patent infringement complaint.  Antonius v. Spalding & Evenflo Cos., Inc.,275 F.3d 1066, 1072 (Fed. Cir. 2002).  Because claim construction is a matter of law, an attorney's proposed claim construction is subject to the requirement that all legal arguments be non-frivolous. Thus, while the attorney may consult with the client as the claim construction positions are developed, Rule 11 requires the attorney to perform an independent claim analysis.  Moreover, because claim construction is a matter of law, an attorney's proposed claim construction is subject to the requirement that all legal arguments be non-frivolous.

In Source Vagabond, the Federal Circuit affirmed Rule 11 sanctions for an inadequate prefiling investigation where the patent owner relied on a claim construction that was objectively unreasonable as it violated several basic claim construction tenets.  753 F.3d 1291, 1301 (Fed. Cir. 2014).  The patent at issue is directed to flexible water reservoirs, such as for storage in a backpack.  According to the patent, a hermetic seal is formed by folding the top of the flexible reservoir over a rod and positioning a long sealer clip sideways over the folded reservoir and rod.  The sealer clip has a slot big enough for the folded reservoir but not the rod.  The specific claim limitation at the center of the dispute requires the slot to be "narrower than the diameter of the rod" so that the sealer clip is only to be "slidingly mounted sideways over the rod." The full claim is reproduced below:

'276 patent at col. 10, ll. 20–42 (emphasis added).  The accused Hydrapak product includes a "sealing member, called a 'slider,' with an opening or gap along its long axis."  753 F.3d at 1296.  The slider attaches to elements, called "catches," located on plastic lips that "run along each side of the water reservoir's mouth."  Id.  The catches guide the slider along the container's plastic lips, thereby locking the slider in place, preventing detachment.  Id.  In other words, the slot of the accused Hydrapak sealer clip was wider than the rod's diameter.  Thus, Source's infringement theory depended entirely on its ability to construe the limitation as "narrower than the diameter of the rod together with the container folded over it."  In response to Source's complaint, Hydrapak moved for sanctions, and eventually both parties filed cross-motions for summary judgment with respect to infringement. 

The district court granted Hydrapak's motions for summary judgment and Rule 11 sanctions.  In its motion, Source argued that the limitation "the slot being narrower than the diameter of the rod, so that the sealer is only to be slidingly mounted sideways over the rod" should be construed to mean "the slot is narrower than the diameter of the rod together with the container folded over it, so that the sealer is only to be slidingly mounted sideways over the rod and the container."  Id. at 1297 (internal citations omitted) (emphases added).  The district court remarked that there was "nothing complicated or technical" about the claim limitation and that none of the words of this limitation required interpretation beyond its plain and ordinary meaning."  Id.  According to the district court, not only did Source's proposed claim interpretation violate all the relevant canons of claim construction, but even under Source's own construction, Hydrapak did not infringe.  Id.  In particular, the district court determined that in Hydrapak's products, the slot is larger than the diameter of the rod, even under Source's proposed construction.  Thus, the court concluded that Source's infringement assertion, regardless of the claim construction adopted, lacked evidentiary support because "the difference is apparent to the naked eye, and the tape measure leaves no room for doubt."  Id. 

On appeal, the Federal Circuit affirmed the district court's ruling.  The court reiterated that any claim construction analysis must begin and remain centered on the claim language itself, "for that is the language the patentee has chosen to particularly point[] out and distinctly claim[] the subject matter which the patentee regards as his invention."  Id. at 1299 (citing Innova/Pure Water, Inc. v. Safari Water Filtration Sys., Inc., 381 F.3d 1111, 1116 (Fed. Cir. 2004)).  After analyzing Source's position, the court found that "instead of looking to the words of the claim themselves, Source added language without support from the specification or prosecution history, altering otherwise unambiguous claim language, a practice this court has repeatedly rejected."  Id. at 1299.  While Source argued that the claim language is ambiguous, the court found that Source failed to make that contention to the district court and, when making the argument to the Federal Circuit, it did not explain what terms were ambiguous or how.  Id.  

Moreover, the court affirmed the district court's conclusion that Source's proposed construction contradicted the specification.  Id.  With regards to the prosecution history, the court noted that in response to an invalidity rejection, Source had amended claim 1 to require a "slot being narrower than the diameter of the rod."  Id. at 1300-01.  Thus, the Federal Circuit concluded that the prosecution history further demonstrated the unreasonableness of Source's claim construction,  and that the claims do not cover products with a slot wider than the diameter of the rod. 

Finally, the court rejected Source's argument that it is proper to rely on the purpose of the invention in construing the claims.  The court reiterated that the purpose of the limitation in the claimed invention—not the purpose of the invention itself—is relevant to the claim construction analysis.  See id. (citing Cohesive Techs. Inc. v. Waters Corp., 543 F.3d 1351, 1368 (Fed .Cir. 2008). 

Because Source's claim construction was clearly inadequate, and, indeed, the literal infringement claim 'lacked evidentiary support no matter how the claim was construed,' the Federal Circuit found that the district court did not abuse its discretion in imposing Rule 11 sanctions and affirmed.  The court highlighted that Source's opposition to the Rule 11 sanctions "lacked any analysis or product measurement and calculation" to support a finding that Source's attorneys performed a sufficient analysis to support a reasonable belief of literal infringement, even under Source's construction.  Id. at 16.  The court concluded that Source was "obligated to come forward with a showing of exactly why, prior to filing suit, they believed their claim" was reasonable.  Id. at 18.  Source did not comply with this requirement.  Thus, finding that Source violated Rule 11 was appropriate.

A party facing sanctions deals not only with the risk of losing the case and paying monetary damages, but even more importantly with the risk of losing credibility and reputation.  Thus, a patentee and its attorneys must always be careful to meet or exceed the threshold set forth by Rule 11.  Source Vagabond illustrates the importance of conducting a solid prelitigation analysis rooted in thoughtful claim construction positions that are grounded on the specification and prosecution history of the patent.  Claim construction positions overly focused on capturing the infringing product may sometimes miss the mark.  As the Federal Circuit has noted "reasonable minds can differ as to claim construction positions and losing constructions can nevertheless be nonfrivolous.  But there is a threshold below which a claim construction is 'so unreasonable that no reasonable litigant could believe it would succeed,' and thus warrants Rule 11 sanctions." Raylon, LLC v. Complus Data Innovations, Inc., 700 F.3d 1361, 1368 (Fed. Cir. 2012).  As always, a well drafted patent, with claims drafted with an eye towards enforcement can be the strongest starting point for a successful defense of the patentee's rights.

This article previously appear in Full Disclosure Patent Newsletter, September 2014.

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