United States: Pre-Filing Infringement Analysis is "Key Factor" to Avoiding Rule 11 Sanctions

The U.S. Court of Appeals for the Federal Circuit confirmed that the Rule 11 requirements of reasonable pre-filing investigation may be satisfied by an "infringement analysis" performed prior to filing a patent infringement suit. Q-Pharma, Inc. v. The Andrew Jergens Company, Case No. 03-1184 (Fed. Cir. Mar. 8, 2004) (Lourie, J.).

Q-Pharma filed suit against Jergens alleging that Jergens’ sale of its "Cruel Lotion with Coenzyme Q10" infringed the Q-Pharma patent directed to a method for therapeutically treating damaged tissue by administering a composition containing Coenzyme Q10 (C0Q10). The label on the Jergens’ lotion prominently displays the term "Q10."

During discovery, Q-Pharma repeatedly demanded information regarding the contents of the Jergens’ lotion. Jergens refused to comply. Eventually, Jergens revealed that its lotion contained an almost negligible amount of Q10. Upon learning that information, Q-Pharma abandoned its suit.

After the district court dismissed Q-Pharma’s infringement claim, Jergens filed motions for sanctions under Rule 11 and for attorney fees. As the basis for its Rule 11 motion, Jergens argued that Q-Pharma did not prepare an appropriate claim construction chart and did not perform a chemical analysis on the lotion prior to filing the suit. According to Jergens, a rigorous claim chart would have made it apparent that the claims of the patent required "a therapeutically effective" amount of C0Q10 and a chemical analysis of Jergens’ lotion would have revealed that it contained an almost negligible amount of C0Q10. Thus, Jergens argued, had Q-Pharma performed an adequate pre-filing investigation, it would have known that Jergens’ "Cruel Lotion" could not possibly infringe the patent. Jergens further argued that Q-Pharma’s suit was filed in bad faith, making it an exceptional case under §285.

The district court denied both motions and the Federal Circuit affirmed. The Court explained that "[i]n the context of patent infringement actions, we have interpreted Rule 11 to require… that an attorney interpret the asserted patent claims and compare the accused device with those claims before filing a claim alleging infringement." Relying on the filing attorney’s declaration, the Court noted that, "[I]t was enough that the filing attorney had reviewed the patent claims, written description, and prosecution history, and interpreted the patent claims." A "claim chart is not a requirement of a pre-filing infringement analysis." Rather, the Court explained, it is "[t]he presence of an infringement analysis [that] plays the key role in determining the reasonableness of the pre-filing inquiry made in a patent infringement case under Rule 11."

Such an "infringement analysis can simply consist of a good faith, informed comparison of the claims of a patent against the accused subject matter." The Federal Circuit noted that Q-Pharma acquired a sample of the Cruel Q10 lotion, which "listed the product’s ingredients and repeatedly touted the therapeutic effects of C0Q10." Given Q-Pharma’s non-frivolous interpretation of its patent claim (as requiring no specified amount of C0Q10) and Jergens’ assertions regarding the therapeutic effects of C0Q10 expressly made on the packaging of the accused product, the Court concluded that "it was reasonable for Q-Pharma to believe that the product contained a ‘therapeutically effective amount’ of C0Q10."

The Federal Circuit also rejected the award of attorneys fees, concluding that Q-Pharma reasonably believed its patent was valid and infringed when it filed suit and that its claim of infringement was, therefore, neither frivolous nor unjustified. Jergens did not show by clear and convincing evidence that Q-Pharma was grossly negligent in its belief of infringement and validity.