The U.S. Court of Appeals for the Federal Circuit has vacated a district court's refusal to sanction a patent owner for pursuing allegedly frivolous infringement claims. The precedential decision, reported by IPWatchdog, sends the case back to the Northern District of Georgia for a more detailed explanation of its denial of Pen-Tech Associates' motion for sanctions and attorney's fees.
Pen-Tech had argued that Epic Tech should have known the asserted claims of U.S. Patent No. 8,545,317 were ineligible under Section 101. Pen-Tech pointed to the Supreme Court's Alice decision, USPTO rejections of related applications, and a separate court ruling invalidating similar claims. The district court denied the motion, finding that neither Epic Tech nor its counsel, Baker Donelson, had acted so unreasonably as to be frivolous.
The Federal Circuit disagreed with the district court's reasoning, saying it did not permit meaningful review. The appellate court noted that the district court focused too much on Epic Tech's pre-suit infringement investigation rather than validity, and failed to explain why the USPTO office actions and the Fusion Skill case were insufficient notice of potential invalidity. The case was remanded for further proceedings consistent with the opinion.