Only Use Rule 11 on Trolls After Going Thru the Motions.

My Oct. 11 `06 post overstated the utility of Rule 11 to excise cases that plead infringement like a mass tort by a class of internet merchants.  It was overstated, as a presently available remedy, because now the CAFC has reversed the R. 11 sanctions assessed in Eon-Net L.P. v. Flagstar Bank.  This non-precedential opinion instructs that a Rule 11 determination cannot be made about infringement allegations until after the Court performs a Markman analysis.

The Rule 11 remedy against mildly-researched infringement claims by patent trolls should be even more available after the Supreme’s ruling in Twombly.  The CAFC panel in Eon-Net noted that the District Judge found that “Eon-Net failed to present facts demonstrating infringement, identify [Flagstar] products that might infringe…, ‘proffer …’ or apply its [claims] construction to” allegedly infringing products.  Those shortcomings might have passed muster under the former “any set of facts” pleading standard, but not the present Twombly standard of alleging facts sufficient to make the case “plausible” and not “speculative.”

How then to rid the docket of thinly-pleaded claims, with generalized allegations of infringement, against no identified structure or product?  The CAFC was comfortable in taking away Rule 11 as a tool to triage trolls from the truly-infringed.  “[W]here a district court construes a patent without following the necessary steps, we should remand for …the district court …[to] follow the appropriate steps.”

The CAFC panel left undisturbed the finding of no pre-filing claims construction by Eon-Net, which had not “reasonably evaluated the `687 patent’s claims.”  It remanded for the district judge to do the claim construction, which the plaintiff essentially never did.  Only after a Court has construed the claims, can it adjudge the inadequacy of the plaintiff’s pre-filing read of those claims.  That mandate seems illogical, as though a Court is obligated to evaulate what evidence a plaintiff would need before ruling that suit was filed before the plaintiff had the evidence it needed.

Of course, the Eon-Net ruling is “nonprecedential.”  If, however, there is no CAFC precedent on how Rule 11 imposes a pre-filing obligation to perform a claims interpretation and apply it to specific subject matter, then a nonprecedential ruling has to be treated as near-gospel on the subject.