A Narrow Escape

Submitted by patentadmin on Fri, 06/04/2010 - 20:23

Lawyers who file frivolous claims may be sanctioned by the court (“sanctioned” is legalese for “ordered to pay money to the opposing party”). The question, of course, is which claims are frivolous.

The applicable rule of civil procedure – for all you anal retentive types, it’s F.R.C.P. 11 – states that “sanctions are appropriate when … the party files a pleading that is based on a legal theory that has no reasonable chance of success and that cannot be advanced as a reasonable argument to change existing law …"

This sort of begs the question. Obviously, not all claims which were defeated are frivolous. Some were almost successful – “close, but no cigar” – while others never had a chance – “dead-bang losers.” In the latter case, humorless and uncharitable prevailing parties – once they cease gloating – may move for sanctions (“move” is lawyerspeak for “file a motion”). This, of course, can be tough on the defeated party, really rubbing their noses in it; but it can be shrugged off as mere vindictiveness.

What’s worse – for the defeated party – is when the JUDGE imposes sanctions sua sponte (“sua sponte” is Latin for “all by him/herself without anyone even asking for it”). (Carter v. ALK Holdings, Inc. et al.)

Carter brought suit claiming that Hassebrock (the “et al.” in ALK Holdings, Inc. et al.) had been improperly named as a co-inventor on an application for a patent on his invention. He lost, which was bad enough. The judge, however, went on to find three of Carter’s claims frivolous: alleged violation of his constitutional rights; alleged breach of fiduciary duty by the attorney who prosecuted the patent application; and alleged breach of the duty to maintain the confidentiality of the contents of the subject patent application.

Carter’s attorneys – who were now on the hook for over $30K in sanctions – appealed. The appellate court noted that “Rule 11 sanctions should only be imposed in limited circumstances where the frivolous nature of the claims-at-issue is unequivocal.” They concluded that, although Carter’s claim was properly one for legal malpractice, the alleged malpractice related to a patent and hence “involved a substantial question of federal patent law.” This was close enough to a constitutional issue to render that claim nonfrivolous. They sent the whole matter back to the district court with a strong suggestion that sanctions were not appropriate.

THE LESSON TO BE LEARNED: Appellate courts are not always so forgiving; be careful of the claims you make.

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