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Total Rebuild, Inc. v. PHC Fluid Power, LLC

United States District Court, W.D. Louisiana, Lafayette Division

November 8, 2019

TOTAL REBUILD, INC.
v.
PHC FLUID POWER, L.L.C.

          WHITEHURST MAG. JUDGE

          RULING

          TERRY A. DOUGHTY UNITED STATES DISTRICT JUDGE

         This is a patent infringement case in which Plaintiff Total Rebuild (“Plaintiff”) contends systems and/or methods utilized by or through Defendant PHC (“Defendant”) infringe claims of United States Patent No. 8, 146, 428 (“the '428 Patent”). The '428 Patent is directed to systems and methods for safely testing devices and components under high-pressure.

         Pending before the Court is Defendant's “Motion for Rule 11 Sanctions and Other Relief” [Doc. No. 332]. Plaintiff responded to the motion. [Doc. No. 368]. Defendant filed a reply. [Doc. No. 377]. For the following reasons, the motion is DENIED.

         Also pending before the Court is Defendant's “Motion for Attorney Fees, Expenses, and Costs under 35 U.S.C. § 285” [Doc. No. 399]. Plaintiff responded to the motion. [Doc. No. 433]. Defendant filed a reply. [Doc. No.436]. For the following reasons, the motion is DENIED.

         Finally, pending before the Court is Defendant's “Motion for Attorney Fees, Expenses, and Costs under 28 U.S.C. § 1927” [Doc. No. 401]. Plaintiff responded to the motion. [Doc. No. 426]. Defendant filed a reply. [Doc. No.431]. For the following reasons, the motion is DENIED.

         I.PROCEDURAL HISTORY

         A. Defendant's Motion for Rule 11 Sanction and Other Relief.

         On January 3, 2019, Defendant delivered to Plaintiff notice under Fed.R.Civ.P. 11 of Defendant's intent to file a motion for sanctions. (Doc. No. 332-1 at 4, Doc. No. 368 at 3). On January 11, 2019, within the safe harbor period, Plaintiff responded to Defendant's January 3, 2019 proposed motion and memorandum. (Doc. No. 368-1). Following receipt of Plaintiff's January 11, 2019 correspondence, Defendant waited a period of approximately eight months before filing the present motion on August 30, 2019.

         B. Defendant's Motion for Attorney Fees, Expenses, and Costs under 35 U.S.C. § 285 and 28 U.S.C. § 1927.

         A bench trial on inequitable conduct was conducted from September 12 to September 13, 2019. The Court entered Preliminary Findings of Fact and Conclusions of Law on September 13, 2019, and concluded that the '428 Patent is unenforceable due to inequitable conduct. (Doc. No. 388). The Court canceled the jury trial set to begin on September 16, 2019, and ordered Defendant to file a motion for attorney fees under 35 U.S.C. § 285 no later than Wednesday, September 18, 2019. (Id. at 6). On September 18, 2019, Defendant filed the present motions for attorney fees, expenses, and costs under 35 U.S.C. § 285 and 28 U.S.C. § 1927. (Doc. Nos. 399 and 401). On October 15, 2019, the Court entered a Memorandum Opinion and Judgement finalizing the Findings of Fact and Conclusions of Law related to the bench trial on inequitable conduct. (Doc. Nos. 427 and 428).

         II.LAW AND ANALYSIS

         A. Defendant's Motion for Rule 11 Sanction and Other Relief.

         Federal Rule of Civil Procedure 11 requires attorneys to certify that their claims are well-grounded in fact and in law, and their filings are not being presented for any improper purpose. Rule 11(b) provides in relevant part:

         By presenting to the court a pleading, written motion, or other paper-whether by signing, filing, submitting, or later advocating it-an attorney . . . certifies that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:

(1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation;
(2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law; [and] (3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery. . . . .

FED. R. CIV. P. 11(b).

         In determining compliance with Rule 11, an attorney is measured under a standard of objective reasonableness based on the circumstances. Whitehead v. Food Max of Miss., Inc., 332 F.3d 796, 802-03 (5th Cir. 2003) (en banc). The reasonableness of the conduct involved is to be viewed at the time counsel signed the document alleged to be the basis for the Rule 11 violation, commonly referred to as the “snapshot rule.” Marceaux v. Lafayette City Par. Consol. Gov't, 14 F.Supp.3d 760, 766 (W.D. La. 2014). This rule “ensures that Rule 11 liability is assessed only for a violation existing at the moment of filing.” Skidmore Energy, Inc. v. KPMG, 455 F.3d 564, 570 (5th Cir. 2006).

         The determination of a Rule 11 motion is not a determination of the merits of the action. Cooter & Gell v. Hartmax Corp., 496 U.S. 384, 396 (1990). “Rather, it requires the determination of a collateral issue: whether the attorney has abused the judicial process, and, if so, what sanction would be appropriate.” Id. To succeed on their request for Rule 11 sanctions, Defendant must establish that Plaintiff lacked a reasonable basis for its allegations at the time that it filed its federal court pleadings. See Thomas v. Capital Sec. Servs., Inc., 836 F.2d 866, 874 (5th Cir. 1988). This determination is a “fact intensive inquiry” that turns on an “assessment of the gravity of the conduct at issue, ” and is measured by an objective standard of reasonableness under the circumstances. Id. at 872-73; see also Smith v. Our Lady of the Lake Hosp., 960 F.2d 439, 444 (5th Cir. 1992) (reversing the imposition of Rule 11 sanctions, although the Court “doubted the merits of Smith's suit, ” and finding that “the attorneys' investigation, while not perfect, was reasonable under the circumstances”). The purpose of Rule 11 is to “deter baseless filings in district court” and “streamline the administration and procedure of the federal courts.” Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393, 110 S.Ct. 2447, 2454, 110 L.Ed.2d 359 (1990).

         In this case, the entirety of Defendant's argument is that Plaintiff and its counsel continued to frivolously assert that systems where a pump is not in the explosion-proof housing infringe the claims of the '428 Patent. (Doc. No. 332-1 at 1).[1] Specifically, Defendant identify six systems that they contend do not have testing equipment inside the housing. (Id. at 6-9). Defendant argues that each of the independent claims of the '428 Patent require the pressure testing equipment to be located within the explosion-proof safety housing where high-pressure testing takes place. (Id. at 5-6). Defendant further contends that Plaintiff's conduct is frivolous because it cannot directly infringe claims 3-5, 11-15, and 18-19 of ʼ428 Patent through the identified systems. (Id. at 12-17).

         On January 3, 2019, Defendant served a demand letter and draft of a Motion for Sanctions and supporting memorandum. (Id. at 3-4). Defendant argues that since receiving the January 3, 2019 Demand Letter and Draft Motion, Plaintiff and its counsel asserted infringement of a sixth system where ...


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