Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in PS Products, Inc. v. Panther Trading Co. Inc., No. 2023-1665 (Dec. 6, 2024), affirming a district court’s award of monetary sanctions under the court’s inherent authority.
PSP Products sued Panther Trading alleging infringement of U.S. Design Patent No. D680,188, directed to a long-spiked electrode for a stun device. Panther Trading sent a Rule 11 letter and draft motion to PSP Products’ attorney of record arguing the infringement allegations were factually frivolous because the patented design and accused products were dissimilar and that venue was improper. Panther Trading filed a motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim and Rule 12(b)(3) for improper venue. PSP Products did not respond to either the Rule 11 letter or the motion to dismiss.
PSP Products later moved to voluntarily dismiss the case, and the district court dismissed the action. Panther Trading filed a motion for attorney fees and costs under 35 U.S.C. § 285 and for $100,000 in deterrence sanctions under the court’s inherent power. The district court found the case exceptional under § 285 and awarded $43,344.88 against PSP Products and its attorney. The district court then awarded $25,000 in deterrence sanctions against PSP Products and its attorney. PSP Products appealed the district court’s award of sanctions under its inherent power but not the § 285 award.
The Federal Circuit affirmed. PSP Products argued the district court could not award sanctions when it had already awarded attorney fees and costs and argued the district court applied the incorrect legal standard. The Federal Circuit rejected both arguments. The panel held § 285 does not preclude a district court from separately imposing sanctions or fees under another authority, including a court’s inherent authority. The panel further held that the district court did not error in imposing sanctions due to PSP Products’ bad faith conduct, which the district court was free to find based on the lack of legal merit of the present action and PSP Products’ history of filing meritless lawsuits in the district. The panel declined to award attorneys’ fees and costs on the appeal holding that while the arguments on appeal were without merit, they were not quite frivolous.
