Patent and trademark – Sanctions – Rule 11 – Voluntary dismissal

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Where a defendant has requested sanctions after the plaintiff moved to voluntarily dismiss a design patent infringement claim, the defendant’s request should be denied because the motion for voluntary dismissal was filed by the plaintiff within the 21-day safe harbor provision of Rule 11 of the Federal Rules of Civil Procedure.

“… The most significant procedural requirement is that the moving party must serve the proposed motion on the target opponent and then wait at least twenty-one days before filing that motion with the court. …

“The relevant chronology is this: The defendants sent Caffeinate’s attorney an email containing a proposed Rule 11 motion for sanctions on Friday, March 17, 2017 at 8:55 p.m. The defendants accordingly assert that service of the motion was completed on March 17, and that the safe harbor period expired on Friday, April 7. According to this view, the safe harbor period expired before Caffeinate filed its motion to withdraw the design patent infringement claim on April 10.

“Caffeinate argues that the defendants’ email containing the proposed motion, which was sent at 8:55 p.m. on Friday, March 17, was not seen or read until the following morning and should therefore be treated as having been served on Saturday, March 18. Based on a service date of March 18, the safe harbor period ended on April 10, which is the day that Caffeinate moved to dismiss its design patent claim. On this timeline, Caffeinate withdrew the challenged claim within the safe harbor period, thus protecting it from Rule 11 sanctions. … While no rule expressly addresses the question of after-hours electronic service, Caffeinate notes that this District’s local rule regarding the timely filing of electronic documents requires that ‘electronic transmissions of documents be completed prior to 6:00 p.m. to be considered timely filed that day.’ LR 5.4(d). While this rule applies only to filing deadlines, it does provide as a useful — and sensible — analogy for timeliness of electronic service as well.

“On the facts and circumstances presented, I find that Caffeinate withdrew the design patent infringement claim within the safe harbor period, and therefore that sanctions under Rule 11 are not warranted. Caffeinate’s argument on this point is persuasive because allowing parties to utilize after-hours service to gain advantage should not be encouraged. Ultimately, the intention of Rule 11’s safe harbor provision is to provide a party with a reasonable amount of time to withdraw or amend a challenged filing, and attempts to minimize that period should not be allowed.

“Alternatively, the defendants move for sanctions under 28 U.S.C. section1927, arguing that Caffeinate’s pursuit of the design patent infringement claim unreasonably and vexatiously increased the proceedings in this case. Under section1927, an attorney’s conduct is vexatious if it is ‘harassing or annoying.’ … The conduct must go beyond ‘carelessness or even incompetence’ and ‘evince a studied disregard of the need for an orderly judicial process, or add up to a reckless breach of the lawyer’s obligations as an officer of the court.’ In support of this claim, the defendants recount their interactions with Caffeinate’s counsel regarding the design patent infringement  claim, but they do not offer sufficient facts or reference any case law that suggests the actual conduct of Caffeinate’s attorneys rose to the level required to justify statutory sanctions under section1927.

“The defendants also argue that the court should use its inherent power to sanction Caffeinate. A district court may invoke its power to sanction parties or attorneys who ‘acted in bad faith, vexatiously, wantonly, or for oppressive reasons.’ … However, these circumstances do not warrant the exercise of that power.”

Caffeinate Labs, Inc. v. Vante Inc., et al. (Lawyers Weekly No. 02-319-17) (4 pages) (O’Toole, J.) (Civil Action No. 16-12480-GAO) (July 6, 2017).

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