The following is excerpted from a September 27, 2011 article by Stephen M. Hash, John A. Fedock and Syed Kamil Fareed of Vinson & Elkins LLP published by Mondaq:
The U.S. Federal Circuit recently affirmed an award of attorneys' fees and sanctions against plaintiff Eon-Net in excess of $630,000. (Eon-Net LP, v. Flagstar Bancorp, Case No. 2009-1308 ). In an opinion written by Judge Lourie and joined by judges Mayer and O'Malley, the Federal Circuit affirmed the district court's finding that the case was exceptional under 35 U.S.C. § 285 in light of various instances of litigation misconduct and other bad faith behavior, including what the district court termed "indicia of extortion." The Federal Circuit also affirmed the lower court's grant of sanctions under Rule 11 because Eon-Net filed "legally baseless" infringement contentions and failed to perform a proper pre-suit investigation. At the heart of the decision was the plaintiff's strategy of suing a large number of defendants in an attempt to extract quick "cost of defense" settlements, but without performing a proper pre-suit investigation against many of those companies.
Read the full article here.