The following is excerpted from a November 30, 2011 article by Gregory S. Cordrey of Jeffer Mangels Butler & Mitchell LLP published by Mondaq:
In three patent cases brought by the same plaintiff, Raylon LLC, against numerous defendants, Judge Davis of the Eastern District of Texas denied Rule 11 sanctions and motions for attorneys' fees under Section 285 of the Patent Statute, and Section 1927 of Title 28.
In denying Defendants' subsequent motion for Rule 11 sanctions, the Court stated its concern "about plaintiffs who file cases with extremely weak infringement positions in order to settle for less than the cost of defense and have no intention of taking the case to trial." The court further stated that "[w]here it is clear that a case lacks any credible infringement theory and has been brought only to coerce a nuisance value settlement, Rule 11 sanctions are warranted." On the other hand, the court countered that "there may be legitimate cases where a plaintiff settles with a few smaller defendants in an effort to raise needed capital in order to proceed to trial against the remaining major defendants. In those situations, plaintiffs typically settle with smaller defendants and proceed to trial against larger defendants who have larger damage potential. Such is a legitimate trial strategy. Moreover, the Court does not want to discourage early settlement of some or all defendants. This Court has always taken a favorable view of business resolutions to legitimate commercial disputes when those settlements are based on the case's merits and risks."
Read the full article here.