Hastily Filed Declaratory Judgment Claim Did Not Violate Rule 11 in Light of PTAB Institution Decision​

The court denied a patentee-defendant's motion for Rule 11 sanctions because plaintiff's claims for declaratory relief of noninfringement and invalidity were not frivolous in light of the PTAB's decision to institute inter partes review of a related claim. "Although [defendant] criticizes [plaintiff] for not providing an attorney declaration testifying about what inquiry was conducted in the two days between the receipt of [defendant's] notice-of-infringement letter and the filing of [plaintiff's] complaint seeking declaratory relief, that failure is immaterial so long as [plaintiff's] complaint was not legally or factually baseless from an objective perspective. Here, [defendant] claims that . . . [plaintiff's] contention that claim 4 of the [patent-in-suit] was invalid was not factually supported. But that position cannot be sustained given the results of [a related] inter partes review. . . . [T]he PTAB's grant of review on claim 1 implicates the validity of claim 4, because claim 4 is, in effect, part of the process described in claim 1, only in reverse. [Defendant's] argument that 'dependent or multiple dependent claims [i.e., claim 4] shall be presumed valid even though dependent upon an invalid claim [claims 1-3],' does not establish [plaintiff's] challenge to claim 4 is frivolous."

Craigslist, Inc. v. EveryMD.com LLC, 3-16-cv-03421 (CAND January 12, 2017, Order) (Chen, USDJ)