It might be just as important not to be a jerk about it.

How badly does a patentee have to anger the trial judge before it is sanctioned for bad faith litigation?  Apparently, the patent-holding company Eon-Net managed to cross that line by (1) failing to investigate its claims before filing, (2) relying on a crazy claim construction, and (3) being a serial litigant that routinely settles for less than the cost of defense.  Plus a side of document destruction, and a dollop of arrogance.

The following paragraph from the Federal Circuit opinion neatly sums up the importance of pre-filing investigations and not following a client’s wishes blindly:

Eon-Net argues that it is not improper for a patentee to vigorously enforce its patent rights or offer standard licensing terms, and Eon-Net is correct. But the appetite for licensing revenue cannot overpower a litigant’s and its counsel’s obligation to file cases reasonably based in law and fact and to litigate those cases in good faith. Here, the district court did not clearly err when it found that Eon-Net filed an objectively baseless infringement action against Flagstar and brought that action in bad faith, specifically to extract a nuisance value settlement by exploiting the high cost imposed on Flagstar to defend against Eon-Net’s baseless claims. It also appears that in filing this case, Zimmerman merely followed the direction of his client, Medina, who Zimmerman characterized at oral argument as “difficult to control.” [Citation omitted.]  But an attorney, in addition to his obligation to his client, also has an obligation to the court and should not blindly follow the client’s interests if not supported by law and facts. In these circumstances, coupled with the district court’s supported findings regarding Eon-Net’s litigation misconduct, we conclude that the district court did not clearly err in its exceptional case finding.

Eon Net LP v. Flagstar Bancorp, No. 2009-1308 (Fed. Cir. July 29, 2011) (emphasis added).

You can read the whole jaw-dropping opinion here.

Rick Sanders

Rick is an intellectual-property litigator. He handles lawsuits, arbitrations, emergency injunctions and temporary restraining orders, opposition and cancellation proceedings, uniform dispute resolution proceedings (UDRPs), pre-litigation counseling, litigation avoidance, and other disputes, relating to copyrights, trademarks, trade secrets, domain names, technology and intellectual-property licenses, and various privacy rights. He has taught Copyright Law at Vanderbilt University Law School. He co-founded Aaron | Sanders with Tara Aaron-Stelluto in 2011.