Performing A Pre-Filing Investigation When Samples Are Not Available: The Adequacy Of A Pre-Filing Investigation After Intamin

By James G. McEwen[1]

Introduction

As a general rule, the Federal Rules of Civil Procedure require that a lawsuit be brought in good faith.  As such, Rule 11 requires that, prior to filing a lawsuit, a pre-filing investigation be performed.  Specifically, Rule 11(b)(3) states as follows:

By presenting to the court (whether by signing, filing, submitting, or later advocating) a pleading, written motion, or other paper, an attorney or unrepresented party is certifying that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, . . . (3) the allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery.

Should this pre-filing investigation not be properly performed, Rule 11(c) allows the court to impose stiff sanctions “upon the attorneys, law firms, or parties that have violated subdivision (b) or are responsible for the violation.”  Fed. R. Civ. P. 11(c).  As such, both the individual parties and their representatives can be and have been sanctioned for failing to properly conduct an adequate pre-filing investigation.     

While a seemingly simple and obvious requirement, the need for a pre-filing investigation becomes problematic in patent litigation.  Specifically, without access to detailed plans and information known only to the potential infringer, the patent owner’s investigation is often quite limited to only what is available to the public.  For instance, where infringement of a patented process is suspected, but is being performed in a non-public area, how does one conduct the pre-filing investigation using only the resultant product?  In the context of software where the end user license specifically prevents reverse engineering, what is the method for establishing the functional interrelationships needed to determine if the software is infringing?  Given the potential for sanctions, the question ultimately becomes: what is the minimum threshold of investigation, before filing suit, that a patent infringement plaintiff must conduct in order to comply with Rule 11 of the Federal Rules of Civil Procedure, and is reverse engineering always required before filing suit?

As described below, it is the general rule that, before bringing an infringement lawsuit, a detailed analysis must be reviewed using conventional techniques, including reverse engineering.  Where reverse engineering is not possible (as is often the case for computer software), the plaintiff can still proceed.  However, as recently confirmed by the Federal Circuit in Intamin Ltd. v. Magnetar Technologies Corp., 483 F.3d. 1328, 82 USPQ2d 1545 (Fed. Cir. 2007), the plaintiff will need to show that all reasonable efforts were made to perform reverse engineering, that such efforts were prevented or not reasonable under the circumstances, and that the detailed analysis was performed using information reasonably available.  Therefore, the duty to perform a pre-filing investigation is not limited to situations where reverse engineering is possible so long as there is evidence that indirect evidence of infringement was used and was the best available evidence for use in determining infringement.

Analysis

Rule 11 Requires Direct Claim Comparison

In interpreting Rule 11, the Supreme Court has stated that the “the central purpose of Rule 11 is to deter baseless filings . . . . Rule 11 imposes a duty on attorneys to certify that they have conducted a reasonable inquiry and have determined that any papers filed with the court are well grounded in fact [and] legally tenable . . . .” Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990). In the context of a patent infringement suit, an attorney will be held to have violated Rule 11(b)(3) “when an objectively reasonable attorney would not believe, based on some actual evidence uncovered during the prefiling investigation, that each claim limitation reads on the accused device either literally or under the doctrine of equivalents.”  Antonious v. Spalding & Evenflo Cos., 275 F.3d 1066, 1074, 61USPQ2d 1245, 1250 (Fed. Cir. 2002).  

The U.S. Court of Appeals for the Federal Circuit has interpreted Rule 11 “to require, at a minimum, that an attorney interpret the asserted patent claims and compare the accused device with those claims before filing a claim alleging infringement.”  Q-Pharma, Inc. v. Andrew Jergens Co., 360 F.3d 1295, 1300-01, 70 USPQ2d 1001, 1005 (Fed. Cir. 2004); see Antonious, 275 F.3d at 1072; View Eng’g, Inc. v. Robotic Vision Sys., Inc., 208 F.3d 981, 986, 54 USPQ2d 1179 (Fed. Cir. 2000); Judin v. United States, 110 F.3d 780, 784, 42 USPQ2d 1300 (Fed. Cir. 1997); S. Bravo Sys., Inc. v. Containment Techs. Corp., 96 F.3d 1372, 1375, 40 USPQ2d 1140 (Fed. Cir. 1996). The court in View Eng’g stressed that “[t]he presence of an infringement analysis plays the key role in determining the reasonableness of the pre-filing inquiry made in a patent infringement case under Rule 11.” 208 F.3d at 986; see also Antonious, 275 F.3d at 1073-74; Judin, 110 F.3d at 784; S. Bravo Sys., 96 F.3d at 1375. “An infringement analysis can simply consist of a good faith, informed comparison of the claims of a patent against the accused subject matter.” Q-Pharma Inc., 360 F.3d at 1302. As such, the Federal Circuit broadly requires the comparison of available evidence of the infringing product with the invention as claimed.

Claim Analysis Must Be Independent

However, an attorney may not exclusively rely on his client’s opinion that the accused device infringes the patent in question as the basis of the comparison. View Eng’g, 208 F.3d at 985, 54 USPQ2d at 1182; Judin, 110 F.3d at 784, 42 USPQ2d at 1304; S. Bravo Sys., 96 F.3d at 137, 540 USPQ2d at 1143.  In View Eng’g, the court highlighted the plaintiff’s failure to carry out either a proper legal or factual analysis. 208 F.3d at 984-85.  “At the time the counterclaims [for infringement] were filed, the only basis for their filing was the belief of [the inventor] that the [defendant’s] devices probably infringed the [plaintiff’s] patents.”  Id.  The plaintiff chose not to perform any independent claim construction analysis.  Id. at 985.  The court came to the conclusion that “[the plaintiff] was afforded ample opportunity to construe the 120 claims [that the defendant] was eventually accused of infringing”, Id. at 986, yet neglected to do so.

Furthermore, the court made note of factual inquiries that the plaintiff could have made, but did not, prior to filing its counterclaim for infringement.  Id.  The plaintiff “had the opportunity to file immediately for the protective order that eventually resulted in discovery, to appoint an outside expert to review [the defendant’s] machines, to talk to [plaintiff’s] sales corps to learn what it knew of [defendant’s] machines – in other words to conduct some form of reasonable inquiry.” Id. In fact, counsel for the plaintiff admitted that its infringement suit was based on knowledge of the defendant’s machines that it gained from publicly available information and from the defendant’s literature. Id. at 985. Therefore, the court concluded that the plaintiff did not perform a reasonable investigation in the context of filing patent infringement claims. Id. at 986.

Direct Analysis Of Sample Is Only Required When Reasonable Under The Circumstances

In contrast, the Federal Circuit held in Q-Pharma that the defendant’s action for patent infringement possessed a “sufficient factual basis”, 360 F.3d at 1302, because the defendant “obtained a sample of the accused product, reviewed [the defendant’s] statements made in advertising and labeling of the accused product, and, most importantly, compared the claims of the patent with the accused product.” Id. The court distinguished its decision in View Eng’g by stating that in the present case, the patentee “did not file suit based solely on [the defendant’s] advertising; critically, it also relied on its own comparison of the asserted claims with the accused product.” Id.

Where the sample is easily obtained, the pre-filing investigation will generally include a direct product comparison.  For software, this comparison should involve reverse engineering.  However, reverse engineering is typically only required where reverse engineering is possible or where there is evidence that reverse engineering would not reveal more information than otherwise available.  By way of example, in Network Caching Technology, LLC v. Novell, Inc., 67 USPQ2d 1034 (N.D. Cal. 2002), the Northern District of California found that, while not all comparisons of allegedly infringing products to the plaintiff’s patent claims specifically required reverse engineering of the defendant’s products, the equivalent of such a comparison is necessary.   In contrast, there is no need for reverse engineering when reverse engineering would not provide the relevant information needed to show infringement; however, the plaintiff needs to provide evidence to support this contention.

Upon revisiting this case, the district court in Network Caching Technology, LLC v. Novell, Inc., No. C-01-2079 VRW, 2003 WL 21699799 at *6 (N.D. Cal. Mar. 21, 2003), declined to accept the plaintiff’s contention that reliance on marketing materials, white papers, and other product documentation “operate as the functional equivalent of traditional reverse engineering”, Id., in this context as the patentee “[did] not deny that it had the ability to obtain the allegedly infringing products and examine them to determine, for example, whether they operated materially in the manner described by the marketing materials.” Id. at *7. The court concluded that “looking at these indirect sources of information fails to satisfy the pre-filing inquiry requirements described [in] View Eng’g.”, Id at *6, since the plaintiff had sufficient direct access to the infringing product, and could reasonably have completed a more thorough pre-filing investigation directly.  Id.  As such, the district court took a narrow view of when reverse engineering need not be performed and seemed to indicate that very few circumstances exist when reverse engineering would be excused.

Federal Circuit Clarifies Standard In Intamin

More recently, the Federal Circuit expanded upon the notion that a proper pre-filing investigation need not include reverse engineering or even the acquisition of a sample product.  In Intamin Ltd. v. Magnetar Technologies Corp., 483 F.3d. 1328, 82 USPQ2d 1545 (Fed. Cir. 2007), the Court of Appeals for the Federal Circuit found that a proper pre-filing investigation had been performed.  Intamin and Magnetar Technologies (Magnetar) both manufacture braking systems for amusement park rides, such as roller coasters. The braking systems at issue in the case involved an array of magnets arranged along the rails of the roller coaster.  When working in concert with a conducting rail, the magnets act as a brake on a passenger car riding along the rails.  Magnetar manufactured a magnetic braking system called “Soft Stop”.  In Magnetar’s Soft Stop system, a “Halbach array” of magnets is arranged along the rails.  Each magnet in the array has a polarity rotated 90 degrees from the previous magnet, and the magnets are arranged one after the other with nothing substantial in between. 

Prior to filing the infringement complaint, Intamin had reviewed publicly available documents, photographed the brakes, reviewed the findings with experts, and conducted a comparison of the claims.  However, Intamin did not cut open the brake casing to physically inspect the magnets or their alignment, which was critical to determining infringement.  In filing a motion of Rule 11 sanctions, Magnetar alleged that “Intamin’s pre-filing investigation was insufficient because it did not obtain and physically cut open the metal casing on the magnets in Magnetar’s brake system.”  483 F.3d. at 1552.  As such, Magnetar based its motion on the fact that “a visual inspection would not disclose the orientation of the magnets within the tubes”, Id., and therefore, Intamin’s failure to obtain a sample of the brakes was in violation of Rule 11.

The Federal Circuit noted that its case law does not require obtaining a sample in each instance.  Compliance with Rule 11 is not based solely on whether reverse engineering was conducted and a sample obtained, but is instead based upon a totality of the circumstances and what is reasonable under these circumstances.  The Federal Circuit held that patentees do not need to conduct a thorough investigation of the potentially infringing product, especially where, as in the instant case, such an investigation would present “unreasonable obstacles” (i.e., cutting open a metal case to examine the magnets inside.)

The Federal Circuit contrasted its decision in Judin v. United States, 110 F.3d 780, 42 USPQ2d 1300 (Fed. Cir. 1997), where the failure to obtain a sample was found to be sanctionable since this “did not create a blanket rule that a patentee must obtain and thoroughly deconstruct a sample of a defendant’s product to avoid violating Rule 11.”  483 F.3d. at 1552.  Instead, the facts in Judin showed that “the patentee could have easily obtained a sample of the accused device (a bar code scanner) for a nominal price from the post office.”  Id.  In sum, the Federal Circuit found that “the technology presented the patentee with unreasonable obstacles to any effort to obtain a sample of Magnetar’s amusement ride brake system, let alone the difficulty of opening the casing.”  Id.

Further, while Intamin might have been able to conduct testing without cutting the casing, the Federal Circuit noted that in its decision in Q-Pharma, no sanctions were needed to be imposed even though the patent owner could have easily resolved infringement by performing “a simple chemical test on a sample to determine its composition.”  Id.  As such, even though testing was not performed and the magnets were not inspected, Intamin properly conducted its independent claim construction using the evidence reasonably at hand: Intamin properly reviewed roller coasters having the Soft Stop system installed, examined publicly available materials on the Soft Stop system, photographed the brakes, and consulted with experts.  These efforts were enough to qualify as a good faith investigation given the unreasonable obstacles to a physical investigation.

Conclusion

While the Federal Circuit case law does not provide a bright line rule, the minimum requirement of pre-suit investigations would require at least an independent claim comparison with the product.  Where the product cannot be obtained or analysis would be unduly burdensome, an equivalent will suffice using a good faith analysis of the claims as compared to information available which is reasonable under the circumstances.  While findings are preferably found through inspection or reverse engineering of the allegedly infringing product or the equivalent thereof, the courts are mindful that these are not always reasonable under the circumstances.  Consequently, where no reverse engineering is possible or the inspection would be unreasonable, such as where the product owner refuses to allow the plaintiff access to the source code or where the sample cannot be readily and cost-effectively obtained, the plaintiff may be able to perform the infringement analysis using the best available materials (such as manuals or very specific product descriptions made by the software developer) and comply with Rule 11 because such equivalent analysis is reasonable under the circumstances.


[1] Partner, Stein, McEwen & Bui, LLP. The opinions expressed in this article do not represent the official positions of the author’s firm or former employers.

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