Seoul Viosys Co., Ltd. v. P3 International Corporation

Filing 229

MEMORANDUM OPINION AND ORDER. P3 International's motion for Rule 11 Sanctions (Dkt. No. 209) is DENIED. SO ORDERED. re: 209 MOTION for Sanctions pursuant to Rule 11 filed by P3 International Corporation. (Signed by Judge Alison J. Nathan on 11/19/2020) (rjm)

Case 1:16-cv-06276-AJN-SN Document 229 Filed 11/19/20 Page 1 of 4

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
11/19/2020
Seoul Viosys Co., Ltd.,
Plaintiff,
16-cv-6276 (AJN)
–v–
P3 International Corporation,

MEMORANDUM OPINION &
ORDER

Defendant.

ALISON J. NATHAN, District Judge:
Defendant P3 International moves for sanctions under Federal Rule of Civil Procedure
11, contending that Plaintiff Seoul Viosys’s motion for reconsideration (Dkt. No. 167) was
frivolous and was filed for improper purposes. For the reasons that follow, the Court denies the
motion.
I.

Background
The parties are familiar with the facts of this case and so the Court will not repeat them

again at length. In a memorandum opinion and order dated September 30, 2018, the Court found
that Seoul Viosys’s ’207 patent was invalid under the on-sale bar. Dkt. No. 164, at 14. Seoul
Viosys moved for reconsideration, which the Court denied by opinion and order dated August
16, 2019. Dkt. No. 208. Apart from arguments considered and rejected in the Court’s
September 2018 order, Seoul Viosys contended only that the Court had improperly considered its
damages arguments in concluding that the allegations in its complaint established anticipation of
the ’207 patent. The Court acknowledged Seoul Viosys’s apparent misunderstanding of the
Court’s September 2018 order as relying on its damages allegation. Id. at 5. The Court clarified

Case 1:16-cv-06276-AJN-SN Document 229 Filed 11/19/20 Page 2 of 4

that it discussed the damages allegations only for context and that its finding rested on the
infringement allegations. Id. The Court entered judgment and the Federal Circuit affirmed
without opinion. See Seoul Viosys Co. v. P3 Int’l Corp., 810 F. App’x 903 (Fed. Cir. 2020).
II.

Discussion
Federal Rule of Civil Procedure 11 allows a district court to impose sanctions when a

party presents a pleading, motion, or other paper to the court for an improper purpose or that is
not supported by law or fact. “As [the Second Circuit] ha[s] repeatedly held, ‘Rule 11 is targeted
at situations where it is patently clear that a claim has absolutely no chance of success under the
existing precedents, and where no reasonable argument can be advanced to extend, modify or
reverse the law as it stands.’” Rodick v. City of Schenectady, 1 F.3d 1341, 1350 (2d Cir. 1993)
(some internal quotation marks omitted) (quoting Associated Indem. Corp. v. Fairchild Indus.,
961 F.2d 32, 34 (2d Cir. 1992) (quoting Stern v. Leucadia Nat’l Corp., 844 F.2d 997, 1005 (2d
Cir. 1988))). “When divining the point at which an argument turns from merely losing to losing
and sanctionable, [the Second Circuit] ha[s] instructed district courts to resolve all doubts in
favor of the signer.” Id. (internal quotation marks and citations omitted). “The imposition of
Rule 11 sanctions is discretionary and should be reserved for extreme cases . . . .” Sorenson v.
Wolfson, 170 F. Supp. 3d 622, 626 (S.D.N.Y. 2016), aff’d, 683 F. App’x 33 (2d Cir. 2017).
P3 International points to the Federal Circuit’s opinion in Raylon LLC v. Complus Data
Innovations, Inc., 700 F.3d 1361 (Fed. Cir. 2012), in which the Federal Circuit held that a district
court abused its discretion in holding that a patent plaintiff’s claim construction argument was
not frivolous. Raylon arose from a district court within the Fifth Circuit, and so the Federal
Circuit’s holding on Rule 11 sanctions—applying Fifth Circuit law—is not binding on this
Court. The Second Circuit has repeatedly emphasized that Rule 11 sanctions are appropriate in

2

Case 1:16-cv-06276-AJN-SN Document 229 Filed 11/19/20 Page 3 of 4

only the most egregious cases. See, e.g., Rodick, 1 F.3d at 1350; Stern, 844 F.2d at 1005. Nor
would applying Raylon get P3 International the result it seeks. The Federal Circuit there held
that the district court abused its discretion because it applied the wrong legal standard under Fifth
Circuit law—that is, it determined frivolousness based on a subjective, rather than objective,
standard. Raylon, 700 F.3d at 1367–68. But the court did not hold that the district court was
required to award sanctions. To the contrary, it remanded to the district court to determine
whether a sanctions award was appropriate. See id. at 1370 (“Determining what sanctions, if
any, to impose is initially a matter within the discretion of the district court.”).
The Court finds that Seoul Viosys’s motion for reconsideration was not frivolous. To be
sure, its arguments were weak, as are many of the (non-sanctionable) arguments presented to this
Court. But the Court recognized that it referenced Seoul Viosys’s damages allegations in its
September 2018 order, and that Seoul Viosys apparently misunderstood that those references
were not necessary to the Court’s reasoning. Nor does P3 International provide any evidence
that Seoul Viosys’s motion was filed for an improper purpose apart from the bare allegations in
the first paragraph of its brief.
Even assuming a Rule 11 violation here, the Court would decline to impose monetary
sanctions. Rule 11 affords district courts “broad discretion” to impose sanctions (including
nonmonetary sanctions) or to decline to do so. Universitas Educ., LLC v. Nova Grp., Inc., 784
F.3d 99, 103 (2d Cir. 2015); see Fed. R. Civ. P. 11(c)(1) (“the court may impose an appropriate
sanction” (emphasis added)). The Court finds that a monetary sanction is unnecessary to deter
unsupported arguments in a motion for reconsideration in circumstances like these, that Seoul
Viosys’s litigation conduct is not particularly culpable, and that the burden its motion for
reconsideration imposed on P3 International and the Court was minimal.

3

Case 1:16-cv-06276-AJN-SN Document 229 Filed 11/19/20 Page 4 of 4

Conclusion
P3 International’s motion for Rule 11 Sanctions (Dkt. No. 209) is DENIED.

SO ORDERED.

Dated: November 19, 2020
New York, New York

__________________________________
ALISON J. NATHAN
United States District Judge

4