Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-23-01665/USCOURTS-ca13-23-01665-0/pdf.json

Parties Involved:
PS Products Inc.
Appellant
Panther Trading Co. Inc.
Appellee
Billy Pennington
Appellant

Document Text:

United States Court of Appeals 

for the Federal Circuit

______________________

PS PRODUCTS INC., BILLY PENNINGTON,

Plaintiffs-Appellants

v.

PANTHER TRADING CO. INC.,

Defendant-Appellee

______________________

2023-1665

______________________

Appeal from the United States District Court for the 

Eastern District of Arkansas in No. 4:22-cv-00473-JM, 

Judge James M. Moody, Jr.

______________________

Decided: December 6, 2024

______________________

CHRIS STEWART, Chris Stewart, PLLC, Little Rock, AR, 

argued for plaintiffs-appellants. 

 STEPHEN D. ZINDA, Cabello Hall Zinda PLLC, Houston, 

TX, argued for defendant-appellee. Also represented by J.

DAVID CABELLO. 

 ______________________

Before MOORE, Chief Judge, STOLL and CUNNINGHAM,

Circuit Judges.

MOORE, Chief Judge.

Case: 23-1665 Document: 53 Page: 1 Filed: 12/06/2024
2 PS PRODUCTS INC. v. PANTHER TRADING CO. INC.

PS Products, Inc. and Mr. Billy Pennington 

(collectively, PSP) appeal an order of the United States 

District Court for the Eastern District of Arkansas 

granting Panther Trading Company, Inc.’s (Panther) 

motion for sanctions. Because the district court did not 

apply an incorrect legal standard or abuse its discretion

when awarding sanctions under its inherent power, we 

affirm. Panther requests attorney fees and costs for this 

appeal, arguing PSP’s appeal is frivolous as argued. We 

decline to award attorney fees. 

BACKGROUND

PSP owns U.S. Design Patent No. D680,188, directed 

to a long-spiked electrode for a stun device. On May 23, 

2022, PSP filed the instant suit in the Eastern District of 

Arkansas, alleging Panther infringed the D’188 patent. 

J.A. 9–18;

1 see also J.A. 5. On June 24, 2022, Panther sent 

a Rule 11 letter and draft motion for Rule 11 sanctions to 

PSP’s attorney of record, Mr. Chris Stewart. The letter 

alleged: (1) the infringement allegations were facially 

frivolous because the patented design and accused product 

were plainly dissimilar, and (2) venue was statutorily 

improper and the suit should not have been filed in 

Arkansas. That same day, Panther filed a motion to 

dismiss pursuant to Federal Rule of Civil Procedure 

12(b)(6) for failure to state a claim and 12(b)(3) for 

improper venue. PSP did not respond to Panther’s Rule 11 

letter or motion to dismiss. 

After filing the motion to dismiss, Panther discovered 

a prior art marketing brochure from PSP depicting a design 

nearly identical to that claimed in the D’188 patent. On 

July 6, 2022, Panther sent another letter to Mr. Stewart,

1 “J.A.” refers to the appendix filed with PSP’s 

Opening Brief. 

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PS PRODUCTS INC. v. PANTHER TRADING CO. INC. 3

demanding the lawsuit be dismissed in light of the 

marketing brochure. PSP did not respond. 

On July 11, 2022, PSP moved to voluntarily dismiss the 

case with prejudice. J.A. 20. On July 26, 2022, Panther 

sent PSP a letter demanding reimbursement for attorney 

fees and expenses incurred defending against the frivolous 

lawsuit and warning that refusal would lead to Panther 

seeking sanctions to dissuade PSP from further frivolous 

filings. PSP did not respond. 

On August 1, 2022, the district court dismissed the case 

with prejudice. J.A. 2. The next day, Panther filed a 

motion for attorney fees and costs under 35 U.S.C. § 285 

and $100,000 in deterrence sanctions under the court’s 

inherent power. J.A. 22–23; see also J.A. 28. At a hearing 

on the motion, the district court deemed the case 

exceptional under § 285 and granted Panther’s motion for 

attorney fees and costs totaling $43,344.88. J.A. 1. PSP 

and Mr. Stewart were jointly and severally liable. J.A. 69 

¶ 7. 

The district court subsequently ordered PSP and Mr.

Stewart to jointly and severally pay $25,000 in deterrence 

sanctions to the court. J.A. 1; see also J.A. 3. PSP filed a 

motion for reconsideration of deterrence sanctions. J.A. 

62–67. The district court denied the motion. J.A. 7. PSP 

appeals. We have jurisdiction pursuant to 28 U.S.C. 

§ 1295(a)(1). 

DISCUSSION

PSP has not appealed the district court’s finding that 

this is an exceptional case or its decision to grant attorney 

fees and costs, and PSP does not dispute the amount 

awarded. Oral Arg. at 0:39–0:48, available at 

https://oralarguments.cafc.uscourts.gov/default.aspx?fl=23

-1665_10102024.mp3. PSP’s appeal is limited to a claim 

that the district court erred in awarding an additional 

$25,000 in sanctions under its inherent power. Id. PSP 

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4 PS PRODUCTS INC. v. PANTHER TRADING CO. INC.

argues the district court erred by awarding sanctions for 

several reasons. First, PSP argues the district court is 

without authority to award sanctions when it has already 

awarded attorney fees and costs. Appellants’ Br. 7–11. 

Second, PSP argues the district court applied the incorrect 

legal standard because the order did not state the sanctions 

were being imposed due to bad faith or fraudulent conduct. 

Oral Arg. at 3:22–3:37, 37:52–38:23. Finally, PSP argues 

the district court abused its discretion when it imposed 

deterrence sanctions under its inherent power. Appellants’

Br. 12–25. 

Panther requests attorney fees and costs for defending 

this appeal, alleging that PSP’s appeal is frivolous as 

argued. We decline to award attorney fees for the appeal. 

I.

“District courts have the inherent power to control 

litigation by imposing sanctions appropriate to rectify 

improper conduct by litigants.” Micron Tech., Inc. v. 

Rambus Inc., 645 F.3d 1311, 1326 (Fed. Cir. 2011) (internal 

citation and quotation marks omitted). Whether the 

district court imposed sanctions under the correct legal 

standard is a question of law we review de novo. See 

Highway Equip. Co. v. FECO, Ltd., 469 F.3d 1027, 1032 

(Fed. Cir. 2006). 

“When reviewing the imposition of sanctions under a 

district court’s inherent powers, we apply the law of the 

regional circuit in which the district court sits, here the 

Eighth Circuit.” Monsanto Co. v. E.I. Du Pont de Nemours 

& Co., 748 F.3d 1189, 1196 (Fed. Cir. 2014). Under Eighth 

Circuit law, a court may use its inherent power to sanction 

parties’ bad faith conduct during litigation. Schlafly v. 

Eagle F., 970 F.3d 924, 936–37 (8th Cir. 2020). The Eighth 

Circuit reviews a district court’s imposition of sanctions 

under its inherent powers for an abuse of discretion. 

Chrysler Corp. v. Carey, 186 F.3d 1016, 1019 (8th Cir. 

1999). This standard applies to a court’s “decision to 

Case: 23-1665 Document: 53 Page: 4 Filed: 12/06/2024
PS PRODUCTS INC. v. PANTHER TRADING CO. INC. 5

impose a sanction, the nature of the sanction imposed, and 

the factual basis for the court’s decision.” Id. A district 

court abuses its discretion when its decision rests on 

clearly erroneous factual findings or legal conclusions. 

Miller v. Honkamp Krueger Fin. Servs., Inc., 9 F.4th 1011, 

1013–14 (8th Cir. 2021). 

A.

PSP argues the district court legally erred by imposing 

deterrence sanctions under its inherent power when it had 

already awarded attorney fees and costs under 35 U.S.C. 

§ 285. Appellants’ Br. 7–11. It is well-settled that § 285

does not preclude a district court from separately imposing 

sanctions or fees under another authority. See, e.g., EonNet LP v. Flagstar Bancorp, 653 F.3d 1314, 1317 (Fed. Cir. 

2011) (affirming district court award of attorney fees and 

costs under § 285 and sanctions for Rule 11 violation);

Takeda Chem. Indus., Ltd. v. Mylan Lab’ys, Inc., 549 F.3d 

1381, 1391 (Fed. Cir. 2008) (affirming district court award 

of attorney fees and costs under § 285 and expert fees 

under the court’s inherent power). We see no reason to 

treat sanctions under the court’s inherent power differently 

from sanctions under Rule 11 or expert fees under the 

court’s inherent power. We hold the district court can 

impose sanctions under its inherent power in addition to 

awarding attorney fees and costs under § 285. 

B.

We cannot conclude that the district court erred when 

it imposed sanctions due to PSP’s bad faith conduct, which 

it inferred “[b]ased upon the lack of legal merit of this 

action and [PSP’s] history of repeatedly filing meritless 

lawsuits in this district.” J.A. 1. Whether PSP acted in bad 

faith is a factual determination that the Eighth Circuit 

reviews for clear error. Black Hills Inst. of Geological 

Rsch., Inc. v. Williams, 88 F.3d 614, 616 (8th Cir. 1996). 

The facts of this case support the district court’s award of 

sanctions. 

Case: 23-1665 Document: 53 Page: 5 Filed: 12/06/2024
6 PS PRODUCTS INC. v. PANTHER TRADING CO. INC.

First, PSP’s complaint did not state a plausible claim

for design patent infringement. To establish design patent 

infringement, a plaintiff must show an “ordinary observer”

would be deceived into believing the accused product is the 

same as the patented design. Crocs, Inc. v. Int’l Trade 

Comm’n, 598 F.3d 1294, 1303 (Fed. Cir. 2010). In some 

cases, however, the accused product and the patented

design are “plainly dissimilar” such that it will be clear to 

an ordinary observer the two designs are not “substantially 

the same.” Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 

665, 678 (Fed. Cir. 2008) (en banc). 

J.A. 38. 

No ordinary observer would be deceived into believing 

Panther’s accused product is the same as the D’188 

patented design, see above. No reasonable person could 

conclude that the facts of this case create a cause of action 

for design patent infringement. The accused product and 

patented design are so plainly dissimilar that it appears,

as Panther argues, fairly characterized as a nuisance suit. 

Second, PSP’s complaint cited the general venue 

statute, 28 U.S.C. § 1391, rather than the patent-specific 

venue statute, 28 U.S.C. § 1400. J.A. 9 ¶ 2 (“Pursuant to 

28 U.S.C. § 1391, venue in this suit lies in the Eastern 

District of Arkansas . . . .”). We have repeatedly warned to

“be mindful of the specific and unambiguous nature of 

venue in applying the statute and be careful not to conflate 

showings that may be sufficient for other purposes, e.g., 

personal jurisdiction or the general venue statute, with the 

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PS PRODUCTS INC. v. PANTHER TRADING CO. INC. 7

necessary showing to establish proper venue in patent 

cases.” Valeant Pharms. N. Am. LLC v. Mylan Pharms. 

Inc., 978 F.3d 1374, 1380 (Fed. Cir. 2020) (cleaned up); see 

also In re Cray Inc., 871 F.3d 1355, 1361 (Fed. Cir. 2017)

(explaining “the regular and established place of business 

standard [under § 1400(b)] requires more than the 

minimum contacts necessary for establishing personal 

jurisdiction or for satisfying the doing business standard

[under § 1391(c)]”). 

Under 28 U.S.C. § 1400(b), venue is proper “where the 

defendant resides, or where the defendant has committed 

acts of infringement and has a regular and established 

place of business.” PSP does not dispute that Panther 

neither resides in nor has a regular and established place 

of business in Arkansas. Panther resides in Maryland 

because it is incorporated there. J.A. 30; TC Heartland 

LLC v. Kraft Foods Grp. Brands LLC, 581 U.S. 258, 262

(2017) (“We therefore hold that a domestic corporation 

‘resides’ only in its State of incorporation for purposes of 

the patent venue statute.”). Panther does not have a 

regular and established place of business in Arkansas 

because it has no physical presence there. J.A. 30; Cray, 

871 F.3d at 1360 (explaining § 1400(b) requires, inter alia, 

“a physical place in the district”). Thus, venue is not proper 

in the Eastern District of Arkansas under the correct venue 

statute. 

In addition to the serious flaws in the filing of this case, 

since 2010, PSP has filed twenty-five patent infringement 

lawsuits in the Eastern District of Arkansas. J.A. 31. PSP 

dismissed thirteen of those suits before, or soon after,

answers were filed. Id. at n.3. PSP voluntarily dismissed 

three of those suits after motions to dismiss were filed by 

defendants but before the district court ruled on the 

motions. Id. at n.4. In two instances where the district 

court adjudicated the motions to dismiss, PSP’s claims 

were either dismissed for failure to state a claim or lack of 

personal jurisdiction. Id. at n.5. In each of the twenty-five

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8 PS PRODUCTS INC. v. PANTHER TRADING CO. INC.

lawsuits filed, PSP incorrectly asserted venue based on the 

general venue statute, 28 U.S.C. § 1391, rather than the 

patent-specific venue statute, 28 U.S.C. § 1400. Oral Arg. 

at 9:19–9:53 (PSP’s counsel admitting he used the same 

complaint for each of the lawsuits and the complaint did 

not cite the correct venue statute). 

While the district court did not individually analyze 

each of the twenty-five lawsuits, it was reasonable given 

these facts for the district court to infer PSP’s many other 

lawsuits mirroring this suit’s procedural posture were 

similarly meritless. Under these circumstances, the 

district court did not clearly err when it inferred bad faith 

from PSP’s history of filing meritless lawsuits. 

C.

PSP argues the district court abused its discretion

when it imposed sanctions under its inherent power. 

Appellants’ Br. 12–25. We do not agree. 

PSP argues the quantity of lawsuits filed does not 

warrant sanctions. Appellants’ Br. 20–22 (citing SFA Sys., 

LLC v. Newegg Inc., 793 F.3d 1344, 1349–50 (Fed. Cir. 

2015)). PSP’s reliance on SFA Systems is misplaced. In 

SFA Systems, we affirmed the district court’s judgment 

denying fees and holding the case was not exceptional 

under § 285, where the sole allegation was the patentee’s 

history of filing many lawsuits and settling for low 

amounts. 793 F.3d at 1351. Here, the determination of 

exceptionality is not challenged on appeal. Oral Arg. at 

0:39–0:48. More importantly, the sanction was not solely 

based on PSP’s history of filing many lawsuits but on PSP’s 

history of filing meritless lawsuits. J.A. 1. There is, for 

example, no dispute that PSP filed all twenty-five lawsuits 

in the Eastern District of Arkansas pursuant to the wrong 

venue statute and, at least in this suit, venue would be 

improper under the correct venue statute. Oral Arg. at 

8:25–9:02 (PSP’s counsel admitting venue was alleged due 

to defendants “selling into the district” under the general 

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PS PRODUCTS INC. v. PANTHER TRADING CO. INC. 9

venue statute because “that is the only way we could have 

brought [those lawsuits]”). 

PSP further argues its conduct must be “sufficiently 

beyond ‘exceptional’” to justify sanctions under the court’s 

inherent power. Appellants’ Br. 23 (quoting Amsted Indus. 

Inc. v. Buckeye Steel Castings Co., 23 F.3d 374, 379 (Fed. 

Cir. 1994)). Amsted is inapposite because it involved an 

award of expert witness fees beyond the limits of 28 U.S.C. 

§ 1821(b), not a sanction paid directly to the court. 23 F.3d

at 379. 

PSP does not dispute the district court could have 

imposed the sanction under Rule 11. FED. R. CIV. P. 11(c)(4) 

(“The sanction may include . . . an order to pay a penalty 

into court . . . .”). However, Rule 11 sanctions were 

unavailable because PSP dismissed the case before 

Panther could file a Rule 11 motion.2 J.A. 32–33. Given 

there were no other mechanisms to sanction PSP’s bad 

faith conduct except the court’s inherent power, the district 

court acted within its discretion by relying on its inherent 

power to sanction conduct that would typically fall under 

Rule 11. “[W]hen there is bad faith conduct in the course 

of litigation that could be adequately sanctioned under the 

[Federal Rules of Civil Procedure], the court ordinarily 

should rely on the Rules rather than the inherent power. 

But if in the informed discretion of the court, neither the 

2 Federal Rule of Civil Procedure 11(c)(2) requires a 

motion for sanctions based on improper filings be served on 

the offending party but not filed with the court for 21 days, 

allowing the party to correct or withdraw the offending 

document before any sanctions are imposed. Thus, 

Panther could not have filed its Rule 11 motion until 21 

days after serving a draft of the motion on PSP. Panther 

served its draft motion on June 24, 2022, making the 21-

day deadline July 15, but PSP dismissed the case with 

prejudice on July 11. J.A. 20. 

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10 PS PRODUCTS INC. v. PANTHER TRADING CO. INC.

statute nor the Rules are up to the task, the court may 

safely rely on its inherent power.” Chambers v. NASCO, 

Inc., 501 U.S. 32, 50 (1991). 

The district court did not abuse its discretion by 

imposing sanctions under its inherent power. Panther 

requested $100,000 in sanctions, but the district court 

found “$25,000.00 is sufficient to deter the repeated filing 

of meritless lawsuits in this district.” J.A. 1. 

II.

Panther requests attorney fees and costs for defending 

this appeal because PSP’s appeal is frivolous as argued.3 

Appellee’s Br. 42–46. Although it is a close call, this appeal 

is not frivolous. 

We have discretion over whether to “award just 

damages and single or double costs to the appellee.” FED.

R. APP. P. 38. As we have explained: 

[T]here are two senses in which an appeal can be 

held frivolous: First, where an appeal is taken in a 

case in which “the judgment by the tribunal below 

was so plainly correct and the legal authority 

contrary to appellant’s position so clear that there 

really is no appealable issue,” the appeal is held to 

be “frivolous as filed.” Second, even in cases in 

which genuinely appealable issues may exist, so 

that the taking of an appeal is not frivolous, the 

appellant’s misconduct in arguing the appeal may 

be such as to justify holding the appeal to be 

“frivolous as argued.” 

Romala Corp. v. United States, 927 F.2d 1219, 1222 (Fed. 

Cir. 1991) (internal citations omitted). 

3 Panther does not argue the appeal is frivolous as 

filed. Oral Arg. at 31:31–31:41. 

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PS PRODUCTS INC. v. PANTHER TRADING CO. INC. 11

While this appeal, and the arguments made herein, are 

entirely without merit, they are not quite frivolous. It was 

not, for example, frivolous to argue, as PSP did, that the 

district court could not award deterrence sanctions under 

its inherent power in addition to attorney fees pursuant to 

§ 285. While the argument is without merit, it has not 

previously been decided by this court. 

Panther presents three reasons why PSP’s conduct on 

appeal is sanctionable: PSP (1) misrepresented the record, 

(2) continued to misrepresent the law on patent venue and 

argue its infringement claims were reasonable, and (3) 

ignored Federal Rule of Appellate Procedure 30. Appellee’s 

Br. 43–45. 

First, PSP does not misrepresent the record by 

claiming Panther moved for sanctions under § 285 when 

Panther sought sanctions under the district court’s 

inherent power. PSP is not arguing that Panther moved 

for sanctions under § 285; rather, PSP is arguing that the 

district court could not issue deterrence sanctions because 

§ 285 is the only authorized remedy and does not allow for 

additional sanctions. Appellants’ Reply Br. 6–9. 

Second, PSP does continue to make the same meritless 

arguments on infringement and venue that it raised before 

the district court. See, e.g., Appellants’ Br. 18 (“[T]here 

exist legal claims for infringement for a fact-finder 

pursuant to an ordinary reasonable observer. Panther had 

placed in the stream of commerce on its website a product 

that infringed on the Plaintiff’s spiked electrode patent.” 

(internal citations omitted)). But merely repeating 

meritless arguments, without more, does not make an 

appeal frivolous as argued. Romala, 927 F.2d at 1224 (“As 

we have on other occasions noted, a meritless appeal is by 

no means necessarily a frivolous one . . . .”).

Finally, PSP did not consult with Panther and include 

Panther’s designated parts of the record in the appendix, 

in violation of Federal Rule of Appellate Procedure 30. 

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12 PS PRODUCTS INC. v. PANTHER TRADING CO. INC.

While PSP behaved poorly, this is not the type of conduct 

that would make the appeal frivolous as argued. Westech 

Aerosol Corp. v. 3M Co., 927 F.3d 1378, 1383 (Fed. Cir. 

2019) (“For example, an appeal may be frivolous as argued 

when the appellant distorts the record, by disregarding or 

misrepresenting the clear authority against its position, 

and by attempting to draw illogical deductions from the 

facts and the law.” (cleaned up)). Although a close case on 

the frivolous as argued standard, we decline to impose 

attorney fees. 

CONCLUSION

We have considered PSP’s remaining arguments and 

find them unpersuasive. For the reasons given above, we 

affirm the district court’s order granting deterrence 

sanctions. 

AFFIRMED

COSTS

Costs to Panther. 

Case: 23-1665 Document: 53 Page: 12 Filed: 12/06/2024