adequate pre-filing investigation. Thus, we immediately tum to the issue of
maintaining frivolous infringement arguments.

In our summary judgment ruling, we held that the Arquest Diapers did not
infringe claim 2 of the ‘824 patent because they lacked two elements of the claim: “the
first strip providing an additional absorbent barrier against leakage” and a “soft
substance presenting a soft surface along at least a portion of said inside of the diaper
waistband portion despite said plastic layer edge.” Tracy argued that the elastic
member of the Arquest Diapers satisfied both of these elements. Both arguments were
unjustified.

The elastic member is utterly nonabsorbent. Tracy’s insistence that it is capable
of providing an additional absorbent barrier against leakage was unjustified.

The elastic member does not present a soft surface for a baby’s skin or protect
a baby’s skin against a plastic layer edge in any manner because the elastic member
material is sandwiched between two other layers. Because it is sandwiched, it cannot
and does not contact the baby’s skin or cover any portion of a plastic layer edge that
would otherwise be exposed to the baby’s skin. Tracy’s argument as to this element
was unjustified.

In our summary judgment ruling, we held that the Arquest Pants did not infringe

claim 2 of the ‘824 patent because they lacked two elements of the claim: “a plastic

4.



sanctions for an abuse of discretion.”). Arquest’s basis for this motion is its claim that
counsel for Tracy failed to perform an adequate inquiry as to whether Arquest’s
products infringe prior to filing the counterclaim for infringement. After reviewing the
briefs and evidentiary support, we are unconvinced that sanctions are warranted.
35 U.S.C. § 285 ATTORNEY'S FEES

Arquest moves for attorney’s fees pursuant to 35 U.S.C, § 285, which states that,
with respect to patent cases, “[t]he court in exceptional cases may award reasonable
attorney fees to the prevailing party.” 35 U.S.C. § 285. An exceptional case may be
established by showing, for example: “inequitable conduct before the PTO; litigation
misconduct; vexatious, unjustified, and otherwise bad faith litigation; [or] a frivolous
suit or willful infringement.” Epcon Gas Sys. v. Bauer Compressors, 279 F.3d 1022,
1034 (Fed. Cir. 2002). A finding that a case is exceptional is a factual finding for the
court and must be supported by clear and convincing evidence. Hoffmann-La Roche
Inc. v. Invamed Inc., 213 F.3d 1359, 1365 (Fed. Cir. 2000), Arquest contends that this
case is exceptional because counsel for Tracy failed to perform an adequate
infringement investigation before filing Tracy’s counterclaim and because Tracy

maintained frivolous infringement arguments. As we stated above with respect to the

Rule 11 motion, we are unconvinced that counsel for Tracy did not perform an



layer having an edge at the edge of the diaper” and a “soft padding member being
distinct from all of said body-portion layer.” Tracy unjustifiedly argued that both
elements were present in the Arquest Pants.

The edge of the plastic layer in the Arquest Pants is clearly not at the edge of the
diaper—indeed it is approximately three-quarters of an inch from the edge of the diaper.
Tracy even acknowledged that the edge of the plastic layer in the Arquest Pants was
“not ‘at? the edge of the diaper but near the edge.” (Tracy’s SJ Opp. at 17.)
Nevertheless, she maintained her suit against Arquest under the doctrine of equivalents.
Tracy argued that the claim term “at” could be expanded to mean “near” under the
doctrine of equivalents. As explained in our previous holding, however, Tracy clearly
and unequivocally relinquished any coverage for an edge of the plastic layer not “at”
the edge of the diaper when she amended her claims and stated her reason for so doing.
Arquest, 2002 WL 31744658, *7, Tracy’s attempt to recapture patent protection which
she clearly yielded during prosecution was unjustified.

Tracy accused the outer body portion (or backsheet) layer of the Arquest Pants
of being the soft padding member. Claim 2 requires a “soft padding member being
distinct from all of said body-portion layer.” This clearly means that the soft-padding
member cannot be one of the body portion layers. Despite this straightforward claim

language, Tracy maintained that the outer body portion layer of the Arquest Pants

5.



Minute Order Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge Charles P. Kocoras Sitting Judge if Other
or Magistrate Judge . . than Assigned Judge
CASE NUMBER 02 C 1649 DATE 3/12/2003
CASE Arquest, Inc. vs. Rhonda Tracy
TITLE
{In the following box (a) indicate the party filing the motion, e.g., plaintif¥, defendant, 3rd purty plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
qd) im Filed motion of [ use listing in “Motion” box above.]
(2) oO Brief in support of motion due
(3) a Answer brief to motion duc. Reply to answer brief due
(4) Qa Ruling/Hearing on set for at
(3) Oo Status hearing[held/continued to] [set for/re-set for] on set for at
(6) d Pretrial conference[held/continucd to} (set for/re-set for] on setfor at
(a) Qo Trial[sct for/re-sct for] on at
(8) Oo [Bench/Jury trial] [Hearing] held/continued to at
(9) o This case is dismissed [with/without] prejudice and without costs[by/agrcement/pursuant to]
OFRCP4(m) OlLocal Rule 41.1 OFRCP41(a)(1) O FRCP41(a)(2).
qo if {Other docket entry] ENTER MEMORANDUM OPINION: We deny the motion (Doc 39-1) for
sanctions and grant the motion (Doc 40-1) for attomey’s fees.
ay @f [For further detail see order attached to the original minute order.]

‘No notices required, advised in open court.

No notices required. umber of notices

MAR 1 3 9nd

date dociered

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Notices mailed by judge's staff.

Notified counsel by telephone.

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provided the soft padding member. Even under the doctrine of equivalents, Tracy’s
argument was unjustified. See Warner Jenkinson Co. v. Hilton Davis Chem., 520 U.S.
17, 39 n.8 (1997) (“if a theory of equivalence would entirely vitiate a particular claim
element,” the theory is in applicable).
CONCLUSION
Based on the foregoing analysis, we deny the motion for sanctions and grant the

motion for attorney’s fees.

Charles P. Kocoras

Chief Judge
United States District Court

MAR 12 2003

Dated:



UNITED STATES DISTRICT COURT wy
NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION ,
ARQUEST, INC., )
Plaintiff, .
vs. 02 1649
RHONDA TRACY,
Defendant.

MEMORANDUM OPINION
CHARLES P. KOCORAS, Chief District Judge:

This matter comes before the court on Plaintiff Arquest, Inc.’s (“Arquest”)
motion for attorney’s fees pursuant to 35 U.S.C, § 285 and motion for sanctions
pursuant to Rule 11 of the Federal Rules of Civil Procedure. For the reasons set forth
below, we deny the motion for sanctions and grant the motion for attomey’s fees.

BACKGROUND

This lawsuit arises from a patent, U.S. Pat. No. 5,797,824 (the “824 patent”),
held by Rhonda Tracy. The ‘824 patent covers an improvement for disposable diapers.
Arquest sued Tracy for declaratory judgment that its diapers (the “Arquest Diapers”)
and training pants (the “Arquest Pants”) do not infringe the ‘824 patent and that the

*824 patent is invalid. Tracy filed a counterclaim in the action alleging infringement.

ss



Previously, we granted summary judgment that the Arquest Diapers and the Arquest
Pants do not infringe the ‘824 patent. Arquest, Inc. v. Tracy, 2002 WL 31744658
(N.D. Ill. Dec. 5, 2002). Subsequent to the summary judgment, Arquest filed the
present motions, which are based on Tracy’s filing and maintenance of her
counterclaim as well as certain arguments made in support of the counterclaim and
against summary judgment of non-infringement.
RULE 11 SANCTIONS

Arquest moves to sanction counsel for Tracy for violating Rule 1 1(b)(3) of the
Federal Rules of Civil Procedure by making allegations and other factual contentions
without evidentiary support. Rule 1 1(b)(3) states:

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,
Fep.R.CIv. P. 11(b)(3), The decision whether to grant or deny a motion for sanctions
is left to the discretion of this court. Brunt v. Service Employees Int'l Union, 284 F.3d

715, 721 (7th Cir. 2002) (“We review the district court's decision to impose Rule 11

2-