contributory infringement.” (Motion for Sanctions, at 7 8).
Further, Glenayre argues that its payment of the six percent
royalty rate “assessed in the Remittitur Order grants it the
unrestricted right to sell to customers, permit customers to use
the products, and exhausts Jackson’s patent rights. Glenayre’s
customers do not directly infringe, since Glenayre has paid the
maximum royalty as reflected in the Remittitur Order.” Finally,
Glenayre contends that at the time Jackson filed the Set Trial
Motion, it was not reasonable for Jackson's counsel to assert that
Glenayre had remaining liability relating to the ‘900 Patent.
Jackson contends that due to the bifurcated trial, only the
issues of liability and damages for Glenayre’s direct infringement
have been resolved. The jury instructions and verdict, Jackson
contends, clearly indicate that the damages awarded were not
intended to compensate Jackson for Glenayre’s contributory
infringement/inducement as such issues were not presented to the
jury. Further, Jackson contends that “no trier of fact has ever
been presented the opportunity to analyze the full profits realized
by users of Jackson’s Patent in the Glenayre supply chain.” (Orum
and Roth’s Response, at 97 2). Jackson further argues that it was
attempting to comply with the Court’s earlier rulings in setting
the issues for trial that the Court specifically contemplated and
stayed pending resolution of the direct infringement matter.

Jackson also notes that Glenayre at no point submitted an order to


Glenayre’s infringement, despite the fact that Jackson purportedly
had already been fully compensated in the earlier judgment.
II. LEGAL STANDARD

Glenayre alleges that Jackson has violated Rule 11(b) (1), (3),
and (4) of the Federal Rules of Civil Procedure. erp. R. Civ. P.
11. Rule 11 seeks to ensure that documents submitted by counsel to
the Court “are well grounded in fact and in law or present a good
faith argument for the extension, modification, or reversal of
existing law.” Pacific Dunlop Holdings, Inc. v. Barosh, 22 F.3d
113, 118 (7th Cir. 1994). Under Rule 11, motions must not be made
for any improper purpose and allegations and factual contentions
must have evidentiary support. See Fsp. R. Civ. Pro. 11(b) (1) (3) (4).
The court evaluates whether “a party’s conduct was imposed for an
improper purpose by an objective standard.” Pacific Dunlop
Holdings, Inc., 22 F.3d at 118. The Seventh Circuit further
instructs that Rule 11 “sanctions are to be imposed sparingly, as
they can ‘have significant impact beyond the merits of the
individual case’ and can affect the reputation and creativity of
counsel.” Hartmarx Corp. v. Abboud, 326 F.3d 862, 867 (7th Cir.
2003) (quoting Pacific Dunlop Holdings, Inc. 22 F.3d at 118)).

III. DISCUSSION

Glenayre contends that “Glenayre’s payment of the judgment

against it has the effect of extinguishing Jackson’s patent rights,

and precluding any liability for inducement to infringe or


withdraw the remaining claims and there was no order dismissing the
claims when Jackson filed the Set Trial Motion. In the Set Trial
Motion, Jackson advocates for a one-day trial with limited
discovery at the earliest possible date.

As noted above, Rule 11 sanctions are to be used very
sparingly because of the potential chilling effect such sanctions
can have on the extension of good faith arguments and the potential
for reputational harm. Here, Court’s previous orders carried some
ambiguity as to the continuing viability of Jackson's
counterclaims. For instance, the Court expressly stayed and
enjoined any discovery and other proceedings relating to Glenayre’s
contributory infringement or inducement of the ‘900 Patent. See
9/27/02 Minute Order; 10/9/02 Motion to Clarify. Further, even in
the amended judgment, the Court by its own language contemplates
the possibility of additional claims. That said, the Court has
also made clear in oral comments and by previous rulings from the
bench that no counterclaims survive.

Accordingly, there is sufficient good faith basis for
Jackson’s Set Trial Motion. Or, put another way, even if ill-
advised, the Set Trial Motion is not so devoid of merit or aimed at
improper purpose as to warrant the imposition of Rule 11 sanctions.
Because it was not objectively unreasonable for Jackson to file the

Set Trial Motion, the Court denies Glenayre’s Motion.



Minute Order Form (06/97)

United States District Court, Northern District of Ilinois

Nom MagisrateJudge | —__atty D. Leinenweber “Thaw Assigned Judge

CASE NUMBER 02 C 256 DATE 9/8/2004
CASE Glenayre Electronics Inc. vs. Phillip Jackson
TITLE

[in the following box (a) indicate the party filing the motion, e.g,, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

of the motion being presented.]

qa)

MOTION:

DOCKET ENTRY:

ql) im Filed motion of [ use listing in “Motion” box above.]

(2) Oo Brief in support of motion due

(3) a Answer briefto motion due___. Reply to answer briefdue___.

(4) o Ruling/Hearingon____set for at

(5) Oo Status hearing[held/continued to] [set for/re-set for]on__—sset for at

(6) Oo Pretrial conference[held/continued to] [set for/re-set for]on____—ssetfor at.

(7) Oo Trial{set for/re-set for]on__at

(8) Oo (Bench/Jury trial] [Hearing] held/continued to at

(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) CLocal Rule 41.1 OFRCP41(a)(1) O FRCP41(a)(2).

qo) so {Other docket entry] ENTER MEMORANDUM OPINION AND ORDER: Glenayre’s Motion for

Sanctions is denied.

a {For further detail see order attached to the original minute order.]

No notices required, advised in open court,

ices required.
No notices required. number of notices

Notices mailed by judge's staff.
Notified counsel by telephone.
Docketing to mail notices,

Mail AQ 450 form.

docketing dofuty initials
Copy to judge/magistrate judge.

date mailed notice

courtroom - se Rng
WAP deputy’s GG 2h WY G- d3S nO0e
initials

Date/time recejvediin: : 7
central Clerk’s.Offices ! 3 mailing deputy initials



Iv. CONCLUSION

For the foregoing reasons, Glenayre’s Motion for Sanctions is

DENIED.

IT IS SO ORDERED.

Harry D. “Leinenweber, Judge
United States District Court

Dated: 7 £. 0


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION F | L E D

GLENAYRE ELECTRONICS, INC., SEP 8 2004
: 5 JUDGE FARR’
Plaintiff, YD. REIN
4a. DISTRICT COURT JURE R
v

PHILLIP JACKSON,

Defendant.
Case No. 02 C 0256

PHILIP JACKSON, an individual,

and PMJ FAMILY LIMITED Hon. Harry D. Leinenweber
PARTNERSHIP,

Counterclaim-Plaintiffs,

v. DOCKETED

GLENAYRE ELECTRONICS, INC., SEP 0 $ 2004

Counterclaim-Defendant,

MEMORANDUM OPINION AND ORDER

Before the Court is the motion of Glenayre Electronics, Inc.
(hereinafter, “Glenayre”) for sanctions pursuant to Rule 11 of the
Federal Rules of Civil Procedure (“Rule 11”) against Philip Jackson
and PMJ Family Partnership (hereinafter “Jackson”), and all counsel
who have appeared on behalf of Jackson (the “Motion”). For the
following reasons, the Motion is denied.

I. INTRODUCTION

Glenayre filed the instant action seeking a declaratory

judgement that its products do not infringe any claim of U.S.

Jo4



Patent No. 4,596,900 (the “‘900 Patent”) held by Jackson. Jackson
filed a counterclaim against Glenayre for contributory infringement
or inducement to infringe the ‘900 Patent, and against some of
Jackson’s named and unnamed customers for direct infringement of
Jackson’s ‘900 Patent. In September 2002, the Court stayed and
enjoined Jackson’s counterclaim against Glenayre for contributory
infringement or inducement and against its customers for direct
infringement pending resolution and final judgment in Glenayre’s
declaratory judgment suit. Subsequently, Jackson amended its
counterclaim to include a claim for direct infringement against
Glenayre. The jury returned a $12 million verdict for Jackson on
the direct infringement claim. The Court entered a remittitur
reducing the award and entered a final judgment in the amount of
$2,929,674.41. Neither party contests that Glenayre has satisfied
the judgment in full.

After voluntarily dismissing its infringement claims against
Glenayre’s customers, Jackson filed a Motion to Set Trial on the
remaining issues of Glenayre’s contributory infringement and
inducement claims, as well as any resulting damages from such
infringement (the “Set Trial Motion”).

In response to Jackson’s Set Trial Motion, Glenayre filed the
present Motion arguing that Jackson violated Rule 11 by continuing

to prosecute its counterclaims relating to further liability for