Court Opinion

ID: 8408396
Source: CourtListenerOpinion
Date Created: 2022-11-02 16:42:52.82897+00
Date Added: 2024-06-11T16:46:42.323272
License: Public Domain

PAULINE NEWMAN, Circuit Judge,
dissenting.
It is now clear that Phonometries and its counsel must recognize that the infringement action cannot succeed against a hotel that does not provide real-time display of cumulative telephone charges to the user. However, this critical fact was not manifest until after this court’s unpublished decision in Phonometrics, Inc. v. Choice Hotels Int’l, Inc., 21 Fed.Appx. 910, 2001 WL 1217219 (Fed.Cir.2001). Choice Hotels is a nonprecedential decision and, although it binds the parties, there is a leap from that uncitable ruling to the award of Rule 11 sanctions for declining to withdraw other litigation against other parties whose infringement status was still being explored.
My colleagues on this panel rely on earlier decisions raising different, albeit related, issues of infringement, specifically, Intellicall, Inc. v. Phonometries, Inc., 952 F.2d 1384 (Fed.Cir.1992), and Phonometrics, Inc. v. Northern Telecom, Inc., 133 F.3d 1459 (Fed.Cir.1998). In order to rely on these decisions to support today’s sanctions, they have been reinterpreted to have a meaning they did not have when they were decided. Thus the majority opinion states that “in Intellieall, we affirmed a grant of summary judgment of nonin-fringement of the '463 patent, holding that the term ‘digital display’ does not include machine-readable devices.” Maj. op. at 3-4. However, in Northern Telecom this court restricted that interpretation to the Intellieall facts:
[T]he limitation “digital display” does not include machine readable devices, or information given to a computer for later access. Any construction of other limitations in claim 1, including any construction of those limitations at issue here, that we or the district court made in Intellieall was merely dictum, ...
133 F.3d at 1464 (citation omitted). Thus in 1998 this court refused to give Intelli-call the scope that the panel majority now gives it to support a punitive award made a decade later.
In turn, Northern Telecom was limited to equipment manufacturers, as the district court recognized when it stated that: “At that point in the litigation, [Phonome-trics’] argument was not completely baseless because there was no precedent from the Federal Circuit requiring such display to the caller.” Order of April 12, 2002.
Not until the nonprecedential decision in Choice Hotels did this court present an opinion on the merits of the question of infringement by hotels based on the nature *1368of the display to the user. The Rule 11 sanctions were not requested until Phono-metrics thereafter chose to continue this action against these defendants, counsel telling the district court that the Federal Circuit decision was “mistaken.” Perhaps the fact that we did not give the Choice Hotels decision precedential force, despite the extensive ongoing litigation, gave hope to Phonometrics that we were uncertain of the broad applicability of that ruling. Rule 11 is a chilling punitive action, and is not properly based on positions that were not known to be false or irresponsible when they were taken.
The panel majority nonetheless relies on Intellicall and Northern Telecom, decisions that the district court recognized as not deciding the issue of hotel room displays. That Choice Hotels cited Northern Telecom “four times,” as the majority opinion stresses, does not endow Northern Telecom with sanction-generating prescience as to future decisions, particularly when Northern Telecom itself disposed of a similar assertion for Intellicall as “merely dictum.” 133 F.3d at 1464. In addition, this court continually overturned the district court’s attempts to dispose of the hotel cases under Rule 12(b)(6). See, e.g., Phonometrics, Inc. v. ITT Sheraton Corp., 2000 WL 286624 (Fed.Cir. Mar.16, 2000) (unpublished, non-precedential); Phono-metrics, Inc. v. Hospitality Franchise Sys., Inc., 203 F.3d 790 (Fed.Cir.2000). Phonometrics’ counsel’s optimism that this court would distinguish Northern Telecom, just as Northern Telecom distinguished Intellicall, was not so unreasonable as to warrant Rule 11 sanctions. It was not a violation of Rule 11 to continue to press the client’s cause until the Federal Circuit produced a precedential opinion on the merits of the hotel issues.
In support of the Rule 11 punishment here imposed, the majority opinion relies on unpublished decisions, designated by the court as non-precedential and non-cita-ble. That status is not overcome by listing a Westlaw page or an unofficial Appendix. These decisions are not grounds of stare decisis, do not evidence bad faith, and do not import any of the demanding criteria of Rule 11. From the court’s contrary holding, I respectfully dissent.