Warning Signs Ignored: Federal Circuit Vacates Denial of Rule 11 Sanctions and Attorneys’ Fees

In Epic Tech, LLC v. Pen-Tech Associates, Inc., 2025-1624 (Fed. Cir. Sept. 30, 2026), the Federal Circuit vacated and remanded a district court order denying Rule 11 sanctions and attorneys’ fees for providing insufficient detail to permit meaningful review.

Epic Tech sued Pen-Tech for infringement of its ’317 patent directed to electronic sweepstakes, which had issued before the Supreme Court’s decision in Alice Corp. v. CLS Bank. The district court granted Pen-Tech’s motion for summary judgment of invalidity of the ’317 patent, which relied on a prior Fusion Skill decision finding similar claims of a related ’315 patent invalid under Alice. The district court, however, denied Pen-Tech’s later motion for Rule 11 sanctions and attorneys’ fees, which was premised on the theory that Epic Tech was aware the asserted claims were likely invalid due to (1) the Alice decision, (2) the USPTO’s subsequent rejections of claims for three related applications , and (3) the invalidity ruling in Fusion Skill. 

On Appeal, the Federal Circuit held that the district court abused its discretion by failing to address whether Alice and other events served as notice of invalidity. Regarding the related prosecution, the district court had addressed only whether the relevant office actions amounted to claim-limiting prosecution, not whether they provided notice of invalidity. And the district court’s reasoning that “the issues were not the exact same” in Fusion Skill likewise did not address whether Epic Tech was nonetheless on notice of validity concerns. The Federal Circuit thus vacated and remanded for further analysis.