Filed: Aug. 13, 2020
Latest Update: Aug. 13, 2020
Summary: Case: 19-1952 Document: 137 Page: 1 Filed: 08/13/2020 NOTE: This disposition is nonprecedential. United States Court of Appeals for the Federal Circuit _ NAZIR KHAN, IFTIKHAR KHAN, Plaintiffs-Appellants v. HEMOSPHERE INC., ET AL., Defendants-Appellees MERIT MEDICAL SYSTEMS INC., Defendant-Cross-Appellant HOSPITALS AND DOCTORS IMPLANTING UNPATENTED HERO GRAFT TO DOCTORS, ET AL., Defendants _ 2019-1952, 2019-2394 _ Appeals from the United States District Court for the Northern District of Illinois
Summary: Case: 19-1952 Document: 137 Page: 1 Filed: 08/13/2020 NOTE: This disposition is nonprecedential. United States Court of Appeals for the Federal Circuit _ NAZIR KHAN, IFTIKHAR KHAN, Plaintiffs-Appellants v. HEMOSPHERE INC., ET AL., Defendants-Appellees MERIT MEDICAL SYSTEMS INC., Defendant-Cross-Appellant HOSPITALS AND DOCTORS IMPLANTING UNPATENTED HERO GRAFT TO DOCTORS, ET AL., Defendants _ 2019-1952, 2019-2394 _ Appeals from the United States District Court for the Northern District of Illinois ..
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Case: 19-1952 Document: 137 Page: 1 Filed: 08/13/2020
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
NAZIR KHAN, IFTIKHAR KHAN,
Plaintiffs-Appellants
v.
HEMOSPHERE INC., ET AL.,
Defendants-Appellees
MERIT MEDICAL SYSTEMS INC.,
Defendant-Cross-Appellant
HOSPITALS AND DOCTORS IMPLANTING
UNPATENTED HERO GRAFT TO DOCTORS, ET
AL.,
Defendants
______________________
2019-1952, 2019-2394
______________________
Appeals from the United States District Court for the
Northern District of Illinois in No. 1:18-cv-05368, Judge
Virginia M. Kendall.
______________________
Decided: August 13, 2020
______________________
NAZIR KHAN, IFTIKHAR KHAN, Burr Ridge, IL, pro se.
Case: 19-1952 Document: 137 Page: 2 Filed: 08/13/2020
2 KHAN v. HEMOSPHERE INC.
BRENT P. LORIMER, Workman Nydegger, Salt Lake
City, UT, for defendant-cross-appellant and defendants-ap-
pellees Willaim J. Tapscott, James W. Campbell, Heather
LeBlanc, Lee Forestiere, Edward Kim, Joy Garg Kaiser
Permanente, Marius Saines, Gustavo Torres, Charles M.
Eichler, Eric Ladenheim, Robert S. Brooks, Anne Lally,
Matthew G. Brown, Abilio Coello, Howard E. Katzman,
Stephen Wise Unger, Fernando Kafie, Robert Hoyne, Rob-
ert Brumberg, Murray L. Shames, Victor Bowers, Heidi A.
Pearson, Jeffrey Pearce, Michael Klychakin, William
Schroder, Jonathan R. Molnar, Christopher Wixon, Julio
Vasquez, William Soper, Jeffrey Silver, Stephen Jensik,
Gary Lemmon, Raghu L. Motagnahalli, Ruban Nirmalan,
Chase Tattersall, William Ducey, Michael Willerth, Dennis
Fry, Jeffrey Cameron, David Smith, Amit Dwivedi, Joseph
Griffin, Albert Sam, Andrew Sherwood, Larry D. Flanagan,
Thomas Reifsnyder, David B. Leeser, Andres Schanzer,
Robert Molnar, Peter Wong, Kourosh Baghelai, Howard L.
Saylor, Ty Dunn, William Omlie, James R. Rooks, Timothy
C. Hodges, Eddy Luh, Pankaj Bhatnagar, Benjamin West-
brook, Yvon R. Baribeau, George Blessios, Gary Tannen-
baum, Jason Dew, Jason Burgess, Paul Orland, James D.
Lawson, Todd Early, Randal Bast, Clinton Atkinson, Jeff
Stanley, Virginia Wong, Damian Lebamoff, Jonathan Ve-
lasco, Boris Paul, Walter Rizzoni, Jon R. Henwood, Carlos
Rosales, Ellen Dillavou, Eugene Simoni, Alexander Uribe,
Edward Beverly Morrison, Michael Gallichio, Angelo San-
tos, Chad Laurich, Eric Gardner, Stephen Settle, Blair Jor-
dan, Tuan-Hung Chu, Stephen Hohmann, John C. Kedora,
Hector Diaz-Luna, Luis G. Echeverri, Allen Hartsell, Jef-
frey Martinez, Gerardo Ortega, Boulos Toursarkissian,
Todd Smith, Mountain Medial Physician Specialists,
Thomas Ross, Matthew J. Borkon, W. Andrew Tierney,
Thomas Hatsukami, Herbert Oye, Thomas Winek, Allan
Roza, Ignacio Rua, Sheppard Mondy, Alok K. Gupta, Brad
Grimsley. Also represented by DAVID R. TODD, THOMAS R.
VUKSINICK.
Case: 19-1952 Document: 137 Page: 3 Filed: 08/13/2020
KHAN v. HEMOSPHERE INC. 3
STEVEN MCMAHON ZELLER, Dykema Gossett PLLC,
Chicago, IL, for defendants-appellees Hemosphere Inc.,
CryoLife Inc.
PATRICK R. JAMES, James, House, Downing & Lueken,
PA, Little Rock, AR, for defendant-appellee Louis Elkins.
BRIAN DAVID SCHMALZBACH, McGuireWoods LLP,
Richmond, VA, for defendants-appellees Mark Grove,
Javier Alvarez-Tostado. Also represented by KATHRYN
ANN CAMPBELL, EDWIN E. BROOKS, SARAH RASHID, Chicago,
IL.
JENNIFER KURCZ, Baker & Hostetler LLP, Chicago, IL,
for defendant-appellee Siddarth Patel. Also represented by
ALAINA J. LAKAWICZ, Philadelphia, PA.
DAVID ALAN ROODMAN, Bryan Cave Leighton Paisner
LLP, St. Louis, MO, for defendants-appellees Luis
Sanchez, Patrick Geraghty. Also represented by BARBARA
SMITH, JASON MEYER.
______________________
Before PROST, Chief Judge, MOORE and STOLL, Circuit
Judges.
STOLL, Circuit Judge.
These appeals arise from an action for patent infringe-
ment. Drs. Nazir Khan and Iftikhar Khan accused Hemo-
sphere Inc., CryoLife Inc., and Merit Medical Systems, Inc.,
along with over 300 hospitals and individual physicians, of
infringing a claim of U.S. Patent No. 8,747,344, directed to
an arteriovenous shunt. The Khans challenge the district
court’s decision dismissing the action with prejudice for
want of prosecution due to the Khans’ insufficient and un-
timely service of their complaint and, alternatively, for im-
proper venue and misjoinder. The Khans also challenge
the district court’s decisions granting the defendants’
Case: 19-1952 Document: 137 Page: 4 Filed: 08/13/2020
4 KHAN v. HEMOSPHERE INC.
motion for sanctions and denying the Khans’ cross-motion
for sanctions. Merit Medical cross-appeals the district
court’s decision denying its motion to declare the case ex-
ceptional and to award attorney fees under 35 U.S.C. § 285.
Because the district court did not abuse its discretion in
dismissing the action, granting the defendants’ sanctions
motion, denying the Khans’ sanctions motion, or denying
Merit Medical’s motion for attorney fees under § 285, we
affirm.
BACKGROUND
The Khans are Illinois physicians and have exclusive
rights to the ’344 patent. In their complaint filed on Au-
gust 7, 2018, the Khans alleged that the defendant corpo-
rations, hospitals, and physicians directly and indirectly
infringed claim 13 of the ’344 patent by manufacturing or
implanting into patients the accused HeRO® Graft shunt.
The Khans sent a waiver of service of summons form and
their complaint by mail to the over 300 defendants, the
vast majority of whom resided and practiced outside of Illi-
nois. With the exception of three physicians, none of the
defendants returned a completed waiver form.
Following an initial status conference in Novem-
ber 2018, the district court dismissed without prejudice the
Khans’ claims against Merit Medical, CryoLife, and three
physicians for improper venue. Order at 2–3, Khan
v. Hemosphere Inc., No. 18-cv-05368 (N.D. Ill. Jan. 23,
2019), ECF No. 76. According to the district court, the
Khans had not contended that any of these defendants re-
sided in the Northern District of Illinois, and the Khans
had failed to plausibly allege that any of them infringed the
asserted claim in the district and had a “regular and estab-
lished place of business” in the district, as required under
28 U.S.C. § 1400(b). Id. at 2. The district court “cau-
tion[ed] plaintiffs to take heed of the potentially meritori-
ous arguments raised by defendants thus far in considering
the proper and most effective way to prosecute their case
Case: 19-1952 Document: 137 Page: 5 Filed: 08/13/2020
KHAN v. HEMOSPHERE INC. 5
going forward.”
Id. at 3. The district court also held its
second status conference that same day. While the Khans
insisted at the conference that they had completed proper
service for all defendants, by that date—more than
150 days after the filing of the complaint—they had filed
proof of waiver for only one defendant. In response to the
Khans’ argument that placing the waiver request in the
mail is equivalent to service, the district court informed the
Khans that a request to waive service is merely a request
and that waiver by the defendants is not mandatory.
The district court subsequently denied the Khans’ mo-
tion to reconsider the dismissal order because the motion
“impermissibly rehash[ed] previously unsuccessful argu-
ments.” Order at 2, Khan v. Hemosphere Inc., No. 18-cv-
05368 (N.D. Ill. Feb. 13, 2019), ECF No. 84. The district
court “again caution[ed] Plaintiffs that prosecuting a pa-
tent case of any size, much less one against three hundred
defendants, is a complex endeavor,” and that they “should
carefully evaluate clearly established requirements set
forth in governing statutes and other applicable authority
so as not to unnecessarily occupy the time and resources of
the Court and other involved parties.” Id.
Thereafter, more than 100 of the remaining defendants
filed 11 separate motions to dismiss on various grounds, in-
cluding insufficient service, untimely service, improper
venue, misjoinder, and lack of personal jurisdiction. A sub-
set of the non-Illinois-resident defendants also moved for
sanctions against the Khans pursuant to Rule 11 of the
Federal Rules of Civil Procedure for the Khans’ repeated
assertions that venue was proper and that service was
properly completed. The district court granted the motions
and dismissed the claims against the defendants for want
of prosecution. Khan v. Hemosphere Inc., No. 18-cv-05368,
2019 WL 2137378, at *1 (N.D. Ill. May 16, 2019).
The district court held that dismissal of all remaining
defendants was warranted due to the Khans’ “insufficient
Case: 19-1952 Document: 137 Page: 6 Filed: 08/13/2020
6 KHAN v. HEMOSPHERE INC.
and untimely attempts at service.” Id. at *2. The district
court rejected the Khans’ argument that they had complied
with the requirements of Rule 4 of the Federal Rules of
Civil Procedure by simply requesting waivers from the de-
fendants.
Id. The district court also found that the Khans
had not attempted to personally serve any defendant.
Id.
Instead, the Khans asserted that they completed service by
mailing the summons and complaint to the defendants, de-
spite contrary instruction from the district court. The dis-
trict court explained that Rule 4(e) does not permit
personal service via mail and the Khans had not identified
any state laws that would otherwise allow service by mail.
Id. The district court further found that the Khans had
failed to comply with the timeliness requirement of
Rule 4(m).
Id. at *3. In addition, the district court held
that dismissal was warranted on the alternative grounds
of improper venue under § 1400(b) and improper joinder
under 35 U.S.C. § 299.
Id.
Next, the district court granted the non-Illinois-resi-
dent defendants’ motion for sanctions based on the Khans’
assertions regarding venue and service, which they had
maintained despite repeated warnings and guidance from
the court.
Id. at *4–5. The district court recognized that
the Khans were proceeding pro se and thus were “entitled
to some leniency before being assessed sanctions for frivo-
lous litigation.”
Id. at *5 (quoting Thomas v. Foster,
138 F. App’x 822, 823 (7th Cir. 2005)). But the district
court explained that the Khans “not only acted in direct
contravention to clear procedural rules, statutes, and gov-
erning law, but continued to do so after being repeatedly
warned at hearings by the Court, in written orders, and in
correspondence with defense counsel.”
Id. The district
court thus found that it was “more than objectively reason-
able to believe that the [Khans] should have known their
positions on venue and service were groundless.”
Id. Ac-
cordingly, the district court ordered the Khans to pay at-
torney fees associated with the defendants’ filing fees,
Case: 19-1952 Document: 137 Page: 7 Filed: 08/13/2020
KHAN v. HEMOSPHERE INC. 7
motions to dismiss, and motion for sanctions in the amount
of $95,966.90. Order at 1, Khan v. Hemosphere Inc.,
No. 18-cv-05368 (N.D. Ill. July 15, 2019), ECF No. 175.
For their part, the Khans moved for sanctions against
the physician defendants and their attorneys for alleged vi-
olations of Rule 11(b). The district court denied the motion
on the ground that the Khans failed to provide proper no-
tice to the defendants of their motion under Rule 11(c) or
properly present their motion to the court as required by
the court’s local rules. Id. at 3. The district court later
denied the Khans’ motion for reconsideration of the court’s
dismissal and sanctions orders.
Merit Medical thereafter moved the district court to de-
clare the case exceptional and to award attorney fees under
§ 285 in the amount of $292,693. The district court denied
the motion. Minute Entry, Khan v. Hemosphere Inc.,
No. 18-cv-05368 (N.D. Ill. Sept. 4, 2019), ECF No. 213. The
district court found that the motion “cite[d] largely identi-
cal conduct that was previously before the Court on the in-
itial motion for sanctions,” and that “[t]he Court ha[d]
already extensively considered this conduct in determining
whether sanctions were appropriate and indeed ruled in
Defendants[’] favor on this matter.” Id. The district court
also found that, although the Khans had “litigated this case
in an unorthodox manner,” none of their conduct following
the court’s grant of sanctions could be considered “excep-
tional.”
Id.
The Khans and Merit Medical appeal. We have juris-
diction pursuant to 28 U.S.C. § 1295(a)(1).
DISCUSSION
The Khans request that this court reverse the decisions
of the district court dismissing their complaint, granting
sanctions against the Khans, and denying the Khans’ mo-
tion for sanctions. Merit Medical cross-appeals, seeking a
reversal of the district court’s order denying its motion for
Case: 19-1952 Document: 137 Page: 8 Filed: 08/13/2020
8 KHAN v. HEMOSPHERE INC.
attorney fees under § 285. For the reasons discussed be-
low, we discern no abuse of discretion in the district court’s
rulings and, accordingly, we affirm.
I
We first consider the Khans’ challenge to the district
court’s dismissal of their complaint for failure to effectuate
proper and timely service on the defendants as required
under Rule 4 and, alternatively, for improper venue.
A
We apply the law of the regional circuit, here the Sev-
enth Circuit, in resolving whether a district court properly
dismissed a case for want of prosecution. See Bowling
v. Hasbro, Inc., 403 F.3d 1373, 1375 (Fed. Cir. 2005). The
Seventh Circuit reviews a district court’s dismissal for
want of prosecution for an abuse of discretion. Williams
v. Illinois,
737 F.3d 473, 476 (7th Cir. 2013); see also Car-
denas v. City of Chicago,
646 F.3d 1001, 1005 (7th Cir.
2011) (a district court’s dismissal based on untimely service
of process is reviewed for an abuse of discretion).
“A district court may not exercise personal jurisdiction
over a defendant unless the defendant has been properly
served with process, and the service requirement is not sat-
isfied merely because the defendant is aware that he has
been named in a lawsuit or has received a copy of the sum-
mons and the complaint.” United States v. Ligas, 549 F.3d
497, 500 (7th Cir. 2008) (citations omitted). Rule 4 speci-
fies acceptable methods for service. For instance, a plain-
tiff may request a waiver of service from a defendant by
mailing a copy of the complaint, two copies of the waiver
form, and a prepaid means for returning the form. Fed. R.
Civ. P. 4(d). “But if the defendant does not waive service
and if no federal statute otherwise supplies a method for
serving process, then Rule 4(e)’s list of methods is exclu-
sive.”
Ligas, 549 F.3d at 501. Those methods consist of
“following state law for serving a summons in an action
Case: 19-1952 Document: 137 Page: 9 Filed: 08/13/2020
KHAN v. HEMOSPHERE INC. 9
brought in courts of general jurisdiction in the state where
the district court is located or where service is made”; “de-
livering a copy of the summons and of the complaint to the
individual personally”; “leaving a copy of each at the indi-
vidual’s dwelling or usual place of abode with someone of
suitable age and discretion who resides there”; and “deliv-
ering a copy of each to an agent authorized by appointment
or by law to receive service of process.” Fed. R. Civ. P. 4(e).
“Unless service is waived, proof of service must be made to
the court.” Fed. R. Civ. P. 4(l)(1).
Rule 4 also provides that “[i]f a defendant is not served
within 90 days after the complaint is filed, the court—on
motion or on its own after notice to the plaintiff—must dis-
miss the action without prejudice against that defendant
or order that service be made within a specified time.”
Fed. R. Civ. P. 4(m). “[I]f the plaintiff shows good cause for
the failure,” however, “the court must extend the time for
service for an appropriate period.” Id. A district court has
the discretion to dismiss a complaint with prejudice “for
want of prosecution if the plaintiff’s delay in obtaining ser-
vice is so long that it signifies failure to prosecute.” Wil-
liams, 737 F.3d at 476 (citations omitted). A defendant
may move to dismiss based on the court’s lack of personal
jurisdiction, the insufficiency of process, or the insuffi-
ciency of service of process. Fed. R. Civ. P. 12(b)(2), (4), (5).
Here, the district court properly exercised its discretion
in dismissing the Khans’ complaint due to their insufficient
and untimely attempts at service. Although the Khans en-
deavored to obtain waivers from all of the defendants, with
very few exceptions, the defendants did not return signed
waiver forms. Thus, the Khans were required to serve the
non-waiving defendants by the other methods set forth un-
der Rule 4(e). See Ligas, 549 F.3d at 501. As the district
court correctly observed, the Khans’ mailing of the com-
plaint and the summons does not constitute service under
Rule 4(e).
Case: 19-1952 Document: 137 Page: 10 Filed: 08/13/2020
10 KHAN v. HEMOSPHERE INC.
The Khans argue that each defendant had a duty under
Rule 4 to sign the waiver form and return it within 30 days
or otherwise show good cause for not doing so. Appellants’
Br. 13, 15. They contend that “service is complete when
the signed waiver form is returned by the defendant and
filed by the plaintiff for entry into the District Court.” Id.
at 13. In their view, the district court lacked jurisdiction
to decide the motions to dismiss because the defendants did
not return the waiver forms back to the Khans.
Id. at 15–
16.
The Khans misinterpret the provisions of Rule 4.
While Rule 4(d) obligates defendants “to avoid unnecessary
expenses of serving the summons,” it does not require de-
fendants to waive formal service. Fed. R. Civ. P. 4(d)(1).
Nor did the defendants’ decisions to forgo waiving service
in this case strip the district court of its authority to decide
the motions to dismiss on the basis of insufficient service.
The Khans cite subsection (e) of Illinois statute 735 ILCS
5/2-201, in conjunction with Rule 4(e)(1), as permitting ser-
vice by mail, but subsection (e) of Illinois statute 735 ILCS
5/2-201 does not appear to exist. The Khans also cite sub-
section (e) of Illinois statute 735 ILCS 5/2-202, but this sub-
section concerns the housing authority police force’s service
of process for eviction actions and is thus inapplicable to
this civil action. The Illinois statute that governs service
of individuals in civil actions is 735 ILCS 5/2-203, which
does not allow service by mail. Absent proof under
Rule 4(l) that proper service was made on any of the non-
waiving defendants, the district court properly held that
the Khans had failed to provide proper service.
The district court also correctly concluded that the
Khans failed to comply with Rule 4(m)’s timeliness require-
ment. In the more than 250 days between the filing of the
complaint and the district court’s dismissal decision, nearly
all of the over 300 defendants had not been properly served.
The district court did not abuse its discretion in determin-
ing that the Khans did not show good cause to justify such
Case: 19-1952 Document: 137 Page: 11 Filed: 08/13/2020
KHAN v. HEMOSPHERE INC. 11
“extreme delay”—nearly three-fold the amount of time al-
lotted to complete service. Khan, 2019 WL 2137378, at *3.
Accordingly, we conclude that the district court was
well within its discretion to dismiss the complaint with
prejudice for want of prosecution due to the Khans’ insuffi-
cient and untimely service.
B
Turning to the issue of venue, the governing statute
provides that “[a]ny civil action for patent infringement
may be brought in the judicial district where the defendant
resides, or where the defendant has committed acts of in-
fringement and has a regular and established place of busi-
ness.” 28 U.S.C. § 1400(b). A “regular and established
place of business” requires a “place of business” in the dis-
trict, i.e., “a physical, geographical location in the district
from which the business of the defendant is carried out.”
In re Cray Inc., 871 F.3d 1355, 1362 (Fed. Cir. 2017). The
place of business must be the defendant’s, “not solely a
place of the defendant’s employee.”
Id. at 1363. We review
de novo the question of proper venue under § 1400(b).
Westech Aerosol Corp. v. 3M Co.,
927 F.3d 1378, 1381
(Fed. Cir. 2019).
The district court correctly concluded that venue was
improper under § 1400(b). As to Merit Medical, CryoLife,
and the three physicians dismissed earlier in the action,
the district court found that the Khans had not contended
that any of these defendants resided in the district. The
district court also found that the Khans had failed to plau-
sibly allege that any of them infringed the asserted claim
in the district or had a “regular and established place of
business” in the district. As to the remaining defendants,
the district court found that the complaint and related fil-
ings were “devoid of any facts establishing that the infring-
ing acts occurred in” the district or that the defendants
“reside in the district.” Khan, 2019 WL 2137378, at *3.
The district court also found that the Khans instead
Case: 19-1952 Document: 137 Page: 12 Filed: 08/13/2020
12 KHAN v. HEMOSPHERE INC.
“allege[d] that the acts of infringement took place in the
states in which the Defendants reside,” and that “nearly all
of the Defendants are not residents of Illinois and are in-
stead scattered throughout the country in dozens of differ-
ent states.”
Id.
These findings remain largely unchallenged on appeal.
Indeed, the Khans concede that their complaint names
“more than 300 defendants residing in 43 states and two
manufacturers who are on opposite sides of the country.”
Appellants’ Br. 17. The Khans also admit that “the venue
for non-Illinois defendant physicians is improper here.”
Id.; see also
id. at 22 (“[T]he plaintiffs made it clear in our
pleadings that the venue is improper for non-Illinois de-
fendant physicians.”);
id. at 11 (“The totality of the record
shows that the plaintiffs have never said that the venue is
proper for the 106 non-Illinois defendant physicians.”).
The Khans instead focus their challenge on the district
court’s findings that Merit Medical and CryoLife each lack
a “regular and established place of business” in the district.
For instance, they contend that these corporations have
sales representatives in the district that promote the ac-
cused HeRO® Graft shunt.
Id. at 18. But the fact that cer-
tain employees live or conduct business in the district does
not establish proper venue over defendants in the district.
See
Cray, 871 F.3d at 1363.
We are also unpersuaded by the Khans’ contention that
venue in the district is proper because it is the most con-
venient forum to all parties under 28 U.S.C. § 1404(a). Ap-
pellants’ Br. 17. Section 1404(a) governs transfers of
actions to other judicial districts for convenience; it does
not set the standard for whether venue is proper. Sec-
tion 1400(b) governs that issue, and the Khans have failed
to convince us that the district court erred in determining
that venue under that statute was improper.
We have considered the Khans’ other arguments re-
garding service and venue, but do not find them
Case: 19-1952 Document: 137 Page: 13 Filed: 08/13/2020
KHAN v. HEMOSPHERE INC. 13
persuasive. Accordingly, we conclude that the district
court did not abuse its discretion in dismissing the action
with prejudice.
II
We next consider the Khans’ challenge to the district
court’s decision granting the non-Illinois-resident defend-
ants’ motion for Rule 11 sanctions. We apply the law of the
regional circuit, here the Seventh Circuit, to review an
award of Rule 11 sanctions. See Eon-Net LP v. Flagstar
Bancorp, 653 F.3d 1314, 1328 (Fed. Cir. 2011) (citing
Power Mosfet Techs., L.L.C. v. Siemens AG,
378 F.3d 1396,
1406–07 (Fed. Cir. 2004)). The Seventh Circuit reviews de-
cisions regarding Rule 11 sanctions for an abuse of discre-
tion. Bell v. Vacuforce, LLC,
908 F.3d 1075, 1079 (7th Cir.
2018) (citing Cooter & Gell v. Hartmarx Corp.,
496 U.S.
384, 405 (1990)).
The district court properly exercised its discretion in
sanctioning the Khans under Rule 11(b) for their frivolous
arguments regarding venue and service of process. The
district court found that the Khans had repeatedly as-
serted throughout the litigation that venue was proper in
the Northern District of Illinois. In support of this argu-
ment, the Khans relied on this court’s decision in In re TC
Heartland LLC, 821 F.3d 1338 (Fed. Cir. 2016), despite the
fact that the Supreme Court had reversed that decision
prior to the Khans’ lawsuit, see TC Heartland LLC v. Kraft
Foods Grp. Brands LLC,
137 S. Ct. 1514 (2017). The dis-
trict court also noted that it had cited the Supreme Court’s
TC Heartland decision both in its order granting Merit
Medical’s and CryoLife’s motions to dismiss based on im-
proper venue and in status hearings. Despite this guidance
from the court, the Khans “again raised their baseless ar-
gument in their Motion to Reconsider.” Khan,
2019 WL
2137378, at *4. The district court further found that the
Khans’ complaint “undercut[] any good faith basis for as-
serting venue is proper in th[e] district,” since it alleged
Case: 19-1952 Document: 137 Page: 14 Filed: 08/13/2020
14 KHAN v. HEMOSPHERE INC.
that the non-Illinois-resident defendants’ infringing acts
occurred “at their addresses in their respective states.”
Id.
(quoting Complaint at 41, Khan v. Hemosphere Inc.,
No. 18-cv-05368 (N.D. Ill. Aug. 7, 2018), ECF No. 1). Fi-
nally, the district court found that the Khans had main-
tained their baseless assertion that service by mail was
sufficient under Rule 4, again despite contrary guidance
from the court.
Id. at *5.
The Khans do not challenge any of these factual find-
ings on appeal. Instead, they contend that sanctions are
inappropriate because the defendants violated
Rule 11(c)(2), which prohibits the filing of a sanctions mo-
tion “if the challenged paper, claim, defense, contention, or
denial is withdrawn or appropriately corrected within
21 days after service or within another time the court sets.”
Fed. R. Civ. P. 11(c)(2). Specifically, they argue that the
defendants did not serve them with the sanctions motion
more than 21 days prior to filing it with the district court.
But the district court found the opposite—namely, that the
defendants put the Khans “on notice of their intent to seek
sanctions as early as September 24, 2018”—more than
five months before they filed their sanctions motion in
March 2019. See Khan, 2019 WL 2137378, at *5. The dis-
trict court also found that the Khans were notified on sev-
eral more occasions before the defendants moved for
sanctions.
Id. The Khans offer no response to the district
court’s finding that the defendants’ “‘early and often’ ap-
proach in corresponding with [the Khans] regarding their
desire to pursue sanctions no doubt satisfies the 21-day re-
quirement of Rule 11(c).” Id.; see also Matrix IV, Inc. v. Am.
Nat’l Bank & Tr. Co.,
649 F.3d 539, 552–53 (7th Cir. 2011)
(concluding that “a letter informing the opposing party of
the intent to seek sanctions and the basis for the imposition
of sanctions” sent more than two years before the motion
was filed was “sufficient for Rule 11 purposes” (citations
omitted)).
Case: 19-1952 Document: 137 Page: 15 Filed: 08/13/2020
KHAN v. HEMOSPHERE INC. 15
The Khans also argue that a sanctions award cannot
be based on their assertions regarding service and venue
because such assertions are “ancillary issues” that are “un-
related to the merits of the claim.” Appellants’ Br. 24. The
Khans cite Rule 41(b) of the Federal Rules of Civil Proce-
dure and Moeck v. Pleasant Valley School District, 844 F.3d
387 (3d Cir. 2016), to support their argument.
Id. at 24–
25. Rule 41(b) provides that an involuntary dismissal or
other dismissal except “for lack of jurisdiction, improper
venue, or failure to join a party under Rule 19 . . . operates
as an adjudication on the merits,” Fed. R. Civ. P. 41(b), but
this rule does not preclude sanctions for frivolous venue
and service assertions. The Khans’ reliance on Moeck is
similarly misplaced. In Moeck, the Third Circuit discerned
no error in the district court’s observations that the defend-
ants’ numerous sanctions motions were a “waste of judicial
resources” and that discovery, motion practice, and trial
were better vehicles than sanctions motions to determine
the truth of a plaintiff’s
allegations. 844 F.3d at 389–92
& n.9. Nothing in Moeck suggests, however, that sanctions
are precluded for frivolous venue and service assertions,
even if those assertions are considered “ancillary” to the
merits of a plaintiff’s infringement claims.
We have considered the Khans’ other arguments, but
do not find them persuasive. Accordingly, we conclude that
the district court did not abuse its discretion in granting
the defendants’ motion for sanctions.
III
We next consider the Khans’ challenge to the district
court’s denial of their cross-motion for Rule 11 sanctions
against the physician defendants and their attorneys. In
their motion, the Khans sought $250,000 in damages based
on the defendants’ and their attorneys’ alleged violations of
Rule 11(b), including their “inadequate pre-filing investi-
gation” preceding their sanctions motion and “prose-
cuti[on] [of] the case for [the] improper purpose of
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16 KHAN v. HEMOSPHERE INC.
harass[ing]” the Khans and “for causing mental anguish.”
Request for Sanctions, Khan v. Hemosphere Inc., No. 18-cv-
05368 (N.D. Ill. June 13, 2019), ECF No. 155.
We conclude that the district court did not abuse its
discretion in denying the Khans’ cross-motion for sanc-
tions. The district court denied the motion for failure to
comply with the safe harbor provisions of Rule 11(c) and
the requirement of the district court’s Local Rule 5.3(b) to
accompany a motion with “a notice of presentment specify-
ing the date and time on which, and judge before whom,
the motion or objection is to be presented.” The Khans do
not address either of these defects on appeal. Instead, they
merely reiterate that the defendant physicians and their
attorneys should be sanctioned for their assertions that the
HeRO® Graft shunt does not infringe the asserted claim of
the ’344 patent and for filing a motion for sanctions against
the Khans. Under these circumstances, we conclude that
the district court was well within its discretion to deny the
Khans’ cross-motion for Rule 11 sanctions.
IV
Lastly, we turn to Merit Medical’s cross-appeal from
the district court’s decision denying its motion to declare
the case exceptional and to award attorney fees in the
amount of $292,693. “The court in exceptional cases may
award reasonable attorney fees to the prevailing party.”
35 U.S.C. § 285. “[A]n ‘exceptional case’ is simply one that
stands out from others with respect to the substantive
strength of a party’s litigating position (considering both
the governing law and the facts of the case) or the unrea-
sonable manner in which the case was litigated.” Octane
Fitness, LLC v. Icon Health & Fitness, Inc., 572 U.S. 545,
554 (2014). “District courts may determine whether a case
is ‘exceptional’ in the case-by-case exercise of their discre-
tion, considering the totality of the circumstances.”
Id. We
review a district court’s denial of a motion for attorney fees
under § 285 for an abuse of discretion. Highmark Inc.
Case: 19-1952 Document: 137 Page: 17 Filed: 08/13/2020
KHAN v. HEMOSPHERE INC. 17
v. Allcare Health Mgmt. Sys., Inc.,
572 U.S. 559, 561, 564
(2014).
We conclude that the district court did not abuse its
discretion in denying Merit Medical’s motion for attorney
fees under § 285. The district court found that the conduct
described in the motion was largely identical to the conduct
already presented in the defendants’ earlier sanctions mo-
tion and was already considered by the court in granting
sanctions against the Khans. The district court also deter-
mined that, although the Khans’ litigation strategy was
“unorthodox,” their conduct following the district court’s
grant of sanctions did not rise to the level of “exceptional.”
The district court further found that the previous sanctions
amount of $95,966.90 was appropriate and reasonable
given the Khans’ conduct in the case, but that imposing a
three-fold increase in those fees was not warranted. We
are unpersuaded that the district court “based its ruling on
an erroneous view of the law or on a clearly erroneous as-
sessment of the evidence.” Highmark, 572 U.S. at 563 n.2
(quoting Cooter &
Gell, 496 U.S. at 405).
Merit Medical cites Rothschild Connected Devices In-
novations LLC v. Guardian Protection Services, Inc.,
858 F.3d 1383 (Fed. Cir. 2017), to support its argument
that the district court “improperly conflated” Rule 11 with
§ 285 rather than accounting for the totality of the circum-
stances. Cross-Appellant’s Br. 80. In Rothschild, the dis-
trict court denied a motion for fees under § 285 based on its
finding that the patent owner’s “decision to voluntarily
withdraw its complaint within [Rule 11’s] safe harbor pe-
riod [wa]s the type of reasonable conduct [that] Rule 11 is
designed to encourage” and, thus, awarding fees under
§ 285 would “‘contravene[] the aims of Rule 11[’s]’ safe-har-
bor
provision.” 858 F.3d at 1390 (latter three alterations
in original) (quoting Rothschild Connected Devices Innova-
tions, LLC v. Guardian Prot. Servs., Inc., No. 15-cv-1431,
2016 WL 3883549, at *2 (E.D. Tex. July 18, 2016)). We
held that the district court’s decision was contrary to the
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18 KHAN v. HEMOSPHERE INC.
Supreme Court’s admonition that “[w]hether a party
avoids or engages in sanctionable conduct under Rule 11(b)
‘is not the appropriate benchmark’” for an award of fees un-
der § 285.
Id. (quoting Octane Fitness, 572 U.S. at 555).
By contrast, here, the district court considered the to-
tality of the circumstances, including the Khans’ litigation
approach and the substantial overlap between the com-
plained-of conduct in Merit Medical’s motion and the ear-
lier sanctions motion. Based on its assessment of the
procedural history and parties’ briefing, the district court
determined that the Khans’ conduct in this case—while
sanctionable—was not so unreasonable so as to make this
case one of the rare cases worthy of a three-fold increase in
fees imposed against them. Octane Fitness gives district
courts broad discretion in such exceptional-case determi-
nations. We are not persuaded that the district court
abused its discretion in determining that this case is not
exceptional.
CONCLUSION
For the foregoing reasons, we affirm the district court’s
decisions dismissing the action with prejudice, granting
the defendants’ motion for sanctions, denying the Khans’
cross-motion for sanctions, and denying Merit Medical’s
motion for attorney fees under § 285. Because we have af-
firmed the district court’s dismissal and award of sanctions
based on the issues of insufficient service of the complaint
under Rule 4 and improper venue, we need not reach the
district court’s determination of misjoinder.
AFFIRMED
COSTS
No costs.
