CAFC Affirms Ruling that Patent Owner Engaged in Abusive Litigation Tactics Against IBM, SAP and JP Morgan Chase

“Even according Dr. Arunachalam wider latitude in view of her pro se status, her baseless, outlandish and irrelevant invective degrades the dignity and decorum of the court and hampers ‘the orderly and expeditious disposition of cases.’” – CAFC

CAFC - U.S. Court of Appeals for the Federal Circuit (CAFC) on March 1 affirmed a district court’s decision that a patent owner’s “scandalous and baseless allegations” against IBM, SAP America, Inc. (“SAP”) and JP Morgan Chase (“Chase”) warranted monetary sanctions. The CAFC decision also noted that patent infringement is not a predicate act for purposes of the Racketeer Influenced and Corrupt Organizations Act (RICO) and that “redundant, immaterial, impertinent or scandalous” matter may be stricken from the record as a lesser, alternate sanction to monetary sanctions.”


Dr. Lakshmi Arunachalam (Appellant) is the owner of U.S. Patent No. 7,340,506 (“the ‘506 patent”) and filed suit against IBM and several other defendants (listed by Appellant in her complaint as “Does 1-100,” collectively “Appellees”) alleging infringement thereof in 2016. Appellant further alleged violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”). In subsequent years, Appellant filed first and second amendment complaints and a variety of motions, adding SAP, Chase and even the District Judge assigned to the case as defendants.

Appellees moved to dismiss the RICO claims via a 12(b)(6) motion, which motion Appellant opposed.

At the same time, Appellant filed a motion to recuse the Judge, as well as a motion for entry of default judgement against him. The Government filed a statement of interest on behalf of the Judge which was referred to the Chief Judge for consideration. Appellant promptly filed a motion to recuse the Chief Judge.

In 2017, the District Court granted Appellee’s motion to dismiss the RICO claims, holding that because “patent infringement is not a crime,” it is necessarily not “a racketeering [predicate] act.”  Appellee’s requests for sanctions were dismissed without prejudice. Though the District Court also held that Appellant’s amended complaint failed to provide any “plausible factual allegations” that supported her claims, the Court nonetheless granted Appellant leave to file a motion to amend and amended complaint compliant with local rules.

Appellant responded with a motion to vacate the dismissal, accompanied by a proposed second amended complaint noncompliant with the local rule Appellant was specifically instructed to observe.

Later in 2017, PTAB issued a final written decision finding that claims 20 and 21 of the ‘506 patent unpatentable, after a proceeding in which claims 1-19 were cancelled. PTAB further denied Appellant’s motion to amend to add new claims. After the period for appeal of the PTAB decision had passed, IBM moved to dismiss Count I of the amended complaint, the only count left standing after dismissal of the RICO claims. Appellant opposed the dismissal arguing that “there was no need for her to appeal the PTAB’s ultra vires unconstitutional and hence void decision ‘invalidating’ the ‘506 patent”, because the PTAB judges lacked “jurisdiction and immunity.” In May of 2018, the District Court granted IBM’s motion to dismiss Count I with prejudice.

Appellant filed a motion for reconsideration, which was promptly denied, the District Court finding that none of Appellant’s arguments provided sufficient basis for reconsideration. Appellant appealed all of the District Court’s orders to the Federal Circuit in 2019. The Federal Circuit affirmed, agreeing with the District Court that i) patent infringement is not a recognized predicate “racketeering activity” for a RICO claim, and ii) Appellant’s second amended claim continued to fail to provide sufficient factual allegations to support the RICO claim. The Federal Circuit further held that Appellant’s failure to timely appeal the PTAB decision is “final and may not be collaterally attacked through a separate litigation.”

In July of 2018, Appellee’s again moved for sanctions, as well as injunctions against further filings by Appellant. Appellant responded with a sur-reply, thereby necessitating further briefing by Appellees.

In March of 2019, the District Court granted SAP and Chase’s motions for attorney’s fees, and granted IBM’s motion in part. Appellant filed an opposition, with questions in the form of “Interrogatories propounded to Defendants, their Counsel of Record and Hon. Judge Andrews.”. Appellant filed two additional motions demanding that the Judge and attorneys of record provide Appellant with copies of their oaths of office, any foreign registration statements as well as bond and insurance information.

The District Court granted Appellee’s motions and awarded over $57000 to Chase, over $51,000 to SAP and $40,000 to IBM and denied Appellant’s motions requesting information, as well as additional motions to recuse both the presiding and Chief Judge.

Appellant responded by filing a “M[otion] and Notice to Enforce the Mandated Prohibition from Repudiating Government-Issued Contract Grants of Any Kind as Declared by Chief Justice Marshall in Fletcher [v.] Peck (1810) and Trustees of Dartmouth College [v.] Woodward (1819) Which Have Never Been Repudiated and Stand as the Law of the Land and Case, of Which this Courts Solemn Oath Duty Compels this Court to Enforce above All Else, with All Due Respect” as well as a “Motion for the Court to Vacate Its Unconstitutional Order…and Enter a New and Different Order.”  The District Court dismissed both in January of 2020. Appellant, of course, appealed.

CAFC Says No Abuse of Discretion

After setting forth the standard that “federal courts may assess attorney[s’] fees when a party has acted in bad faith, vexatiously, wantonly or for oppressive reasons,” the Federal Circuit held that the record amply supported the award of sanctions. The Court noted with particularity the fact although Appellant had alleged three counts of RICO violations, the only factual allegations concerned personal jurisdiction, infringement and/or lack of a license under the ‘506 patent. The Court was particularly sensitive to the fact that each of Appellant’s “repetitive, frivolous and often bizarre oppositions and motions” had required responsive filings on the part of Appellee’s: “As of the date of this opinion, these allegations have embroiled [Appellees] in baseless litigation for over four and a half years.”

Appellant’s opposition to the fee award was based upon the arguments that “[n]ot one dollar is reasonable” and that affirmance of the District Court award was an offense to the Constitution, and in particular, her rights under the First, Fifth, Eighth and Fourteenth Amendments. The Court found that Appellant’s arguments were so insufficiently developed as to be deemed waived.

Scandalous and Irrelevant Statements are Stricken

Appellant’s briefing was found by the Court to be “replete with scandalous and baseless allegations…all presented without a semblance of factual support.”  Further, the Court held that Appellant had made “multiple demonstrably false statements of fact.”  As held by the Court:

Dr. Arunachalam’s bizarre and scandalous statements extend to this court, the Judiciary, and indeed the Government as a whole. She alleges that we have colluded with the District Court, the PTAB, and Appellees in a “collateral estoppel farce propagated against multiple [c]ourts,”…we have “committed treason,”…failed to apply Governing Supreme Court Precedents…that our “rulings are all void”…[that she has been injured] “through a treasonous breach of solemn oaths of office by Judges and officers of the court and the corruption of fraud of the court…This is far from an exhaustive list…

And yet, the Court found that the most damaging impact of Appellant’s actions had been to her own claims:

Further, Dr. Arunachalam’s scandalous and unsupported statements are largely irrelevant to the issues on appeal and take up the vast majority of her briefing, hindering our ability to review her pertinent arguments…Dr. Arunachalam’s scandalous and irrelevant statements impede meaningful review of her arguments…(“Judges are not like pigs, hunting for truffles buried in briefs.” (quoting United States v. Dunkel, 927 F.2d 955,956 (7th Circuit. 1991))

The Court thus concluded that striking the comments from the record was a more appropriate punishment than additional monetary sanctions:

Even according Dr. Arunachalam wider latitude in view of her pro se status, her baseless, outlandish and irrelevant invective degrades the dignity and decorum of the court and hampers “the orderly and expeditious disposition of cases”…In view of the fact that monetary sanctions have already been assessed in the underlying case, as well as the form of Dr. Arunachalam’s misconduct, we conclude that a lesser sanction is appropriate. Accordingly, the scandalous and irrelevant statements in Dr. Arunachalam’s briefs…are stricken.

On March 5, the court separately issued an order denying Dr. Arunachalam’s petition for interlocutory appeal and request to proceed in forma pauperis before the CAFC.

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Join the Discussion

10 comments so far.

  • [Avatar for Jacek]
    March 9, 2021 02:48 pm

    “From inventors-friendly culture to an inventors-hostile culture.”
    The fact is that reading about the mythical “Patent trolls, “Nonpracticing entities,” etc., it is not hard to start asking yourself a question: What kind of Criminal as an Inventor am I?
    Are you forcing people to pay licensing fees? Outrageous.

    Remarkably China is predicted to outpace the US in R&D investment next year. In the UK, they finance 20% of all R&D developments.
    With the official Chinese Goal of outpacing the US in IP activity in 2025, the 2011 AIA plays well in Chinese Hands.
    Big Tech actions in gutting US patents we may compare with the German 5th column before World War 2 in Europe.
    Weaken the enemy before the final assault.
    I think it is time to sober up.

  • [Avatar for ipguy]
    March 8, 2021 09:12 pm

    “The U.S. has changed from an inventors-friendly culture to an inventors-hostile culture.”

    On the contrary, the US has always had a generally positive view about inventors. The USPTO on the other hand…… Well, that pendulum has swung back and forth for quite a long time. The USPTO was inventor-friendly, pro-patent allowance in the 1990s, then took an anti-allowance tack with the Bush 43 Administration, and then made moves back towards pro-allowance during the Obama years with Kappos at the helm. The Iancu years were just mired in Section 101 nonsense that seemed to consume all the discussion that wasn’t otherwise consumed by post-grant proceedings.

    “it is always inventors’ fault.”
    Nope, patent litigators are clearly the ones to blame. How many appeals from prosecution decisions (ex parte appeals) does the SCOTUS hear every decade? Behind every big case that makes life difficult for inventors, there is generally a patent litigator.

  • [Avatar for Jianqing Wu]
    Jianqing Wu
    March 8, 2021 03:02 pm

    I took a look at her arguments (see below). Her argument is not frivolous. However, one thing has changed. The U.S. has changed from an inventors-friendly culture to an inventors-hostile culture. In the early years, the majority of housewives were inventors and filed patent applications for food recipes, few could come out with an idea to do mass patent invalidation. Now, it is different, exceptional few people even bother patenting. Now, inventors belong to an extremely small minority. Most people and our leaders probably think that the nation no longer needs inventors. This is like one inventor’s voice against thousands of voices. Human beings love to get free properties. Under this culture, no matter what happens, it is always inventors’ fault.

    1) Supreme Court’s Recognition of Public Contract Basis of Patent Rights in Grant v. Raymond
    (1832): U.S. Supreme Court J. Marshall articulated the public contract basis of patent grants as “indispensably necessary to the faithful execution of the solemn promise made by the United States;”

    2) In U.S. v. American Bell Telephone Company (1897); Justice Brewer concluded that “the differences between the two types of patents give the federal government “higher rights” to cancel land patents than to cancel patents for inventions. “…the patent for an invention is not a conveyance of something which the government owns….The inventor is the one who has discovered something of value. It is his
    absolute property….;”

    3) Supreme Court’s Recognition of the Public Contract Basis of Patent Rights after Grant v. Raymond: Shaw v. Cooper (1833); Justice John McLean articulated the contract basis for patent rights; recognized the public benefit produced by inventive discoveries and the importance of securing protections for inventors in exchange for that benefit: “All enlightened governments reward the inventor. He is justly considered a public benefactor. Many of the most splendid productions of genius,…have been conceived and elaborated in a garret or hovel. Such results not only enrich a nation, but render it illustrious. And should not their authors be cherished and rewarded? …But in order that such property should be of any value, it is necessary that society should interfere actively for its protection. It can interfere by the enactment of penalties, which, in order to be effectual, must be severe; or it can interfere by prohibition, which is a stern and summary exercise of power.”

    4) U.S. v. Dubilier Condenser Corp. (1933);

    5) Bonito Boats, Inc. v. Thunder Craft Boats, Inc. (1989);

    6) James Madison in Federalist No. 44 stated:
    “…Patent rights receive protection pursuant to public contracts between inventors and the federal government, acting on behalf of the people.” The Judiciary, USPTO/PTAB, USITC and the Legislature/Congress/AIA have failed to provide the protections they pledged in their Contract with Plaintiff.

    7) In Burrow-Giles Lithographic Co. v. Sarony (1884), Justice Samuel Miller stated: “On the one hand, grants of patents cannot, by law, be issued to the inventor until the novelty, the utility, and the actual discovery or invention by the claimant have been established by proof before the commissioner of patents…The public faith is pledged to the exclusive rights protections set out in the law upon the inventors’ compliance with the corresponding procedures provided in the law.”

    Plaintiff satisfied all these requirements before the USPTO granted Plaintiff her patents and continues paying her maintenance fees to the USPTO, in living up to her end of the Contract.

    8) Public Contract Basis of Patent Rights Applied by Lower Courts: In Celluloid Manufacturing. Co. v. Arlington Manufacturing. Co. (1890), Judge Edward T. Green of the District Court of New Jersey stated: “The object of the patentee is to secure to himself complete control, the monopoly of his invention, and the use of it as a certain source of income. The object sought by the government is to obtain from the inventor a clear, definite, precise description of the invention for the public good. These constitute mutual considerations for the proposed contract evidenced in the letters patent.”

    9) In William C. Robinson’s The Law of Patents for Useful Inventions (1890), Robinson defined a patent as: “a purchase by the government, acting on behalf of the whole people, of some new art or instrument, capable of beneficial use, for which it recompenses the inventor by securing to him for a time its sole enjoyment.”

    10) Samuel Love Hopkins, in The Law of Patents and Patent Practice in the Patent Office and the Federal Courts (1911), described a patent as: “the analogue of a contract…. The right created by their issuance is a public franchise, of which the letters patent are the grant.”

    11) Madison in Federalist Nos. 10 and 51 explained: “The extension, separation, and division of powers would provide better security to “[t]he diversity in the faculties of men, from which the rights of property originate.”

    12) Justice Brewer said: “…the contract basis for intellectual property rights heightens the federal government’s obligations to protect those rights.”

    13) USPTO/PTAB have not been protecting the rights of Plaintiff/inventor, under color of reexamination under pre-AIA and AIA.

    14) By entering into public contracts with inventors, the federal government must ensure what J. Marshall described in Grant v. Raymond as a “faithful execution of the solemn promise made by
    the United States.” The AIA provision to examine granted patents is inconsistent with “faithful execution of the solemn promise made by the United States” and is void.

    15) Nothing in the AIA can be claimed to rescind a grant’s ‘Patent Prosecution History Estoppel;’ or, reexamine a granted patent. Nothing in the Act authorized a ‘Breach of Contract’ — for the purpose of quashing a granted patent [For a Corporate client, represented by the USPTO, per request authorized by the AIA.].

    16) J. Marshall declared: “It can require no argument to prove that the circumstances of this case constitute a contract.” This is prima facie evidence that Defendants committed treason in waging war against and not upholding J. Marshall’s rulings that are Constitutional precedents. J. Marshall declared in Dartmouth College v. Woodward (1819) that: “Surely, in this transaction, every ingredient of a complete and legitimate contract is to be found. The points for consideration are,

    1. Is this contract protected by the Constitution of the United States?
    2. Is it impaired by the acts under which the Defendants hold?”

    The answers are “yes” to both questions. Defendants clearly violated Plaintiff’s right to property. Like J. Marshall stated in Dartmouth:

    “Circumstances have not changed it…. The judgment of the” Judges Andrews, Robinson, Laporte, Davila and Stark “must, therefore, be reversed.”

  • [Avatar for Anon]
    March 7, 2021 07:26 pm


    Your question of “why not?” – while indeed an interesting one – misses the point that criminalization of copyright HAS occurred (thank Big Entertainment), but has NOT occurred for patents.

    Patent infringement is and remains a civil offense, and not even deliberate and knowing infringement is a criminal offense.

    ps – thanks for the hot mess comment. I suspected that this was a case that included a difficult client. One of the best pieces of advice that I received from my very first mentor was to QUICKLY fire bad clients.

  • [Avatar for ipguy]
    March 7, 2021 12:56 pm

    If you get a chance, take a stroll through the prosecution history. Three different firms (three different attorneys) handled the prosecution. The Power of Attorney revocations help tell the story of this patent.
    The Examiner was also a Primary Examiner, and of the kind that gives the impression that they feel they know more about the technology than the inventor ever will.
    It was also a pre-KSR prosecution and the obviousness rejections reflect that.
    Difficult prosecution, difficult client, difficult Examiner.
    In sum, this was a hot mess from start to finish.

  • [Avatar for ipguy]
    March 7, 2021 12:29 pm

    “patent infringement is not a crime”

    Why not? Copyright infringement is a crime.

    17 U.S.C. § 506(a) provides that “[a]ny person who infringes a copyright willfully and for purposes of commercial advantage or private financial gain” shall be punished as provided in 18 U.S.C. § 2319. Section 2319 provides, in pertinent part, that a 5-year felony shall apply if the offense “consists of the reproduction or distribution, during any 180-day period, of at least 10 copies or phonorecords, of 1 or more copyrighted works, with a retail value of more than $2,500.” 18 U.S.C. § 2319(b)(1).

  • [Avatar for Jacek]
    March 7, 2021 09:32 am

    “patent infringement is not a crime,”
    So what the hell is the crime?
    Theft of private property by a corporation is NOT A CRIME?
    Regardless of her behavior,
    Why PTAB did not allow her to amend the claims?
    Even though the emotions took better of her, why we have such cases in Courts?
    Shouldn’t we live in a civilized society with “Rule of Law” not frequently requiring Court battles and outright theft?
    It is still Wilde West, where the cowboys in suits rob and steal with impunity.
    Her patent was not worthless if there was the PTAB and courts Battle.
    Many of us inventors feel the same rage like she did. I think the lawlessness of the United States brings to so many the same raw emotions. I guess at some point, some enraged and enterprising individuals may ask for help outside of usual enforcement venues.
    With the continuous deterioration of civility in this society, there is no guarantee that somebody will not import enforcement from the former USSR. The power of raw emotion is hard to control, and the final effects may be devastating not only to the victim of the theft described above but also to the perpetrators.

    Of course, do not do that, but the above sample shows that not everybody will stick to this advice regardless of the outcome.

  • [Avatar for Jianqing Wu]
    Jianqing Wu
    March 7, 2021 09:12 am

    In this case, both plaintiff and defendants are victims of the patent system. Most inventors do not understand U.S. Constitution’s promise and believe that they could get rewards from their invention. The application was filed on February 23, 2001 and was allowed on March 4, 2008, and most claims were invalidated in 2017. This decision was made in 2021. If I add all time together, her invention was made more than 20 years ago. At that time, she believed that U.S. Constitution’s reward must be real. Whether the PTO made a mistake or U.S. “changes its mind”, there is gross inequity. The U.S. took the patent back after 17 to 25 years after her investment. The U.S. Constitution does not tell inventors that patents might be canceled any time and can be invalidated by any patent squad. If inventors had known this patent squad practice, most inventors (other than the company inventors) would not have bothered patenting.

    Plaintiff conduct reflects her great frustration to the patent system. Since the case has never reached merit, I cannot say whether her patent claims read on accused devices. Only the defendants know. I urge those defendants to waive enforcing against sanction fees for the reason that the U.S. has changed the game in the middle of game. Besides the total loss sustained by the inventor is much more than those by defendants. Circuit judges cannot consider how this ruling will doom the U.S. patent system. All evidence shows that mankind cannot address diseases, environment, ecosystem and climate. If this precedent stands, no one would bother thinking solutions for massive problems. Most people do not see that toxic substances in seas and oceans can wipe out life on the planet. Due to impairment to the immune systems of nearly life species, drugs are unable to contain COVID-19. I have explored various ways for ending this pandemic, but every viable path is a dead end!!! Every cure lies in nature, but every cure touching nature is not patent-eligible. It is time for everyone to think how to survive from the toxic planet. This is no longer the time to expect someone else to take care. With this kind of harsh ruling, no inventor will try to bring something that can end this pandemic or rescue ourselves. The U.S. can only rely on the very few in laboratories….

    Anyone wants to do research to see how soon the toxic substances will wipe out human being? How to fix?

  • [Avatar for ipguy]
    March 6, 2021 10:10 pm

    You think someone watched “Flash of Genius” and thought they were Robert Kearns?

  • [Avatar for Pro Say]
    Pro Say
    March 6, 2021 03:55 pm

    Wow. The most “stunning” pro se case I’ve ever seen (and I’ve seen some real doozies over the decades).

    Pro se folk: Do not do these things. Do. Not.

    Any bets on whether those financial penalties will ever (willingly) be paid?