The Upshot of Epic Tech v. Pen-Tech: The Presumption of Validity Is Not a Pre-Suit Investigation

Epic Tech’s U.S. Patent No. 8,545,317, directed to a networked electronic sweepstakes system, issued in October 2013. Alice Corp. v. CLS Bank came eight months later. Over the next several years, the U.S. Patent and Trademark Office (USPTO) rejected claims in three related Epic Tech applications under Section 101, having already found claims in two of them patentably indistinct from the ‘317 claims, and Epic Tech abandoned all three. A district court in Texas then held claims of the sibling ‘315 patent ineligible. In June 2020, six years after Alice, Epic Tech sued Pen-Tech Associates on the ‘317 patent. The firm that had been prosecuting the rejected applications filed the complaint.

The district court held the asserted claims ineligible on summary judgment but denied Rule 11 sanctions and fees under Sections  285,  1927, and its inherent power, crediting Epic Tech’s “good faith, pre-suit investigation” and the claim chart its counsel had prepared. On September 30, 2026, in a precedential opinion by Chief Judge Moore, the Federal Circuit vacated all four rulings. Epic Tech, LLC v. Pen-Tech Associates, Inc., No. 25-1624 (Fed. Cir. Sept. 30, 2026).

The reasoning turned on a distinction most pre-suit investigations ignore. The district court’s reliance on the infringement investigation, the panel wrote, “does not explain why sanctions were unjustified under Pen-Tech’s notice theory centered on validity.” Those facts “may bear on whether Epic Tech reasonably investigated infringement before filing suit, but they do not address the distinct question of whether Epic Tech should have investigated validity.” And in the sentence that will appear in every fee motion involving a pre-Alice software patent: “it does not suffice for Epic Tech or its counsel to rely only on the presumption of validity when faced with multiple indicators that these claims were unpatentable under § 101.”

The panel was careful about what it did not decide. It did not hold that Rule 11 was violated, and it did not say when notice of potential invalidity makes continued assertion of a presumptively valid patent unreasonable. It held only that a district court must engage with the question. The practical consequence is the same. The infringement comparison and the validity assessment are now two separate pre-suit obligations, and a record that answers the first says nothing about the second.

Three Regimes, Two Investigations

Practitioners sometimes talk about “the pre-suit investigation standard” as though there were one. There are at least three regimes, and until Epic Tech the Federal Circuit’s Rule 11 cases were almost entirely about infringement.

Rule 11(b)(3) is the familiar starting point. In patent cases, counsel must at minimum interpret the asserted claims and compare them to the accused device before filing. View Engineering, Inc. v. Robotic Vision Systems, Inc., 208 F.3d 981, 986 (Fed. Cir. 2000). Q-Pharma, Inc. v. Andrew Jergens Co., 360 F.3d 1295, 1302 (Fed. Cir. 2004), made the presence of an infringement analysis the key factor, and Intamin, Ltd. v. Magnetar Technologies Corp., 483 F.3d 1328 (Fed. Cir. 2007), held that a patentee need not always buy and dissect the accused product. Every one of those cases asked whether the patentee had compared claims to a product. None asked whether the patentee had considered whether the claims were valid. Epic Tech adds that question to Rule 11, which is where it reaches counsel directly.

Section 285 asks something broader. Under Octane Fitness, an exceptional case is one that “stands out from others” on the totality of the circumstances, and pre-suit diligence is a factor rather than a test. Bayer CropScience AG v. Dow AgroSciences LLC, 851 F.3d 1302, 1307 (Fed. Cir. 2017). The validity inquiry has lived here for a decade. In Rothschild Connected Devices Innovations, LLC v. Guardian Protection Services, Inc., 858 F.3d 1383 (Fed. Cir. 2017), the Federal Circuit reversed a fee denial because the district court ignored the patentee’s “willful ignorance of the prior art” after a safe-harbor letter arrived with anticipating references attached. The same opinion rejected the idea that fees require Rule 11-sanctionable conduct, quoting Octane: sanctionable conduct “is not the appropriate benchmark.” Chief Judge Moore repeated that holding this August in VDPP, LLC v. Volkswagen Group of America, Inc., No. 24-2226 (Fed. Cir. Aug. 19, 2026).

Section 1927 and inherent-power sanctions require bad faith or recklessness and are governed by regional circuit law. They are the regime patentees fear and the one least often triggered. The exposure that matters in ordinary litigation is Section 285, which needs no bad-faith finding, and now Rule 11, which needs no fee motion from a prevailing party to be raised.

The division of labor among the three has a practical consequence. A patentee can clear Rule 11 on infringement and still lose on Section 285 for validity, as Rothschild did. After Epic Tech, it can also lose on Rule 11 for validity while holding a perfectly good claim chart.

The District Courts Got There First

Epic Tech did not invent the idea that an issued patent can be too weak to assert. In Finnavations LLC v. Payoneer, Inc., No. 18-444 (D. Del. Mar. 18, 2019), Judge Andrews awarded § 285 fees after a § 101 dismissal and rejected the argument that the examiner’s allowance over four § 101 rejections excused the patentee from assessing eligibility itself. Issuance “cannot and should not be a license to sue with abandon,” he wrote, and “any reasonable patent attorney with an understanding of Section 101 law could have predicted the outcome.”

The point generalizes beyond § 101. In WPEM, LLC v. SOTI Inc., 2020 WL 555545 (E.D. Tex. Feb. 4, 2020), aff’d, No. 20-1483 (Fed. Cir. Dec. 9, 2020) (nonprecedential), Chief Judge Gilstrap awarded fees because the patentee had built its case on the user manual for version 11 of the accused software without asking whether version 10, which predated the patent and was linked from the same manual, was itself prior art. The court found that WPEM “conducted absolutely no pre-filing investigation into the validity or enforceability” of its patent, and that “even the most cursory” one would have found the problem.

What Epic Tech adds is the appellate statement that this failure is a Rule 11 question, not only a Section 285 one, and a description of what counts as notice.

What Counts as Notice

None of the three indicators in Epic Tech came from the defendant. That is the part of the opinion worth reading twice.

The first was Alice itself. The patent was examined under pre-Alice law and asserted six years after the law changed. The district court never addressed whether that alone put Epic Tech on notice, and the panel treated the omission as reversible. The point is not confined to software. Any claim examined before a Supreme Court or en banc decision reset the governing test carries the same question. A functional genus claim allowed before Amgen v. Sanofi is the life-sciences version of a software claim allowed before Alice.

The second was the family’s own prosecution history. The Section 101 rejections of indistinct claims in the continuations were office actions issued to Epic Tech’s own counsel. The district court brushed them aside on the ground that later prosecution history cannot limit an earlier patent’s claims. The panel pointed out that Pen-Tech had never argued claim scope; it argued notice. An examiner’s rejection of claims the USPTO itself called patentably indistinct from the asserted claims is a statement about how the asserted claims would fare under current law. It sits in the file wrapper.

The third was the sibling patent’s loss in another district. The district court dismissed Fusion Skill because “the issues were not the exact same.” The panel’s answer: “the issues need not be identical to provide notice of potential invalidity.” A related patent’s adverse ruling is in the patentee’s own docket.

The lesson for anyone who prosecutes as well as litigates is uncomfortable. The office action rejecting the continuation is notice to the litigator. The intervening Supreme Court decision is notice. The sibling patent’s loss is notice. Before filing, the question is not whether the patent issued, but whether these claims would issue today, and whether anything in the family’s history since issuance suggests the answer has changed.

A Validity Checklist

Each item corresponds to a failure that has drawn fees or sanctions.

1. Date the claims against the law. Identify when the asserted claims were examined and what has changed since: Alice for software and business methods, Amgen for functional genus claims, any en banc or Supreme Court decision in the relevant doctrine. A claim allowed under a superseded standard is a red flag on its own (Epic Tech).
2. Pull the whole family’s prosecution history. Look for post-issuance rejections in continuations, divisionals, and reissues, and for any examiner finding that pending claims are patentably indistinct from the asserted ones. Those rejections are the USPTO’s current view of your claims (Epic Tech).
3. Pull the family’s litigation and PTAB record. An adverse ruling on a sibling patent is notice even when the issues are not identical (Epic Tech). So is an IPR institution decision or final written decision on related claims.
4. Treat a safe-harbor letter with art attached as a hard stop. Read the references. A declaration of good-faith belief in validity that admits counsel never reviewed them is evidence for the other side (Rothschild).
5. Check whether the accused product is its own prior art. Earlier versions, archived manuals, and prior releases of the accused technology are the first place to look (WPEM).
6. Do not treat allowance as insulation. An examiner’s withdrawal of a § 101 rejection is not a validity opinion a court will defer to on a fee motion (Finnavations). The presumption of validity allocates the burden at trial; it is not a substitute for the investigation (Epic Tech).
7. Document the validity investigation separately from the infringement investigation. Epic Tech turned on a record that was full of infringement diligence and silent on validity. Make the file answer both questions.

The Other Half of the Cabinet

Epic Tech is about the law and the prosecution record. The same court has spent the past year saying the same thing about the patentee’s commercial files. In VDPP, fees were affirmed against a patentee that sued on an expired patent and sought pre-suit damages without checking the marking obligations in its own settlement licenses. In Viavi Solutions v. Platinum Optics Technology (Fed. Cir. Sept. 8, 2026) (nonprecedential), fees ran from the day a sworn declaration refuted a theory the patentee had built on a sample it had already licensed. Those cases are a subject for another day. The common thread is the one Epic Tech makes explicit: the evidence that should have stopped the suit was in the patentee’s possession before the complaint was filed.

Q-Pharma still states the floor, and Epic Tech did not raise it; the panel decided no sanctions question and set no threshold for when notice of invalidity makes assertion unreasonable. What it did decide is enough to change the file. A claim chart answers one question. A court that denies fees on that record now has to explain why, with Alice in the reporters and Section 101 rejections in the family’s own file wrapper, the claim still had a reasonable chance of success.