Source Vagabond Systems Ltd v. Hydrapak, Inc

United States Court of Appeals
for the Federal Circuit
______________________
SOURCE VAGABOND SYSTEMS LTD.,
Plaintiff-Appellant,
AND
PEARL COHEN ZEDEK LATZER LLP,
Sanctioned Party-Appellant,
v.
HYDRAPAK, INC.,
Defendant-Appellee.
______________________
2013-1270, -1387
______________________
Appeals from the United States District Court for the
Southern District of New York in No. 11-CV-5379, Judge
Colleen McMahon.
______________________
Decided: June 5, 2014
______________________
WILLIAM G. J ENKS , Jenks IP Law, PLLC, of Washing-
ton, DC, argued for plaintiff-appellant and sanctioned
party-appellant. With him on the brief was G UY YONAY ,
Pearl Cohen Zedek Latzer, LLP, of New York, New York.

-- 1 of 18 --

SOURCE VAGABOND SYSTEMS v. HYDRAPAK, INC. 2
ERIC S. WALTERS , Davis Wright Tremaine LLP, of San
Francisco, California, argued for defendant-appellee.
With him on the brief was ERICA D. WILSON. Of counsel
was BENJAMIN J. BYER, of Seattle, Washington.
______________________
Before M OORE, REYNA , and WALLACH , Circuit Judges.
WALLACH , Circuit Judge.
Source Vagabond Systems, Ltd., Pearl Cohen Zedek
Latzer LLP, Guy Yonay, and Clyde Shuman (collectively,
“Source” or “Appellants”) appeal the decision of the dis-
trict court sanctioning Source under Federal Rule of Civil
Procedure 11 (“Rule 11”) for bringing a frivolous patent
infringement suit against Hydrapak, Inc. (“Hydrapak”).
For the reasons set forth below, this court affirms.
BACKGROUND
Source manufactures water reservoirs in which drink-
ing water can be stored inside backpacks for use in out-
door activities. Source is the assignee of U.S. Patent No.
7,648,276 (the “’276 patent”), which covers Source’s
Widepac reservoir.
Guy Yonay and Clyde Shuman are partners in the law
firm Pearl Cohen Zedek Latzer LLP. Prior to the present
action, Mr. Yonay prosecuted the ’276 patent application.
In the underlying district court litigation, Mr. Yonay
signed the original Complaint on behalf of Source, and
Mr. Shuman signed the Amended Complaint.
I. The ’276 Patent
The ’276 patent, in which Yoram Gill is the named in-
ventor, relates to flexible hydration reservoirs and focuses
specifically on the sealing mechanisms for reservoirs. The
reservoir includes a hermetic seal to prevent leakage and
a large opening to facilitate the filling and cleaning of the

-- 2 of 18 --

SOURCE VAGABOND SYSTEMS v. HYDRAPAK, INC. 3
container. ’276 patent col. 6 ll. 17–24. The only claim at
issue is claim 1, reproduced below:
1. A sealable flexible liquid container system compris-
ing:
a flexible liquid container having a cavity for re-
ceiving liquids, said cavity formed of two films
having the majority of their perimeter fused, and
a portion of the perimeter unfused so as to present
a lateral opening for filling the container with liq-
uids, and a liquid dispensing outlet;
a rod having a first end and a second end, fixedly
attached to the container laterally across the lat-
eral opening of the flexible container so that a
portion of the container adjacent the lateral open-
ing can be folded over the rod and substantially
overlap an adjacent portion of the container; and
a sealer comprising an elongated rigid member
having two opposite sides along which a hollow
cavity is extended with a longitudinal slot where-
in said slot is adapted to accommodate said two
films, wherein the sealer is provided with an open-
ing on at least one of the opposite sides with a
broadening for inserting an end of the rod into the
cavity when the portion of the container is folded
over the rod into the hollow passage, the slot being
narrower than the diameter of the rod, so that the
sealer is only to be slidingly mounted sideways
over the rod.
Id. col. 10. ll. 20–42 (emphases added).
The closure disclosed in the ’276 patent includes a
rod, over which the top portion of the container is folded,
and a sealer that is slidingly mounted over the rod when
the container is folded over the rod. Id. col. 7 ll. 20–28.
Figures 2, 3A, and 3B, reproduced below, are illustrative.

-- 3 of 18 --

SOURCE VAGABOND SYSTEMS v. HYDRAPAK, INC. 4
Id. figs. 2, 3A, 3B. After water fills the container ((10) in
Figures 3A and 3B), the opening has to be hermetically
sealed. Id. col. 7 ll. 1–2. Figure 2 illustrates an isometric
view of the sealer. Id. col. 7 ll. 3–5.
Figure 3A depicts the water container (10) that is
folded so that extension (16) is wrapped over the opening
and a fold (62) is formed. Id. col. 7 ll. 20–21. Rod (60)
protrudes from the hollow cylinder (52) in order to ease
the insertion of the fold between the rod and the cylinder.
Id. col. 7 ll. 28–30. “Sealer (50) cannot be removed from
the fold unless it slides in an opposite direction to the
direction it has been put on since slot (54) is narrower
than the diameter of rod (60).” Id. col. 7 ll. 33–36 (empha-
sis added). Figure 3A shows sealer (50) halfway put onto
fold (62). Id. col. 7 ll. 36–37.

-- 4 of 18 --

SOURCE VAGABOND SYSTEMS v. HYDRAPAK, INC. 5
Figure 3B illustrates the hydration system completely
closed by the sealer. Id. col. 7 ll. 38–40. When sealer (50)
is fully inserted and container (10) is closed, water (28)
from the container “cannot leak even if the container is
oriented upside down so that the fold is in the bottom of
the container. . . . The container is thus hermetically
sealable if the slot in the hollow cylinder is slightly wider
than twice the thickness of the container.” Id. col. 7 ll.
45–52.
The specification explains: “[w]hen the portion of the
container provided with the lateral opening is folded over
the rod, substantially overlapping an adjacent portion of
the container and the sealer is slidingly mounted over the
folded portion of the container, liquid is prevented from
leaking out of the container through the lateral opening.”
Id. at [57].
II. The Accused Product—Hydrapak’s Reversible
Reservoir II
Hydrapak also manufactures a flexible hydration res-
ervoir called the Reversible Reservoir II, the accused
product in this case. The Reversible Reservoir II has a
sealing member, called a “slider,” with an opening or gap
across its long axis. The slider attaches to six elements,
called “catches,” located on the outside of two plastic lips
that run along each side of the water reservoir’s mouth.
The catches guide the slider along the container’s plastic
lips, thereby locking the slider in place, preventing de-
tachment. One of the lips “contains a small protrusion,
called a ‘lip bulge,’ on its interior proximal end.” J.A. 189.
The following pictures of the Reversible Reservoir depict
the “lip bulges”:

-- 5 of 18 --

SOURCE VAGABOND SYSTEMS v. HYDRAPAK, INC. 6
J.A. 189. The following two pictures depict the catches:
J.A. 190.
III. Proceedings
On August 2, 2011, Source sued Hydrapak for, inter
alia, infringing “at least claim 1 of the ’276 patent, either
literally, or under the doctrine of equivalents.” J.A. 78.
On September 16, 2011, Hydrapak served a sanctions
motion under Rule 11. On October 6, 2011, Source filed
an Amended Complaint, and on October 12, 2011, Hy-
drapak served an amended Rule 11 motion.1
In late 2011, the parties filed cross motions for sum-
mary judgment with respect to infringement. Source
argued the claim limitation “the slot being narrower than
the diameter of the rod, so that the sealer is only to be
slidingly mounted sideways over the rod” should be con-
strued to mean “the slot is narrower than the diameter of
the rod together with the container folded over it, so that
the sealer is only to be slidingly mounted sideways over
1 Rule 11 includes a “safe harbor” period, which
provides that, before a motion for sanctions is filed, the
party against whom the sanctions will be sought must be
notified of the potential Rule 11 violation and given a
twenty-one-day period to withdraw the offending claim.
Fed. R. Civ. P. 11(c)(2). Source declined to withdraw its
Amended Complaint.

-- 6 of 18 --

SOURCE VAGABOND SYSTEMS v. HYDRAPAK, INC. 7
the rod and the container.” Source Vagabond Sys. Ltd. v.
Hydrapak, Inc., No. 11 Cv. 5379 (S.D.N.Y. Apr. 11, 2012)
(“Dist. Ct. Op.”) (J.A. 4).
The district court granted Hydrapak’s motions for
summary judgment and Rule 11 sanctions on April 11,
2012. Regarding claim construction, the court said there
was “nothing complicated or technical” about the claim
limitation “slot being narrower than the diameter of the
rod,” and that none of the words of this limitation “re-
quires definition or interpretation beyond its plain and
ordinary meaning.” J.A. 4. Accordingly, the court gave
“slot being narrower than the diameter of the rod” its
“plain and ordinary meaning.” J.A. 4. The district court
stated that Source’s proposed claim interpretation “vio-
lates all the relevant canons of claim construction” and
that even under Source’s own construction, Hydrapak did
not infringe. J.A. 8–9. It also found the literal infringe-
ment claim “lacked evidentiary support no matter how
the claim was construed” and “the difference is apparent
to the naked eye, and the tape measure leaves no room for
doubt.” J.A. 8. Specifically, the district court determined
that in Hydrapak’s products the slot is larger than the
diameter of the rod, even under Source’s proposed con-
struction.
A determination on the “amount of sanctions” was
referred to Magistrate Judge James L. Cott. Hydrapak’s
final request for attorney’s fees and costs was
$294,636.91, consisting of $289,532.74 in attorney’s fees
and $5,104.17 in costs. Neither party made any distinc-
tion between Source and its counsel in its briefs.
On May 11, 2012, Source filed two notices of appeal:
one addressing the district court’s denial of Source’s
motion for reconsideration of the Rule 11 Order and the
second addressing the district court’s merits decision.
Source subsequently filed a motion terminating the

-- 7 of 18 --

SOURCE VAGABOND SYSTEMS v. HYDRAPAK, INC. 8
motion for reconsideration appeal. The appeal on the
merits of the district court’s decision moved forward.
On January 11, 2013, this court summarily affirmed
the district court’s summary judgment decision and
denied Hydrapak’s motion for sanctions for a frivolous
appeal.
Parallel with Source’s merits appeal to this court,
Magistrate Judge Cott determined the sanctions were
based on two interrelated violations of Rule 11: first,
“Source made frivolous legal claims in its submissions to
the Court, in violation of Rule 11(b)(2); and [second,]
Source failed to conduct an adequate investigation before
filing this lawsuit, in violation of Rule 11(b)(3).” J.A. 19.
He recommended Source’s counsel pay $187,308.65 in
partial attorney’s fees, but that Source not be sanctioned.2
Magistrate Judge Cott found the recommended sanction
was “consistent with the deterrence purpose of the Rule.”
J.A. 45–46. His order warned Appellants in bold letters
that: “Failure to file objections within fourteen (14) days
will result in a waiver of objections and will preclude
appellate review.” J.A. 47. Appellants did not file any
objection to Magistrate Judge Cott’s report.
2 The district court explained:
Given counsel’s sole responsibility, as a matter of
law, for the violations of Rule 11(b)(2), and coun-
sel’s additional responsibility for the failure to in-
vestigate under Rule 11(b)(3), I recommend that
Yonay and Shuman be held responsible for any
monetary sanction. I further recommend Yonay
and Shuman’s law firm, Pearl Cohen Zedek
Latzer LLP be held jointly and severally liable in
accordance with Fed. R. Civ. P. 11(c)(1).
J.A. 24.

-- 8 of 18 --

SOURCE VAGABOND SYSTEMS v. HYDRAPAK, INC. 9
The district court adopted Magistrate Judge Cott’s
calculation of sanctions. Hydrapak argued it should
receive attorney’s fees for defending against the (termi-
nated) reconsideration motion. The district court agreed
and determined the fees incurred in opposing Source’s
motion for Reconsideration should be included in the
requested sanction, raising the sanction amount to
$200,054.00.
Source timely appealed the district court’s sanctions
determination and this court has jurisdiction pursuant to
28 U.S.C. § 1295(a)(1) (2012).
D ISCUSSION
I. Standard of Review
In determining whether Rule 11 sanctions are war-
ranted, the Federal Circuit applies the law of the regional
circuit. Antonious v. Spalding & Evenflo Cos. Inc., 275
F.3d 1066, 1072 (Fed. Cir. 2002). In the Second Circuit,
“liability for Rule 11 violations ‘requires only a showing of
objective unreasonableness on the part of the attorney or
client signing the papers.’” ATSI Commc’ns, Inc. v. Shaar
Fund, Ltd., 579 F.3d 143, 150 (2d Cir. 2009) (quoting Ted
Lapidus, S.A. v. Vann, 112 F.3d 91, 96 (2d Cir. 1997)). All
aspects of a district court’s imposition of Rule 11 sanctions
are reviewed under an abuse of discretion standard.
Caisse Nationale De Credit Agricole-CNCA v. Valcorp,
Inc., 28 F.3d 259, 264 (2d Cir. 1994); see also Cooter &
Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990). An
“abuse of discretion occurs when a district court base[s]
its ruling on an erroneous view of the law or on a clearly
erroneous assessment of the evidence, or render[s] a
decision that cannot be located within the range of per-
missible decisions.” Kiobel v. Millson, 592 F.3d 78, 81 (2d
Cir. 2010) (internal quotation marks and citation omit-
ted).

-- 9 of 18 --

SOURCE VAGABOND SYSTEMS v. HYDRAPAK, INC. 10
In patent lawsuits, “[d]efending against baseless
claims of infringement subjects the alleged infringer to
undue costs—precisely the scenario Rule 11 contem-
plates.” View Eng’g, Inc. v. Robotic Vision Sys., 208 F.3d
981, 986 (Fed. Cir. 2000). Rule 11(b)(2) mandates that, in
any filing, counsel certifies he or she has made a reasona-
ble inquiry that “the claims, defenses, and other legal
contentions are warranted by existing law.” Fed. R. Civ.
P. 11. Rule 11(b)(3) also requires that counsel certify they
have made a reasonable inquiry into whether their “fac-
tual contentions have evidentiary support.” Id.; see also
Int’l Shipping Co., S.A. v. Hydra Offshore, Inc., 875 F.2d
388, 390 (2d Cir. 1989) (Sanctions are appropriate where
an attorney fails to “conduct a reasonable inquiry into the
viability of a pleading before it [was] signed.” (internal
quotation marks and citation omitted)). Sanctions may be
imposed for counsel’s failure to make a reasonable inquiry
into either the facts or the law. Caisse Nationale De
Credit Agricole-CNCA, 28 F.3d at 264.
II. Analysis
We turn to the legal and factual issues that formed
the bases of the district court’s sanctions determination.
The district court found that Source had an obligation to
demonstrate “exactly why it believed before filing the
claim that it had a reasonable chance of proving in-
fringement.” J.A. 7–8. The court ultimately found Source
could not demonstrate this belief as it related to either
literal infringement or the doctrine of equivalents.
The district court found claim construction of the
slot/rod limitation “lies at the heart of this lawsuit.” J.A.
4. It determined that the claim limitation stating the
“slot being narrower than the diameter of the rod” re-
quired that the slot is narrower than the rod without
including the portion of the container folded over the rod.
That construction was not disturbed by this court. J.A.
1639–40.

-- 10 of 18 --

SOURCE VAGABOND SYSTEMS v. HYDRAPAK, INC. 11
A. Claim Construction
Source argues its proposed claim construction was
reasonable and not precluded by the plain language of the
claim when read in context. Hydrapak counters that
Source did not “look to the words” of claim 1 and inserted
additional words to change the unambiguous meaning of
the claim.
A basic principle of claim construction is that “the
words of a claim are generally given their ordinary and
customary meaning.” Phillips v. AWH Corp., 415 F.3d
1303, 1312 (Fed. Cir. 2005) (en banc) (internal quotation
marks and citation omitted). Thus, “a claim construction
analysis must begin and remain centered on the claim
language itself, for that is the language the patentee has
chosen to particularly point[ ] out and distinctly claim[ ]
the subject matter which the patentee regards as his
invention.” Innova/Pure Water, Inc. v. Safari Water
Filtration Sys., Inc., 381 F.3d 1111, 1116 (Fed. Cir. 2004)
(internal quotation marks and citation omitted); see also
White v. Dunbar, 119 U.S. 47, 52 (1886) (explaining “[t]he
claim is a statutory requirement, prescribed for the very
purpose of making the patentee define precisely what his
invention is; and it is unjust to the public . . . to construe
it in a manner different from the plain import of its
terms.”). “The claims, of course, do not stand alone.”
Phillips, 415 F.3d at 1315. “Rather, they are part of a
fully integrated written instrument, consisting principally
of a specification that concludes with the claims.” Id.
(internal quotation marks and citation omitted). “For
that reason, claims must be read in view of the specifica-
tion, of which they are a part.” Id. (internal quotations
marks and citation omitted).
Source argued to the district court that the slot/rod
limitation (i.e., “the slot being narrower than the diameter
of the rod, so that the sealer is only to be slidingly mount-
ed sideways over the rod”) should be construed to mean

-- 11 of 18 --

SOURCE VAGABOND SYSTEMS v. HYDRAPAK, INC. 12
“the slot is narrower than the diameter of the rod together
with the container folded over it, so that the sealer is only
to be slidingly mounted sideways over the rod and the
container.” J.A. 354 (emphasis added). Source contends
it based its construction on the specification and the
“context of claim 1 of the ’276 patent as a whole,” J.A. 355,
and “there is no bar to proposing a claim construction that
only adds words to the claim being construed.” Reply 6.
Source added words to the actual claim language,
thus changing the relevant comparison from the slot to
the diameter of the rod to the slot to the diameter of the
rod added to the thickness of the container folded over it.
Instead of looking to the words themselves, Source added
language without support from the specification or prose-
cution history, altering otherwise unambiguous claim
language, a practice this court has repeatedly rejected.
See Phillips, 415 F.3d at 1312; Vitronics Corp. v. Concep-
tronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996) (“[W]e
look to the words of the claims themselves . . . to define
the scope of the patented invention.”); see also McCarty v.
Lehigh Val. R.R. Co., 160 U.S. 110, 116 (1895) (“[I]f we
once begin to include elements not mentioned in the
claim, in order to limit such claim . . . we should never
know where to stop.”). As the district court said, “an
‘analysis’ that adds words to the claim language [without
support in the intrinsic evidence] in order to support a
claim of infringement” does not follow “‘standard canons
of claim construction.’” J.A. 9.
Additionally, the surrounding claim language demon-
strates that the “the slot,” “the rod, and “the portion of the
container . . . folded over the rod” are distinct from each
other. The claim language does not compare the size of
the slot to the size of the rod together with the folded over
container. Source had the ability to draft the claim that
way but did not. It cannot correct that failure by adding
words to otherwise unambiguous claim language.

-- 12 of 18 --

SOURCE VAGABOND SYSTEMS v. HYDRAPAK, INC. 13
Source conclusorily argues that the claim language is
ambiguous, but it did not make that contention at the
district court and, here, does not explain what terms are
ambiguous or how. Likewise, Source does not, and could
not, argue that the patentee acted as his own lexicogra-
pher. There is no indication or reference in the specifica-
tion that “rod” means “rod-plus-container.”
In any event, the district court examined the specifi-
cation and held that Source’s proposed claim construction
“contradicts the specification, which states: ‘[s]ealer 50
cannot be removed from the fold unless it slides in an
opposite direction to the direction it has been put on since
slot 54 is narrower than the diameter of rod 60.’” J.A. 5
(quoting ’276 patent col. 7 ll. 33–36). Source contends this
part of the specification does not render its arguments
frivolous because the language in the specification “does
not address the relative sizes of the rod, slot, and contain-
er film, but rather the relative width of the rod and the
slot after the container is folded over the rod.” Appel-
lants’ Br. 30.
Source further contends the section quoted by the dis-
trict court refers to Figure 3A and the “relative sizes
shown in the drawings rebut the Court’s finding that
Source’s claim construction was objectively unreasonable.”
Id. at 33. However, “patent drawings do not define the
precise proportions of the elements depicted and may not
be relied on to show particular sizes if the specification is
completely silent on the issue.” Hockerson-Halberstadt,
Inc. v. Avia Grp. Int’l, Inc., 222 F.3d 951, 956 (Fed. Cir.
2000). The district court considered the drawings in the
specification and correctly determined that Source’s
proposed construction was contradicted by the patent’s
specification.
“In addition to consulting the specification, . . . a court
should also consider the patent’s prosecution history, if it
is in evidence.” Phillips, 415 F.3d at 1317 (internal

-- 13 of 18 --

SOURCE VAGABOND SYSTEMS v. HYDRAPAK, INC. 14
quotation marks and citation omitted). “[T]he prosecution
history can often inform the meaning of the claim lan-
guage by demonstrating how the inventor understood the
invention and whether the inventor limited the invention
in the course of prosecution, making the claim scope
narrower than it would otherwise be.” Id. Here, the
prosecution of the ’276 patent supports the plain meaning
of the claim language. Before claim 1 was amended, the
referenced slot did not have an upper size limit.3 In
response to an invalidity rejection, the patentee amended
claim 1 to require a “slot being narrower than the diame-
ter of the rod.” J.A. 320. The prosecution history is thus
consistent with the claim language and the specification,
and further demonstrates that Source’s claim construction
3 Initially, claim 1 identified a lower size limit:
“wherein the slot is not narrower than the total thickness
of the folded portion of the container and the adjacent
portion when inserted through the slot” but identified no
upper size limit. See J.A. 279 (emphasis added). In
response to an obviousness rejection over Dikeman, a
prior art reference, Source added to the claim language:
“the distance between the lips allow[] the sealer to be
mounted only slidingly sideways over the rod.” J.A. 300.
However, the Examiner found this amendment insuffi-
cient as failing to comply with the written description
requirement, nonenabling, and indefinite. Thus, Source
amended a final time and replaced the phrases “substan-
tially parallel lips” and “distance between the lips allow-
ing the sealer only to be mounted slidingly sideways over
the rod” with the phrase “slot being narrower than the
diameter of the rod so that the sealer [is] to be mounted
only slidingly sideways over the rod.” J.A. 320. This
explicitly narrowed the claim by excluding any device in
which the slot is not narrower than the diameter of the
rod.

-- 14 of 18 --

SOURCE VAGABOND SYSTEMS v. HYDRAPAK, INC. 15
is unreasonable and that the claims do not cover products
with a slot wider than the diameter of the rod.
Finally, Source argues that Hydrapak’s proposed con-
struction “would render the entirety of claim 1 nonsensi-
cal,” J.A 356, and “Source read[s] the claim to avoid a
nonsensical result.” Appellants’ Br. 35. However, Source
should have known it could not prevail because a court
may not rewrite a claim even if giving a disputed claim its
plain meaning would lead to a “nonsensical result.” See
Chef Am., Inc. v. Lamb-Weston, Inc., 358 F.3d 1371, 1373
(Fed. Cir. 2004) (explaining “courts may not redraft
claims, whether to make them operable or to sustain their
validity” even if the plain meaning of the claim leads to “a
nonsensical result”); Generation II Orthotics Inc. v. Med.
Tech. Inc., 263 F.3d 1356, 1365 (Fed. Cir. 2001) (“[C]laims
can only be construed to preserve their validity where the
proposed claim construction is ‘practicable,’ is based on
sound claim construction principles, and does not revise
or ignore the explicit language of the claims.”).
Source also cites several cases to argue it is proper to
rely on the purpose of the invention in construing the
claim. Appellants’ Br. 35–36. The district court properly
determined that “claim construction is a function of the
words of the claim not the ‘purpose’ of the invention,” and
that Source’s construction “violates nearly every tenet of
claim construction and amounts to a wholesale judicial
rewriting of the claim.” J.A. 4; see also Cohesive Techs.
Inc. v. Waters Corp., 543 F.3d 1351, 1368 (Fed. Cir. 2008)
(“To be clear, it is the purpose of the limitation in the
claimed invention—not the purpose of the invention
itself—that is relevant.”). Source was required to “per-
form an objective evaluation of the claim terms” to satisfy
its obligation to conduct a reasonable pre-suit evaluation.
Eon-Net LP v. Flagstar Bancorp, 653 F.3d 1314, 1329
(Fed. Cir. 2011). By proposing a definition that ignores
the canons of claim construction, Source did not meet that
standard. The district court did not abuse its discretion

-- 15 of 18 --

SOURCE VAGABOND SYSTEMS v. HYDRAPAK, INC. 16
in imposing Rule 11(b)(2) sanctions based upon Source’s
frivolous claim construction arguments.
B. Infringement
i. Literal Infringement
Source argues that Hydrapak’s “sealing member” “lit-
erally include[ed]” a “slot narrower than the diameter of
the rod, so that the sealer is only to be slidingly mounted
sideways over the rod.” J.A. 360. The district court did
not abuse its discretion in finding that, even under
Source’s claim construction, there was no reasonable basis
for alleging Hydrapak’s Reversible Reservoir II literally
infringed.
The district court found that Source’s opposition to
the Rule 11 motion did “not even contain any product
measurement that would tend to show whether Hy-
drapak’s products infringe under any version of claim
construction!” J.A. 8. Mr. Yonay’s declaration in opposi-
tion to the motion for sanctions lacked any analysis or
product measurement and calculation that would tend to
support a finding that he performed a sufficient analysis
supporting a reasonable belief of literal infringement,
even under Source’s own proposed claim construction. See
J.A. 765. The declaration simply restated the claim
construction arguments and asserted the conclusory
statement that he “analyzed the sample to ascertain
whether or not it infringes at least claim 1 of [the ’276
patent] by comparing every element of claim 1, as con-
strued, to the Reversible Reservoir II.” J.A. 765. A “pa-
tent holder, if challenged, must be prepared to
demonstrate to both the court and the alleged infringer
exactly why it believed before filing the claim that it had a
reasonable chance of proving infringement.” View Eng’g,
208 F.3d at 986. Source was not prepared and failed to
offer any legitimate evidence supporting a reasonable
belief that it had a meritorious direct infringement claim.

-- 16 of 18 --

SOURCE VAGABOND SYSTEMS v. HYDRAPAK, INC. 17
On appeal, Source also argues the district court
abused its discretion because it did not address Hy-
drapak’s product’s “catches” “either on the merits or with
respect to the reasonableness of Source’s argument.”
Appellants’ Br. 41. Hydrapak counters that the argument
is baseless because the catches are not part of Hydrapak’s
container itself. As Source recognizes, see J.A. 406, the
catches are “discrete elements” that are attached to
“plastic lips” that in turn are “attached to the outside of
the container.” J.A. 406. Additionally, the catches do not
go onto the portion of the container that is folded over the
rod, as is required by Source’s proposed claim construc-
tion, which combines the diameter of the rod and thick-
ness of the “container folded over it.” J.A. 406. The
district court explicitly recognized Hydrapak’s product
could not literally infringe, stating: “In both of defendant’s
products, the slot is still several millimeters larger than
the diameter of the “rod,” (i.e., the rod with the portion of
the container that is folded over it). So a finding of literal
infringement is impossible.” J.A. 6. In opposing Hy-
drapak’s Rule 11 motion, Source did not explain why it
believed, prior to filing suit, that the Reversible Reservoir
II literally infringed. Source also failed to submit any
evidence demonstrating pre-suit analysis that reasonably
concluded there was literal infringement because the
thickness of the lips and catches should be considered
part of the thickness of “the folded over container.”
Since Source’s claim construction is clearly inade-
quate, and, indeed, the literal infringement claim “lacked
evidentiary support no matter how the claim was con-
strued,” J.A. 8, the district court did not abuse its discre-
tion in imposing Rule 11 sanctions.
ii. Doctrine of Equivalents
Source argues its doctrine of equivalents arguments
were objectively reasonable. Source’s only mention of the
doctrine of equivalents in its Opposition to the Rule 11

-- 17 of 18 --

SOURCE VAGABOND SYSTEMS v. HYDRAPAK, INC. 18
motion was the assertion that Hydrapak infringed “either
literally or under the doctrine of equivalents.” J.A. 744,
766. Source failed to offer any legal or factual support for
this conclusory statement. See J.A. 9 (“[N]either the
attorney’s affidavit nor plaintiff’s ‘pre-suit analysis’ . . .
[ever] mentioned, let alone analyzed, how Hydrapak’s
product infringed Source’s patent under the doctrine of
equivalents.”). Counsel was obligated to come forward
with a showing of exactly why, prior to filing suit, they
believed their claim of infringement under the doctrine of
equivalents was reasonable. See View Eng’g, 208 F.3d at
986. Source did not comply with this requirement below.
Under these circumstances, the district court did not
abuse its discretion in finding a Rule 11 violation.
CONCLUSION
Source’s claim construction and infringement posi-
tions were untenable. Source did not make reasonable
arguments and did not make a reasonable inquiry into its
claims against Hydrapak. Because of the specific circum-
stances of this case, this court affirms the district court’s
Orders imposing $200,054.00 in Rule 11 sanctions against
Source.
AFFIRMED

-- 18 of 18 --