McOm Ip, LLC v. City National Bank of Florida

United States Court of Appeals
for the Federal Circuit
______________________
MCOM IP, LLC,
Plaintiff-Appellant
VICTORIA E. BRIEANT,
Sanctioned Party-Appellant
v.
CITY NATIONAL BANK OF FLORIDA,
Defendant-Appellee
______________________
2024-2089
______________________
Appeal from the United States District Court for the
Southern District of Florida in No. 1:23-cv-23427-RNS,
Judge Robert N. Scola, Jr.
______________________
Decided: May 15, 2026
______________________
WILLIAM P ETERSON R AMEY , III, Ramey LLP, Houston,
TX, argued for plaintiff-appellant and sanctioned party-ap-
pellant.
MICHAEL I. SANTUCCI, 500law, Fort Lauderdale, FL, ar-
gued for defendant-appellee. Also represented by
S ALVATORE F AZIO; T ED WHITLOCK, Ted Whitlock Regis-
tered Patent Atty PA, Fort Lauderdale, FL.
______________________
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MCOM IP, LLC v. CITY NATIONAL BANK OF FLORIDA 2
Before D YK, MAYER , and T ARANTO, Circuit Judges.
T ARANTO, Circuit Judge.
mCom IP, LLC, is the assignee of U.S. Patent
No. 8,862,508, which claims a “unified electronic banking
system” and a method of constructing a “unified electronic
banking environment.” In 2023, the Patent and Trade-
mark Office (PTO), in an inter partes review (IPR) under
35 U.S.C. §§ 311–19, held unpatentable all but four claims
of the ’508 patent, slating them for cancellation. Thereaf-
ter, mCom brought the present action against City Na-
tional Bank of Florida in the U.S. District Court for the
Southern District of Florida, alleging infringement of the
remaining four claims (2, 8, 14, and 17). The district court
dismissed mCom’s complaint with prejudice for failure to
state a claim, ruling that the asserted claims were invalid
on the same obviousness grounds asserted in the IPR
against the other claims of the ’508 patent and that mCom
had not adequately pleaded infringement. mCom IP, LLC
v. City National Bank of Florida, No. 1:23-cv-23427, 2024
WL 2892007, at *2–5 (S.D. Fla. June 10, 2024) (Dismissal).
The court subsequently awarded attorneys’ fees and costs
to City National, relying on the exceptional-case authority
of 35 U.S.C. § 285 for an award against mCom and on the
attorney-sanction authority of 28 U.S.C. § 1927 for a sepa-
rate award against mCom’s counsel, Victoria Brieant.
mCom IP, LLC v. City National Bank of Florida, No. 1:23-
cv-23427, 2025 WL 939224, at *1–2 (S.D. Fla. Mar. 28,
2025) (Fees Ruling).
mCom and Ms. Brieant challenge the dismissal, the
§ 285 award, and the § 1927 sanction. (Because they have
filed a single brief, we refer to both of them as “mCom.”)
We affirm the dismissal because mCom advances no meri-
torious challenge to the invalidity ground for that dismis-
sal. We reverse the § 285 award and § 1927 sanction
because the grounds presented to the district court were
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MCOM IP, LLC v. CITY NATIONAL BANK OF FLORIDA 3
insufficient to support a conclusion that the case was ex-
ceptional as required by § 285 or that mCom’s counsel
acted with the bad faith required by § 1927.
I
A
The ’508 patent is titled “System and Method for Uni-
fying e-Banking Touch Points and Providing Personalized
Financial Services.” It suggests that, at present, electronic
banking “touch points,” such as ATMs and web-based
online banking portals, are “stand-alone systems,” each
providing “relatively few control and presentation options”
to customers and financial institutions. ’508 patent, col. 1,
lines 25–67. According to the specification, “there is cur-
rently no system or method” “for unifying all of a financial
institution’s e-banking touch points into a common point of
control.” Id., col. 1, lines 63–67.
To fill a stated need for such unification, the patent pro-
poses configuring a “multi-channel server . . . to unify
transactional and customer related data processed
throughout all e-banking touch point services provided by
a financial institution.” Id., col. 2, lines 24–27. Such a
server “allows for robust distribution of advertisements
and messages to any combination or group of transaction
screens viewable by a customer” and “enable[s customers]
to customize their experience at any of the e-banking touch
points.” Id., col. 2, lines 37–47.
Claim 17, which depends on independent claim 13, is
the only claim at issue in mCom’s merits appeal. Those two
claims read as follows:
13. A unified electronic banking system, said sys-
tem comprising:
a common multi-channel server, wherein said
multi-channel server is communicatively coupled
to one or more independent computer systems;
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MCOM IP, LLC v. CITY NATIONAL BANK OF FLORIDA 4
wherein each of one or more independent computer
systems is associated with an independent finan-
cial institution, and each of said computer systems
is communicatively coupled to said multi-channel
server;
one or more e-banking touch points, each of which
comprise one or more of an automatic teller/trans-
action machine (ATM), a self-service coin counter
(SSCC), a kiosk, a digital signage display, an online
accessible banking website, a personal digital as-
sistant (PDA), a personal computer (PC), a laptop,
a wireless device, or a combination of two or more
thereof, wherein one or more of said e-banking
touch points are communicatively coupled to said
multi-channel server, and wherein at least one of
said e-banking touch points is in communication
with one or more financial institutions through
said multi-channel server; and
a data storage device, wherein transactional usage
data associated with a transaction initiated by a
user through one of said e-banking touch points is
stored in said data storage device and accessed by
one or more of said other e-banking touch points;
wherein said active session is monitored via said
server in real-time for selection of targeted market-
ing content correlated to said user-defined prefer-
ences, said targeted marketing content correlated
to said user-defined preferences is selected subse-
quent to said monitoring and transmitted in real-
time to at least one of said e-banking touch points
for acceptance, rejection, or no response by a user,
and wherein said response by said user is used dur-
ing said active session to determine whether trans-
mission of additional information related to said
marketing content occurs during said active ses-
sion.
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MCOM IP, LLC v. CITY NATIONAL BANK OF FLORIDA 5
17. The system of claim 13, wherein said system
provides said one or more financial institutions
with a common point of control of functionality pro-
vided by said system.
Id., col. 10, line 35, through col. 11, line 4; col. 11, lines 15–
17.
B
In April 2021, mCom sued NCR Corporation in the
Western District of Texas for infringement of the ’508 pa-
tent. Complaint, mCom IP, LLC v. NCR Corp., No. 6:21-
cv-00325, ECF No. 1 (W.D. Tex. Apr. 5, 2021). In Septem-
ber 2021, the case settled and was voluntarily dismissed.
Id., ECF No. 27 (Sept. 24, 2021). As part of the settlement,
mCom entered into an agreement with NCR in September
2021 (the 2021 mCom-NCR Agreement), in which mCom
provided, with respect to at least the ’508 patent, a license
and a release, with some coverage of at least some NCR
customers. See J.A. 946; J.A. 1004–11 (confidential).
In October 2021, an entity called Unified Patents, LLC,
petitioned the PTO to institute an inter partes review, for
obviousness under 35 U.S.C. § 103, of most of the claims of
the ’508 patent—claims 1, 3–7, 9–13, 15–16, and 18–20.
The review was instituted, and in February 2023, the
PTO’s Patent Trial and Appeal Board held all the chal-
lenged claims unpatentable for obviousness, slating them
for cancellation under 35 U.S.C. § 318. See Unified Pa-
tents, LLC v. mCom IP, LLC, No. IPR2022-00055, 2023 WL
1824005, at *1 (P.T.A.B. Feb. 8, 2023).
mCom filed the present action in September 2023 in
the Southern District of Florida, alleging that City Na-
tional infringed the four claims (2, 8, 14, and 17) not chal-
lenged in the IPR. J.A. 32, 39–43. It attached to the
complaint a claim chart for asserted claim 17 and its inde-
pendent (unasserted) claim 13. J.A. 61–71. The claim
chart, containing screenshots of City National web pages
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MCOM IP, LLC v. CITY NATIONAL BANK OF FLORIDA 6
titled “Online and Mobile Services” and “Privacy Policy,”
purported to show that City National’s online banking of-
ferings infringed the asserted claims. See id. In a single
count of the complaint, mCom alleged that City National
directly and indirectly, and indeed willfully, infringed the
asserted claims. J.A. 41–42; see J.A. 43.
City National moved to dismiss for failure to state a
claim, and mCom opposed, but the district court struck the
complaint sua sponte as a so-called “shotgun pleading” be-
cause it “fail[ed] to ‘separate[ ] into a different count each
cause of action.’” J.A. 268–69 (quoting Weiland v. Palm
Beach County Sheriff’s Office, 792 F.3d 1313, 1322–
23 & n.13 (11th Cir. 2015) (disapproving such pleadings)).
In the same order, the court denied the motion to dismiss
as moot and gave mCom leave to file an amended com-
plaint, warning that a complaint that did not satisfy the
plausibility pleading standard might be subject to dismis-
sal with prejudice. Id.
mCom filed an amended complaint (the operative com-
plaint here) in February 2024, which differed from the orig-
inal complaint in two principal respects. First, it contained
several new paragraphs of pleading that the ’508 patent
claimed patent-eligible subject matter, satisfying the re-
quirements of 35 U.S.C. § 101. J.A. 275–84. Second, it at-
tached an updated claim chart with additional
infringement allegations, including more screenshots of
City National’s website. See J.A. 304–29.
City National, in April 2024, again moved to dismiss
under Federal Rule of Civil Procedure (Rule) 12(b)(6). J.A.
343–63. It argued that the asserted claims were invalid
under § 101 because they claimed patent-ineligible subject
matter. J.A. 355–57. Separately, City National argued
that the claims were invalid under § 103, because they
were “not patentably distinct” from the claims determined
to be unpatentable in the IPR, so were “also obvious . . . in
view of the[ ] same [prior art] references.” J.A. 357–62.
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MCOM IP, LLC v. CITY NATIONAL BANK OF FLORIDA 7
Beyond its invalidity grounds, City National contended
that the complaint does not plausibly allege infringement
of the asserted claims, J.A. 351–53—specifically, that, for
claim 17, it does not “allege any infringing activity outside
the scope of invalid and canceled independent claim 13,”
J.A. 353. City National further asserted that the amended
complaint still impermissibly “commingles several theories
of liability in a single ‘infringement’ count.” J.A. 350 (cap-
italization altered). mCom opposed dismissal and, in the
alternative, requested leave to amend its complaint,
though it did not specify what different or additional alle-
gations a further amendment would include. See J.A. 490–
514.
From March through May of 2024, concurrent with the
parties’ briefing on the motion to dismiss, there was an on-
going dispute about whether City National was licensed to
practice the patent under the 2021 mCom-NCR Agree-
ment. By mid-March, City National had learned of that
Agreement and sought information about it from mCom.
See J.A. 575. Between March and May, the parties corre-
sponded about the Agreement several times, with City Na-
tional taking the position that it was a customer of NCR
covered by the Agreement and mCom insisting that City
National provide a statement from NCR to the same effect.
See J.A. 581–82, 585.
In June 2024, the district court granted the motion to
dismiss. It ruled that infringement had not been ade-
quately pleaded because mCom’s “claim chart is difficult (if
not impossible) to parse,” and mCom otherwise offered only
“bare assertions . . . that the screenshots in the claim chart
‘literally specify the claimed functions.’” Dismissal, at *5.
Before it made that noninfringement ruling, the court sep-
arately reviewed each of the four asserted claims and held
that they “do[ ] not add any non-obvious content” or “do[ ]
not add patentable substance” to the claims held unpatent-
able (and slated for cancellation) in the IPR, and were
therefore invalid. See id., at *2–5. The court did not
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MCOM IP, LLC v. CITY NATIONAL BANK OF FLORIDA 8
separately address and adjudicate City National’s sepa-
rately presented argument for ineligibility under § 101. Fi-
nally, having held that the complaint must be dismissed,
the court denied leave to amend because mCom’s request
was noncompliant with Rule 7(b)(1) (requiring that a re-
quest for a court order be made by motion) and “lacking in
any substantive support.” Id., at *6. mCom timely ap-
pealed the dismissal.
C
Following the dismissal and mCom’s notice of appeal,
City National sought attorneys’ fees and costs (hereafter
referred to just as fees, for simplicity), contending that the
case was exceptional under 35 U.S.C. § 285 and litigated in
bad faith under 28 U.S.C. § 1927. J.A. 544–61. It re-
quested $72,508.50, i.e., all of City National’s fees from the
filing of the original complaint. See J.A. 560, 965. City
National advanced the same principal reasons for both the
§ 285 award and the § 1927 sanction: (a) “a cursory look” at
the asserted claims showed them to be invalid, J.A. 552;
(b) mCom had not adequately pleaded infringement, J.A.
555; (c) “mCom [never] investigate[d] whether a license . . .
would cover the purported infringing activity,” “even after
being put on actual notice” of such a license, J.A. 552, 554;
and (d) mCom had filed many other patent suits without
taking any to trial, implying an improper goal of “quickly
settling . . . for nuisance value,” J.A. 553–54. See J.A. 555–
57. mCom opposed. It emphasized that it was entitled to
rely on the presumption of validity in suing on the asserted
claims, J.A. 663–64, and had attempted in good faith to ad-
equately plead infringement, J.A. 664–67. mCom further
contended that City National had never produced evidence
that would establish that it had a licensure defense, J.A.
661–63, 667, and that there was “no evidence . . . that
mCom sought nuisance value settlements,” J.A. 666.
The district court referred the fees motion to a magis-
trate judge, who heard argument and then recommended
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MCOM IP, LLC v. CITY NATIONAL BANK OF FLORIDA 9
that City National be awarded all of the fees it had re-
quested, under both statutory provisions, increased to
$87,111 to reflect fees incurred litigating the fees motion.
mCom IP, LLC v. City National Bank of Florida, No. 1:23-
cv-23427, 2025 WL 1047149, at *3–5, *7–8 (S.D. Fla. Mar.
11, 2025) (Report and Recommendation). The magistrate
judge further recommended that $33,986.43 be awarded
under § 285, reflecting fees incurred before the filing of the
amended complaint, and the remaining $50,619.59 be as-
sessed against Ms. Brieant as a § 1927 sanction, reflecting
City National’s fees after the amended complaint was filed.
Id., at *6–8. In March 2025, the district court adopted the
magistrate judge’s report and recommendation “in full”
over mCom’s opposition, Fees Ruling, at *2, so we refer to
the magistrate judge’s analysis as the district court’s own.
Thereafter, mCom amended its notice of appeal to chal-
lenge the fees award. We have jurisdiction to hear the ap-
peal under 28 U.S.C. § 1295(a)(1). We heard oral argument
in this matter in tandem with mCom’s appeal from another
district court’s dismissal of an mCom action alleging in-
fringement of the ’508 patent, which we decide today along
with the present matter. mCom IP, LLC v. HSBC Bank
USA, N.A., No. 24-1828 (Fed. Cir. May 15, 2026).1
1 After the briefs were filed in this court, City Na-
tional filed a motion, ECF No. 65, asking us (1) to strike
mCom’s reply brief for containing redundant or new argu-
ments, or to allow the filing of a sur-reply, id. at 5, and to
order that mCom (2) update its Rule 47.4 certificate of in-
terest and (3) add to the joint appendix matter that mCom
had omitted, id. at 5–7. We deny the motion. We are able
to determine what, if any, aspects of the reply brief should
be disregarded, and we see no need for a sur-reply. City
National has not adequately elaborated on the pertinent
Rule 47.4 standards to show that mCom’s certificate needs
amending. And supplementation of the joint appendix at
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MCOM IP, LLC v. CITY NATIONAL BANK OF FLORIDA 10
II
mCom challenges the dismissal of its amended com-
plaint with prejudice only as to claim 17. It also seeks re-
versal of the § 285 award and the § 1927 sanction.
Following the Eleventh Circuit’s law, we review the
Rule 12(b)(6) dismissal without deference, accepting the
well-pleaded allegations in the complaint as true and draw-
ing all reasonable inferences in favor of the plaintiff, Mag-
luta v. Samples, 375 F.3d 1269, 1273, 1276 (11th Cir.
2004), and we review the denial of leave to amend for abuse
of discretion, Burger King Corp. v. Weaver, 169 F.3d 1310,
1315 (11th Cir. 1999). We review a § 285 award and un-
derlying exceptional-case determination for abuse of dis-
cretion, applying our own law. In re PersonalWeb
Technologies LLC, 85 F.4th 1148, 1153–54 (Fed. Cir. 2023);
see Highmark Inc. v. Allcare Health Management System,
Inc., 572 U.S. 559, 563–64 (2014). We review a § 1927 sanc-
tion for abuse of discretion, applying the Eleventh Circuit’s
law. Norelus v. Denny’s, Inc., 628 F.3d 1270, 1280 (11th
Cir. 2010). A district court abuses its discretion when it
makes “a clear error of judgment in weighing relevant fac-
tors or in basing its decision on an error of law or on clearly
erroneous factual findings.” Bayer CropScience AG v. Dow
AgroSciences LLC, 851 F.3d 1302, 1306 (Fed. Cir. 2017) (ci-
tations omitted); see Whitten v. Clarke, 41 F.4th 1340, 1346
(11th Cir. 2022) (similar).
A
mCom appeals the district court’s merits ruling, dis-
missing the case, only as to claim 17. mCom Opening Br.
at 36. mCom addresses both invalidity, id. at 39–42, and
noninfringement, id. at 36–39. mCom also challenges the
this stage is not needed; all the material at issue is publicly
available on the district court’s docket and already part of
our record. Fed. R. App. P. 10(a)(1).
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MCOM IP, LLC v. CITY NATIONAL BANK OF FLORIDA 11
denial of leave to amend the complaint after the dismissal.
Id. at 42–43. We reject mCom’s arguments.
We affirm the dismissal on the ground of invalidity.
mCom makes only two arguments to us regarding invalid-
ity: (1) that the district court did not actually invalidate
claim 17; and (2) that claim 17 claims patent-eligible sub-
ject matter under 35 U.S.C. § 101. Id. at 39–42. Neither
argument presents any obstacle to affirming the dismissal.
The first argument is plainly incorrect. The district
court ruled that claim 17 “does not add patentable sub-
stance to [unpatentable] claim 13.” Dismissal, at *5. That
ruling was part of a multi-page analysis of the four as-
serted claims, id. at *2–5—directly corresponding to the
section of City National’s motion urging invalidity, J.A.
357–62—in which the court concluded that mCom had not
“rebutted City National’s argument regarding the claims’
invalidity,” Dismissal, at *4. The only possible reading of
the district court’s decision is that it held the asserted
claims invalid.
It is equally clear that the court did so on the same ob-
viousness grounds, under 35 U.S.C. § 103, as those on
which the PTO’s Board relied to hold the other claims of
the ’508 patent unpatentable. See id., at *2–5; J.A. 136–
76. mCom’s second point about invalidity, which is an ar-
gument for subject-matter eligibility under 35 U.S.C.
§ 101, is simply beside the point. City National made an
ineligibility argument to the district court, but the court
did not decide the issue. See J.A. 355–57; Dismissal, at *2–
5. mCom’s argument that claim 17 passes muster under
§ 101 is not a substitute for an argument for nonobvious-
ness under § 103. See Diamond v. Diehr, 450 U.S. 175, 191
(1981) (“[R]ejection on [obviousness] grounds does not af-
fect the determination that [a] claim[ ] recite[s] subject
matter . . . eligible for patent protection.”). Because we
have been presented with no challenge at all related to
claims 2, 8, or 14, and no persuasive reason to disturb the
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MCOM IP, LLC v. CITY NATIONAL BANK OF FLORIDA 12
invalidation of claim 17, mCom has failed to show error in
the district court’s invalidity ruling.2
Given that conclusion, we need not decide definitively
whether there is reversible error in the district court’s al-
ternative determination that the complaint did not plausi-
bly plead infringement of claim 17. See Dismissal, at *5.
In the mCom v. HSBC case, we today hold that mCom’s
complaint asserting claim 17 against a different bank was
properly dismissed for failure to meet the governing plead-
ing standards with respect to the “real-time” elements and
the “common point of control” element of claim 17. See
mCom v. HSBC, slip op. at 7–9. mCom’s complaint in the
present matter appears quite similar, suggesting compara-
ble deficiencies in pleading. But we need not decide that
issue given our affirmance of the district court’s invalidity
ruling.
Finally, we see no basis for disturbing the district
court’s denial of leave to amend the complaint after the dis-
missal. mCom has identified no abuse of discretion in the
district court’s rejection of mCom’s request as both proce-
durally improper under Rule 7 and substantively deficient
for failing to explain how mCom proposed to amend its al-
legations. See Newton v. Duke Energy Florida, LLC, 895
F.3d 1270, 1277 (11th Cir. 2018) (holding that a request for
leave to amend must “state with particularity the
2 mCom adverts to the possible issue-preclusive ef-
fect of the invalidity ruling, mCom Opening Br. at 41, but
such a possible (or confirmed) preclusive effect neither cre-
ates doubt that the district court here held the claims in-
valid for obviousness nor undermines the obviousness
ruling on its merits. We do find such a preclusive effect
today in the mCom v. HSBC case, following the general
principle that whether a decision in one case has preclusive
effect in another is to be determined in the latter. See
Smith v. Bayer Corp., 564 U.S. 299, 307 (2011).
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MCOM IP, LLC v. CITY NATIONAL BANK OF FLORIDA 13
grounds,” and “has not been raised properly” when “simply
[ ] imbedded within an opposition memorandum” (citations
omitted)). We therefore affirm the dismissal of mCom’s
complaint with prejudice.
B
mCom challenges the award of fees under § 285 and
§ 1927. It principally argues that both of those determina-
tions were improper because there is no sound determina-
tion of unusually clear weakness (or bad faith) of the
infringement assertion (whether for invalidity or nonin-
fringement reasons), mCom Opening Br. at 49, 53–56, 58–
60; it was never established even that City National had a
good licensure defense to infringement, much less that
mCom knew or should have known so, id. at 49–52; and no
evidence permitted a reasonable finding that mCom had
sought nuisance-value settlements, id. at 56–58. We agree,
addressing first the § 285 award and then the § 1927
award, though there is overlap in the analysis. We there-
fore reverse the fees determinations.
1
Section 285 permits a district court, in its discretion, to
award fees to the prevailing party in an “exceptional” case.
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). We review a district court’s decision for abuse
of discretion, but “[t]he abuse-of-discretion standard does
not preclude . . . correction of a district court’s legal or fac-
tual error,” and the district court “necessarily abuse[d] its
discretion if it based its ruling on an erroneous view of the
law or on a clearly erroneous assessment of the evidence.”
Highmark, 572 U.S. at 563 n.2 (quoting Cooter & Gell
v. Hartmarx Corp., 496 U.S. 384, 405 (1990)). We apply the
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MCOM IP, LLC v. CITY NATIONAL BANK OF FLORIDA 14
review standard to the “clear explanation of its reasons”
required of the district court. Munchkin, Inc. v. Luv
n’Care, Ltd., 960 F.3d 1373, 1378 (Fed. Cir. 2020) (quoting
Hensley v. Eckerhart, 461 U.S. 424, 437 (1983)). Here, we
conclude, the reasons for exceptionality articulated by or
presented to the district court are either legally deficient or
inadequately supported by the record.
a. The district court reasoned that mCom’s case was
unusually substantively weak because the asserted patent
claims were invalid. Fees Ruling, at *1–2; Report and Rec-
ommendation, at *4. But mere invalidity is not legally suf-
ficient to find a case exceptional. For a patent-
infringement case to “stand[ ] out . . . with respect to the
substantive strength of a [patentee’s] litigating position” by
reason of invalidity, there must be (as the language of § 285
indicates) unusually or extraordinarily weak patent
claims. See Octane Fitness, 572 U.S. at 554; SFA Systems,
LLC v. Newegg Inc., 793 F.3d 1344, 1348 (Fed. Cir. 2015)
(“[I]t is the ‘substantive strength of the party’s litigating
position’ that is relevant . . ., not the correctness . . . of that
position.” (quoting Octane Fitness, 572 U.S. at 554) (em-
phases in SFA)); Munchkin, 960 F.3d at 1378–80 (revers-
ing fees award where district court “never adequately
explain[ed] why [patentee’s] validity position was unrea-
sonable”); compare Bayer CropScience, 851 F.3d at 1306–
07 (affirming fees award based in part on losing party’s “ob-
jectively unreasonable” and “contorted” legal position).
Moreover, City National did not present a sound basis
for deeming mCom’s validity position to be exceptionally
weak. City National made its fees argument on this issue
in conclusory terms: It never explained why the asserted
claims in this case—which enjoyed the statutory presump-
tion of validity, 35 U.S.C. § 282, and which were not even
challenged in the IPR—could not have been reasonably
thought by mCom to have a scope materially different for
obviousness purposes from the claims deemed unpatenta-
ble in the IPR, even taking that unpatentability as a
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MCOM IP, LLC v. CITY NATIONAL BANK OF FLORIDA 15
starting point. See J.A. 549–52. And because in district
court a fact-dependent obviousness challenge faces a
higher burden of persuasion than in an IPR, mCom could
reasonably have believed that an invalidity analysis in dis-
trict court could not simply take the IPR result for different
claims as a starting point (based on issue preclusion) and
address only patentable distinctness. See Kroy IP Hold-
ings, LLC v. Groupon, Inc., 127 F.4th 1376, 1379–81 (Fed.
Cir. 2025); ParkerVision, Inc. v. Qualcomm Inc., 116 F.4th
1345, 1360–62 (Fed. Cir. 2024). Given the arguments that
were available to mCom—even though not offered by
mCom in challenging the invalidity ground for the dismis-
sal of the complaint, supra, Section II.A—we see no war-
rant for a determination that this case was exceptionally
weak or unreasonably maintained because of invalidity of
the asserted claims.
b. The district court also observed that mCom had filed
a first complaint that was struck for a nonsubstantive rea-
son (shotgun pleading, i.e., insufficient separation of the
claims of direct and indirect infringement) and a second
complaint that was dismissed. Fees Ruling, at *1–2; Report
and Recommendation, at *4. But this two-pronged reason
does not go to the relevant question whether the case was
exceptionally substantively weak or unreasonably liti-
gated. The first aspect is purely formal; the second is noth-
ing more than lack of merit, which, as indicated, is not
legally sufficient for § 285 purposes.
We have already addressed invalidity. As to nonin-
fringement apart from invalidity, City National’s fees mo-
tion does not even contend that mCom’s infringement
allegations were exceptionally weak in terms of whether
the accused products came within the scope of the asserted
patent claims. J.A. 552–55.
c. The district court cited “the licensee agreement with
NCR” as a reason for the § 285 award. Report and Recom-
mendation, at *4; see Fees Ruling, at *1–2. License and
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MCOM IP, LLC v. CITY NATIONAL BANK OF FLORIDA 16
release are affirmative defenses. Fed. R. Civ. P. 8(c)(1). We
take the district court’s rationale to be that mCom was re-
quired to investigate before filing suit whether City Na-
tional held a license to the ’508 patent through NCR or
that, at some point during the litigation, mCom should
have realized that, because of such a license, it was unrea-
sonable to maintain the suit. Neither understanding is
supported by the record.
City National conceded at oral argument on appeal
that the district court never made a finding that there was
a license (or release) covering the accused activities of City
National. See Oral Arg. 33:50–34:40, https://www.
cafc.uscourts.gov/oral-arguments/24-2089_04132026.mp3
(The Court: “Is there still an unadjudicated question
whether [City National] was a customer subject to [settle-
ment] language [creating licenses in NCR customers]?”
City National: “Yes. . . . It is unadjudicated.”) The exist-
ence of a license covering the accused activities is a neces-
sary predicate to a determination that the license made
bringing or maintaining the suit unreasonable. Further-
more, City National has not made any showing that if
mCom had investigated the possibility of a license it would
have discovered anything more than the mCom-NCR
agreement, which does not reveal who are covered custom-
ers. The absence of findings that a license existed or could
have been discovered by mCom with reasonable diligence
means that City National’s alleged licensure defense can-
not support the § 285 award. See Munchkin, 960 F.3d at
1378–80.
d. The district court made oblique references to
mCom’s “previous litigation.” Report and Recommenda-
tion, at *2, *4; see Fees Ruling, at *1–2. City National urges
us to construe those references as a finding, consistent with
City National’s arguments to the district court, that mCom
brought other lawsuits for the impermissible purpose of ex-
tracting nuisance-value settlements (implicitly, unrelated
to the merits) and that such activity should make the
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MCOM IP, LLC v. CITY NATIONAL BANK OF FLORIDA 17
present action exceptional. City National Br. at 51–52; see
J.A. 553–55.
But City National has identified no record support for
the asserted premise about other mCom lawsuits. The al-
legation City National made to the district court was that
mCom had previously filed other suits that settled or were
dismissed before summary judgment. See J.A. 553–55.
City National’s motion did not furnish any information
about the values of those alleged settlements, or even
which such cases involved the ’508 patent. See id.; J.A.
577–79. But the premise for any reliance on this kind of
litigation activity is evidence establishing its character,
which is missing here.
For the reasons discussed, we conclude that neither the
district court’s analysis nor the record developed and argu-
ment presented by City National can support the conclu-
sion that this is an exceptional case. In the circumstances
here, we reverse the fees award under § 285. A remand is
not warranted in this case for additional costly proceedings
to give City National a chance to develop and present new
evidence or arguments. See Fox v. Vice, 563 U.S. 826, 838
(2011) (“[T]he determination of fees ‘should not result in a
second major litigation[, and t]he fee applicant . . . must, of
course, . . . meet ‘the burden of establishing entitlement to
an award.’” (quoting Hensley, 461 U.S. at 437)).
2
Section 1927 provides that an attorney who “multiplies
the proceedings in any case unreasonably and vexatiously”
may be made personally liable for the resulting costs. 28
U.S.C. § 1927. Under Eleventh Circuit law, the sanction of
imposing liability for such costs requires that the attorney
have engaged in “egregious” and “objectively reckless” con-
duct, that is, behavior “tantamount to bad faith” conduct.
Norelus, 628 F.3d at 1282–83 (citation omitted). For the
sanction to be warranted, “the attorney must [have] know-
ingly or recklessly pursue[d] a frivolous claim or needlessly
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MCOM IP, LLC v. CITY NATIONAL BANK OF FLORIDA 18
obstruct[ed] the litigation of a non-frivolous claim.” Am-
long & Amlong, P.A. v. Denny’s, Inc., 500 F.3d 1230, 1242
(11th Cir. 2007) (emphasis in original); see United States
v. Shaygan, 652 F.3d 1297, 1314 (11th Cir. 2011); Bonfiglio
v. Nugent, 986 F.2d 1391, 1394 (11th Cir. 1993) (imposing
§ 1927 sanctions, among others, where “lawsuit was wholly
without merit”).
The district court made no express determination that
mCom’s case was frivolous. See Fees Ruling, at *1–3; Re-
port and Recommendation, at *3–5. And there is no suffi-
cient ground for such a determination here, for the reasons
set forth above for why no proper determination of excep-
tional substantive weakness could have been made. With
respect to invalidity, infringement, and licensure, it cannot
be said that mCom’s legal positions were frivolous or
wholly without merit.
If the § 1927 sanction is to stand, then, it must be be-
cause Ms. Brieant’s conduct “needlessly obstruct[ed]” the
litigation of mCom’s non-frivolous suit. Amlong, 500 F.3d
at 1242. But the district court made no finding to that ef-
fect. Fees Ruling, at *2; Report and Recommendation, at
*4–5. Instead, what the district court ruled was that
Ms. Brieant was insufficiently diligent in investigating the
case and the material produced during discovery, because
had she done so she would have realized that the suit
should have been dropped. Fees Ruling, at *2; Report and
Recommendation, at *4–5. In the absence of a determina-
tion that the case was frivolous, that lack of diligence does
not rise to the level of needless obstruction. Put differently,
because there was no adequate reason to conclude that
mCom should have dropped its suit before the court ruled
on the dismissal, it was not unreasonable for Ms. Brieant
to litigate the case to a ruling on the Rule 12(b)(6) motion.
The district court found no other obstructive conduct re-
lated to this case, so we reverse the § 1927 sanction.
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MCOM IP, LLC v. CITY NATIONAL BANK OF FLORIDA 19
III
We have considered the parties’ remaining arguments
and find them unpersuasive. For the foregoing reasons, we
affirm the district court’s dismissal of mCom’s complaint
with prejudice and we reverse the § 285 fees award and
§ 1927 sanction.
The parties shall bear their own costs.
AFFIRMED IN PART AND REVERSED IN PART
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