This section contains the nature of the case and procedural background.

Pennie & Edmonds LLP (D) represented defendants in a trademark infringement case wherein P was aware of prior false affidavits submitted by the defendants to the court when the defendants were represented by different counsel. D in opposition to a motion filed further affidavits on behalf of their defendants. It too was proven false. The court sua sponte ordered a show cause hearing as to why Rule 11 sanctions should not be imposed. D contends that the standard for sua sponte imposition is one of subjective bad faith. The court imposed sanctions under an objective reasonableness standard. D appealed.

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