The Supreme Court has recently provided a two-tiered definition of sham litigation.
First, the lawsuit must be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits. If an objective litigant could conclude that the suit is reasonably calculated to elicit a favorable outcome, the suit is immunized under Noerr, and an antitrust claim premised on the sham exception must fail. PRE, 113 S.Ct at 1928, 26 USPQ at 1646 (footnote omitted). The second tier, to be reached "only if challenged litigation is objectively meritless," id., is "whether the baseless lawsuit conceals an attempt to interfere directly with the business relationships of a competitor through the use of the governmental process -- as opposed to the outcome of that process -- as an anticompetitive weapon." Id., 113 S.Ct. at 1928, 26 USPQ2d at 1646.
On the one hand, the Supreme Court has cautioned that "when the antitrust defendant has lost the underlying litigation, a court must resist the understandable temptation to engage in post hoc reasoning by concluding that an ultimately unsuccessful action must have been unreasonable or without foundation." Id.. On the other hand, a preliminary success on the merits does not necessarily preclude a court from concluding that litigation was baseless. See Boulware, 960 F.2d at 788-89.
Because there is no dispute over the facts, the question of whether or not a cause of action is reasonable or an abuse of process is a question of law. See PRE, 113 S.Ct. at 1930 ("Where, as here, there is no dispute over the predicate facts of the underlying legal proceeding, a court may decide probable cause as a matter of law.") (citations omitted).
We review questions of law without deference to the trial forum.
As noted, the Supreme Court has forbidden us to equate loss on the merits with objective unreasonableness. The Court requires an inquiry into the reasonableness of the antitrust defendant's litigation when filed. "[S]ham litigation must constitute the pursuit of claims so baseless that no reasonable litigant could realistically expect to secure favorable relief." PRE, 113 S.Ct. at 1929. Conversely, "[t]he existence of probable cause to institute legal proceedings precludes a finding that an antitrust defendant has engaged in sham litigation." Id.
One entered for the mere purpose of delay; it must be of a matter which the pleader knows to be false; as judgment recovered, that is, that judgment has already been recovered by the plaintiff for the same cause of action.
These sham pleas are generally discouraged, and in some cases are treated as a nullity.