Was it like that right out of the box? There have been issues reported with some people installing their Note into one of those cases that use a magnet to secure a strap around the other side of the case to keep it closed. In other words, you stick the phone into the permanent folding wallet type case, and when close the case with the phone in it, the strap or lid is held closed by a magnet. The magnet is usually on the backside of the case putting it under the phone, and if it is strong enough, it will cause the s pen not to work in the area of the magnetic field. If you remove the phone from this case the pen will work again in that area. If however the phone is not in a case of any type and it doesn't work with you holding just the phone by itself, then it's defective and I'd return it immediately under warranty for a new phone.