U. S. patent statutes provide that the court in exceptional cases may award reasonable attorney fees to the prevailing party. An exceptional case is simply one that stands out from the 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 unreasonable manner in which the case was litigated. The United States Supreme Court recently emphasized that district courts have both the authority and responsibility to discourage frivolous cases, pointing out that some companies may use patents as a sword to go after defendants for money, even when the company’s claims are frivolous.

Many forms of misconduct can support a district court’s exceptional case finding, including inequitable conduct before the U.S. Patent and Trademark Office (USPTO); litigation misconduct; vexatious, unjustified, and otherwise bad faith litigation; a frivolous suit; or willful
infringement.

District courts also have inherent power to award attorney fees and other sanctions when the losing party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons. In egregious cases involving fraud on the court or an abuse of the judicial process before trial, a court may utilize its inherent sanctioning power to impose expert witness fees, but such fees are not ordinarily recoverable under the exceptional case standard of the patent statutes. However, the Federal Circuit has held that a district court does have authority, in cases of bad faith or other exceptional circumstances, to award prejudgment interest on the unliquidated sum of an award under the patent statutes. These aggregate economic remedies (reasonable fees, costs, expert witness fees, and prejudgment interest on those fees) are now regularly imposed by district courts in the most extreme exceptional cases. Pending Congressional amendments to the patent statutes may soon provide direct statutory support for what is now only discretionary sanctions.

For more information on intellectual property litigation, including a pre-filing assessment of your patent infringement case(s), please contact Ascendant IP℠.