Patent infringement litigation is expensive, and the cost of that litigation can make or break a company. By the same token, even our nation's largest and healthiest companies are spending millions of dollars on arguably meritless patent litigation brought by non-practicing entitites and, at the end of the case, they have nothing to show for it but a hefty legal bill. The Patent Act allows a successful party to recover its attorney fee expenses from the other party under certain circumstances. Even for a company that has succeeded in protecting a valuable patent against unsupported attack, however, such an award has remained an elusive dream. Recently the Supreme Court changed the rules on when a trial court can shift the cost of those fees to the other party.
Litigants are generally responsible for paying their own attorney fees, regardless of whether they win or lose, under the "American Rule." The Patent Act has long provided an exception to this general rule, allowing a judge to award attorney fees to the prevailing party in "exceptional" cases. 35 U.S.C. § 285. In recent years, however, rulings by the U.S. Court of Appeals for the Federal Circuit – the court that hears appeals of patent cases from all district courts – have made fee awards all but nonexistent. Indeed, the Federal Circuit employed a rigid framework that authorized the award of attorney fees under Section 285 in two very limited circumstances: (1) when there has been litigation misconduct, or (2) when the litigation is both brought in subjective bad faith and objectively baseless. On April 29, 2014, the Supreme Court rejected this framework for awarding attorney fees. Octane Fitness, LLC v. Icon Health & Fitness, Inc., 572 U.S. ___ (2014).
http://www.mondaq.com/unitedstates/x/326398/Patent/The+Supreme+Court+Redefines+Exceptionality+and+Lowers+Bar+for+Recovery+of+Attorney+Fees+in+Patent+Suits
