Amount of attorneys’ fees for exceptional case must be related to extent of misconduct

The patentee appealed a district court ruling that its infringement suit was an “exceptional-case” and awarding $51 million in attorneys’ fees to the accused infringers. The Federal Circuit upheld the exceptional-case determination, but vacated the fee award.

Because the patentee compensated fact witnesses, spoliated evidence, and asserted fraudulently obtained patents, the district court did not abuse its discretion in finding the case exceptional. However, the $51 million award was “excessive and unreasonable because the district court failed to establish a causal connection between the claimed misconduct and the fees awarded.” Attorneys’ fees “are compensatory, not punitive,” and thus “the amount of the award must bear some relation to the extent of the misconduct.” A decision awarding fees “must explain that relationship, at least to the extent practicable.”

In cases “involving a few patents and a couple of defendants, a finding of pervasive misbehavior or inequitable conduct that affects all of the patents-in-suit may justify an award of all of the fees incurred.” “What the district court did here — award all fees with no explanation whatsoever of such a causal connection—was not enough.”

A copy of the opinion can be found here