Commercial Litigation and Arbitration

Sanctions — The Relationship Between 35 U.S.C. § 285 and the Inherent Power of the Court

From Kellogg v. Nike, Inc., 2010 U.S. Dist. LEXIS 8576 (D. Neb. Jan. 20, 2010):

The purpose of 35 U.S.C. § 285 is to compensate the prevailing party for its monetary outlays in the prosecution or defense of the suit and those fees include the "sums that the prevailing party incurs in the preparation for and performance of legal services related to the suit." *** Although the amount the client paid the attorney is one factor for the court to consider in determining a reasonable fee, it does not establish an absolute ceiling — the determination of a reasonable attorney fee requires the court to consider all the relevant circumstances in a particular case.... The evidence usually analyzed in determining a reasonable attorney fee includes hourly time records, full expense statements, documentation of attorney hourly billing rates in the community for the particular type of work involved, the attorney's particular skills and experience, and detailed billing records orclient's actual bills showing tasks performed in connection with the litigation....

The court should also take into account the amount of the recovery and the results obtained by the lawsuit. *** Consideration may also be given to the experience, reputation and ability of the attorneys as well as to the difficulty of the issues presented and the amount at stake in the litigation. ***

Courts possess inherent powers to sanction litigation misconduct. Chambers v. NASCO, Inc., 501 U.S. 32, 43-45 (1991). A court may use its inherent power to "assess attorney's fees when a party has 'acted in bad faith, vexatiously, wantonly, or for oppressive reasons.'" Id. at 45 (quoting Alaska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 258-259 (1975)). However, "inherent powers must be exercised with restraint and discretion." Id. at 44.

Not every case qualifying as exceptional under 35 U.S.C. § 285 will qualify for sanctions under the court's inherent power. Amsted Indus. Inc. v. Buckeye Steel Castings Co., 23 F.3d 374, 378 (Fed. Cir. 1994). To the contrary, a district court may resort to its inherent power to impose sanctions only in those highly unusual cases in which the pertinent statutory remedies are plainly inadequate to address the misconduct at issue. Id. at 379 (stating that courts "should only resort to further sanctions when misconduct remains unremedied by those initial tools."). Routine use of inherent authority to impose sanctions in addition to those authorized by applicable statutes risks contravening Congress's judgment as to what sanctions are appropriate for particular misconduct. Id.

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