Attorneys’ Fees

In the United States, this is the bill from one’s lawyers, especially in litigation. The U.S. distinguishes between “legal costs” and “attorneys’ fees.” The former refers to court expenses such as filing fees, certain expenses related to discovery, and the costs and fees of some witnesses, etc. and in a major suit can be 5-15 percent of the total bill for a litigant. In the U.S. a prevailing party, i.e., the winner of a lawsuit, usually receives their legal costs but not their attorneys’ fees.

Attorneys’ fees may be awarded if the statutory provision under which a suit is brought, for example Section 285 of the U.S. Patent Act, provides for the award of attorneys’ fees, but even so, such an award only arises in exceptional circumstances, e.g., willful infringement. Certain U.S. statutes, for example civil rights laws, can provide for automatic recovery of a winning plaintiff’s attorneys’ fees.In an April 2014 decision, Octane Fitness v. ICON changed the standard for an award of attorney’s fees in a way that increased the likelihood of such an award, especially against a patent infringement plaintiff. Previously the Federal Circuit had held that some litigation misconduct was required for an award of attorney’s fees, as well as bad faith and no reason to believe the case would succeed – a standard which made an award of fees in even ludicrous cases hard to secure.  The Supreme Court rejected this requirement and set a standard:

“an ‘exceptional’ case is simply one that stands out from 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.”

This case may have a major impact on patent troll litigation.  Certainly the authors of the glossary have experienced many troll cases in which is was apparent that the defendant could not possibly infringe and that the “troll” had simply sued anyone with an electronic device, without ever doing a pre-filing infringement analysis – such cases would now be much more likely to result in an attorney’s fee award.

By contrast with the United States, most other countries include attorneys’ fees in legal costs and will usually award them to the prevailing party, a system known in the U.S. as the ‘English Rule.’ Defendants, as well as plaintiffs, can receive costs under either system. See, Costs, Indemnity Principle. A number of civil law systems, for example Germany, also provide that the winner should receive reimbursement of legal fees. However, that reimbursement may be limited to scale fees.