In the context of patent cases, this recently went to the Supreme Court. The case is Octane Fitness, LLC v. ICON Health & Fitness, Inc. T
This summary is from www.oyez.org.
Decision: 9 votes for Octane Fitness, 0 vote(s) against
Legal provision: Section 285 of the Patent Act
Yes. Justice Sonia Sotomayor delivered the opinion for the 9-0 majority. The Court held that the appellate court construed the attorney fees statute in a manner that was unduly rigid. Restricting the grant of reasonable attorney fees to the prevailing party in all but two exceptions would render the statute meaningless and would contradict patent litigation norms. The appellate court’s interpretation of the statute would also impermissibly encumber the district court’s discretionary power to award such fees. The Court also held that an “exceptional” case is simply one that stands out from others because of its frivolous nature relating to the legal arguments or merits of the claim. District courts may determine exceptionalness by considering the totality of the circumstances on a case-by-case basis. Finally, the Court rejected the appellate court’s “clear and convincing evidence” standard that successful patent litigants would have to establish in order to receive fees. Instead, the Court held that a simple discretionary inquiry would serve to determine whether granting attorney fees is appropriate.
Justice Scalia did not join footnotes 1-3.