concurring in part, dissenting in part.
I agree that the district court did not abuse its discretion when it dismissed Meter Treater’s1 infringement action without prejudice. However, my reasons for affirming the dismissal differ somewhat from those of the majority. I believe that the district court took the action it did because it was persuaded by LEA’s argument, set forth in its April 8, 1993 motion papers, that the existence of an infringement suit pending against it (even if stayed) damaged its business. I also believe that the district court was persuaded by LEA’s argument that Meter Treater would not be prejudiced if the case, instead of being stayed, was dismissed without prejudice. These are both valid considerations, so I do not think the district court abused its discretion in taking action based upon them.
I respectfully dissent, however, from Part II of the majority opinion. In my view, the district court abused its discretion in imposing the fee-shifting sanction against Meter Treater. I do not believe that the necessary factual finding of bad faith or abuse of the judicial process, which I will presume to have been made by the district court, is supported by the record. In addition, I believe that the district court’s imposition of the sanction was premature, given that an appeal involving the reissue application was, and is still, pending.
DISCUSSION
I agree with the majority that, in imposing the fee-shifting sanction, the district court apparently relied upon its inherent authority to do so for bad-faith litigation conduct. The Supreme Court, in Chambers v. NASCO, Inc., 501 U.S. 32, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991), held that a federal court has this inherent authority, even where the conduct at issue does not come within a statute or court rule providing for sanctions. Id. at 45-51, 111 S.Ct. at 2133-36. This inherent fee-shifting authority, however, is limited to situations where there is bad faith or an abuse of the judicial process. Id. at 45-46, 111 S.Ct. at 2133-34; Roadway Express, Inc. v. Piper, 447 U.S. 752, 766, 100 S.Ct. 2455, 2464, 65 L.Ed.2d 488 (1980); Amsted Indus. Inc. v. *1533Buckeye Steel Castings Co., 23 F.3d 374, 378, 30 USPQ2d 1470, 1473 (Fed.Cir.1994). The “bad-faith” limitation “derives from [the Supreme Court’s] jurisprudence regarding the so-called American Rule, which provides that the prevailing party must bear its own attorney’s fees and cannot have them assessed against the loser.” Chambers, 501 U.S. at 59, 111 S.Ct. at 2140 (Scalia, J., dissenting) (citing Alyeska Pipeline Serv. Co. v. Wilderness Society, 421 U.S. 240, 247, 95 S.Ct. 1612, 1616, 44 L.Ed.2d 141 (1975)).
I recognize that the imposition of a fee-shifting sanction under a court’s inherent authority is reviewed on appeal under the abuse of discretion standard. However, the exercise of such discretion must rest upon the existence of the type of bad faith contemplated in Chambers. Like the majority, I presume that the district court made a finding of bad faith on the part of Meter Treater. We review that finding under the clearly erroneous standard. J.P. Stevens Co. v. Lex Tex, Ltd., 822 F.2d 1047, 1050, 3 USPQ2d 1235, 1237 (Fed.Cir.1987). As part of that review, it is necessary to consider the underlying course of events in this case.
When Meter Treater opposed LEA’s request for a stay in 1992, it explained to the district court why it believed the case should proceed. Specifically, Meter Treater explained that it had filed the reissue application solely for the purpose of adding claims from a third party’s patent so as to provoke an interference with that party. Meter Treater further explained that, while the application which resulted in the ’895 patent was pending in the Patent and Trademark Office, the third party had copied confidential information from the application and later secured patent claims that it was not entitled to receive. Although conceding that the original claims (the claims-in-suit) were also technically subject to rejection in the reissue proceeding, Meter Treater said that it did not expect that the original claims would be affected by the reissue, given that it was not seeking reexamination of any original claim. Finally, Meter Treater pointed out that its reissue application was not one which was filed so that newly discovered prior art could be considered. Thus,' it argued, the case did not present a situation where the legal scope of the original claims was likely to be substantially different after reissue. In denying LEA’s motion for a stay, the court apparently accepted Meter Treater’s representations.
We know, of course, that the reissue proceeding turned out differently than Meter Treater had predicted. The original claims were affected by the reissue. The claims were rejected, and now that rejection is on appeal to the Board of Patent Appeals and Interferences (Board). In its April 8, 1993 motion to dismiss without prejudice following the Examiner’s rejection, LEA strongly implied to the district court that Meter Treater had misled the court in 1992 when it opposed the stay request, and it argued that Meter Treater should be required to reimburse it for the expenses it incurred for the period after Meter Treater’s opposition.
On April 28, 1993, Meter Treater responded to LEA’s motion by reminding the district court of its rationale as to why it had previously opposed the stay. In addition, it represented to the district court that the Examiner in the reissue proceeding had rejected the original claims contra to a decision of the Board made during the original prosecution. In that regard, Meter Treater asserted that the Board’s reversal in the original prosecution involved this same Examiner and a similar rejection to the one now presented. Thus, on appeal Meter Treater tells us that the rejection of the original claims was “unexpected.”
In its April 30, 1993 order, the district court did not specify the factual basis for its imposition of the fee-shifting sanction. Nevertheless, it is quite clear that the court imposed the sanction because it believed that it had been misled by the statements of Meter Treater made during its opposition to the stay in 1992, and also because it did not favorably view Meter Treater’s flip-flop of position following the rejection of the claims. However, taking Meter Treater’s representations as to the purpose and nature, of its reissue proceeding at face value — and I have *1534no reason to do otherwise2 — I do not believe that the record supports a finding that Meter Treater was guilty of the kind of bad faith or abusive conduct that is required under Chambers.
As a preliminary matter, it is true that, prior to the time it filed its notice of appeal, Meter Treater did not state to the district court in haec verba that it objected to the fee-shifting sanction. However, Meter Treater, in its April 28, 1993 response, did provide the court with the explanations discussed above, which explanations were provided to illustrate to the court that it had acted in good faith. Therefore, I believe that it can fairly be said that Meter Treater timely objected to the sanction, despite its failure to say: “We object to the shifting of fees.”
Turning to the merits, I am unable to agree with the proposition that, in urging that the case proceed while the reissue proceeding was pending, Meter Treater was acting in bad faith or was abusing the judicial process.
To begin with, I know of no per se rule that a litigation must be stayed during the pendency of a reissue proceeding. Moreover, in view of the nature and purpose of the reissue application, I do not think that it was unreasonable for Meter Treater to tell the district court that the original claims were unlikely to be affected by the reissue proceeding. This was not a reissue application prompted by the discovery of prior art, where the patent owner is trying to have the scope of the claims limited. See, e.g., Howes v. Medical Components, Inc., 814 F.2d 638, 645, 2 USPQ2d 1271, 1275 (Fed.Cir.1987). It also was not a reissue application by a patent owner who wished to bring an infringement action but whose claims did not reach the alleged infringement and who stated to the PTO that during the original prosecution he did not claim all to which he was entitled and that thus the claims should be broadened. See 35 U.S.C. § 251 (1988) (allowing a patent owner to enlarge the scope of claims by reissue, but only if the reissue application is filed.within two years from the grant of the original patent). In both of those situations, the scope of the original claims will no doubt be affected by the reissue proceeding, and it may well make sense to hold up the litigation.
The present reissue is of quite a different variety, though. Again, the sole reason it was filed was to add claims of a third party’s patent so as to provoke an interference with the third party. Further, a rejection of the claims diming their original prosecution was reversed by the Board. One would expect that under these circumstance the original claims very likely would not be affected by the reissue proceeding. In short, if there ever was a ease where a strong argument could be made for not holding up litigation during a reissue proceeding, this would seem to be the one. I therefore do not believe that the evidence of record supports a finding that Meter Treater — who did not initiate this lawsuit — intentionally misled the court (and thus abused judicial process) when it opposed the stay.
In addition, I do not.believe that Meter Treater should be faulted for switching its earlier position and urging a stay once the claims were rejected in the reissue proceeding. Although this change of position was certainly in Meter Treater’s own interest, in my view it can also fairly be said to have been a prudent suggestion. There now appeared to be a serious question as to whether the case would ever need to be tried, and even if such a need eventually came about, it was uncertain what the scope of the claims at issue would be. Under these circumstances, it was proper for Meter Treater to support a stay of the case. In sum, I do not believe that the record supports the district court’s presumed finding of bad faith or abuse of the judicial process.
Finally, at the time the district court ruled on LEA’s motion to dismiss, the reissue proceeding had not been resolved. Indeed, as far as we know, it still has not been resolved. Meter Treater’s appeal of the Examiner’s rejection still is pending before the Board. Under these circumstances, I think it was *1535premature for the district court to impose the fee-shifting sanction. After all, what happens if Meter Treater eventually prevails, and the claims are issued? Then, the Examiner will have been found to have been in error, and Meter Treater’s original prediction will have been proved correct. Under those circumstances, what would be the basis for the imposition of the fee-shifting sanction? At the very least, a crucial factual predicate for the district court’s action will have been eliminated. In any event, assuming for the moment that Meter Treater does not prevail before the Board or upon a subsequent appeal, until the reissue proceeding is completely resolved, there is no way for a court to know whether the attorney fees and other expenses incurred by LEA were unnecessary.3 I do not suggest that a fee-shifting sanction is required to have some causal link to the abuse which took place. Indeed, a fee-shifting sanction, like any sanction, is punitive in nature. However, where, as appears to be the case here, the district court tailors the sanction so as to cover fees and expenses that would not have been incurred had it not been for the alleged abuse, I believe it is necessary to determine whether, and to what extent, the fees were unnecessarily incurred by the aggrieved party.
CONCLUSION
For the foregoing reasons, I believe that the district court abused its discretion in assessing attorney fees against Meter Treat-er. I would remand so that the issue of shifting fees could be considered at some appropriate time in the future.
. Like the majority, I refer to Meter Treater, Inc. and Edward F. Allina collectively as "Meter Treater.”
. On appeal, LEA does not contest the purpose and nature of Meter Treater's reissue application. In addition, I note that we have before us no prosecution history material from either the reissue proceeding or the original application.
. For example, if there are further proceedings in this case, it may well turn out that LEA's expenditures for discovery and trial preparation were not in vain.