The U.S. Court of Appeals for the Second Circuit on Tuesday revived a motion for sanctions against an information technology firm and its attorneys for allegedly pushing a frivolous claim in a long-running and troubled contract suit that invoked the court's inherent power to punish parties for misconduct.

A three-judge panel of the appeals court held that a Manhattan federal judge had improperly denied defendant Verint Systems inc.'s motion for sanctions on the basis that a single alleged misrepresentation by the plaintiff, International Technologies Marketing Inc., and its now-withdrawn counsel had not impeded "the ability of the court to adjudicate the issues presented in the case."