Resolving Circuit Splits: Supreme Court Addresses Issues Regarding Legal FeesMarch 7, 2019

On March 4, 2019, the United States Supreme Court granted certiorari in Iancu v. NantKwest, Inc. to settle the debate over what “all the expenses” means under the U.S. Patent and Trademark Office’s (USPTO) win-or-lose attorney fee policy. This controversial policy involves seeking attorneys’ fees from applicants, regardless of the outcome of a case.

During patent prosecution, if met with an adverse ruling from the Patent Trial and Appeal Board (PTAB), the applicant has the option of either appealing to the Court of Appeals for the Federal Circuit or filing a civil action in federal district court under 35 U.S.C. § 145. The key statement in § 145 states, “[a]ll the expenses of the proceedings shall be paid by the applicant”.

Previously, in 2017, the Federal Circuit confirmed that “all the expenses” included attorneys’ fees under § 145. See a previous blog post here. However, in July 2018, the en banc Federal Circuit deviated from its own previous ruling and held that the USPTO’s policy violated the traditional presumptive “American Rule”—a presumption that every party bears its own attorneys’ fees. While the USPTO argues the fees are necessary to pay for the more expensive appellate option, critics argue that it results in unreasonable expenses for applicants appealing to the district court.

Therefore, the question to be considered by the Supreme Court on cert. is, “[w]hether the phrase ‘[a]ll the expenses of the proceedings’ in 35 U.S.C. 145 encompasses the personnel expenses the USPTO incurs when its employees, including attorneys, defend the agency in Section 145 litigation”. The Supreme Court’s decision to grant cert. on this policy comes on the same day the Court decided Rimini Street v. Oracle USA, clarifying what “full costs” means under the Copyright Act, and restricting costs a prevailing party can recover in copyright litigation. Though it is unclear what has motivated the justices to hear these cases recently, hopefully the clarifications regarding legal fees can provide applicants with a more informative approach to overall strategy and decision-making.

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