On December 11, 2019, the U.S. Supreme Court issued a decision in Peter v. NantKwest, Inc. (U.S. Supreme Court docket no. 18-801). In its unanimous decision, the Court held that the USPTO is not entitled to recover attorney’s fees from the opposing party in an action brought under Section 145 of the Patent Act. The Supreme Court decision affirmed the en banc ruling of the Federal Circuit denying the USPTO’s request for an award of attorney’s fees.
NantKwest had filed a patent application directed to a method for treating cancer. When the USPTO rejected the application, instead of appealing to the Federal Circuit (the typical route for challenging a USPTO decision), NantKwest filed a civil action against the Director in District Court for the Eastern District of Virginia pursuant to Section 145 of the Patent Act. Section 145 specifically provides that “[a]ll the expenses of the proceedings shall be paid by the applicant.” Subsequently, the USPTO won a motion for summary judgment in the District Court and requested reimbursement of expenses, including attorney’s fees in the form of the pro rata share of the salaries of legal personnel. The District Court denied the request for attorney’s fees, and the USPTO appealed to the Federal Circuit. At the Federal Circuit, a divided panel reversed and held that “expenses” in this case did include attorney’s fees. However, upon an en banc rehearing, the Federal Circuit found that the American Rule presumption against fee shifting applied to Section 145, and that nothing in the language or legislative history of Section 145 suggested that Congress intended to shift attorney’s fees. Nevertheless, the USPTO persisted in its quest for these fees by seeking review by the Supreme Court.
In its opinion, the Supreme Court noted that the foundational principle when it comes to attorney’s fees in the United States is the American Rule presumption that each party pays its own fees regardless of outcome, unless a statute or contract provides otherwise. The Court then looked to the language of Section 145 of the Patent Act to ascertain whether Congress specifically and explicitly intended to depart from the presumption. The Court found that the word “expenses” used in Section 145 typically did not include attorney’s fees, and that in other statutes Congress has referred to both “expenses” and “attorney’s fees,” indicating that Congress understands the two to be separate and distinct. In other words, if Congress intends to shift fees from one party to another, it will explicitly recite that “attorney’s fees” may be recovered. The Court also found that the history of the Patent Act supported that Congress did not intend for Section 145 to include attorney’s fees. Never has the USPTO or its predecessors paid its employees from money collected during litigation, and this is the 170-year history of Section 145 that the USPTO has attempted to obtain attorney’s fees.
A copy of the NantKwest decision may be accessed at https://www.supremecourt.gov/opinions/19pdf/18-801_o758.pdf.
U.S. Supreme Court Issues Decision in Peter v. NantKwest
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