US Supreme Court says USPTO cannot charges attorney’s fees to appellate litigants in patent court cases.

 

PETER, DEPUTY DIRECTOR, PATENT AND TRADEMARK OFFICE v. NANTKWEST, INC. Decided: December 11, 2019.

 

The Patent Act provides two mutually exclusive methods for challenging an adverse decision by the Patent and Trademark Office (PTO). A dissatisfied applicant may appeal directly to the Federal Circuit, 35 U. S. C. §141, or, as relevant here, may file a new civil action against the PTO Director in the United States District Court for the Eastern District of Virginia, §145. Under this second proceeding, the applicant must pay “[a]ll the expenses of the proceedings.” Respondent NantKwest, Inc., filed a §145 civil action after its patent application was denied. The District Court granted summary judgment to the PTO, and the Federal Circuit affirmed. The PTO moved for reimbursement of expenses, including the pro rata salaries of PTO attorneys and a paralegal who worked on the case. The District Court denied the motion, concluding that the statutory language referencing expenses was not sufficient to rebut the “American Rule” presumption that parties are responsible for their own attorney’s fees. The en banc Federal Circuit affirmed.

Held: The PTO cannot recover the salaries of its legal personnel under §145. Pp. 3–10. (a) The “American Rule”—the bedrock principle that “[e]ach litigant pays his own attorney’s fees, win or lose, unless a statute or contract provides otherwise,” Hardt v. Reliance Standard Life Ins. Co., 560 U. S. 242, 253—provides the starting point for assessing whether §145 authorizes payment of the PTO’s legal fees. Contrary to the Government’s view, this Court has never suggested that any statute is exempt from the presumption against fee shifting or limited its American Rule inquiries to prevailing party statutes. Rather, it has developed a line of precedents addressing statutory deviations from the American Rule that do not limit attorney’s fees awards to prevailing parties.  The presumption against fee shifting is particularly important here because reading §145 to permit an unsuccessful government agency to recover attorney’s fees from a prevailing party “would be a radical departure from longstanding fee-shifting principles adhered to in a wide range of contexts.”

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