The U.S. Supreme Court held that the costs borne by an appellant seeking review of a rejection from the U.S. Patent Office by a District Court do not include the apportioned salaries of the Office’s employees in Peter v. Nantkwest. The Patent Office had argued that § 145 of the Patent Act authorized it to collect those expenses because the section states that “[a]ll the expenses of the proceedings shall be paid by the applicant.” If the Court had ruled the other way, the additional expense would have made seeking review of the Patent Office’s decisions under § 145 far less appealing.
When someone applies for a patent and the Patent Office’s internal Appeals Board confirms an Examiner’s rejection of that application, the applicant generally has two avenues for review of that decision. An applicant could appeal to the U.S. Court of Appeals for the Federal Circuit. There, the Court has to give deference to the Office’s findings of fact. The appellant may not present new evidence before that Court.
Alternatively, the applicant could file suit against the director of the Patent Office in the U.S. District Court for the Eastern District of Virginia. There, the Court must give a fresh evaluation of the facts, without giving deference to the Patent Office’s rulings. The appellant may also present new evidence that was not previously made of record in the application. Recognizing that this route for review can result in protracted litigation and significant expense, § 145 places the burden for paying “all the expenses of the litigation” on the appellant.
As a starting point, the Supreme Court emphasized the general presumption under U.S. law that each litigant is responsible for its own attorneys’ fees. Congress may shift the responsibility for paying attorneys’ fees, but only when the relevant statute is “specific and explicit” about the shift. The Court pointed to historical use of the term “expenses” to conclude that it did not typically include attorneys’ fees. Adding the word “all” could not transform “expenses” to reach an outlay it would not otherwise include.
In addition, the Supreme Court pointed to several other statutes dealing with “expenses.” Many of them explicitly shifted the burden for both “expenses” and “attorneys’ fees.” This indicated that Congress recognized a distinction between the two, and only wanted shifting of both when it said so. The Court also characterized the Patent Office’s request as unusual because this was the first time it had sought attorneys’ fees in the 170-year history of § 145.
This ruling should make requesting review of a Patent Office rejection by the District Court more attractive to applicants. Without the fear of having to pay the salaries of Office employees, appellants may better plan for the likely costs of overturning a rejection. This is especially true when considering that the Office could dedicate unreasonable amounts of attorney time in the proceeding. The Court’s decision reduces the incentive for the Office to avoid review of its decisions by inflating the cost for the applicant.
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