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To Fee or Not to Fee: Supreme Court to
Consider Attorneys' Fees in Patent Disputes
October 3, 2019
When a court case is over, who pays the attorneys? Under the American Rule, the presumption in the
United States is that each side will pay its own attorneys' fees. (The opposite presumption-that the
losing party will pay the attorneys' fees of the prevailing party-is referred to as the British Rule.) That
presumption of the American Rule can be rebutted, however, if Congress passes a statute that
specific[ally] and explicit[ly] indicates that one party must pay the other's fees.
In Peter v. NantKwest, the Supreme Court is poised to decide whether the statute governing certain patent
proceedings shifts to one party the cost of paying all attorneys' fees. Specifically, when the United States
Patent and Trademark Office (PTO) rejects a patent application, 35 U. S. C. § 145 allows the applicant to
seek review of that decision in the United States District Court for the Eastern District of Virginia
(EDVA). The statute states that [a]ll the expenses of the [district court] proceedings shall be paid by the
applicant. The PTO contends that all the expenses means that the applicant must pay the PTO's
attorneys' fees-in other words, the prorated salaries of the PTO employees involved in the case. In
NantKwest, the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) rejected the PTO's
argument and held that all the expenses does not include PTO employee salaries. In another case,
however, the U.S. Court of Appeals for the Fourth Circuit (Fourth Circuit) read nearly identical language
in 15 U.S.C. § 1071(b)(3), the trademark analogue to section 145, as allowing the PTO to recover its
attorneys' fees. In NantKwest, the Supreme Court is expected to resolve disagreement between the
Federal and Fourth Circuits, in a case that could significantly affect access to the courts for those who
have their patent or trademark applications rejected.
Legal Background
The American Rule
The American Rule that [e]ach litigant pays his own attorney's fees, win or lose, unless a statute or
contract provides otherwise, is a bedrock principle ofjurisprudence in the United States, dating back
to at least the 18th century. The Supreme Court has cited at least two reasons for the American Rule.
First, because the outcome of litigation can be uncertain, litigants with fewer financial resources may be
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