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Researh Servi kM-
To Fee or Not to Fee: Supreme Court to
Consider Attorneys' Fees in Patent Disputes
Updated December 11, 2019
UPDATE (December 11, 2019): On December 11, 2019, the Supreme Court issued its opinion in Peter v.
NantKwest, Inc. Justice Sotomayor's opinion for a unanimous court held that the United States Patent
and Trademark Office is not entitled to recover the salaries of its legal personnel under 35 US. C, §' 145.
The Court reasoned that § 145 implicates the American Rule 's presumption that each side pays for its
own attorneys, and that it had never suggested that any statute is exempt from the presumption against
fee shifting. The Court then held that § 145's use of the term expenses was not a sufficiently clear
indication that Congress intended to depart from the American Rule presumption. Accordingly, the Court
affirmed the judgment of the U.S. Court of Appeals for the Federal Circuit.
The original post on Peter v. NantKwest, from October 3, 2019, is reproduced below.
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. anMtKwest, 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.SoC. § 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.
Congressional Research Service
https://crsreports.congress.gov
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