SCOTUS to hear oral arguments over USPTO attorneys’ fees
The US Supreme Court will today, October 7 hear oral arguments in a dispute over whether the US Patent and Trademark Office (USPTO) can seek an award of its attorneys’ fees irrespective of the result of a case.
The country’s top court granted certiorari in the case in March this year after the US Court of Appeals for the Federal Circuit denied the USPTO’s request for attorneys’ fees in Iancu v NantKwest last July.
Until 2012, the USPTO had a longstanding policy of not seeking attorneys’ fees. The US legal system operates under the so-called ‘American rule’, which requires each party to bear its own attorneys’ fees in legal proceedings short of specific legislation to the contrary.
The USPTO claims that section 145 of the Patent Act provides for such an exception. Under the law, a party can challenge a USPTO patent ruling in court, but is required to pay “all the expenses of the proceedings”.
In 2017, after NantKwest unsuccessfully brought a section 145 action, the US District Court for the Eastern District of Virginia awarded the USPTO its experts’ fees, but not attorneys’ fees.
The Federal Circuit upheld that decision on appeal from the USPTO last year. In its ruling, a split Federal Circuit declined to set a precedent “requiring a private litigant to pay the government’s attorneys’ fees without regard to the party’s success in the litigation”.
Lawyers who have followed the case told WIPR that it marks an opportunity for the Supreme Court to provide greater clarity on what is still a “relatively recent reversal in policy by the USPTO”.
Jonathon Kance, partner at Bracewell in Houston, said the case was of particular interest to his firm which represented mining company Asarco in a dispute which also turned on “whether attorney’s fees were recoverable in light of the American Rule”.
The Supreme Court’s 2015 ruling in Baker Botts v Asarco is cited throughout both parties’ briefs in NantKwest.
“Baker Botts v Asarco, which we prevailed on, hammered home the preeminence of the American Rule, which is that both sides bear their own attorneys’ fees,” Kance said.
“Here, [in NantKwest], I would expect the court to also focus on whether the plain language of the statue at issue—’all expenses of the proceeding’—requires shifting of attorneys’ fees.”
Kance said that NantKwest likely had the “upper hand” in the dispute, given the “ strong presumption in favour of the American Rule”.
He added: “What makes this case particularly interesting to watch, however, is that it involves payments to USPTO personnel, who just happen to be attorneys. Whatever the court holds, it gives the Supreme Court an opportunity to further clarify the scope of the American Rule and the common meaning of the word ‘expenses’ as it relates to attorneys’ fees.”
Karen Sebaski, counsel at Holwell Shuster & Goldberg in New York, said that oral arguments were likely to “shed light on the Supreme Court’s appetite for an anomalous exception to the American Rule”.
She added: “As the Federal Circuit panel recognised, Congress otherwise has ‘never enacted a fee-shifting provision that shifts only the government’s fees onto private parties, much less a provision that does so even if the government loses the litigation.’”
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