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IP Alert: Sue the USPTO? You're on the Hook for Their Attorneys’ Fees

June 23, 2017

Today, in Nantkwest, Inc. v. Matal, the Court of Appeals for the Federal Circuit held that a party who brings a civil action against the U.S. Patent and Trademark Office (USPTO) under 35 U.S.C. 145 must pay the USPTO’s attorneys’ fees as part of the costs of the proceeding. This somewhat surprising decision gives those contemplating such a civil action something more to consider when deciding their next step.

An applicant or patentee dissatisfied with the result of a Patent Trial and Appeal Board appeal can take an appeal to the Federal Circuit or, alternatively, can bring a civil action against the USPTO in federal court. The implementing statute, 35 U.S.C. 145, provides that “All the expenses of the proceedings shall be paid by the applicant.” In today's case, the District Court for the Eastern District of Virginia had held that this statute did not require the applicant to pay the USPTO’s attorneys’ fees. The USPTO appealed, and the Federal Circuit reversed. The court ruled that attorneys’ fees, in addition to other expenses of the lawsuit, are properly chargeable to the dissatisfied patent applicant. The USPTO had determined its attorneys’ fees by calculating the pro rata share of the salaries of the USPTO attorneys and paralegal who worked on the lawsuit, and the applicant had not challenged the statement of hours worked or other aspects of the USPTO’s methodology.

Judge Stoll dissented, asserting that under the “American Rule,” each party to a lawsuit normally pays its own attorneys’ fees, absent an express intent by Congress to deviate from this practice. She pointed out that section 145 “neither mentions ‘attorneys’ fees’ nor reflects a congressional intent to include them.” Further, she concluded that “Congress did not view ‘[a]ll the expenses of the proceedings’ as necessarily including ‘attorneys’ fees.’”

Today’s decision dramatically affects the economic calculus in bringing a 145 civil action, as opposed to continuing USPTO proceedings or filing an appeal to the Federal Circuit. It is left to future cases to decide whether the USPTO’s pro rata apportionment is sound. For more information on this ruling, please contact Fitch Even partner Allen E. Hoover, author of this alert.

 

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