Attorney Fees Not Included, High Court Says of Patent Appeals

WASHINGTON (CN)  Inventors fighting to reinstate patent applications need not cover the salaries of government lawyers who work on such appeals, the Supreme Court ruled unanimously Wednesday.

The case came to the high court following NantKwest’s appeal of a decision by the U.S. Patent and Trademark Office that its method for treating cancer was obvious, based on prior inventions, and therefore ineligible for a patent.

After a federal judge upheld the determination, the office asked for more than $111,000 to cover the costs of litigating the case. Under federal patent law, a company that brings a civil lawsuit in U.S. district court challenging the denial of their patent application must bear the cost of “all the expenses of the proceedings.” 

The court granted the agency some of the expenses it sought from NantKwest but denied its request for $78,500 to cover the costs of two attorneys and a paralegal who spent almost 1,000 hours litigating the case. 

The court ruled the reimbursement provision of patent law did not cover attorney expenses, given the general understanding that each litigant in court disputes in the United States covers the costs of their own attorneys. An en banc panel of the Federal Circuit upheld the lower court ruling.

Writing for the Supreme Court today, Justice Sonia Sotomayor explained that this is the result of the so-called American Rule: without a specific provision in a law or contract that says otherwise, each party in a lawsuit covers its own attorney’s fees.

It is not abundantly clear based on the text of the Patent Act that Congress meant to shift from this general presumption. The way expenses is used in the statute suggests it is not meant to cover attorney’s fees, and Congress has used expenses and attorney’s fees alongside one another in other federal laws, suggesting it views the terms as distinct, the court ruled.

“Section 145’s plain text thus does not overcome the American Rule’s presumption against fee shifting to permit the PTO to recoup its legal personnel salaries as ‘expenses of the proceedings,’” Sotomayor wrote in a 10-page opinion. 

NantKwest was represented by Morgan Chu with the Los Angeles firm Irell & Manella. Chu did not immediately return a request for comment on the case.

The Patent and Trademark Office declined comment on the decision.

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