USPTO Can Receive Its Attorneys’ Fees for Applicant Appeals to District Court

In NantKwest, Inc. v. Matal, No. 2016-1794 (Fed. Cir. June 23, 2017), the Federal Circuit reversed the district court’s denial of the USPTO’s motion for attorneys’ fees, holding that the “expenses” authorized under 35 U.S.C. § 145 include the USPTO’s attorneys’ fees.

Section 145 allows a patent applicant to appeal a patentability decision from the Patent Trial and Appeals Board to a district court rather than directly to the Federal Circuit. In exchange, the statute requires the applicant to pay “[a]ll the expenses of the [district court] proceedings.” At issue here was whether these “expenses” include the USPTO’s attorneys’ fees or whether each party must bear its own attorneys’ fees under the general “American Rule.” To resolve this question, the Federal Circuit examined history of the Patent Act of 1836, modern legal dictionary definitions and treatises, and Supreme Court and regional circuit decisions interpreting “expenses” in other statutes, concluding that the statutory “expenses” include attorneys’ fees. The Federal Circuit found further support in the “unique” nature of § 145, under which the USPTO is the only defendant and because these appeals require the USPTO to divert time and resources of attorneys and staff from other endeavors. The Federal Circuit thus rejected NantKwest’s position and concluded that § 145 permits awarding the pro-rata share of the USPTO’s attorneys’ fees to defend § 145 appeals to the district courts.

Judge Stoll dissented and would have found that neither the text of § 145 nor its legislative history provides a “specific and explicit” authorization from Congress to deviate from the American Rule.