When the PTO refuses to issue a patent, the applicant can appeal directly to the Court of Appeals for the Federal Circuit or instead file a civil action under 35 U.S.C. 145. The Section 145 action gives the applicant the opportunity to further develop facts, including live expert testimony and cross-examination.
An oddity of the statute is its statement that “all the expenses of the proceedings shall be paid by the applicant.” In its 2010 Hyatt decision, the Federal Circuit ruled that the expenses are to be paid by the applicant “regardless of the outcome.” In the new decision NantKwest v. Matal, the Federal Circuit has ruled that the provision includes attorney fees and thus allows the USPTO to recoup its expert witness fees, attorney fees and other expenses without any showing of exceptional case or even any merits.
Here, the majority opinion filed by Judge Prost and Joined by Judge Dyk found that the term “all expenses” was designed to “deter applicants” from choosing the civil action pathway. The dissent filed by Judge Stoll (her first in a patent case?) argues that the term “expenses” is not sufficient to overcome the traditional american rule regarding attorney fees.
The lucky-thing here is that USPTO attorneys are paid government salaries and so the attorney fees added up to only $78k before the district court granted summary judgment against NantKwest.
The patent application in this case is based upon a 2001 filing by Hans Klingemann directed to a method of treating cancer by administering natural killer cells. Those Natural Born Killers will now be released on the public without the protections offered by the patent system.
Another salvo against the little guy and independent inventors. Shame.
Paul, think about this: public interest groups have been filing IPRs and they cannot participate in an appeal because they have no standing. That has already been decided. Thus, they bail after the decision of invalidity allowing the government to defend the PTAB decision.
If the government itself cannot participate, then as a practical matter, the public interest groups would be wasting their time filing IPR petitions because even if they win, there would be no one to defend the decision in an appeal. The decision would have to be vacated.
This might be a backhanded way of imposing a standing requirement on petitioners.
[I respond here, Paul, because the filter is again blocking all my posts in the other thread and it will not be cleared for days.]
Ned. please explain your support for your position that if no Fed. Cir. appeal of an IPR is allowed, because one party gave up, that the Board IPR decision must be vacated?
If you had won a case at a D.C. and the losing side decided not to appeal would you want the D.C. decision vacated?
Paul, if a case becomes “mooted” by action or inaction of the winning party, that losing party has a legal right to have the decision vacated. That is what happened in In re Lockwood when Lockwood withdrew his jury trial demand after the case had been taken by the Supreme Court. American Airlines moved to vacate. The motion was granted.
There are a lot of cases on point. Below is a snippet from a website.
“Although the limitation on judicial power conferred by Article III of the United States Constitution prohibits a decision on the merits when a case becomes moot, an appellate court “‘may make such disposition of the whole case as justice may require,’” including vacating the judgment entered by the lower court. U.S. Bancorp Mortgage Company v. Bonner Mall Partnership, 513 U.S. 18, 21-22 (1994), quoting Walling v. James V. Reuter, Co., Inc., 321 U.S. 671, 677 (1944).”
“Paul, if a case becomes “mooted” by action or inaction of the winning party, that losing party has a legal right to have the decision vacated.”
That glosses over things too smoothly, Ned.
By “action” is one thing. But the path being strolled down here – “inaction” because the system “won’t allow” action takes the decision TO act out of the hands of the winning party and makes the win a mirage.
That is, of course, in that subset in which the petitioner does not have Article III standing.
If knowing a priori that all it takes to nullify a losing decision at the PTAB is to merely make an appeal to an Article III court, then why would anyone spend a dime trying to defend any attack in the PTAB?
If indeed, the “standing” ruling comes down that the PTAB petitioner AND the Office (in any sense of intervenor) cannot even appear in an appeal, the ONLY move necessary for any and all patent holders to make in an IPR initiated by a petitioner without standing is to submit a one paragraph statement that in the broadest conclusory manner possible states that the petitioner is wrong, and that the patentee fully believes that he has a valid property.
Nothing more. Not a dime’s worth of effort more.
You win at the PTAB? great.
You lose at the PTAB? No problem, appeal and vacate. Under your view, no one CAN stop your motion for vacatur.
Can it really be that simple?
What of separation of powers in this instance? Here, the judicial branch is co-opted to nullify the legislative branch.
anon, I would file that and a motion to dismiss the petition due to lack of standing.
And, anon, if I were up against a do-gooder LLC without standing, I would file that motion to dismiss right now.
Ned, this is not a situation of a case “becoming moot.”
Paul,
But according to Ned’s path, it absolutely is a situation of a case “becoming moot.”
Your reply here does not make sense.
Furthermore, although the Fed. Cir. has already held that an alleged pro-bono organization that is not being personally sued or threatened by the patent owner lacks standing to appeal an IPR decision to the Fed. Cir., they did NOT moot or dismiss or render invalid the PTAB’s IPR decision.
You miss the point (again) Paul.
Focusing too narrowly on “lacks standing to appeal” is just not the same as lacks standing to defend an appeal.
Further, if – as Ned is suggesting – there is a de facto reversal inherent in the LACK of a “winner” at the PTAB level to even appear and defend at the Article III level, then the “win” is NO win at all, as the loser at the PTAB level obtains an automatic reversal and vacatur merely by being the only one that “can show up” at the Article III level.
This next step then – uncontested and uncontestable – IS the item that you are refusing to recognize.
Your posts are most unhelpful when you are refusing to bother understanding and reflecting ALL of the pertinent issues.
I put up a short Linkedin article that discusses the wrongfulness of the Nantkwest v USPTO decision.
link to linkedin.com
“The lucky-thing here is that USPTO attorneys are paid government salaries and so the attorney fees added up to only $78k before the district court granted summary judgment against NantKwest.”
This time.
But with this decision, the spigots will be thrown full bore open, and why not? There’s no limit of “reasonableness” to put any ‘check’ to the government spending. Like the majority stated, how better to “deter,” then throw an army of government attorneys on every matter?
Just think of the “easy” billings that might attract employment for attorneys in the government….
The attorneys don’t get the money.
Of course they do.
Yes, it is not “direct,” but nonetheless my post is accurate and a bottomless budget guaranteed to pay for all of the hours that the government can heap on every single matter.
Why not throw 10, 20, 30 or more attorneys at every single applicant/patentee challenge? Win or lose those attorney fees are going to come directly out of the challenger’s pockets.
So regardless of merit, a free-for-all mechanism “to dissuade” the ability of those seeking to protect innovation is in place.
And you seriously see nothing wrong with this?
Why are not standard accounting definitions applied?
Because of the nature of the service that the USPTO provides, the government attorneys represent a direct labor cost and not an expense under Accounts Payable as a technical expert would be treated, who prepared an expert report, was deposed, and testified in court.
link to linkedin.com
Um, the “spigots” only “open” when someone sues the office for them to get a patent. If you’re thinking the PTO is all of a sudden going to start putting more attorneys on the case to stop a patent from issuing, meh, not likely bruh. Save in a rare case, same as before.
“when someone sues the office for them to get a patent.”
Of course – why would you think that I was talking about anything else?
it results in having to pay the government to correct its mistake
The government didn’t make a mistake here.
Whether or not “here,” there be a mistake, the point is quite clear that even in those cases where the government DOES make a mistake, the patentee STILL foots the bill.
Try to see the actual point of the comment that you are responding to.
Those Natural Born Killers will now be released on the public without the protections offered by the patent system.
Translation: treating a child’s cancer with natural killer cells just got a little cheaper for everybody because a junky application was properly rejected by the PTO.
Translation. The next breakthrough in fighting cancer will take far longer because there is far less financial incentive to invest in the associated research and testing.
I would not be shocked to see a strong cert petition in this case.
Agreed.
Prost.
Dyk.
They were on the MCM panel as well. When that dynamic duo gets together, we know that patent owners are going to get rough justice, forcing a petition for rehearing or a certiorari.
The other day I was discussing judges who consistently had to be overruled by higher authority. I was just saying that I have never heard of action against them by the higher courts or by congress by way of impeachment. Drunks can be pushed aside. Judges who violate the rules of ethics “resign.” But so long as judges stay withing the law or ethical bounds, they get to say what they want to say in their rulings. Litigants still can appeal.
Is this wrong?
I would phrase that a little differently Ned: any secondary panel does not get to “set its own precedent” on legal issues, and should be following prior panels.
The CAFC often has panels acting as if other panels have been entirely silent on legal issues.
I blame two major players for this – one internal to the CAFC, and one external.
The external one of course is the Supreme Court, who “firehoses the simians in the cage” routinely.
The internal one is Chief Judge Prost. Is not part of being “Chief” making sure that panel decisions do not “go rogue”…?
Of course, “anon” could care less about precedent if the decision tilts his way.
That goes without saying. But we say it because letting silly children like “anon” run around behaving like entitled hypocritical g0 ons just encourages them to act g 00 nier.
Good for laughs, but little else.
Your feelings – as off in the weeds as they are – are noted.
Much more because this is a clear statutory interpretation case, it’s a civil procedure issue, and it’s something that is so far from the default rule that it will seem egregious. It might be an issue of minor impact, but it’s the kind of case that is the bread and butter of the Supreme Court.
this is a clear statutory interpretation case
And it’s been interpreted. Some rich people lost a chance to lower their expenses. Boo hoo hoo hoo.
Done.
Well, the Sup. Ct. does seem to like to reverse disputed Fed. Cir. statutory interpretations lately, but the mere $78k they might save even by winning will not pay for the attempt. On the other hand, this application owner must have already wasted more than that with this 35 U.S.C. 145 civil suit before a Fed. Cir. appeal, rather than the cheaper and normally more effective filing of a continuation with supporting declarations [that would not be cross -examined, as in a 145 suit] before going to the Fed. Cir.
The idea of petitioning the Supreme Court to hear this is so silly that I assumed the commenter was referring to a petition for re-rehearing en banc.
I just tend to think that the dissent lays out a very strong case of a wrong statutory interpretation. This is a civil procedure issue, one about statutory interpretation. That’s the bread and butter of the Court’s docket. Maybe they decide it’s not worth the cost of taking this up, but I think that this has a higher chance of getting cert granted than your standard Fed Circuit case. Particularly because it results in having to pay the government to correct its mistake – that seems like a compelling argument for a few Justices to consider it cert-worthy.
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