Attorney Fees: What is the meaning of “all expenses?”

In a sua sponte en banc order, the Federal Circuit has announced its intent to reevaluate the NantKwest decision permitting the PTO to recoup its attorney fees in defending a Section 145 civil action.

Issue: Did the panel in NantKwest, Inc. v. Matal, 860 F.3d 1352 (Fed. Cir. 2017) correctly determine that 35 U.S.C. § 145’s “[a]ll the expenses of the proceedings” provision authorizes an award of the United States Patent and Trademark Office’s attorneys’ fees?

After being finally rejected by both the examiner and the PTAB, a patent applicant can then take its case to court.  The Statute provides two options – either (1) a direct appeal to the Federal Circuit or (2) filing a civil action in district court to pursue a trial on the merits under 35 U.S.C. 145.

An oddity of Section 145 civil action is the last line which states: “All the expenses of the proceedings shall be paid by the applicant.”  In 2010, the en banc Federal Circuit ruled that the statute means what it says – expenses are to be paid by the applicant “regardless of the outcome.” Hyatt v. Kappos, 625 F.3d 1320 (Fed. Cir. 2010) (en banc).  In NantKwest, the panel ruled that the “expenses” include attorney fees.

[Panel Decision][Patently-O Write-up]

The panel decision was split – with Judges Prost and Dyk in majority and Judge Stoll in dissent and arguing that the term “expenses” is not sufficient to overcome the traditional american rule regarding attorney fees.

9 thoughts on “Attorney Fees: What is the meaning of “all expenses?”

  1. It *doesn’t* include attorneys’ fees. But Prost and Dyk have repeatedly shown themselves to be [insert word of one’s choice that connotes a person low intelligence].

  2. The USPTO argument has been illogical since the USPTO began to make it.

    USPTO lawyers represent direct labor cost according to GAAP (Generally Accepted Accounting Principles) and not an expense paid out from accounts payable as attorney fees are normally accounted (like all temp and consultant expenses).

    Suppose all patent applicants are paying a little toward 35 U.S. Code § 145 into the paychecks of USPTO in-house attorneys.

    That is not a subsidy of those that use 35 U.S. Code § 145, but insurance for all patent applicants against USPTO error or misbehavior. I doubt many patent applicants have a problem with paying such insurance, which relatively speaking is quite small compared to the cost of a patent.

    Only if the USPTO is perfect and never makes error is the cost of 35 U.S. Code § 145 USPTO attorneys a subsidy.

    Obviously, Congress does not believe the USPTO is perfect and never makes an error.

    If Congress did, it would repeal 35 U.S. Code § 145.

  3. This may not be all that popular with the PTO Solicitors Office? It might discourage a few less 35 USC 145 civil action appeals from PTAB rejected application claims? But, it should require them to all keep track of all their billing hours on every 145 case, and justify their rates and expended hours to a E.D. VA D.C. judge, to get attorney fee reimbursements, which are not even paid to their office?

    1. Which reminds me, speaking of 145 suits, when are we finally going to get a report on the fate of those thousands of Gilbert Hyatt claims that have been pending with the PTO since Rip Van Winkle went to sleep in Sleepy Hollow?

    2. Paul, the PTO has consistently been trying to throttle any and all appeals to district courts – getting rid of re-examinations in 1999, arguably interferences in 2011, and by imposing attorneys fees in appeals from ex parte. By doing so, they control findings of fact, which inevitably means the entire issue is under their exclusive control.

      This power grab is obvious to any and all. It should cause anybody to be concerned.

      1. But Ned, can you not see that the Ends are “noble,” thus we really should just turn a blind eye to any of this “nonsense” concerning Constitutionality or Rule of Law….?

        (where did I put my sar casm emoticon….?)

      2. Ned, the avoidance of extra work for PTO employees is a far more likely explanation for PTO motives, but in any case it was not the PTO that changed the statutes for civil actions for reexaminations and interferences.

        1. d, the avoidance of extra work for PTO employees is a far more likely explanation for PTO motive

          Actually this is entirely untrue – and very Pollyanna of you.

          Avoidance of extra work would require an across the board application, regardless of the players involved.

          This is just not so.

          What IS “a far more likely explanation” of your choice to attempt to put forth such a point is the fact of the matter is that the Article I “judicial nature” of the particular administrative agency under discussion suffers from one of the worst separations of political and judicial functionalities across the administrative agency spectrum.

          That lack of separation is – and should be – an important determinant in evaluating ANY post grant power application in that Article I forum.

          (you should be able to recognize the solid admin law and Con law aspects to this discussion point – even if you decide to refrain from engaging on the merits)

  4. New Google’s slogan – Don’t be evil. That’s our job.!

    Google Lee ! : USPTO / PTAB : We are running a fraud : USPTO charges $5000 to an inventor and give him a patent after 5 years, then PTAB charges $25,000 to the infringer and to take away that same patent in 18 months.

    Google blessed CAFC : We make sure inventor never wins and Google / infringement lobby is happy.

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