by Dennis Crouch
In its new en banc opinion, the Federal Circuit has confirmed that the Patent Act does not require patent applicants to pay the USPTO’s attorney fees in Section 145 actions. The USPTO had requested $100,000+ to compensate for the time of its in-house attorneys.
NantKwest, Inc. v. Iancu, 16-1794, 2018 U.S. App. LEXIS 20932 (Fed. Cir. 2018) (en banc).
35 U.S.C. 145 provides an unsuccessful patent applicant with the option of either (a) appealing the PTAB decision to the Federal Circuit or (b) filing a “civil action” in district court. One kicker though – the statute provides that “All the expenses of the proceedings shall be paid by the applicant.”
Back in 2010, the Federal Circuit ruled that the statute allows the USPTO to collect expenses “regardless of the outcome.” Hyatt v. Kappos, 625 F.3d 1320 (Fed. Cir. 2010) (en banc).
In NantKwest, the original panel split on the meaning of “all the expenses” — with the majority holding that “expenses” include USPTO attorney fees (including in-house salaried attorney fees).. That panel decision has now been rejected in a 7-4 decision with Judge Stoll penning the majority decision. Chief Judge PROST wrote in dissent and was joined by Judges Dyk, Reyna, and Hughes.
The court’s reasoning here is that the “American rule” on fees (each party pays for its own attorney fees) is a strongly embedded and any statutory rejection of the rule must be “specific and explicit.” The “all the expenses” language here does not meet that requirement — especially since such an interpretation would render this the only federal statute requiring “a private litigant to pay the government’s attorneys’ fees without regard to the party’s success in the litigation.”
The bottom line here is that patent applicants who challenge a PTAB decision will still be forced to pay other expenses such as printing costs and expert fees — but will not be required to pay the PTO attorney fees as a matter of course.
Well thank the Lord for the small miracles of common sense. The right to “sue out a patent” is the definitional right of an inventor under US patent law for over 200 years. Paying the sovereign’s internal attorney fees to defend against that right – just nuts – PTO should dunk their collective heads in a toilet for even advocating such a position. Why do we even have rights and Government? Pay the US attorney’s internal salary to vindicate a right against the Government? Sure apply that to free speech or discrimination. But I guess inventors are a lower life form than even racial classes.
Besides PTO who even cares? Just kill the patent at PTAB – after the fact of losing in a 145 court of record action. Oil States Anomaly #9. PTO can lose a 145 trial (a court of record mind you) – and still overturn the court action under PTAB. Wherein the PTO was a party – and collateral estoppel should and must apply? What a world. Justice Story is rolling in his grave.
Hayburn’s case on steroids. Do you they still teach the in Con law Dennis? What are you doing to the future of the Republic without lawyers who know the Constitution? Meh, guess we know the answer – Oil States.
It is a good thing that the Google judges at the CAFC have a little bit of shame left. Even that group of unethical bought off dixtbags couldn’t bring themselves to trash the Constitution this bad. Although, I note that the dissent is dominated by the Google judges.
Probably Lemley (i.e., I love to hold my ankles and wait for the Google) will write some blog posts (whoops I mean law journal articles) on why the applicant should pay and pay and pay.
Dennis –
There appears to be a typo in the following copied sentence:
The “all the expenses” language here does that meet that requirement — especially since such an interpretation would render this the only federal statute requiring “a private litigant to pay the government’s attorneys’ fees without regard to the party’s success in the litigation.”
I think the “that” in the first line should have been a -not-.
yes. the statute does NOT meet the heightened requirement for overturning the longstanding presumption on attorney fees.
I wonder if the US government would go for cert. On the one hand, it’s a weird anomalous statute, and it seems unlikely (in my uninformed speculation at least) to generate enough money for the government to care a lot. On the other hand, there’s an explicit split with the Fourth Circuit on a statutory interpretation question, and little danger of unforeseen consequences whichever way the court decides it.
The solicitors office hates 145 actions. The position were purely for the In Terrorem effect by PTO to make a 145 action punitive.
Absolutely.
And I would add, this sounds in exactly as I had portrayed the situation (even though the anti-patent cheerleading of Paul Morgan tried to deny that very in terrorem effect).
Had this gone the other way, there would be no limit as to the level of resources that the (political) executive branch could have decided to throw at particular parties making challenges (and likewise, providing miniscule support for “favored” parties). The executive branch – at its own unbridled choosing – could have effectively “taxed” any party into submission by assigning teams with unlimited number of members as it desired.
Perhaps only of tangential interest, but page 6 provides a premise worth some consideration:
The rationale supporting the American Rule is rooted in fair access to the legal system, as well as the difficulty of litigating the fee question:
[S]ince litigation is at best uncertain one should
not be penalized for merely defending or prosecuting
a lawsuit, and . . . the poor might be unjustly
discouraged from instituting actions to vindicate
their rights if the penalty for losing included the
fees of their opponents’ counsel.
Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 718 (1967) (citations omitted) (quote here shortened).
One of the great propaganda moves has been to paint anyone daring to actually enforce their property right (be that a Public Franchise property right or a Private Personal property right) as implicitly having “bad intent.” Otherwise known as the “O H N O E S, Patent Tr011s” scare tactic, one should remember that the court system was set up TO enforce one’s rights. The Efficient Infringers crowd would have people believing that the choice to enforce is somehow necessarily a “bad thing.”
While no one likes to be sued, there is a HUGE difference between not liking something and the extreme for which the court even here distinguishes as a proper setting for fee shifting. See page 7, footnote 2:
“The Supreme Court has carved out several equitable exceptions to further the interests of justice. See F. D. Rich Co. v. U.S. for Use of Indus. Lumber Co., 417 U.S. 116, 129 (1974) (acknowledging availability of attorneys’ fees where party “has acted in bad faith, vexatiously, wantonly, or for oppressive reasons”);”
In its haste to weaken the US patent system, the Efficient Infringer mantra attempts the very thing warned against by the court here: “penalize[ ] for merely defending or prosecuting a lawsuit”
How many commentators here (who also happen to align with some anti-patent zeitgeist) fall to the first impression that bringing a lawsuit implicitly signals a bad action?
One of the great propaganda moves has been to paint anyone daring to actually enforce their property right (be that a Public Franchise property right or a Private Personal property right) as implicitly having “bad intent.” Otherwise known as the “O H N O E S, Patent Tr011s” scare tactic
Nice try. In fact, very very very few people out there (even less here) have an issue with practicing entities enforcing their valid, eligible patent claims.
The “bad intent” of patent monetizing machines like Intellectr0ll Ventures, on the other hand, pretty much speaks for itself. The “intent” of those entities (and relentless cheerleaders for those entities, like you and your mentor, Big Jeans) is to funnel money into the hands of patent attorneys at the expense of pretty much everyone and everything else. No “propaganda” was needed to spread the news about such entities. They spread it themselves, like a thick spray of liquid bull shirt on a family picnic.
Did you deliberately try to twist what I stated with your “have an issue with practicing >/b>entities” misquote?
You do realize that there is absolutely zero requirement in US patent law for an entity to enforce its property right to be a practicing entity, right?
You seem only TOO eager to prove my point for me.
And you seem blithely unaware that THAT is what you are doing.
It’s a kind of small miracle anon can keep avoiding the point to pedantically point out something everyone knows; of course you don’t have to practice to enforce, and there is nothing wrong with that. MM’s example of the kinds of patents that virtually everyone is in favor of- which includes enforcement- is the point you are avoiding. The patents people rightfully reject are broad, obvious claims to some species of information, because those belong to the public.
Quite the opposite Marty.
There is no “avoiding” what amounts to be merely an attempt to draw a distinction where no such distinction exists in the law.
It is simply a not-subtle attempt to create that artificial distinction that somehow being a practicing entity means that your enforcement efforts are somehow inherently “more legitimate.”
You absolutely miss the point of the exchange here.
Don’t be infantile. We all understand that practicing or not is merely a clue– but a good one- as to the moral basis of any given grant.
Some patents are very, very upright and others are a pure license to steal. An immoral patent is no better than an immoral law- and ain’t never presumed valid in my book.
We know em when we see em. That’s half the fun of the game.
“We all understand that practicing or not is merely a clue– but a good one- as to the moral basis of any given grant.”
Don’t be infantile yourself.
You have obviously missed the key legal point that such is NO clue whatsoever to ANY “moral basis.”
You want a difference that is just not there. That you seem eager to ALSO apply some level of this “moral” thing only goes to show that you are inserting your “feelings” into an area that such insertion is just not proper.
Patents – by design, and expressly dating back to the very beginning of this country were expressly meant to be FULLY alienable, which means that your “moral” sense is simply off.
There is zero relation – legally or morally – of the property to its current owner. The law simply was never meant to have such a relation, and your desire for “clue” is simply misguided. You simply seem not to grasp the dynamics in play, the “politics” employed by those seeking to twist the patent system to their own ideological ends that contravene what our system was built to be, and have fully swallowed the Kool-Aid of the Efficient Infringers (who, as I may remind you, CREATED the Tr011 scare tactic – and did so NOT for your benefit, but solely for their own benefit).
As to your “feelings” of ain’t never presumed valid in my book,” it is altogether not shocking that you proudly proclaim your absence of legal knowledge that stems from your own bruised feelings.
Maybe someday, YOU will stop being infantile and insist that your feelings are an acceptable substitute for actual legal understanding.
Not that it would have likely affected the outcome, but does anyone know why Judge Chen did not participate?
Perhaps involved in a different role prior to his becoming a judge on the CAFC…
Judge Chen was USPTO solicitor in at least one 35 U.S.C. § 145 proceeding.
The case was Hyatt v. Kappos. The USPTO did not seek attorney fees from Hyatt.
I am not sure it creates an ethical conflict, but Chen might be in a delicate position to judge a USPTO change from a policy he followed.
Isn’t there something just a wee comedic in Judge Prost’s dissent?
He wrote the following on page 15 of the dissent and page 49 of the PDF file.
On the basis of the Prost’s foregoing text, he seems to have left out a word.
Judge Prost is a she. And this at least the second time you’ve been told that in this forum.
Because the comment suggests I forgot something and because I can forget non-tech related information, I did a google search.
link to google.com
I never used a pronoun to refer to Judge Prost before in this forum or — as far as I can remember — in any other forum.
In Eon v. AT&T and the role of “Pure Functional Claiming”, BabelBoy points out that in the past he has mistakenly used a masculine pronoun to refer to Judge Prost. I did not read BabelBoy’s comment when I was commenting on that blog posting.
It is interesting that Nantkwest v Iancu and Eon v AT&T both refer to terminological issues.
In Nantkwest the issue relates to the difference in defining “expenses” according to law or according to accounting.
WRT Eon I note that mathematicians, software engineers, and judges define “algorithm” in materially different ways.
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