Challenging the PTO Doesn't Mean Paying Attorney's Fees
Updated: May 13, 2020
In Peter v. Nantkwest, Inc., the Supreme Court held that a party challenging an adverse decision by the PTO in district court did not have to cover the PTO's attorney's fees. The PTO argued that 35 U.S.C. § 145, which requires the challenging party to pay "[a]ll the expenses of the proceedings," allowed it to recover the pro-rata share of the PTO attorney and staff salaries spent on defending against Nantkwest's challenge.
The district court sided with Nantkwest's argument that the American Rule, each party pays its own attorney's fees, governed the interpretation of "expenses" under Section 145. Thus, without more, the statute's general use of "expenses" cannot be read to include attorney's fees. Without a more express definition including attorney's fees, the background presumption of the American Rule controlled.
The Federal Circuit initially reversed the district court. But upon en banc review, the Federal Circuit reversed the panel.
The Supreme Court unanimously affirmed the Federal Circuit. Justice Sotomayor, writing for the Court, held that "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.'"
Moving forward, when a party challenges an adverse PTO decision in district court, it still has to cover "all expenses." But those expenses do not include the PTO's attorney's fees or pro-rata share of staff salaries.
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