Court Revisits Patent Office Lawyer Fees When Filers Sue - Big Law Business

By Peter Leung, Bloomberg BNA

The nation’s patent appeals court reopened a dispute about whether patent filers who contest rejections in district court must pay the Patent and Trademark Office’s lawyer fees.

A majority of a three-judge panel in June said that appealing patent filers must pay the lawyer fees, because a statute requires the filer to pay the PTO’s “expenses,” which include lawyers’ salaries. The U.S. Court of Appeals for the Federal Circuit decided Aug. 31, without request from the parties, to rehear the case before the full court.

NantKwest Inc. sued in district court after the PTO rejected its patent application for a cancer treatment. After winning, the PTO moved for its expenses, including attorneys’ fees. The district court rejected the request for those fees, and the PTO appealed.

If the Federal Circuit sides with NantKwest, it would create a split between patent and trademark law. Trademark law has a provision with largely identical wording, and the U.S. Court of Appeals for the Fourth Circuit has ruled that dissatisfied trademark filers going to district court must pay the PTO lawyers’ salaries for the time spent on the appeal.

Two Options

Patent and trademark filers have two paths if they disagree with the PTO’s rejection of an application. They can appeal the decision to the Federal Circuit, which evaluates cases based on the factual record from the PTO proceedings, or they can go to the U.S. District Court for the Eastern District of Virginia, where the PTO is located. One advantage of going to district court is that a filer can introduce new evidence.

The patent law section 35 U.S.C. §145 requires a party suing in district court to pay the “expenses of the proceedings,” and that includes a portion of the salaries the PTO pays its staff lawyers who are working on the appeal, the Federal Circuit panel majority said. The provision doesn’t apply to appeals to the Federal Circuit.

The district court route results in much higher PTO attorneys’ fees, and constitutes an extra step if the applicant appeals again to the Federal Circuit. The PTO argued that Congress wanted to impose a heavy economic burden on filers that take that path, an argument that Chief Judge Sharon Prost, who wrote the majority opinion, agreed with.

The full Federal Circuit will consider whether the “expenses” in the statute include attorneys’ fees. Typically in litigation, each party covers its own attorneys’ fees unless Congress expressly made an exception. The panel majority said that Section 145 is such an exception.

Irell & Manella LLP represented NantKwest before the panel.

The U.S. Department of Justice represented the PTO.

The PTO’s opening brief is due October 14, and NantKwest’s brief is due 30 days after.

The case is: NantKwest, Inc. v. Matal, Fed. Cir., No. 16-1794, en banc8/31/17.

To contact the reporter on this story: Peter Leung in Washington at pleung@bna.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bna.com