U.S. Supreme Court Grants Certiorari in Iancu v. NantKwest

As reported on the Scotus Blog this morning, the U.S. Supreme Court has decided to hear Iancu v. NantKwest.  The question presented is "Whether the phrase '[a]ll the expenses of the proceedings' in 35 U.S.C. 145 encompasses the personnel expenses the USPTO incurs when its employees, including attorneys, defend the agency in Section 145 litigation."  By way of context, as I noted in June 2017:

The examiner and the PTAB rejected the inventor's patent application on nonobviousness grounds, and rather than immediately appealing to the Federal Circuit (which is one option under these circumstances) the applicant initiated a lawsuit against the director in the U.S. District Court for the Eastern District of Virginia (which is another, less commonly invoked, option).  The district court ruled in favor of the director, and in May the Federal Circuit affirmed (here).  The district court also awarded the director expert witness fees but denied a request for attorney's fees. On appeal of this matter, the Federal Circuit (in an opinion by Chief Judge Prost) concludes that the relevant statute--which in the present context is not 35 U.S.C. § 285, but rather 35 U.S.C. § 145--requires the court to award both expert and attorneys' fees--and, although it isn't at issue in this case, since the director won--the rule applies regardless of outcome.  Here is the relevant statute (35 U.S.C. § 145): 

An applicant dissatisfied with the decision of the Patent Trial and Appeal Board in an appeal under section 134(a) may, unless appeal has been taken to the United States Court of Appeals for the Federal Circuit, have remedy by civil action against the Director in the United States District Court for the Eastern District of Virginia if commenced within such time after such decision, not less than sixty days, as the Director appoints. The court may adjudge that such applicant is entitled to receive a patent for his invention, as specified in any of his claims involved in the decision of the Patent Trial and Appeal Board, as the facts in the case may appear and such adjudication shall authorize the Director to issue such patent on compliance with the requirements of law. All the expenses of the proceedings shall be paid by the applicant.

The Federal Circuit thereafter decided sua sponte to rehear the case en banc, and last July concluded (7-4) that the statute does not authorize awards of attorneys' fees to the USPTO.  According to the majority:

Historically, the agency relied on this provision to recover sums it spent on travel and printing and, more recently, expert witnesses. Now, 170 years after Congress introduced § 145’s predecessor, the agency argues that § 145 also compels applicants to pay its attorneys’ fees. We hold that it does not, for the American Rule prohibits courts from shifting attorneys’ fees from one party to another absent a “specific and explicit” directive from Congress. The phrase “[a]ll the expenses of the proceedings” falls short of this stringent standard. Accordingly, we affirm the district court’s judgment.

The USPTO thereafter petitioned for cert, and the Supreme Court will now hear the case.  The Scotus Blog page for the case has links to the briefs the parties have filed so far, and presumably will link to their subsequent ones as well.

I tend to view the en banc majority's interpretation of the statute as the more reasonable one--though I'll be first to admit that I'm no expert on § 145.  Moreover, even though I believe that fee shifting of some sort or another, as practiced in many countries other than the U.S., is arguably a desirable policy, a policy that shifts fees regardless of outcome seems perverse.  Nevertheless, I've had a difficult time getting excited about this case.  As I stated before, "I don't know off the top of my head how many actions are filed annually under 35 U.S.C. § 145, but I suspect it isn't many, so whatever the outcome is here won't affect a whole lot of cases."  I also suggested, however, that because the Federal Circuit's en banc opinion created a conflict with the Fourth Circuit's interpretation of the analogous statute applicable in trademark matters the Supreme Court might consider hearing the case, if asked.  And perhaps that is the explanation for the Court's decision today.  (Less charitably, perhaps it is more a matter of the Court having a hard time figuring out which patent cases are actually broadly significant.  As Mark Lemley pointed out at a conference last year, in recent years the Court has decided three cases on Patent Act § 271(f), which has got to be one of the least-used subparts of § 271.

The Court today also decided two copyright cases, one of which (Rimini Street Inc. v. Oracle USA Inc.) states that

The Copyright Act gives federal district courts discretion to award “full costs” to a party in copyright litigation. 17 U. S. C. § 505. In the general statute governing awards of costs, Congress has specified six categories of litigation expenses that qualify as “costs.” See 28 U. S. C. §§ 1821, 1920. The question presented in this case is whether the Copyright Act’s reference to “full costs” authorizes a court to award litigation expenses beyond the six categories of “costs” specified by Congress in the general costs statute. The statutory text and our precedents establish that the answer is no.

While not directly on point, perhaps the Court's disinclination to read 17 U. S. C. § 505 broadly enough to permit awards for expert witness fees, e-discovery expenses, and jury consultant fees foreshadows a similarly narrow reading of 35 U.S.C. § 145.  Whatever the result, the world will surely be a better place once this weighty issue is resolved . . . .

Update (March 7, 2019):  Ryan Davis has a good write-up on the case on Law360, which quotes me a couple of time.