Wednesday, August 18, 2021

Federal Circuit: Expert Witness Fees Not a Recoverable Expense Under Section 145

35 U.S.C. § 145 is a little-used provision of the U.S. Patent Act, which provides that "[a]n 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."  Nearly two years ago, the U.S. Supreme Court held in Peter v. NantKwest, 140 S. Ct. 365 (2019), that the “expenses” referred to in the last sentence do not “include the salaries of attorney and paralegal employees of the” USPTO, thus putting an end to the USPTO’s quest to recover attorneys’ fees in § 145 actions (regardless of whether it actually won or lost at trial!).  Today in Hyatt v. Hirshfeld the Federal Circuit holds that the USPTO also isn’t entitled (even if it prevails at trial) to recover expenses for expert witnesses.  From the opinion (authored by Judge Hughes, joined by Chief Judge Moore and Judge Reyna):

We understand that this is a close case. There are many arguments that the phrase “[a]ll the expenses of the proceedings” should be understood to include expert fees. Indeed, many of these arguments apply to expert fees in a way that they do not apply to attorney’s fees, making this case a closer one than NantKwest. But the American Rule sets a high bar, and we find none of these arguments sufficiently specific and explicit to override the presumption against fee shifting (p.10).

The court notes, among other things, that the fact “that district courts have been awarding expert witness fees under this statute ever since the PTO began using experts” (p.11) is not controlling on this issue; and that while there are “other statutes where the term ‘expenses’ has been interpreted to include expert witness fees as evidence that the term consistently includes expert fees,” “the Supreme Court’s opinion in NantKwest countered much of the logic behind” them (p.13).

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