Wednesday, December 11, 2019

Supreme Court Affirms in Peter v. NantKwest

Opinion here.  No big surprise, in my view.  Justice Sotomayor, writing for a unanimous Court, states:
Section 145 of the Patent Act affords applicants “dissatisfied with the decision of the Patent Trial and Appeal Board” an opportunity to file a civil action in the United States District Court for the Eastern District of Virginia. 35 U. S. C. §145. The statute specifies that “[a]ll the expenses of the proceedings shall be paid by the applicant.” Ibid. The question presented in this case is whether such“expenses” include the salaries of attorney and paralegal employees of the United States Patent and Trademark Office (PTO). We hold that they do not (p.1).
The Court makes the following points in support of its conclusion:

1. The "Court’s '"basic point of reference" when considering the award of attorney’s fees is the bedrock principle known as the "'American Rule'": Each litigant pays his own attorney’s fees, win or lose, unless a statute or contract provides otherwise'" (pp. 4-5) (citation omitted).

2.  "To determine whether Congress intended to depart from the American Rule presumption, the Court first 'look[s] to the language of the section' at issue" (p.6) (citation omitted).

3.  "The reference to 'expenses' in §145 does not invoke attorney’s fees with the kind of 'clarity we have required to deviate from the American Rule'" (p.6) (citation omitted).  "The complete phrase 'expenses of the proceeding' is similar to the Latin expensæ litis, or 'expenses of the litigation.' This term has long referred to a class of expenses commonly recovered in litigation to which attorney’s fees did not traditionally belong" (p.7).  Further, "the modifier 'all' does not expand §145’s reach to include attorney’s fees. Although the word conveys breadth, it cannot transform 'expenses' to reach an outlay it would not otherwise include" (id.). In addition, the fact that the words "'expenses' and 'attorney’s fees' appear in tandem across various statutes shifting litigation costs indicates that Congress understands the two terms to be distinct and not inclusive of each other" (p.8).

4.  Finally, historic practice suggests that until recent years the Patent Office itself never considered the term "expenses" to include attorney's fees (p.9).  By contrast, when Congress has "intended to provide for attorney’s fees in the Patent Act, it stated so explicitly. See, e.g., 35 U. S. C. §285 ('The court in exceptional cases may award reasonable attorney fees to the prevailing party'); §271(e)(4) ('[A] court may award attorney fees under section 285'); §273(f) (same); §296(b) (same); §297(b)(1) ('Any customer . . . who is found by a court to have been injured by any material false or fraudulent statement . . . may recover . . . reasonable costs and attorneys’ fees'). Because Congress failed to make its intention similarly clear in §145, the Court will not read the statute to 'contravene fundamental precepts of the common law.' United States v. Rodgers, 461 U. S. 677, 716 (1983)" (p.10). 

This all seems quite reasonable to me, and is what I predicted (see here).  The Court does not expressly address the merits of the Fourth Circuit's interpretation (in Shammas v. Focarino, 784 F.3d 219 (4th Cir. 2015)) of an analogous provision of the Lanham Act (15 U.S.C. § 271(b)(3)), as requiring a person appealing an adverse decision of the Trademark Trial and Appeal Board to pay the USPTO's attorneys' fees, but I would think that Shammas's days probably are now numbered.

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