Federal Circuit Summary

En Banc (excl. Chen), Opinion for the court filed by Stoll, joined by Newman, Lourie, Moore, O’Malley, Wallach, and Taranto. Appeal from the United States District Court for the Eastern District of Virginia.

Summary: 35 U.S.C. § 145 does not require Applicants to pay the attorneys’ fees of the United States Patent and Trademark Office (“USPTO”) when challenging an adverse decision of the USPTO in district court.

NantKwest filed a complaint against the Director of the United States Patent and Trademark Office (“USPTO”) in the U.S. District Court for the Eastern District of Virginia challenging, pursuant to 35 U.S.C. § 145 (“Section 145”), the USPTO’s rejection of its patent application. After prevailing on the merits, the USPTO filed a motion for reimbursement of the “[a]ll the expenses of the proceedings,” including attorney’s fees. The USPTO made this request pursuant to the final sentence of Section 145, which reads “All the expenses of the proceedings shall be paid by the applicant.” The district court denied the USPTO’s motion with respect to attorneys’ fees, citing the American Rule, which provides that each party pay its own attorney’s fees regardless of result. The USPTO appealed the denial of its motion to recover attorneys’ fees, and a divided panel of the Federal Circuit reversed the district court’s judgment, finding that the language of Section 145 justified a deviation from the American Rule. The Federal Circuit voted sua sponte to hear the appeal en banc and vacated the panel’s judgment.

The Federal Circuit found that the American Rule necessarily applies because Supreme Court precedent dictates that the American Rule is the starting point whenever a party seeks to shift fees from one side to the other in adversarial litigation. Having concluded that the American Rule applies, the Federal Circuit also found that Section 145 lacked the specific and explicit congressional authorization regarding attorneys’ fees required to displace the American Rule.

Accordingly, the Federal Circuit affirmed the district court’s denial of the USPTO’s motion to recover attorney’s fees.

This case is: NANTKWEST V. IANCU