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ABA Slams Patent Office Effort to Recover Attorneys’ Fees

July 23, 2019, 5:28 PM

The American Bar Association is urging the U.S. Supreme Court to reject the U.S. Patent and Trademark Office’s bid to recover attorneys’ fees from litigants, whether it wins or loses.

Allowing the agency to recoup fees “would have an unjust chilling effect on small businesses, sole inventors, and others who cannot afford the additional costs of the agency’s fees, regardless of the merits of their inventions and civil actions,” the ABA said in a friend-of-the-court brief July 22.

The ABA’s brief came in support of biotechnology company NantKwest, which wants the high court to uphold a federal appeals court ruling that it doesn’t owe legal fees to the patent office. The patent office is pushing for a “radical, novel departure” from federal law, the bar association said.

The justices agreed to hear the case in March. Oral arguments are scheduled for Oct. 7.

Legal practitioners are closely watching the case, which could affect how often patent applicants opt to challenge a PTO decision by suing the agency, which can be an expensive option. A ruling may clarify how courts must apply the American Rule, which says litigants generally pay their own attorneys’ fees absent an explicit exception.

NantKwest sued the PTO for rejecting its cancer treatment patent. The U.S. District Court for the Eastern District of Virginia directed NantKwest to pay the agency’s $33,104 expert fees expense but denied the PTO’s request for nearly $80,000 in attorneys’ fees. The PTO appealed but lost at the full U.S. Court of Appeals for the Federal Circuit.

Federal law says the patent office can recover “all the expenses of the proceedings” from an applicant in district court litigation. The agency told the high court in May that “all the expenses” covers time and money spent on personnel, including attorneys’ fees.

But the ABA argued that Congress envisioned a way for applicants to challenge the agency in federal court without obstacles such as additional costs.

“For nearly two centuries, the phrase `all the expenses of the proceedings’ has been understood to mean that the applicant must pay only the PTO’s out-of-pocket expenses for the proceedings, such as travel costs and expert witness fees,” the bar association said.

The ABA has 400,000 members, including legal professionals and law firms. Other groups, including the Intellectual Property Owners Association and the Intellectual Property Law Association of Chicago, also filed briefs July 22 opposing the patent office’s appeal.

The case is Laura Peter, Deputy Director, Patent and Trademark Office, Petitioner vs. NantKwest, Inc., U.S., No. 18-801, Amicus brief filed 7/22/19.

To contact the reporter on this story: Malathi Nayak in Washington at mnayak@bloomberglaw.com

To contact the editors responsible for this story: Rebecca Baker at rbaker@bloomberglaw.com; Keith Perine at kperine@bloomberglaw.com

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