Salaries of USPTO Legal Personnel are Not Recoverable as "Expenses" in Section 145 Actions, Says the Supreme Court

January 2020

Section 145 of the U.S. patent laws permits patent applicants to dispute PTAB decisions on their applications by bringing a civil action in the U.S. District Court for the Eastern District of Virginia.  Applicants who bring such actions are subject to the statute’s provision that “all the expenses” of the district court proceeding be paid by the applicant—regardless of who prevails.  In Peter v. NantKwest, Inc., --S. Ct.--, 2019 WL 6719083 (Dec. 11, 2019), the Supreme Court considered whether the term “expenses” in § 145 includes the salaries of USPTO attorneys and paralegals, and held that it does not.

To reach this decision, the Court started with the American Rule presumption that litigants are responsible for their own attorneys’ fees, whether they win or lose, unless a statute or contract provides otherwise.  The Court confirmed that this presumption applies to all statutes—even those that, like § 145, do not explicitly award fees to prevailing parties.

The Court next considered whether Congress intended to depart from the American Rule and, after considering the statutory language in context and how the term “expenses” is used in other statutes, concluded that the term “expenses” in § 145 does not invoke attorneys’ fees with the clarity required to deviate from the American Rule.  The Court found that the history of the Patent Act and the USPTO’s history of never before seeking recovery of attorneys’ fees under § 145 supported its determination that Congress did not intend to shift attorneys’ fees in § 145.  The Court also pointed out that when Congress intended to provide for attorneys’ fees in sections of the Patent Act it did so explicitly (e.g., § 285), and explained that it would not read § 145 to provide for such fees when similar explicit intent is absent in the statute.