On Monday, the Supreme Court of the United States granted certiorari in Iancu v. NantKwest to resolve a circuit split concerning “expenses” a patent applicant must pay when challenging the United States Patent and Trademark Office’s (“USPTO’s”) refusal to issue a patent. Under 35 U.S.C. § 145, the USPTO requests attorneys’ fees as expenses when applicants seek review of a denied patent application in district court, regardless of whether the applicant wins or loses.
The en banc Federal Circuit held here that applicants seeking review in district court are not required to pay attorneys’ fees. The court explained that 35 U.S.C. § 145, which states in part that “all the expenses of the proceeding shall be paid by the applicant,” is “at best ambiguous as to attorneys’ fees.” The court further reasoned that requiring such applicants to pay all attorneys’ fees would depart from the American Rule, which requires each litigant to bear its own attorneys’ fees.
The Federal Circuit’s holding created a split of authority with a 2015 decision by the Fourth Circuit here, which examined similar language in the trademark statute 15 U.S.C. § 1071: “all expenses of the proceeding shall be paid by the party bringing the case, whether the final decision is in favor of such party or not.” The Fourth Circuit held that an applicant challenging the USPTO’s refusal to register a trademark in district court “must pay all reasonable expenses of the proceeding, including attorneys’ fees whether he wins or loses.” The Fourth Circuit held that the American Rule only applies in cases where a prevailing party seeks fees and highlighted the increased cost for the USPTO to litigate an action in district court rather than in the Federal Circuit.
If the Supreme Court’s upcoming decision aligns with that of the Federal Circuit in Iancu, district courts may experience an influx of cases of applicants seeking to overturn unfavorable USPTO decisions.