Supreme Court - Applicant Not Obligated to Pay USPTO under 35 USC §145

If an applicant cannot convince the USPTO (i.e., PTAB) to grant a US patent, it can appeal the adverse decision to the Federal Circuit (35 USC §141) or file a lawsuit against the USPTO director in the US district court for the Eastern District of Virginia (35 USC §145). However, because a §145 lawsuit permits discovery, experts reports, and motions, it can be very expensive for both parties.

In Peter v. NantKwest, the US Supreme Court held that an applicant is not obligated to pay the USPTO legal personnel (e.g., attorneys and paralegals) under §145.

See the opinion for all the reasons for this holding, but some of the reasons were (1) the term “expenses” alone has never authorized an award of attorney fees to overcome the American Rule (each litigant pays his own attorney fees), (2) the term “all” in §145 cannot transform “expenses” to reach an outlay it wouldn't otherwise include, and (3) Congress has distinguished “expenses” and “attorney’s fees” in the past. Finally, history didn’t seem to help the USPTO as it was the first request for attorney fees in the 170-year history of §145.

Not a case likely to reach many, but it may help applicants faced with an adverse PTAB decision when the benefit outweighs the increased cost of your attorney fees for the lawsuit over an appeal to the Federal Circuit.

Copyright © 2019 Robert Moll. All rights reserved.  

Kappos v. Hyatt - 35 USC § 145 Proceedings Allow New Evidence Beyond Record in PTO

In Kappos v. Hyattt, 132 S.Ct. 1690 (2012), the Supreme Court gave a favorable standard for patent appellants that need to introduce evidence after losing on appeal to the Board of Patent Appeals and Interferences (Board).

If the Board affirms the examiner's rejections under 35 USC  §131 a patent applicant has two options: (1) a direct appeal to the Federal Circuit under 35 USC §141; or (2) an action against the PTO Director in federal district court under 35 USC §145. One can also abandon the application or file a continuation, but one unwilling to narrow the rejected claims in the continuation should not expect much.

Harold Wegner notes that a direct appeal to the Federal Circuit is a long shot, because an appellant will not be able to challenge the facts if there is "substantial evidence" to support the facts, which means the Federal Circuit will not reverse the Board’s decision on facts if a reasonable mind might accept the evidence as adequate to support a conclusion. For example, this standard would apply to the Board's factual findings underlying a legal conclusion of obviousness.

In Kappos v. Hyatt, the Supreme Court found no limits on applicants ability to introduce new evidence in a 35 USC § 145 proceeding beyond the limits set forth in the Federal Rules of Evidence and the Federal Rules of Civil Procedure. Further, Supreme Court held if new evidence is presented on a question of fact, the district court must make de novo (i.e., anew) findings that consider the new evidence and the USPTO record.

Companies are stretching to keep legal costs low. The majority had reasoned that "purposely concealed evidence" in the PTO was unlikely since it would undermine the case. However, given today's tight budgets, some may want seek to not file all of the favorable evidence such as that contained in declarations to avoid the expense and risk. However, holding back some favorable evidence may risk some court holding it was "purposely concealing evidence" rather than "reasonable management of legal costs" and that the evidence should not have been admitted by the district court.

In the past, appellants rarely filed a 35 USC § 145 action. Instead, most appealed directly to the Federal Circuit. Now I expect Kappos v. Hyatt will encourage more to file a 35 USC 145 action when (1) a continuation is unlikely to result in claim coverage that properly protects the invention, and (2) appellants need to introduce new evidence in the record in support of patentability.

Finally, I should note those losing an AIA post-grant proceeding at the Board will need to appeal directly to the Federal Circuit and will not be allowed to file a 35 USC § 145 actions

Copyright © 2012 Robert Moll. All rights reserved.