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ABA Calls USPTO Attorney Fee Rule ‘Radical’

July 22, 2019 | Posted in : Expenses / Costs, Fee Doctrine / Theory, Fee Issues on Appeal, Fee Jurisprudence, Fee Shifting, Fee Statute

A recent Law 360 story by Bill Donahue, “ABA Rips USPTO Attorney Fee Rule as ‘Radical’,” reports that the American Bar Association asked the U.S. Supreme Court to strike down the U.S. Patent and Trademark Office's "radical" and "unprecedented" policy of seeking attorney fees regardless of the outcome of a case.  In an amicus brief, the ABA told the justices that the fees policy — rooted in reinterpretation of a century-old statute — was clearly not what Congress had in mind when it authorized USPTO to recoup “all expenses” after certain types of appeals.

“Congress does not hide elephants in mouseholes,” the group wrote.  “Here, it did not hide an unprecedented government-only, regardless-of-outcome, attorney-fee-shifting intent in the word ‘expenses.’”  The filing came in the closely watched case of Iancu v. NantKwest, which will determine the legality of the USPTO’s fee policy.  Federal appeals courts have split on whether the fee policy violates the American Rule, a doctrine that says litigants must pay their own expenses unless Congress expressly says otherwise.

First rolled out in 2013, USPTO's fee policy is rooted in a novel interpretation of so-called de novo appeals — a longer and more fact-intensive route that allows a dissatisfied patent or trademark applicant to appeal to a district court rather than simply asking the Federal Circuit to review a refusal.  Crucially, both the Patent Act and the Lanham Act say that applicants who choose the de novo appellate route must reimburse "all expenses of the proceeding," and that requirement applies regardless of whether applicants win or lose their appeals against the USPTO.

For decades, the agency interpreted that language to mean relatively minor expenses, like travel costs and expert fees.  But that changed in 2013, when USPTO started demanding that applicants reimburse the substantially larger cost of the salaries paid to agency attorneys.  That figure can be tens of thousands of dollars, and the agency has sought — and won — such fees even when it loses a case.

The USPTO has argued that the change was justified to pay for a more expensive type of appellate process, but critics say the rule will make the de novo appeals too expensive for all but the wealthiest patent and trademark applicants.  In the filing, the ABA echoed those access-to-justice concerns, saying the policy would have the “intolerable results."

“The PTO’s interpretation would mean that applicants’ wealth would determine their access to the pathway to justice provided by Congress,” the group wrote.  “Those benefits would remain open to large corporations and affluent individuals able to shoulder the burden of paying for the government’s lawyers.”