Can the U.S. Patent and Trademark Office (USPTO) recover the salaries of its legal personnel in challenges to adverse decisions? Not surprisingly, the answer was a quick and unanimous no. More specifically, on Wednesday, Dec. 11, the U.S. Supreme Court concluded that the USPTO cannot recover the pro rata salaries of its legal personnel.

The case relates to a NantKwest Inc. patent application directed to a method for treating cancer, which was denied by the USPTO. Thereafter, NantKwest filed a complaint against the USPTO Director in the Eastern District of Virginia under Section 145. Subsequently, the Eastern District of Virginia granted summary judgment to the USPTO; thereafter, the Federal Circuit affirmed.

The USPTO then moved for reimbursement of expenses, including the pro rata salaries of USPTO attorneys and paralegals who worked on the case.

The question presented in this case was whether such “expenses” included the salaries of attorney and paralegal employees of the USPTO. The District Court denied the USPTO motion, and an en banc Federal Circuit affirmed.

The U.S. Supreme Court – relying on the “American Rule,” the plain text of Section 145 (including the term “expenses”) and the Patent Act’s history – concluded that the USPTO cannot recover pro rata salaries of its legal personnel under Section 145 actions.

It is noted that the Lanham Act contains similar provisions, and accordingly, the USPTO will no longer be able to seek reimbursement of USPTO attorneys’ and paralegals’ salaries in trademark cases. The decision is seen as beneficial for all intellectual property owners, and especially intellectual property owners that are less affluent. The brief and unanimous opinion was released less than 10 weeks after argument. Moreover, only one of the numerous amicus briefs urged the court to strike down the rule.