When the U.S. Patent and Trademark Office (“PTO”) rejects a patent application, the applicant has two options for judicial review. It can either appeal directly to the U.S. Court of Appeals for the Federal Circuit under 35 U.S.C. §141, or file a new (“de novo”) civil action against the Director of the PTO in the U.S. District Court for the Eastern District of Virginia under §145. Unlike an appeal, a de novo proceeding entitles a rejected applicant to some procedural advantages, such as the ability to conduct discovery and to introduce new evidence, rather than relying solely on the record made before the PTO in prosecuting the patent application.

In order to prevent an abuse of this civil action pathway, §145 also expressly provides that “all the expenses of the proceeding” shall be paid by the applicant, “regardless of the outcome.” Traditionally, courts have interpreted the word “expenses” to mean out-of-pocket costs the PTO incurs, such as printing, travel, and expert fees. However, in 2013, the PTO changed its position and began arguing that “all expenses” included its attorneys’ fees. The Federal Circuit has now held that “all expenses” also applies to the PTO’s attorneys’ fees, regardless of the outcome of the suit.

Nantkwest, Inc. owns a patent application directed to a method of treating cancer by administering natural killer cells. After the examiner rejected the application on obviousness grounds, Nantkwest brought suit against the PTO in the District Court. The court entered summary judgment for the PTO and awarded the PTO expert fees of about $33,000, but denied the PTO’s motion for attorneys’ fees of about $78,000, based on the “American Rule,” which provides that litigants must pay their own attorneys’ fees, win or lose, unless a statute or contract explicitly states otherwise. Both parties appealed.

Read more: http://www.ilnipinsider.com/2017/08/win-or-lose-you-pay-pto-attorneys-fees-for-challenging-decisions-in-district-court/