Supreme Court Says Government Can't Recoup Attorney's Fees When Defending § 145 Actions

Written December 11, 2019

The United States Patent and Trademark Office (USPTO) cannot recover the pro rata salaries of its legal personnel under § 145 of the Patent Act, the Supreme Court held December 11, 2019. Peter vs. NantKwest, Inc., U.S., No. 18-801, 12/11/19.

Writing for a unanimous court, Justice Sotomayor explained that the "American Rule" - the general rule that each party in a suit must pay their own attorney's fees - provided the starting point for "assessing whether § 145 authorizes payment of the PTO's legal fees." She went on to explain that § 145's plain text did not overcome the long-standing presumption against fee shifting.

The decision is consistent with the position advocated in AIPLA's amicus brief filed in this case.


The American Rule

First, Justice Sotomayor addressed the Government's contention that § 145 of the Patent Act was exempt from the American Rule because the presumption only applied to "prevailing-party statutes" whereas § 145 requires one party to pay all the expenses regardless of outcome. Citing several cases as precedent, Sotomayor said "[t]his Court has never suggested that any statute is exempt from the presumption against fee shifting. Nor has it limited its American Rule inquiries to prevailing-party statutes." Indeed, she concluded, awarding attorney's fees in this circumstance "would be a radical departure from longstanding fee-shifting principles".

Sotomayor then stated that § 145's plain text did not overcome the American Rule presumption because the reference to "expenses” in §145 does not invoke attorney’s fees with the kind of “clarity we have required to deviate from the American Rule.” Furthermore, she explained, neither dictionary definitions, nor the common statutory usage, of the term "expenses" provides enough evidence to overcome the American Rule presumption.

Finally, Sotomayor concluded that the Patent Act's history reaffirmed the "Court’s view that the statute does not specifically or explicitly authorize the PTO to recoup its lawyers’ or paralegals’ pro rata salaries in §145 civil actions."

Read the opinion in this case.