The American Rule Is Still the Rule

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John P. Isacson

Laura Peter, Deputy Director, Patent and Trademark Office v. NantKwest, Inc., No. 18-801 (December 11, 2019)

Today, the Supreme Court overruled a recent interpretation of 35 USC §145 by the U.S. Patent and Trademark Office (USPTO), which permits the USPTO to recover expenses against applicants who filed civil actions against the USPTO. Section 145 allows unsuccessful parties at the USPTO to file a district court action for review of a decision from the Patent Trial and Appeal Board instead of going directly to the U.S. Court of Appeals for the Federal Circuit. Traditionally, the statute has been interpreted to permit the USPTO to recover expenses such as copying costs and expert fees.

However, the USPTO reinterpreted Section 145 to allow for recovery of expenses related to attorneys’ and paralegals’ salaries. The Federal Circuit barred this practice based upon the ‘American Rule,’ which means that litigants pay for their own attorneys. In a unanimous decision affirming the Federal Circuit, Justice Sotomayor wrote that the American Rule meant there was a presumption against attorney fee shifting, and that the plain text of Section 145 does not overcome the presumption against fee shifting. Slip op. at 7.