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The 1952 Patent Act, 35 U.S.C. §§1 et seq. permits parties dissatisfied with decisions of the United States Patent and Trademark Office (PTO) to seek de novo review in the United States District Courts. 35 U.S.C. §145. Section 145 provides in relevant part that in such cases for de novo review, “[a]ll the expenses of the proceedings shall be paid by the applicant” (the Expenses Provision). Similar language first appeared in the Patent Act of 1836. The Trademark Act of 1946 (Lanham Act) contains a virtually identical provision. 15 U.S.C. §1071(b)(3) (“unless the court finds the expenses to be unreasonable, all the expenses of the proceeding shall be paid by the party bringing the case, whether the final decision is in favor of such party or not.”)
In NantKwest, Inc. v. Iancu, Slip Op. No. 16-1794 (Fed. Cir. July 27, 2018), the Federal Circuit sitting en banc reversed its own prior ruling in NantKwest, Inc. v. Matal, 860 F.3d 1352 (Fed. Cir. 2017), and held that “all expenses of the proceeding” does not include attorneys' fees. Two weeks later, the Federal Circuit vacated a contrary holding in Realvirt LLC v. Iancu, No. 2017-1159 (Fed. Cir. Aug. 14, 2018), and remanded for resolution in light of NantKwest. Awaiting oral argument in the Fourth Circuit is Booking.com, B.V. v Iancu, No. 17-2458; 17-2459, in which the author is representing the appellee in a cross-appeal concerning the essentially identical phrase under the Lanham Act following an initially successful de novo review of a TTAB proceeding.
In 2018 (and 2017) the issue whether “expenses” includes “attorneys' fees” has generated considerable interest, with the publisher Law360 (for instance) identifying NantKwest and Booking.com as among the most consequential cases of the time. See, “The Next 4 Big Copyright And Trademark Rulings Are …,” Law360 (June 26, 2018); “The Top 10 Trademark Rulings of 2017,” Law360 (Dec. 12, 2017). However, for 175 years, when the PTO sought recovery from intellectual property owners of any of “the expenses of the proceedings,” it never sought to include among such claimed expenses attorneys' fees, but instead (at most) sought on occasion limited expenses, such as travel costs or expert witness fees. Four years ago, however, the PTO began to seek recovery of attorneys' fees as expenses in such de novo proceedings. The first such decision, Shammas v. Focarino, 990 F. Supp. 2d 587 (E.D. Va. 2014), aff'd, 784 F.3d 219 (4th Cir. 2015), cert. denied, 136 S. Ct. 1376 (2016), applying the Lanham Act provision, 15 U.S.C. §1071(b)(3), adopted the PTO's new interpretation that “expenses” does include attorneys' fees. A key part of the Fourth Circuit decision (relied on by the PTO in NantKwest but rejected by the Federal Circuit) is that the American Rule only concerns shifting of fees to prevailing parties, whereas the relevant language in the patent and trademark statutes applies regardless which party wins.
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