Peter v. NantKwest, Inc.

Background

A company sought a patent and, after the Patent Office denied the application, filed a new civil suit that allows introduction of new evidence. The district court ruled for the Patent Office on the patent dispute. Later, the Patent Office asked the court to require the company to pay litigation costs that included the pro rata salaries of PTO attorneys and a paralegal — a request not made in the statute’s roughly 170-year history. The district court denied that request, a Federal Circuit panel briefly allowed it, and the full Federal Circuit rejected the panel. The Supreme Court then reviewed and decided the issue.

Reasoning

The central question was whether the statute’s phrase “all the expenses of the proceedings” includes the Patent Office’s attorneys’ and paralegals’ salaries. The Court applied the long-standing rule that each side pays its own lawyers unless Congress clearly says otherwise. The Court examined the text, historical usage, and related parts of the Patent Act and found no clear and specific statement putting attorney payroll within “expenses.” The word “all” did not change that result, and Congress had elsewhere expressly authorized attorneys’ fees when it intended to do so. The Court therefore concluded the statute does not permit the PTO to recover its legal personnel’s salaries.

Real world impact

Going forward, companies that use the civil pathway that allows new evidence will not face liability for the PTO’s internal legal payroll as an “expense.” The ruling narrows what costs the Patent Office can seek from applicants and preserves the basic rule that parties normally pay their own lawyers unless Congress says otherwise.

Dissents or concurrances

Some judges had argued the civil proceeding is part of the patent-application process and that such payments could be treated like application costs; the Court rejected that view as inconsistent with the text and history.