Late last week, the Federal Circuit affirmed, in an en banc opinion, a district court’s earlier ruling that a patent applicant does not have to reimburse the United States Patent and Trademark Office (USPTO or PTO) for in-house attorneys’ fees.

Per Nantkwest, Inc. v. Iancu, No. 16-1794, when the PTO affirms an examiner’s decision to reject a patent application, § 145 of the Patent Act permits the applicant to challenge the board’s decision in district court. Per the statute, the applicant is responsible for paying for “[a]ll the expenses of the proceedings” that the PTO incurs, such as travel, printing and expert witnesses. The PTO argued that the statute should include attorneys’ fees as well. In a 7-4 decision, the panel disagreed.

“We hold that it does not, for the American Rule prohibits courts from shifting attorneys’ fees from one party to another absent a “specific and explicit” directive from Congress. The phrase “[a]ll the expenses of the proceedings” falls short of this stringent standard. Accordingly, we affirm the district court’s judgment.”

In a Patently-O post, Dennis Crouch points out that that original panel was split on the meaning of “all expenses,” and that the majority held that “expenses” include the PTO attorneys’ fees, including in-house. The current panel disagreed.

“Given the primary purpose of the American Rule — protection of access to courts — the PTO’s alleged distinction makes little sense. We submit that the policy behind the American Rule would be even more strongly implicated where attorneys’ fees would be imposed on a winning plaintiff.”

The current panel also disagreed with the PTO’s reliance in its argument on Shammas v. Focarino, in which a divided Fourth Circuit awarded attorneys’ fees to the PTO.

“We respectfully submit that Shammas’s holding cannot be squared with the Supreme Court’s line of non-prevailing party precedent applying the American Rule.”

Bottom line, as Couch states, patent applicants that challenge a PTO decision will still be expected to pay for other expenses, but not PTO attorneys’ fees.