Peter v. NantKwest to Kick Off Busy IP Term for Supreme Court

The Supreme Court is set to hear six IP cases next term, and is still considering many more.

Supreme Court - Credit: Fred Schilling, Collection of the Supreme Court of the United States

Credit: Fred Schilling, Collection of the Supreme Court of the United States

Next week, the Supreme Court will hear the first of six IP cases granted cert last term. On Monday, the Court will hear Peter v. NantKwest, in which the question presented is “Whether the phrase ‘[a]ll the expenses of the proceedings’ in 35 U.S.C. 145 encompasses the personnel expenses the USPTO incurs when its employees, including attorneys, defend the agency in Section 145 litigation.”

In July, a number of amici weighed in on the case, largely supporting NantKwest. The USPTO is arguing that the Federal Circuit’s en banc 2018 decision holding “all expenses” does not include “expenses that the USPTO incurs when its employees, including attorneys, defend the agency in Section 145 litigation,” is inconsistent with the ordinary meaning of  “expenses” and is Section 145’s “history and purpose.”

In its petition, the USPTO explained that it first began attempting to recover personnel-related expenses in 2013 in response to two developments. First, the America Invents Act’s directed to the Office to set its fees so as “to recover the aggregate estimated costs to the [USPTO] for processing, activities, services, and materials relating to patents * * * and trademarks.” Second, “proceedings under Sections 145 and 1071(b) have grown increasingly expensive, and the single largest expense to the USPTO is often the time that agency employees must devote to those matters—as was true in this case,” said the USPTO’s petition.

But the amici supporting NantKwest—which include the American Bar Association; the Intellectual Property Owners Association (IPO); the American Intellectual Property Law Association; the IEEE-USA; and the International Trademark Association, among others—argue that the American Rule, which prevents fee shifting without a specific and explicit directive from Congress, is a bedrock principle of American law that should not be circumvented lightly. If the USPTO is capable of earning attorney’s fees even when it loses, it could discourage poor parties from vindicating their rights, penalize parties for litigating, impose difficulties on assessing reasonable attorney’s fees, discourage settlement of cases which the agency is likely to lose and increase distrust of attorneys, all of which are policy considerations in favor of respecting the American Rule, said the IPO brief.

R Street Institute filed an amicus brief supporting the USPTO in which it argued that, because more affordable “administrative procedure within the USPTO offers a disappointed patent applicant largely the same remedies and opportunities that may be had in a § 145 action,” there is no need to interpret Section 145 as the en banc Federal Circuit did. The brief added:

“In fact, § 145 actions have generally been the domain of well-financed patent applicants, most commonly biopharmaceutical companies. This is both because § 145 actions are expensive and because the actual benefit of those actions—augmented patent term duration—is useful only to high-value patent applications. To the extent that § 145 is correctly interpreted to permit recovery of USPTO staff expenses, any burden will tend to fall on patent applicants able to afford it without difficulty.”

In its response brief, NantKwest said that “only ‘expenses’ are compensable under § 145, and both courts and Congress have historically treated ‘attorneys’ fees’ and ‘expenses’ as distinct.” NantKwest called the USPTO’s recent change in interpretation of Section 145 “remarkable” for ignoring the American Rule and upsetting nearly two centuries of practice, as well as because the Office “has not identified any other statute (other than § 145’s Lanham Act analogue [1071(b)]) where Congress has authorized the recovery of fees based on the word ‘expenses’ alone; nor has it identified any provision where Congress has permitted the government to recover attorneys’ fees from private citizens even when it loses. Congress would not have intended such a radical departure from the American Rule without saying so explicitly.”


Lots More Lined Up

Following the NantKwest case, the Court will hear arguments in Allen v. Cooper on November 5, in which it will consider whether Congress acted appropriately in relying upon its powers under Article I of the U.S. Constitution to abrogate state sovereign immunity against federal copyright claims by passing the Copyright Remedy Clarification Act (CRCA) or if, as the Fourth Circuit held, Congress improperly abrogated state sovereign immunity by passing that law. Read more here.

On December 2, the Justices will hear Georgia, et al. v. Public.Resource.Org, Inc. The case will consider the question Whether the government edicts doctrine extends to—and thus renders uncopyrightable—works that lack the force of law, such as the annotations in the Official Code of Georgia Annotated.” Read more here.

Thryv, Inc., fka Dex Media, Inc., Petitioner v. Click-To-Call Technologies, LP, et al. is set for argument on Monday, December 9. That case asks the High Court to determine whether 35 U.S.C. § 314(d), which states that decisions to institute inter partes review (IPR) proceedings at the Patent Trial and Appeal Board (PTAB) are final and non-appealable, permits appeal of IPR institution decisions upon a finding that the one-year time bar under 35 U.S.C. § 315(b) doesn’t apply. More here.

Other cases that will be heard this term but are not yet set for argument include two trademark cases: Romag Fasteners v. Fossil, Inc., Fossil Stores, I. Inc., Macy’s Inc, and Macy’s Retail Holdings, Inc. and Lucky Brands Dungarees, Inc. v. Marcel Fashion Group, Inc.

What We’re Really Waiting For

Views of the Solicitor General have also been invited in Google v. Oracle, Berkheimer v. HP, and Hikma v. Vanda. In Berkheimer, the invitation for the SG’s views was made on January 7 of this year, while in Vanda it was made on March 18. In Google v. Oracle, the SG submitted its brief on September 27, advising that certiorari should be denied.

One petition we are watching very closely is Straight Path IP Group, LLC v. Apple Inc., et al., which asks the Court to consider whether the Federal Circuit’s recent spike in use of Rule 36 violates the Fifth Amendment, while the whole patent world is on the edge of its seat waiting for a petition to be filed in Athena Diagnostics v. Mayo Collaborative Services, as it almost certainly will be.

Update: Athena filed its petition for certiorari on October 2. Read the report here.



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Join the Discussion

7 comments so far.

  • [Avatar for TFCFM]
    October 4, 2019 10:04 am

    Regarding Peter v. NantKwest, I’ve never been a big fan of using “legislative history” to interpret statutes. In my view, such “legislative history” too often amounts to little more than stray amounts formally entered into legislative records, not considered by most legislators, and therefore not very probative of the actual “intent” of the legislature.

    Still, in a situation like this one (where Congress used the term “all expenses,” which is a different term than the term normally used when discussing attorney fee awards and a different term than the term normally used when discussing the mere costs of a litigation), I wonder if it might be more informative — in that the language, standing alone, does not appear to clearly convey what the legislature intended.

    I’m not sufficiently curious to slog through the briefs in this matter (because the issue is unlikely ever to be personally relevant to me). If anyone has done such slogging, can you describe what parties or amici have disclosed of the legislative history?

  • [Avatar for Anon]
    October 3, 2019 04:01 pm

    All that those damm scriveners were doing was “applying engineering.”

    Since when would such fall into the innovation protection system?

    (I do not have a large enough Sarcasm sign to hold up at this point)

  • [Avatar for Curious]
    October 3, 2019 12:20 pm

    FYI … This just came out today.

    Holding: a method of manufacturing a shaft assembly of a driveline system is directed to a natural law and patent ineligible under 35 USC 101. Here is claim A method for manufacturing a shaft assembly of
    a driveline system, the driveline system further including a first driveline component and a second driveline component, the shaft assembly being
    adapted to transmit torque between the first driveline component and the second driveline component, the method comprising:
    providing a hollow shaft member;
    tuning at least one liner to attenuate at least two types of vibration transmitted through the shaft member; and
    positioning the at least one liner within the shaft member such that the at least one liner is configured to damp shell mode vibrations in the shaft member by an amount that is greater than or equal to about 2%, and the at least one liner is also configured to damp bending mode vibrations in the shaft member, the at least one liner being tuned to within about ±20% of a bending mode natural frequency of the shaft assembly as installed in the driveline system.

    Seriously? Moore’s dissent is particularly biting.

  • [Avatar for Paul Johnson]
    Paul Johnson
    October 3, 2019 10:55 am

    I agree with you. In O’Reilly v. Morse, the Court suggested that claiming a process of communicating information at a great distance by using electromagnetism is too abstract. The modern-day equivalent of that would be trying to claim a process of entangling photons using beam splitters, which would be equally abstract, yet would NOT preclude a claim to a process of using entangled photons to carry out a novel quantum algorithm. I think s. 101 appeals should be decided by electrical engineers, not judges with liberal arts undergrads.

  • [Avatar for Eileen McDermott]
    Eileen McDermott
    October 3, 2019 10:53 am

    yes – the article says that.

  • [Avatar for Joseph Speyer]
    Joseph Speyer
    October 3, 2019 10:51 am

    Solicitor General already submitted views in Google v. Oracle, recommending denial of cert.

  • [Avatar for Concerned]
    October 3, 2019 07:41 am

    I am hoping the high court will take Trading Tech’s request:

    Does a software process have to improve the computer itself to receive a patent?

    The obvious answer to me is “no”, however, it is rejection angle regardless what problem is solved outside the computer hardware.

    The fact that this question even needs answered suggests how disingenuous the patent process has become in America.