May 20, 2019

Bryan Wheelock Authors Article for Robotics Business Review on the Battle over USPTO Legal Fees

By Bryan K. Wheelock, Principal

A U.S. Supreme Court case could decide whether a patent applicant is required to pay legal fees for the U.S. Patent and Trademark Office if they sue the Patent Office. Beyond the case, however, are implications that could harm healthy competition in the robotics industry.

While such lawsuits are relatively rare — fewer than 20 have been filed in the past five years — suing the patent office pursuant to 35 USC §145 is one of two ways applicants can gain an independent review of the office’s decisions. The other is to appeal to the Court of Appeals for the Federal Circuit, pursuant to 35 USC §141. The ability to seek independent review keeps the system “honest.” Additional barriers to this review, such as the Patent Office’s attempts to foist its legal fees on applicants, threatens the system.

The case began in 2001, when Dr. Hans Klingemann filed a patent application directed to a method of treating cancer by administering natural killer cells. He eventually assigned the patent application to NantKwest. After a long and complicated examination, the Patent Office issued a final rejection in 2010, which was affirmed in 2013 by the appeals board within the Patent Office, known as the Patent Trial and Appeal Board (PTAB). NantKwest subsequently sued the Patent Office rather than appealing the rejection to the Court of Appeals.

The lawsuit allowed NantKwest to introduce new evidence, including testimony from a person of ordinary skill in the art to rebut the Patent Office’s position that the invention was obvious. Unfortunately for NantKwest, the district court found that even considering the new evidence, the claimed invention was unpatentable.

The Patent Office then filed a motion for reimbursement of the “expenses of the proceeding,” including nearly $79,000 for the salaries of two attorneys and a paralegal who worked on the case. The court rejected the request for reimbursement, citing the American Rule that in most circumstances, each litigant bears its own attorneys’ fees, and finding that “expenses” does not encompass personnel expenses, because the statute does not clearly address the shifting of attorneys’ fees.

For the robotics industry, patent applications in the field of robotics and surgical robots fall into the Patent Office’s Technology Center 3700, which is responsible for more than 20% of the appeals to the PTAB. A decision in favor of the Patent Office could do tremendous harm to healthy competition in the overall industry if certain companies are priced out of suing the Patent Office when their applications are improperly refused.

NantKwest is fighting for more than $79,000; they are fighting to keep district court review of the Patent Office affordable. For this, all robotics manufacturers and innovators — and all other patent applicants, really — should be grateful.

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