Cross-Border E-Commerce Conference: INTA Asks ‘How Can We Protect Trademarks?’

On January 23, 2018, INTA filed an amicus brief in NantKwest, Inc. v. Matal, No. 2016-1794, pending before the en banc U.S. Court of Appeals for the Federal Circuit. This is INTA’s fourth amicus brief opposing a requirement in which a party that appeals a U.S. Patent and Trademark Office (USPTO) decision to the district court must pay the government’s “expenses,” including attorney fees incurred on appeal, regardless of who wins. INTA previously (in 2014 and 2015) argued against this rule in two amicus briefs filed in a prior case, Shammas v. Focarino, which held, despite INTA’s arguments to the contrary, that a trademark applicant appealing a Trademark Trial and Appeal Board decision to the district court must pay the government’s “expenses,” which the Fourth Circuit interpreted to include the government’s attorneys’ fees. 784 F.3d 219, 221 (4th Cir. 2015).

The NantKwest case raises the analogous issue in a patent case. The appeal follows a district court decision that explicitly rejected the Fourth Circuit decision in Shammas and held that attorney fees were not “expenses” under Section 145 of the Patent Act. NantKwest, Inc. v. Lee, 162 F. Supp. 3d 540, 541‒42 (E.D. Va. 2016). Like Section 21(b)(3) of the Lanham Act at issue in Shammas, Section 145 requires that a party seeking district court review of a decision by the Patent Trial and Appeal Board (PTAB) pay “all the expenses of the proceeding” regardless of which party prevails. When this decision was appealed, INTA filed an amicus brief supporting the district court, but the Federal Circuit panel nonetheless reversed (2-1), holding that, under the statute, “expenses” included attorney fees. 860 F.3d 1352 (Fed. Cir. 2017). However, in August 2017, the Federal Circuit decided sua sponte to rehear the case en banc, 869 F.3d 1327, giving the parties and INTA another opportunity to consider whether Section 145’s “expenses” included the USPTO’s attorneys’ fees.

In its January 23, 2018, amicus brief to the en banc court in NantKwest, INTA argued, as it had in its amicus briefs in Shammas to the Fourth Circuit, that the Federal Circuit panel’s interpretation of “expenses” as including attorney fees was incorrect for three reasons. First, the so-called American Rule, which requires that each party pay its own attorneys’ fees, applies to Section 145 even though it does not limit fee awards to the prevailing party. The U.S. Supreme Court has made clear that the rule applies to all statutes, not just those allowing for a prevailing party to recover fees. Second, the Court requires that the rule be applied unless there is “specific and explicit” language in the relevant statute allowing for fee-shifting. In this case, Section 145 does not refer to attorney fees or otherwise reflect an intent to permit fee-shifting. Finally, there is nothing in the legislative history evidencing congressional intent that the term “expenses” include attorney fees.

INTA also argued that public policy does not support the panel majority’s decision. Congress has provided two options for challenging a PTAB decision. One is appeal to the Federal Circuit based on the record developed in the PTAB. The second is a district court action, in which the party may conduct discovery and introduce facts outside the PTAB record. Interpreting Section 145 to require payment of the USPTO’s attorneys’ fees would impose a significant cost on parties and have a chilling effect on use of the district court option.

INTA’s amicus brief in the NantKwest en banc appeal was written by Anthony J. Dreyer (Skadden, Arps, Slate, Meagher & Flom LLP, USA) and Mark N. Mutterperl (Zeisler PLLC, USA), with input from members of the International Amicus Committee’s U.S. Amicus Subcommittee.

Several previous INTA Bulletin articles have reported on the three prior INTA amicus briefs relating to the issues raised in the most recent NantKwest amicus brief. See the following links:

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