Last week, the U.S. Court of Appeals for the Federal Circuit issued an order in Hyatt v. Hirshfeld, Nos. 20-2321, -2323, -2324, -2325 (Aug. 18, 2021), vacating an award of prevailing party attorney’s fees to Hyatt and affirming the denial of expert witness fees to the Patent Office.
Hyatt sued the Patent Office in district court under 35 U.S.C. § 145 after receiving adverse results during prosecution of several patent applications. In those proceedings, the district court ordered the Patent Office to issue some of the patents and awarded attorney’s fees to Hyatt as a prevailing party. The district court also denied the Patent Office’s request to be reimbursed for its expert witness fees under the provision of § 145 that provides for shifting “[a]ll the expenses of the proceedings.” On a first appeal, the Federal Circuit vacated and remanded the district court’s decision ordering issuance of patents.
Last week’s decision involved an appeal in which the Patent Office challenged the award of attorney’s fees to Hyatt and the denial of its expert witness fees. The Federal Circuit first addressed the award of fees to Hyatt, vacating the award of fees because Hyatt is no longer a prevailing party in view of the Court’s decision on the first appeal. Next, the Court considered whether the language of § 145 “that ‘[a]ll the expenses of the proceedings shall be paid by the applicant’ requires that the applicant pay the expert witness fees of the [Patent Office].” The Court explained that it starts with the presumption of the American Rule that litigants pay their own fees “unless a statute or contract provides otherwise.” For a statute to upset the presumption, “Congress must provide a sufficiently ‘specific and explicit’ indication of its intent” to do so. Citing the Supreme Court’s decision in NantKwest, which held that the reference to “expenses” in § 145 does not invoke attorney’s fees with enough clarity to overcome the American Rule, the Federal Circuit held the reasoning there applies equally to expert fees. Acknowledging that its decision overturns decades of practice in federal district courts, the Federal Circuit nevertheless concluded, clearly and unequivocally, that “the phrase ‘[a]ll the expenses of the proceedings’ in § 145 does not specifically and explicitly invoke expert witness fees.” Accordingly, it affirmed the decision of the district court denying those fees to the Patent Office.