The second argument at the Supreme Court on the first day of the term is not exactly a barn-burner, unless you're a person who regularly does business in front of the US Patent and Trademark Office. Nonetheless, all cases are loved equally here at Lloenflys's Gavel, so here is an argument preview!
To understand the question presented in this case you first need to understand that when someone seeks a patent or a trademark in front of the PTO and is unsuccessful within the PTO itself (through an initial application process and an internal PTO appeals process), there are two routes that the applicant can take to get judicial review. The first option, which relies on the record that was already established in the application process, goes directly to the US Circuit Court of Appeals for the Federal Circuit, and is relatively straightforward since it focuses on the already established record and is simply focused on finding reversible error, much like a standard judicial appeal.
Alternatively, an unsuccessful applicant can essentially re-open the application process by filing suit in the Eastern District of Virginia. This route, which is rarely taken, allows for new evidence to be presented, new witnesses to be called, etc. As a result, it is significantly more costly and time consuming. In order to discourage unsuccessful applicants from taking this route if it isn't necessary, parties that go in this direction bear "all the expenses of the proceeding" - even if they prevail. It should be noted that this particular case involves a patent issue, but the trademark and patent processes essentially parallel each other for these purposes.
For over 170 years, the Patent and Trademark Office appears to not have understood the term "all expenses" to include attorney's fees incurred by the PTO, as there was never an attempt to recover these from a party that appealed an application in district court through the lengthier process. The patent process in this case started all the way back in 2001, with an initial rejection coming in 2010 and a rejection of the internal PTO appeal coming in 2013. When the case went to the district court, the PTO for the first time decided to seek attorney fees in such a case as part of the "expenses of the proceeding."
This is the type of case that at first seems obvious - the term "all expenses of the proceeding" seems about as clear as could be. As we would ordinarily understand the term, there is certainly a cost for lawyers involved in the case, and cost and expense are synonymous in everyday speech. Since the statute says "all expenses" are covered, this looks open and shut - the PTO has the right to recover attorney fees by the plain meaning of the statute.
Of course, things aren't always quite that simple, and within the law it is possible for terms to take on specialized or narrow legal meanings that they don't have in other contexts. This can be done explicitly through a definition in a statute (for example, I once saw a statute that defined "solid waste" as "any solid, liquid, or gaseous waste ..."). That's clearly nonsense scientifically, but for whatever reason the legislature chose to draft things that way and the definition is therefore legally valid. It's also possible for context to build up essentially through the common law - decisions treated as precendential over the years that give rise to certain rules of construction and interpretation.
Such is the case here. For several hundred years, American courts have recognized that parties generally bear their own burden for attorney fees in US Courts. This so-called "American Rule" means that any statute that purports to shift attorney fees from one party to another must make the intent to shift the fees both specific and explicit. In the ruling below, by an en banc panel of the Federal Circuit Court of Appeals, a 7-4 majority ruled that the term "all expenses of the proceeding" is not specific and explicit enough to overcome the prevailing headwinds of the American Rule, and that attorney fees are therefore excluded from what the PTO can recover from a party.
The argument relies heavily on comparison, looking at whether the term "expenses" usually includes attorney fees or not. Tracing a wide path through history (going back to the 1830's when the Patent Act was originally passed), the court found that the phrase "expenses" is often paired with "attorney fees" when Congress intends to make attorney fees available, and that the Court's typically do not allow such fee shifting when the term expenses is used alone.
The dissent focuses on instances in which the description of expenses include phrases like "attorney's fees" and "other expenses," suggesting that "attorney's fees" are one kind of expense. If that's the case, then the fees should shift. Further, for an organization like the PTO, the cost of attorneys is more an expense than a fee because the lawyers are in-house. Additionally, the purpose of the statute that allows this process of re-opening the application is now currently paid for through user-application fees. Given that reality, recovering costs from applicants is more important than ever, explaining why the department is now seeking attorney fees where previously it may not have so done.
It is very difficult to see where this case falls, because this is such a narrow issue of the law. In this case, the originalist reading is actually the better reading and I rather hope it is adopted. Absent a statutory definition to the contrary, the phrase "all expenses of the proceeding" should really mean what it says - "all expenses of the proceeding" - and carving something out on the narrow ground that attorney's fees haven't previously been considered "expenses" is a bit dubious when sometimes they are and sometimes they aren't. I don't have really solid grounds to support my prediction here, but I'm going to say this is a 6-3 decision and will be authored by Justice Clarence Thomas.
One final word - it doesn't matter overly much whether the Court gets this one "wrong." Unlike a Constitutional interpretation, this is a statutory interpretation that Congress could overturn by simply amending the underlying law. Perhaps if the Court threatens to hold them to what they actually say in a statute, Congress will make sure to be more clear with its intent moving forward.
To understand the question presented in this case you first need to understand that when someone seeks a patent or a trademark in front of the PTO and is unsuccessful within the PTO itself (through an initial application process and an internal PTO appeals process), there are two routes that the applicant can take to get judicial review. The first option, which relies on the record that was already established in the application process, goes directly to the US Circuit Court of Appeals for the Federal Circuit, and is relatively straightforward since it focuses on the already established record and is simply focused on finding reversible error, much like a standard judicial appeal.
Alternatively, an unsuccessful applicant can essentially re-open the application process by filing suit in the Eastern District of Virginia. This route, which is rarely taken, allows for new evidence to be presented, new witnesses to be called, etc. As a result, it is significantly more costly and time consuming. In order to discourage unsuccessful applicants from taking this route if it isn't necessary, parties that go in this direction bear "all the expenses of the proceeding" - even if they prevail. It should be noted that this particular case involves a patent issue, but the trademark and patent processes essentially parallel each other for these purposes.
For over 170 years, the Patent and Trademark Office appears to not have understood the term "all expenses" to include attorney's fees incurred by the PTO, as there was never an attempt to recover these from a party that appealed an application in district court through the lengthier process. The patent process in this case started all the way back in 2001, with an initial rejection coming in 2010 and a rejection of the internal PTO appeal coming in 2013. When the case went to the district court, the PTO for the first time decided to seek attorney fees in such a case as part of the "expenses of the proceeding."
This is the type of case that at first seems obvious - the term "all expenses of the proceeding" seems about as clear as could be. As we would ordinarily understand the term, there is certainly a cost for lawyers involved in the case, and cost and expense are synonymous in everyday speech. Since the statute says "all expenses" are covered, this looks open and shut - the PTO has the right to recover attorney fees by the plain meaning of the statute.
Of course, things aren't always quite that simple, and within the law it is possible for terms to take on specialized or narrow legal meanings that they don't have in other contexts. This can be done explicitly through a definition in a statute (for example, I once saw a statute that defined "solid waste" as "any solid, liquid, or gaseous waste ..."). That's clearly nonsense scientifically, but for whatever reason the legislature chose to draft things that way and the definition is therefore legally valid. It's also possible for context to build up essentially through the common law - decisions treated as precendential over the years that give rise to certain rules of construction and interpretation.
Such is the case here. For several hundred years, American courts have recognized that parties generally bear their own burden for attorney fees in US Courts. This so-called "American Rule" means that any statute that purports to shift attorney fees from one party to another must make the intent to shift the fees both specific and explicit. In the ruling below, by an en banc panel of the Federal Circuit Court of Appeals, a 7-4 majority ruled that the term "all expenses of the proceeding" is not specific and explicit enough to overcome the prevailing headwinds of the American Rule, and that attorney fees are therefore excluded from what the PTO can recover from a party.
The argument relies heavily on comparison, looking at whether the term "expenses" usually includes attorney fees or not. Tracing a wide path through history (going back to the 1830's when the Patent Act was originally passed), the court found that the phrase "expenses" is often paired with "attorney fees" when Congress intends to make attorney fees available, and that the Court's typically do not allow such fee shifting when the term expenses is used alone.
The dissent focuses on instances in which the description of expenses include phrases like "attorney's fees" and "other expenses," suggesting that "attorney's fees" are one kind of expense. If that's the case, then the fees should shift. Further, for an organization like the PTO, the cost of attorneys is more an expense than a fee because the lawyers are in-house. Additionally, the purpose of the statute that allows this process of re-opening the application is now currently paid for through user-application fees. Given that reality, recovering costs from applicants is more important than ever, explaining why the department is now seeking attorney fees where previously it may not have so done.
It is very difficult to see where this case falls, because this is such a narrow issue of the law. In this case, the originalist reading is actually the better reading and I rather hope it is adopted. Absent a statutory definition to the contrary, the phrase "all expenses of the proceeding" should really mean what it says - "all expenses of the proceeding" - and carving something out on the narrow ground that attorney's fees haven't previously been considered "expenses" is a bit dubious when sometimes they are and sometimes they aren't. I don't have really solid grounds to support my prediction here, but I'm going to say this is a 6-3 decision and will be authored by Justice Clarence Thomas.
One final word - it doesn't matter overly much whether the Court gets this one "wrong." Unlike a Constitutional interpretation, this is a statutory interpretation that Congress could overturn by simply amending the underlying law. Perhaps if the Court threatens to hold them to what they actually say in a statute, Congress will make sure to be more clear with its intent moving forward.
Last edited:
