Hyatt v. Hirshfeld
| Decision Date | 18 August 2021 |
| Docket Number | 2020-2321, 2020-2323, 2020-2324, 2020-2325 |
| Parties | Gilbert P. HYATT, Plaintiff-Appellee v. Andrew HIRSHFELD, Performing the Functions and Duties of the Under Secretary of Commerce for Intellectual Property and Director of The United States Patent and Trademark Office, Defendant-Appellant |
| Court | U.S. Court of Appeals — Federal Circuit |
Andrew M. Grossman, Baker & Hostetler LLP, Washington, DC, argued for plaintiff-appellee. Also represented by Mark W. DeLaquil, Sean Sandoloski.
Molly R. Silfen, Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA, argued for defendant-appellant. Also represented by Michael S. Forman, Thomas W. Krause, Farheena Yasmeen Rasheed.
Before Moore, Chief Judge, Reyna and Hughes, Circuit Judges.
After adverse results in proceedings at the Patent and Trademark Office, Gilbert Hyatt sued under 35 U.S.C. § 145 in district court for award of several patents. The district court initially ordered the PTO to issue some of these patents and awarded attorney's fees to Mr. Hyatt as a prevailing party. The district court also denied the PTO's request for expert witness fees under § 145, holding that the statute's shifting of "[a]ll the expenses of the proceedings" to the applicant does not overcome the American Rule presumption against shifting expert fees. On appeal, the PTO challenges both the award of attorney's fees to Mr. Hyatt and the denial of its expert witness fees. Because we previously vacated and remanded the district court's decision ordering the issuance of patents, Mr. Hyatt is no longer a prevailing party, and we vacate the award of attorney's fees. We affirm the district court's denial of expert fees because § 145 does not specifically and explicitly shift expert witness fees.
Mr. Hyatt is a prolific patent filer and litigant. In 1995 alone, Mr. Hyatt filed "hundreds of extraordinarily lengthy and complex patent applications," including the four at issue here. Hyatt v. Iancu , Nos. 1:09-CV-1864-RCL, 1:09-CV-1869-RCL, 2020 WL 4219844, at *1 (D.D.C. July 23, 2020) ( Decision ). We recently chronicled the ensuing conflict between Mr. Hyatt and the PTO, noting that he "adopted an approach to prosecution that all but guaranteed indefinite prosecution delay" in an effort to submarine his patent applications and receive lengthy patent terms. Hyatt v. Hirshfeld (Hyatt I ), 998 F.3d 1347, 1368 (Fed. Cir. 2021). The examination of these patents has cost the PTO millions of dollars. Id. at 1370.
After adverse results at the PTO regarding the patents at issue here, Mr. Hyatt sued the PTO under 35 U.S.C. § 145, which allows a patent applicant to challenge a PTO decision in district court. Decision , 2020 WL 4219844, at *1. The PTO moved to dismiss the actions for prosecution laches, a defense that "render[s] a patent unenforceable when it has issued only after an unreasonable and unexplained delay in prosecution that constitutes an egregious misuse of the statutory patent system under a totality of the circumstances." Hyatt I , 998 F.3d at 1360 (citation omitted). The district court rejected the PTO's arguments and ordered the PTO to issue a patent covering some of the claims in Mr. Hyatt's applications. Decision , 2020 WL 4219844, at *1. The PTO appealed to this court. Id. at *2.
While Hyatt I was pending at this court, Mr. Hyatt sought his attorney's fees under the Equal Access to Justice Act (EAJA). Id. at *1. This statute allows a court to grant fees under certain circumstances, provided that the party seeking fees is a "prevailing party." 28 U.S.C. § 2412(b). The district court granted this motion in part, based on Mr. Hyatt's original victory in the district court. We subsequently vacated and remanded in Hyatt I , holding that the PTO had carried its initial burden of demonstrating prosecution laches. 998 F.3d at 1372. Accordingly, the PTO contends that Mr. Hyatt is not a prevailing party and therefore is not entitled to attorney's fees. Appellant's Br. 31.
Meanwhile, the PTO sought reimbursement of its expert witness fees in Hyatt I . Decision , 2020 WL 4219844, at *1. In an action under 35 U.S.C. § 145, "[a]ll the expenses of the proceedings shall be paid by the applicant," and the PTO cited an unbroken line of district court opinions awarding expert fees under the statute. Decision , 2020 WL 4219844, at *5. The district court noted that the cited cases lacked reasoning regarding the American Rule presumption against fee-shifting, and that recent Supreme Court precedent has emphasized that presumption. The district court denied expert fees and the PTO now appeals.
As an initial matter, we vacate the district court's holding that Mr. Hyatt is entitled to attorney's fees under 28 U.S.C. § 2412(b). After our remand in Hyatt I , Mr. Hyatt cannot be considered a prevailing party. Our holding on this point will not come as a surprise to the district court. See Decision , 2020 WL 4219844, at *4 ( . We vacate and remand for further proceedings in light of our decision in Hyatt I .
We next proceed to the central issue in this appeal: whether 35 U.S.C. § 145 ’s language 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 PTO. The district court held that the statute was not sufficiently explicit to overcome the presumption against fee-shifting, and we review that statutory interpretation de novo. Broadcast Innovation, L.L.C. v. Charter Commc'ns, Inc. , 420 F.3d 1364, 1366 (Fed. Cir. 2005). Because we hold that § 145 is not sufficiently specific to overcome the presumption against fee-shifting, we affirm.
After receiving an adverse decision from the Patent Trial and Appeal Board, a patent applicant has two mutually exclusive options for judicial review. The typical route is to appeal directly to this court under 35 U.S.C. § 141.1 Section 141 review is cabined to the administrative record, and factual determinations of the Board are set aside "only if they are unsupported by substantial evidence." Kappos v. Hyatt , 566 U.S. 431, 434–35, 132 S.Ct. 1690, 182 L.Ed.2d 704 (2012) (citation omitted). Alternatively, the applicant may file a civil action in federal district court under 35 U.S.C. § 145, as Mr. Hyatt did here.2 Review under § 145 is more expansive, allowing the district court to hear new evidence and make de novo factual determinations. Peter v. Nantkwest, Inc. , ––– U.S. ––––, 140 S. Ct. 365, 369, 205 L.Ed.2d 304 (2019). To pursue this more burdensome and circuitous route, the applicant must be willing to shoulder "[a]ll the expenses of the proceedings," including the PTO's expenses. 35 U.S.C. § 145.
Congress enacted § 145 ’s predecessor in 1839, requiring an applicant to pay "the whole of the expenses of the proceeding ... whether the final decision shall be in his favor or otherwise." Act of Mar. 3, 1839, ch. 88, § 10, 5 Stat. 353, 354. The wording remains the same in all meaningful respects today. In 1870, Congress considered changing the word "expenses" to "costs," but the proposal failed. See Nantkwest, Inc. v. Iancu , 898 F.3d 1177, 1194 (Fed. Cir. 2018). Since the 1980s, the PTO has relied on the language in § 145 shifting "expenses" to recover expert fees from applicants. We are tasked with determining whether this reliance was warranted.
We start with the American Rule presumption. See Nantkwest , 140 S. Ct. at 370–71 (). This presumption requires that litigants pay their own fees "unless a statute or contract provides otherwise." Id. at 370 (citation omitted). "Congress must provide a sufficiently ‘specific and explicit’ indication of its intent to overcome the American Rule's presumption against fee shifting." Id. at 372 (quoting Alyeska Pipeline Serv. Co. v. Wilderness Soc'y , 421 U.S. 240, 260, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975) ).
In Nantkwest , the Supreme Court applied the American Rule to § 145. Id . "[T]he presumption against fee shifting applies to all statutes—even those like § 145 that do not explicitly award attorney's fees to ‘prevailing parties.’ " Id. at 371. And while the focus of the Supreme Court's inquiry in Nantkwest was attorney's fees, the American Rule similarly applies to expert witness fees. See Kansas v. Colorado , 556 U.S. 98, 102–03, 129 S.Ct. 1294, 173 L.Ed.2d 245 (2009) .
No magic words are needed to override the American Rule, but the requirement that Congressional intent be specific and explicit is a high bar. See Key Tronic Corp. v. United States , 511 U.S. 809, 815–21, 114 S.Ct. 1960, 128 L.Ed.2d 797 (1994) (); Nantkwest , 898 F.3d at 1182. For example, the Supreme Court held that where a statute shifted a "reasonable attorney's fee," it was clear that Congress intended to override the American Rule with regard to attorney's fees, but the language was not specific enough to also shift expert witness fees. See W. Va. Univ. Hosps., Inc. v. Casey , 499 U.S. 83, 102, 111 S.Ct. 1138, 113 L.Ed.2d 68 (1991). Vague terms like "costs" are also not enough. See, e.g. , Summit Valley Indus. Inc. v. Loc. 112, United Brotherhood of Carpenters & Joiners...
To continue reading
Request your trial