IP Community criticizes USPTO appeals fee rules in a brief submitted to the court before March hearing

In 2013, the USPTO instituted a new fee rule that IP Owners group including Apple, Johnson & Johnson and Google call “crippling.” The rule itself isn’t new, but the interpretation of the law is. The law requires applicants that appeal de novo (a new review by district court) must pay the USPTO’s “expenses of the proceeding.” Until 2013, that clause was interpreted to mean that travel expenses and expert fees. For the past several years, the USPTO is including legal fees as well. The costs to appeal are now hundreds of thousands of dollars, something individual patent applicants and small businesses simply cannot afford. The IP Owners group submitted a “friends of the court” brief to the court to consider in its decision making process concerning a dispute over a fee assessment in a recent case. When there is an issue that can have far reaching consequences to an industry or large group of people/businesses, the court can accept and consider the viewpoints of these groups even though they are not directly involved in the dispute at hand. In these “friends of the court” briefs, arguments are made to support one legal view  and explain the adverse impact a different decision would have. These briefs are generally well researched and can be very effective advocacy as to how the law should be interpreted. They create a genuine public discussion about a law or case whose outcome can have a dramatic effect to a large group.

The 2013 rule provides that anyone who appeals a USPTO decision to district court instead of the Federal Circuit Court must pay the agency’s legal fees. The Federal Circuit’s procedure is more streamlined so the USPTO wants to disincentivize applicants from using the other available forum for its appeals. It claims that the public should not have to subsidize an applicant’s choice to use a more expensive appeal process. However, the appeal routes are not equal. In the streamlined proceedings, there is no expert testimony, no demonstrations and no fact witness testimony. If an applicant wants to present any of these types of evidence, it must go to district court.

The general US rule is that litigants each pay their own attorneys fees. The IP Owners group argues such fee goes against the traditional system. They believe that such rule and expense effectively forecloses that forum to many appellants and cripples the system. As an attorney who works in this agency, I know that the quality of patent prosecution is often questionable and appeals are a necessary avenue to secure important rights. The IP Owners groups makes a good point- the USPTO attorneys are a fixed cost to the USPTO and get paid the same whether they work on an appeal or something else. Therefore, it is not truly an expense of the proceeding itself. The applicant is subsidizing the USPTO. And the applicant does not get its attorneys fees paid if it wins after proving the USPTO was wrong. It is a totally lopsided situation. Our government should not be manipulating justice by making its citizens and other patent applicants use a forum where the government has an advantage. In my opinion, applicants should have a true choice of venues, just as the law provides. Two avenues for appeal were provided for a reason. Is there really a choice when one route has a cost 2-3 times the other? If only a few can afford the cost, there really is not a choice.

The hearing is March 8 and the case should be decided by late Spring.