LAURA PETER, DEPUTY DIRECTOR, PATENT AND TRADEMARK OFFICE, PETITIONER
October 7, 2019
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE
FEDERAL CIRCUIT No. 18-801.
Patent Act provides two mutually exclusive methods for
challenging an adverse decision by the Patent and Trademark
Office (PTO). A dissatisfied applicant may appeal directly to
the Federal Circuit, 35 U.S.C. §141, or, as relevant
here, may file a new civil action against the PTO Director in
the United States District Court for the Eastern District of
Virginia, §145. Under this second proceeding, the
applicant must pay "[a]ll the expenses of the
NantKwest, Inc., filed a §145 civil action after its
patent application was denied. The District Court granted
summary judgment to the PTO, and the Federal Circuit
affirmed. The PTO moved for reimbursement of expenses,
including the pro rata salaries of PTO attorneys and a
paralegal who worked on the case. The District Court denied
the motion, concluding that the statutory language
referencing expenses was not sufficient to rebut the
"American Rule" presumption that parties are
responsible for their own attorney's fees. The en banc
Federal Circuit affirmed.
The PTO cannot recover the salaries of its legal personnel
under §145. Pp. 3-10.
(a) The "American Rule"-the bedrock principle that
"[e]ach litigant pays his own attorney's fees, win
or lose, unless a statute or contract provides
otherwise," Hardt v. Reliance Standard Life Ins.
Co., 560 U.S. 242, 253-provides the starting point for
assessing whether §145 authorizes payment of the
PTO's legal fees. Contrary to the Government's view,
this Court has never suggested that any statute is exempt
from the presumption against fee shifting or limited its
American Rule inquiries to prevailing party statutes. Rather,
it has developed a line of precedents addressing statutory
deviations from the American Rule that do not limit
attorney's fees awards to prevailing parties. See,
e.g., id., at 254. The presumption against fee
shifting is particularly important here because reading
§145 to permit an unsuccessful government agency to
recover attorney's fees from a prevailing party
"would be a radical departure from longstanding
fee-shifting principles adhered to in a wide range of
contexts." Ruckelshaus v. Sierra Club, 463 U.S.
680, 683. Pp. 3-6.
(b) Section 145's plain text does not overcome the
American Rule's presumption against fee shifting.
Definitions of "expenses," while capacious enough
to include attorney's fees, provide scant guidance. The
mere failure to foreclose a fee award "neither
specifically nor explicitly authorizes courts to shift
[fees]." Baker Botts L. L. P. v. ASARCO LLC,
576 U.S. 121, __. The complete phrase "expenses of the
proceeding" would not have been commonly understood to
include attorney's fees at the time §145 was
enacted. Finally, the modifier "all" does not
transform "expenses" to reach an outlay it would
not otherwise include.
In common statutory usage, the term "expenses"
alone has never been considered to authorize an award of
attorney's fees with sufficient clarity to overcome the
American Rule presumption. The appearance of
"expenses" and "attorney's fees"
together across various statutes indicates that Congress
understands the terms to be distinct and not inclusive of
each other. See, e.g., 11 U.S.C. §363(n). Other
statutes that refer to attorney's fees as a subset of
expenses show only that "expenses" can include
attorney's fees when so defined. See, e.g., 28
U.S.C. §361. Nor do this Court's cases further the
Government's position that the Court has used
"expenses" to mean "attorney's fees."
See, e.g., Taniguchi v. Kan.Pacific Saipan, Ltd.,
566 U.S. 560, 573.
The Patent Act's history reinforces that Congress did not
intend to shift attorney's fees in §145 actions.
There is no evidence that the original Patent Office ever
paid its personnel from sums collected from adverse parties.
Neither has the PTO, until this litigation, sought its
attorney's fees under §145. When Congress intended
to provide for attorney's fees in the Patent Act, it has
stated so explicitly. See, e.g., 35 U.S.C.
§285. Pp. 6-10.
898 F.3d 1177, affirmed.
145 of the Patent Act affords applicants "dissatisfied
with the decision of the Patent Trial and Appeal Board"
an opportunity to file a civil action in the United States
District Court for the Eastern District of Virginia. 35
U.S.C. §145. The statute specifies that "[a]ll the
expenses of the proceedings shall be paid by the
applicant." Ibid. The question presented in
this case is whether such "expenses" include the
salaries of attorney and paralegal employees of the United
States Patent and Trademark Office (PTO). We hold that they
Patent Act creates two mutually exclusive pathways to
challenge an adverse decision by the PTO. The first permits
judicial review by direct appeal to the United States Court
of Appeals for the Federal Circuit. §141. There is
"no opportunity for the applicant to offer new
evidence" in a §141 proceeding, and the Federal
Circuit "must review the PTO's decision on the same
administrative record ...