Nankwest, Inc. v. Lee, 162 F. Supp. 3d 540

Background

NantKwest challenged a PTAB decision under 35 U.S.C. § 145, which permits district-court review of patentability but requires the applicant to pay “all the expenses of the proceeding.”
The USPTO (Defendant) prevailed on summary judgment and sought $111,696.39 in expenses under § 145, including $78,592.50 in attorney fees and $33,103.89 for its expert, Dr. Lewis Lanier.
Defendant moved for recovery of its expenses; Plaintiff opposed recovery of attorney fees and contested the reasonableness of the expert fees (Plaintiff’s expert billed $400/hour vs. Lanier’s $800–$1000/hour).
The central legal question was whether § 145’s reference to “expenses” specifically and explicitly includes payment of the USPTO’s attorneys’ fees, thereby overcoming the American Rule.
The court applied the Supreme Court’s Baker Botts “specific and explicit” standard for statutory fee-shifting and evaluated reasonableness of the expert fee considering comparable rates and the USPTO’s selection process.
Ruling: the court denied recovery of the USPTO’s attorney fees but awarded $33,103.89 for the USPTO expert; Plaintiff was ordered to pay that expert fee within 45 days.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether 35 U.S.C. § 145’s requirement that the applicant pay “all the expenses of the proceeding” authorizes the USPTO to recover its attorney fees	§ 145’s “expenses” does not specifically and explicitly include attorneys’ fees; the American Rule thus bars recovery	The term “expenses” is broadly understood to include attorney fees; § 145 requires the applicant to pay all expenses regardless of prevailing status	Denied — § 145 does not meet the Baker Botts “specific and explicit” standard to displace the American Rule; attorney fees not recoverable
Whether Baker Botts permits reading a broad statutory term to include attorney fees absent the words “attorneys’ fees”	Baker Botts supports requiring statutory clarity; ambiguous terms should not displace the American Rule	Baker Botts allows statutes to use phrases other than “attorneys’ fees” if the language clearly refers to services/compensation	Court applied Baker Botts and concluded § 145 lacks sufficiently specific language to authorize attorney-fee recovery
Whether Fourth Circuit’s Shammas decision (reading “expenses” to include fees) controls here	(Plaintiff) Baker Botts supersedes Shammas; Shammas misapplies the American Rule framework	(Defendant) Shammas holds American Rule inapplicable because § 145 mandates payment regardless of prevailing status	Held for Plaintiff — the court follows Baker Botts over Shammas and rejects Shammas’ narrower framing
Reasonableness of USPTO expert’s hourly rate ($800/$1000) compared to Plaintiff’s expert ($400)	Plaintiff argues the USPTO expert’s rate is excessive and should be reduced	Defendant shows selection process, comparable prior rates, and necessity of the expert; requests full expert expenses	Granted in part for expert fees — court found Lanier’s total expert fee of $33,103.89 reasonable and awarded it

Key Cases Cited

Baker Botts L.L.P. v. ASARCO LLC, 135 S. Ct. 2158 (2015) (articulates the “specific and explicit” requirement for statutes to displace the American Rule)
Shammas v. Focarino, 784 F.3d 219 (4th Cir. 2015) (held § 145’s “expenses” includes attorney fees; court here rejects that reading in light of Baker Botts)
In re Crescent City Estates, LLC, 588 F.3d 822 (4th Cir. 2009) (discusses the American Rule that each party bears its own attorney fees)
Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240 (1975) (explains the default rule that litigants pay their own attorneys’ fees absent statute or contract)
Ruckelshaus v. Sierra Club, 463 U.S. 680 (1983) (addresses fee-shifting principles and notes that complete failure does not justify shifting fees)
Travelers Cas. & Sur. Co. v. Pac. Gas & Elec. Co., 549 U.S. 443 (2007) (statutory fee-shifting requires express authorization)