Nantkwest, Inc. v. Iancu
898 F.3d 1177
Fed. Cir.2018Background
- NantKwest sought review under 35 U.S.C. § 145 after the Patent Trial and Appeal Board affirmed an examiner’s rejection; § 145 requires that "[a]ll the expenses of the proceedings shall be paid by the applicant."
- In district court the PTO prevailed on the merits; it then sought reimbursement of $111,696.39 as "expenses," which included $78,592.50 in attorneys’ fees (pro rata PTO attorney salaries) and $33,103.89 in expert fees.
- The district court awarded the PTO expert fees but denied recovery of the PTO’s attorneys’ fees, citing the American Rule.
- A panel of the Federal Circuit reversed as to attorneys’ fees, but the court granted en banc review to resolve whether § 145 authorizes recovery of the PTO’s attorneys’ fees.
- The en banc Federal Circuit affirmed the district court: the American Rule applies, and the phrase "all the expenses of the proceedings" is not a "specific and explicit" statutory waiver of the American Rule to permit shifting of attorneys’ fees.
Issues
| Issue | Plaintiff's Argument (NantKwest) | Defendant's Argument (PTO) | Held |
|---|---|---|---|
| Whether the American Rule applies to § 145 actions | § 145 does not amount to a fee‑shifting statute because it imposes expenses on the applicant regardless of outcome, so the American Rule need not govern | American Rule does apply; any statutory departure must be specific and explicit | Court: American Rule applies to § 145; a statute must clearly authorize fee‑shifting to displace it |
| Whether the phrase "all the expenses of the proceedings" authorizes recovery of the PTO’s attorneys’ fees (including prorated salaries) | "Expenses" is broad and, in context and history, includes personnel and attorney expenses; "all" confirms comprehensive coverage | "Expenses" is ambiguous regarding attorneys’ fees; Congress treats "expenses" and "attorneys’ fees" separately elsewhere, so § 145 lacks the specific language required to shift attorneys’ fees | Court: Phrase ambiguous and insufficient to meet the "specific and explicit" standard; no attorneys’ fees awarded |
| Whether statutory usage elsewhere supports reading "expenses" to include attorneys’ fees | Some contemporaneous and historical uses support a broad reading | Many statutes list "expenses" and "attorneys’ fees" separately or explicitly include attorneys’ fees when intended; this pattern shows Congress knows how to authorize fees | Court: Congressional usage treats fees and expenses as distinct; omission of "attorneys’ fees" in § 145 is significant |
| Whether policy/legislative history or § 145’s remedial purpose warrants reading expenses to include government attorneys’ fees | Purpose of § 145 (applicants choose a more costly remedy) and legislative history support making applicants bear all expenses they cause | Policy concerns (access to courts, American Rule protections) and reliance on textual clarity counsel against inferring fee‑shifting | Court: Policy and history insufficient to overcome the American Rule absent clearer statutory language |
Key Cases Cited
- Baker Botts L.L.P. v. ASARCO LLC, 135 S. Ct. 2158 (2015) (American Rule is the default; statutes must be specific and explicit to displace it)
- Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010) (American Rule background and analysis of non‑prevailing‑party fee statutes)
- Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240 (1975) (fee‑shifting requires a specific and explicit statutory grant)
- Taniguchi v. Kan Pac. Saipan, Ltd., 566 U.S. 560 (2012) (ordinary meaning of "expenses" in litigation contexts may be broad, but does not resolve American Rule displacement)
- Key Tronic Corp. v. United States, 511 U.S. 809 (1994) (absence of the words "attorneys’ fees" not dispositive, but statute must evince specific intent)
- Ruckelshaus v. Sierra Club, 463 U.S. 680 (1983) (statutory provisions allowing awards to either party still analyzed under the American Rule framework)
- Summit Valley Indus., Inc. v. Local 112, United Bhd. of Carpenters, 456 U.S. 717 (1982) (courts should not infer fee awards from vague statutory phrases)
- F. D. Rich Co. v. United States, 417 U.S. 116 (1974) (declining to read attorneys’ fees into general monetary recovery language)
- Kappos v. Hyatt, 566 U.S. 431 (2012) (distinguishing § 141 appellate review from § 145 de novo district‑court actions)
- Shammas v. Focarino, 784 F.3d 219 (4th Cir. 2015) (construed similar Lanham Act language to reach a contrary result; relied upon by earlier panel decision)