Peter v. NantKwest, Inc., 140 S. Ct. 365

The Patent Act offers two exclusive review routes for adverse PTO decisions: direct appeal to the Federal Circuit (§141) or a de novo district-court action by the applicant (§145), which permits new evidence.
Section 145 requires that “[a]ll the expenses of the proceedings shall be paid by the applicant.”
NantKwest filed a §145 suit after the PTO denied its patent application; the District Court granted summary judgment to the PTO and the Federal Circuit affirmed.
The PTO moved to recover “expenses,” including the pro rata salaries of PTO attorneys and a paralegal — the first time the agency sought such internal salary reimbursement under §145.
The District Court denied the request relying on the American Rule; a divided Federal Circuit panel initially awarded the fees, but the en banc Federal Circuit reversed and the Supreme Court granted certiorari.
The Supreme Court unanimously held §145 does not authorize recovery of PTO lawyers’ or paralegals’ salaries as “expenses.”

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether “expenses” in §145 includes PTO attorneys’ and paralegal salaries	“Expenses” does not cover the PTO’s pro rata internal salary costs; applicant should not pay agency personnel salaries	“All the expenses” includes the PTO’s pro rata legal salaries as costs of the proceeding	“Expenses” does not, with the specificity required to overcome the American Rule, include PTO legal personnel salaries; PTO cannot recover them under §145
Whether the American Rule presumption against fee-shifting applies to §145 actions	The American Rule applies; statutes must clearly authorize fee-shifting to overcome it	The American Rule does not apply because §145 is not a prevailing-party statute and requires one side to pay regardless of outcome	The American Rule applies to §145; Congress must provide a specific and explicit statement to deviate from it
Whether statutory text, usage, and history show Congress intended to shift attorney fees in §145	The statutory phrase, historical practice, and “all the expenses” suffice to require applicants to pay agency legal costs	The term “expenses” plainly covers such costs and “all” is broad enough to include salaries	Textual context, consistent statutory usage, and Patent Act history do not supply the clear, specific authorization required to shift attorney fees; Congress has elsewhere said “attorney’s fees” when intended

Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010) (American Rule: each litigant pays own attorney’s fees absent statute or contract)
Baker Botts L.L.P. v. ASARCO LLC, 576 U.S. 121 (2015) (requirement of specific and explicit statutory language to shift fees)
Ruckelshaus v. Sierra Club, 463 U.S. 680 (1983) (caution against allowing agencies to recover attorney fees from prevailing private parties)
Kappos v. Hyatt, 566 U.S. 431 (2012) (describing differences between §141 appeals and §145 de novo proceedings)
Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240 (1975) (presumption against fee-shifting; need for clear congressional intent)
Sebelius v. Cloer, 569 U.S. 369 (2013) (presumption applies even to statutes awarding fees to nonprevailing parties if statute is unambiguous)
West Virginia Univ. Hospitals, Inc. v. Casey, 499 U.S. 83 (1991) (looking to statutory usage to distinguish attorney’s fees from other expenses)
Taniguchi v. Kan Pacific Saipan, Ltd., 566 U.S. 560 (2012) (discussion of distinctions among costs, expenses, and attorney’s fees)
United States v. Rodgers, 461 U.S. 677 (1983) (declining to read statutes to contravene fundamental common-law precepts)