GILBERT P. HYATT, Plаintiff-Appellee v. ANDREW HIRSHFELD, PERFORMING THE FUNCTIONS AND DUTIES OF THE UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE, Defendant-Appellant
2020-2321, 2020-2323, 2020-2324, 2020-2325
United States Court of Appeals for the Federal Circuit
August 18, 2021
Appeals from the United States District Court for the District of Columbia in Nos. 1:05-cv-02310-RCL, 1:09-cv-01864-RCL, 1:09-cv-01869-RCL, 1:09-cv-01872-RCL, Senior Judge Royce C. Lamberth.
ANDREW M. GROSSMAN, Baker & Hostetler LLP, Washington, DC, argued for plaintiff-appellee. Also represented by MARK W. DELAQUIL, SEAN SANDOLOSKI.
MOLLY R. SILFEN, Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA, argued for defendant-appellant. Also represented by MICHAEL S. FORMAN, THOMAS W. KRAUSE, FARHEENA YASMEEN RASHEED.
Before MOORE, Chief Judge, REYNA and HUGHES, Circuit Judges.
After adverse results in proceedings at the Patent and Trademark Office, Gilbert Hyatt sued under
I
Mr. Hyatt is a prolific patent filer and litigant. In 1995 alone, Mr. Hyatt filed “hundreds of extraordinarily lengthy and complex patent applications,” including the four at issue here. Hyatt v. Iancu, Nos. 1:05-CV-2310-RCL, 1:09-CV-1864-RCL, 1:09-CV-1869-RCL, 1:09-CV-1872-RCL, 2020 WL 4219844, at *1 (D.D.C. July 23, 2020) (Decision). We recently chronicled the ensuing сonflict between Mr. Hyatt and the PTO, noting that he “adopted an approach to prosecution that all but guaranteed indefinite prosecution delay” in an effort to submarine his patent applications and receive lengthy patent terms. Hyatt v. Hirshfeld (Hyatt I), 998 F.3d 1347, 1368 (Fed. Cir. 2021). The examination of these patents has cost the PTO millions of dollars. Id. at 1370.
After adverse results at the PTO regarding the patents at issue here, Mr. Hyatt sued the PTO under
While Hyatt I was pending at this court, Mr. Hyatt sought his attorney‘s fees under the Equal Access to Justice Act (EAJA). Id. at *1. This statute allows a court to grant fees under certain circumstances, provided that the party seeking fees is a “prevailing party.”
Meanwhile, the PTO sought reimbursement of its expert witness fees in Hyatt I. Decision, 2020 WL 4219844, at *1. In an action under
II
As an initial matter, we vacate the district court‘s holding that Mr. Hyatt is entitled to attorney‘s fees under
III
We next proceed to the central issue in this appeal: whether
A
After receiving an adverse decision from the Patent Trial and Appeal Board, a patent applicant has two mutually exclusive options for judicial review. The typical route is to appeаl directly to this
Congress enacted
B
We start with the American Rule presumption. See NantKwest, 140 S. Ct. at 370-71 (emphasizing the centrality of the American Rule in analysis of fee-shifting statutes). This presumption requires that litigants pay their own fees “unless a statute or contract provides otherwise.” Id. at 370 (citation omitted). “Congress must provide a sufficiently ‘specific and explicit’ indication of its intent to overcome the American Rule‘s presumption against fee shifting.” Id. at 372 (quoting Alyeska Pipeline Serv. Co. v. Wilderness Soc‘y, 421 U.S. 240, 260 (1975)).
In NantKwest, the Supreme Court applied the American Rule to
No magic words are needed to override the American Rule, but the requirement that Congressional intent be specific and explicit is a high bar. See Key Tronic Corp. v. United States, 511 U.S. 809, 815-21 (1994) (noting that “[t]he absence of [a] specific reference to attorney‘s fees is not
C
The Supreme Court‘s NantKwest decision guides our analysis here. There, in interpreting the same
The Court began by noting that dictionary “[d]efinitions of ‘expenses’ provide scant guidance.” NantKwest, 140 S. Ct. at 372. Both modern and historical definitions of the term tend to be broad. See, e.g., Expense, BLACK‘S LAW DICTIONARY 698 (10th ed. 2014) (defining expense as “an expenditure of money, time, labor, or resources to accomplish a result“); N. WEBSTER, AN AMERICAN DICTIONARY OF THE ENGLISH LANGUAGE 319 (3d ed. 1830) (defining expenses to include “the employment and consumption, as of time or labor,” or the “disbursing of money“). “Though these definitions are capacious enough to include attorney‘s fees, the mere failure to foreclose a fee award neither specifically nor explicitly authorizes courts to shift fees.” NantKwest, 140 S. Ct. at 372 (citation omitted). These definitions provide no more guidance regarding whether “expenses” include expert fees than they do for attorney‘s fees.
Next, the Supreme Court considered the full phrase, “expenses of the proceeding,” noting that the phrase “is similar to the Latin expensae litis, or ‘expenses of the litigation.‘” Id. In the 1830s, when the relevant language in
The Court in NantKwest also emphasized that when Congress has intended to include attorney‘s fee-shifting in a statute, it has referred to them explicitly. NantKwest, 140 S. Ct. at 373 (“That ‘expenses’ and ‘attorney‘s fees’ appear in tandem across various statutes shifting litigation costs indicates that Congress understands the two terms to be distinct and not inclusive of each other.“). The same is true of expert witness fees. See, e.g.,
The central logic of NantKwest is applicable to our decision here, indicating that
D
We understand that this is a close case. There are many arguments that the phrase “[a]ll the expenses of the proceedings” should be understood to include expert fees. Indeed, many of these arguments apply to expert fees in a way that they do not apply to attorney‘s fees, making this case a closer one than NantKwest. But the American Rule sets a high bar, and we find none of these arguments sufficiently specific and explicit to override the presumption agаinst fee shifting.
1
On a couple of occasions, in dicta, the Supreme Court has “suggest[ed] that an explicit reference to ... ‘litigation expenses’ could shift expert fees.” See NantKwest, 140 S. Ct. at 373-74 (citing Casey, 499 U.S. at 99 (“Congress could easily have shifted ‘attorney‘s fees and expert witness fees,’ or ‘reasonable litigation expenses,’ as it did in contemporaneous statutes; it chose instead to enact more restrictive language, and we are bound by that restriction.“)); see also Arlington Cent. Sch. Dist. Bd. of Educ., 548 U.S. at 297 (“The use of [the term ‘costs‘], rather than a term such as ‘expenses,’ strongly suggests that
2
The PTO also emphasizes that district courts have been awarding expert witness fees under this statute ever since the PTO began using experts. See NantKwest, 898 F.3d at 1180-81; e.g., Sandvik Aktiebolag v. Samuels, Civ. A. No. 89-3127-LFO, 1991 WL 25774 (D.D.C. Feb. 7, 1991); Halozyme, Inc. v. Iancu, No. 1:16-CV-1580-CMH, 2018 WL 5270329, at *1 (E.D. Va. Oct. 23, 2018) (“Expenses are commonly understood to encompass printing, travel, and expert witness costs.” (citation omitted)); Taylor v. Matal, No. 1:15-cv-1607-LMB, 2017 WL 5147147, at *5 (E.D. Va. Nov. 6, 2017) (“It is well settled that the term ‘expenses’ as used in
The PTO argues that this difference in historical practice distinguishes this case from NantKwest, but historical practice did not drive the Supreme Court‘s reasoning in that case. Rather, the Court focused on the language of the statute and the centrality of the American Rule in analyzing fee-shifting provisions. Id. at 370-74.
Congress has reenacted the language at issue here multiple times since district courts began awarding fees, but these reenactments were not an explicit endorsement of that interpretation. See id. at 372 (requiring a “specific and explicit” indication from Congress to overcome the American Rule (quoting Alyeska Pipeline, 421 U.S. at 260)). To be sure, reenactment of a statute can be relevant in interpreting that statute. See Pierce v. Underwood, 487 U.S. 552, 567 (1988) (“[R]eenactment, of course, generally includes the settled judicial interpretation.” (citing Lorillard v. Pons, 434 U.S. 575, 580-81 (1978))); Georgia v. Public.Resource.Org, Inc., 140 S. Ct. 1498, 1510 (2020) (“[W]e are particularly reluctant to disrupt precedents interpreting language that Congress has since reenacted.“); but see Merck & Co. v. Reynolds, 559 U.S. 633, 659 (2010) (Scalia, J., concurring) (stating that this rule only applies “if all (or nearly all) of the Circuits” have interpreted statutory language the same way). But this canon regarding Congress‘s implicit acceptance of judicial interpretations loses much of its force in the context of fee-shifting statutes, which require an explicit indication of Congress‘s intent. Moreover, while the practice of district courts awarding expert fees under
3
The PTO points to other statutes where the term “expenses” has been interpreted to include expert witness fees as evidence that the term consistently includes expert fees. See, e.g., Lovell v. Chandler, 303 F.3d 1039, 1058 (9th Cir. 2002) (“[T]he term ‘litigation expenses’ normally encompasses expert witness fees ....“). But while these cases cut in that direction, the Supreme Court‘s opinion in NantKwest countered much of the logic behind these cases.
For example, an almost identical provision regarding eminent domain proceedings has been understood to shift expert witness fees. See
‘All expenses of said proceedings’ is the language; we note the ‘all‘, and we also note the ‘said proceedings‘. This is ordinary English, and from the layman‘s lexicon ‘all expenses’ would certainly be inclusive of the ordinary court costs, the ordinary witness fees, and also the fees
of expert witnesses of both parties to the expropriation procеedings. The legal meaning of the words ‘all expenses’ is certainly more inclusive than court costs, which generally include witness fees, ordinary and expert.
Id. (citation omitted). But the logic of this district court opinion mirrors reasoning rejected by the Supreme Court in NantKwest. See NantKwest, 140 S. Ct. at 372-73 (“Although the word [‘all‘] conveys breadth, it cannot transform ‘expenses’ to reach an outlay it would not otherwise include.“); id. at 372 (citing a dictionary from the era of
The Ninth Circuit addressed the American Rule in an opinion awarding expert witness fees under a phrase shifting “litigation expenses” in the Americans with Disabilities Act. Lovell, 303 F.3d at 1058-59 (noting that “express statutory authority” is required “for shifting expert witness fees,” and holding that “litigation expenses” refers to such fees (citation omitted)). But there, the court found sufficiently clear indicators in the legislative history that Congress intended to shift expert witness fees. Id.; see H.R. Rep. No. 101-485(III), at 73 (1990), reprinted in 1990 U.S.C.C.A.N. 445, 496 (Report of the Committee on the Judiciary) (“Litigation expenses include thе costs of expert witnesses. This provision explicitly incorporates the phrase ‘including litigation expenses’ to respond to rulings of the Supreme Court that items such as expert witness fees, travel expenses, etc., be explicitly included if intended to be covered under an attorney‘s fee provision.“); H.R. Rep. No. 101-485(II), at 140 (1990), reprinted in 1990 U.S.C.C.A.N. 303, 423 (Report of the Committee on Education and Labor) (“Litigation expenses include the costs of experts and the preparation of exhibits.“). Thus, while the Ninth Circuit‘s opinion may indicate that Congress sometimes uses phrases like “litigation expenses” to shift expert fees, the ADA is a statute where Congressional intent is far clearer than here. Even assuming that legislative history could be enough to overcome the explicitness requirement of the American Rule, in
Several other state and district courts have understood statutes awarding “expenses” to shift expert fees. See, e.g., N. Wyo. Surgical Ctr., LLC v. ASC Mgmt., LLC, No. 05-CV-230-D, 2007 WL 9700885 (D. Wyo. Mar. 29, 2007) (awarding expert witness fees despite deeming the word “expenses” not to include attorney‘s fees (citing
4
The PTO argues that the term “expenses” must be broader than “costs,” and that it therefore must encompass expert witness fees. This is a variation of an argument we encountered and rejected in NantKwest. 898 F.3d at 1194-95.
The PTO argues that the legislative history of
A potential difference between “costs” and “expenses” is also demonstrated by numerous statutes independently listing costs and expenses. See, e.g.,
The PTO argues that if “expenses” are broader than “costs,” but “expenses” do not, as the Supreme Court held, include attorney‘s fees, then it is difficult to imagine an interpretation of “expenses” that would not cover expert witness fees. But we need not determine the precise contours of the term “expenses” here. See NantKwest, 898 F.3d at 1194-95. Instead, we must determine whether the term is a specific and explicit invocation of expert witness fees. As we have explained above, the statutory text is not sufficiently specific and explicit to overcome the presumption against shifting fees. What Congress intended to include in “expenses” beyond “costs” will have to be determined in subsequent cases; we conclude that it does not include expert fees.
5
Finally, the PTO argues that a decision denying expert witness fees would have negative ramifications. In addition to overturning decades of district court practice, denying expert feеs here might increase the cost of patent applications. Appellant‘s Br. at 9. (“Congress has mandated that the USPTO be self-funded, where patent application fees are set to cover the agency‘s costs. With millions of dollars of projected additional out-of-pocket payments to expert witnesses in
While it is true that the overall structure of the patent system is designed for applicants to bear the costs of their patent applications, this general principle does not supply the specific and explicit indication of fee-shifting required by the American
We do not lightly overturn decades of practice in federal district courts. But the phrase “[a]ll the expenses of the proceedings” in
IV
Because Mr. Hyatt was not a prevailing party in Hyatt I, we vacate the award of attorney‘s fees and remand for further proceedings consistent with our opinion in that case. And because the phrase “[a]ll the expenses of the proceedings” in
AFFIRMED IN PART AND VACATED AND REMANDED IN PART
COSTS
No costs.