Nantkwest, Inc. v. Iancu , 898 F.3d 1177 ( 2018 )

United States Court of Appeals
for the Federal Circuit
______________________
NANTKWEST, INC.,
Plaintiff-Appellee
v.
ANDREI IANCU, UNDER SECRETARY OF
COMMERCE FOR INTELLECTUAL PROPERTY
AND DIRECTOR OF THE UNITED STATES
PATENT AND TRADEMARK OFFICE,
Defendant-Appellant
______________________
2016-1794
______________________
Appeal from the United States District Court for the
Eastern District of Virginia in No. 1:13-cv-01566-GBL-
TCB, Judge Gerald Bruce Lee.
______________________
Decided: July 27, 2018
______________________
MORGAN CHU, Irell & Manella LLP, Los Angeles, CA,
argued for plaintiff-appellee. Also represented by LAUREN
NICOLE DRAKE, GARY N. FRISCHLING, ALAN J. HEINRICH;
SANDRA HABERNY, Newport Beach, CA.
JAYNIE RANDALL LILLEY, Appellate Staff, Civil Divi-
sion, United States Department of Justice, Washington,
DC, argued for defendant-appellant. Also represented by
BENJAMIN C. MIZER, DANA J. BOENTE, MARK R. FREEMAN;
2 NANTKWEST, INC. v. IANCU
THOMAS W. KRAUSE, THOMAS L. CASAGRANDE, Office of the
Solicitor, United States Patent and Trademark Office,
Alexandria, VA.
ANTHONY J. DREYER, Skadden, Arps, Slate, Meagher
& Flom LLP, New York, NY, for amicus curiae Interna-
tional Trademark Association. Also represented by MARK
N. MUTTERPERL, Zeisler PLLC, New York, NY.
WILLIAM P. ATKINS, Pillsbury Winthrop Shaw Pittman
LLP, McLean, VA, for amicus curiae Federal Circuit Bar
Association. Also represented by WILLIAM K. WEST, JR.,
Washington, DC; MARTIN SCOTT HIGH, Martin S. High,
P.C., Clemson, SC.
KEVIN TOTTIS, TottisLaw, Chicago, IL, for amicus
curiae American Intellectual Property Law Association.
Also represented by MONICA L. THOMPSON, RACHEL M.
VORBEK; LISA K. JORGENSON, American Intellectual
Property Law Association, Arlington, VA.
GREGORY A. CASTANIAS, Jones Day, Washington, DC,
for amicus curiae Intellectual Property Owners Associa-
tion. Also represented by DANIEL KAZHDAN; HENRY S.
HADAD, Bristol-Myers Squibb Company, Princeton, NJ;
MARK W. LAUROESCH, Intellectual Property Owners
Association, Washington, DC; STEVEN W. MILLER, Global
Legal Department, Procter & Gamble Company, Cincin-
nati, OH.
HILARIE BASS, Greenberg Traurig, P.A., Miami, FL,
for amicus curiae American Bar Association. Also repre-
sented by SALVATORE ANASTASI, Barley Snyder, Malvern,
PA; JOSHUA SCHWARTZ, Lancaster, PA; DONALD W.
RUPERT, Marshall, Gerstein & Borun LLP, Chicago, IL;
CHARLES W. SHIFLEY, Banner & Witcoff, Ltd., Chicago, IL.
NANTKWEST, INC. v. IANCU 3
MARGARET MARY DUNCAN, McDermott Will & Emery
LLP, Chicago, IL, for amicus curiae Intellectual Property
Law Association of Chicago. Also represented by DAVID
MLAVER, Washington, DC; ROBERT H. RESIS, CHARLES W.
SHIFLEY, Banner & Witcoff, Ltd., Chicago, IL.
CHARLES ERIC MILLER, Eaton & Van Winkle LLP,
New York, NY, for amicus curiae Association of Amicus
Counsel. Also represented by KELLY L. MORRON, Law
Offices of Kelly L. Morron, Wilton, CT; JONATHAN E.
MOSKIN, Foley & Lardner LLP, New York, NY; ROBERT
JOSEPH RANDO, The Rando Law Firm P.C., Syosset, NY;
ALAN M. SACK, SACK IP Law PC, Syosset, NY.
PATRICK RICHARD DELANEY, Ditthavong & Steiner,
P.C., Alexandria, VA, for amicus curiae Realvirt, LLC.
CHARLES ERIC MILLER, Eaton & Van Winkle LLP,
New York, NY, for amici curiae Isshiki & Co., Hiraide &
Takahashi.
______________________
Before PROST, Chief Judge, NEWMAN, LOURIE, DYK,
MOORE, O’MALLEY, REYNA, WALLACH, TARANTO, HUGHES,
and STOLL, Circuit Judges. *
Opinion for the court filed by Circuit Judge STOLL, in
which Circuit Judges NEWMAN, LOURIE, MOORE,
O’MALLEY, WALLACH, and TARANTO join.
Dissenting opinion filed by Chief Judge PROST, in
which Circuit Judges DYK, REYNA, and HUGHES join.
* Circuit Judge Chen did not participate.
4 NANTKWEST, INC. v. IANCU
STOLL, Circuit Judge.
When the United States Patent and Trademark Of-
fice’s Patent Trial and Appeal Board (“Board”) affirms an
examiner’s rejection of a patent application, § 145 of the
Patent Act permits the disappointed applicant to chal-
lenge the Board’s decision in district court. Applicants
who invoke § 145 are required by statute to pay “[a]ll the
expenses of the proceedings” incurred by the U.S. Patent
and Trademark Office (“PTO”) in defending the Board’s
decision, regardless of the outcome. Historically, the
agency relied on this provision to recover sums it spent on
travel and printing and, more recently, expert witnesses.
Now, 170 years after Congress introduced § 145’s prede-
cessor, the agency argues that § 145 also compels appli-
cants to pay its attorneys’ fees. We hold that it does not,
for the American Rule prohibits courts from shifting
attorneys’ fees from one party to another absent a “specif-
ic and explicit” directive from Congress. The phrase “[a]ll
the expenses of the proceedings” falls short of this strin-
gent standard. Accordingly, we affirm the district court’s
judgment.
I
A
The Patent Act gives applicants two mutually exclu-
sive options for judicial review of an adverse Board deci-
sion. First, the applicant may appeal directly to this
court. 35 U.S.C. § 141. Second, the applicant may file a
civil action against the Director of the PTO in the United
States District Court for the Eastern District of Virginia.
35 U.S.C. § 145. We, in turn, have jurisdiction over
subsequent appeals from the district court under
28 U.S.C. § 1295(a)(1).
Section 141 provides standard judicial review of an
agency decision under the Administrative Procedure Act.
We review the Board’s legal determinations de novo,
NANTKWEST, INC. v. IANCU 5
Honeywell Int’l Inc. v. Mexichem Amanco Holding S.A. DE
C.V., 865 F.3d 1348, 1353 (Fed. Cir. 2017), and we “set
aside the PTO’s factual findings only if they are ‘unsup-
ported by substantial evidence,’” Kappos v. Hyatt,
566 U.S. 431, 435 (2012) (quoting Dickinson v. Zurko,
527 U.S. 150, 152 (1999)). Importantly, appellate review
in § 141 proceedings is confined to the record before the
PTO. 35 U.S.C. § 144.
Section 145, by contrast, authorizes a more expansive
challenge to the Board’s decision and is generally more
time consuming. For example, patent applicants can
conduct discovery and introduce new evidence. And once
an applicant submits new evidence on a disputed factual
question, “the district court must make a de novo finding.”
Hyatt, 566 U.S. at 434–35 (“This opportunity . . . is signif-
icant, not the least because the PTO generally does not
accept oral testimony.”). The parties may also engage in
motion practice, and the proceeding can culminate in a
full-blown trial. Congress set the price for engaging the
PTO in this type of litigation: “All the expenses of the
proceedings shall be paid by the applicant.” 35 U.S.C.
§ 145. Thus, an applicant who proceeds under § 145 must
shoulder not only his own significant expenses and fees,
but also the PTO’s “expenses of the proceedings.”
Congress introduced § 145’s predecessor in 1839, 1 and
over the years, the PTO has relied on these “expenses”
provisions to recover PTO attorneys’ travel expenses to
attend depositions, see Robertson v. Cooper, 46 F.2d 766,
769 (4th Cir. 1931), printing expenses, cf. Cook v. Watson,
1 The original language from 1839 required an ap-
plicant to pay “the whole of the expenses of the proceeding
. . . whether the final decision shall be in his favor or
otherwise.” Act of Mar. 3, 1839, ch. 88, § 10, 5 Stat. 353,
354. Neither party argues that subsequent revisions to
§ 145 impact our analysis.
6 NANTKWEST, INC. v. IANCU
208 F.2d 529, 530 (D.C. Cir. 1953), court reporter fees,
and reasonable fees for expert witnesses, see Sandvik
Aktiebolag v. Samuels, CIV. A. No. 89-3127-LFO,
1991 WL 25774, at *1 (D.D.C. Feb. 7, 1991). For more
than 170 years, however, the PTO never sought—and no
court ever awarded—attorneys’ fees under § 145 or its
predecessor.
B
As its name suggests, the American Rule is a “bedrock
principle” of this country’s jurisprudence. Hardt v. Reli-
ance Standard Life Ins. Co., 560 U.S. 242, 253 (2010). It
provides that, in the United States, “[e]ach litigant pays
his own attorney’s fees, win or lose.” Baker Botts L.L.P. v.
ASARCO LLC, 135 S. Ct. 2158, 2164 (2015) (quoting
Hardt, 560 U.S. at 253). The American Rule may only be
displaced by an express grant from Congress. Id. And it
serves as the “basic point of reference” whenever a court
“consider[s] the award of attorney’s fees.” Id. (quoting
Hardt, 560 U.S. at 252–53).
The rationale supporting the American Rule is rooted
in fair access to the legal system, as well as the difficulty
of litigating the fee question:
[S]ince litigation is at best uncertain one should
not be penalized for merely defending or prosecut-
ing a lawsuit, and . . . the poor might be unjustly
discouraged from instituting actions to vindicate
their rights if the penalty for losing included the
fees of their opponents’ counsel. Also, the time,
expense, and difficulties of proof inherent in liti-
gating the question of what constitutes reasonable
attorney’s fees would pose substantial burdens for
judicial administration.
Fleischmann Distilling Corp. v. Maier Brewing Co.,
386 U.S. 714, 718 (1967) (citations omitted). In the con-
text of this case, the American Rule preserves access to
NANTKWEST, INC. v. IANCU 7
district courts for small businesses and individual inven-
tors seeking to avail themselves of § 145’s benefits.
The American Rule traces its origins back to at least
the late 1700s. In Arcambel v. Wiseman, the circuit court
included $1,600 in counsel’s fees as part of the damages.
3 U.S. (3 Dall.) 306, 306 (1796). The assessment of attor-
neys’ fees, the Supreme Court concluded, could not be
allowed because the “general practice of the United States
is in opposition to it; and even if that practice were not
strictly correct in principle, it is entitled to the respect of
the court, till it is changed, or modified, by statute.” Id.
“[O]ur courts have generally resisted any movement”
toward the English system—which permits the award of
attorneys’ fees to successful parties in litigation—ever
since. 2 Fleischmann, 386 U.S. at 717; see Runyon v.
McCrary, 427 U.S. 160, 185 (1976) (“[T]he law of the
United States . . . has always been that absent explicit
congressional authorization, attorneys’ fees are not a
recoverable cost of litigation.”).
2 The Supreme Court has carved out several equi-
table exceptions to further the interests of justice.
See F. D. Rich Co. v. U.S. for Use of Indus. Lumber Co.,
417 U.S. 116, 129 (1974) (acknowledging availability of
attorneys’ fees where party “has acted in bad faith, vexa-
tiously, wantonly, or for oppressive reasons”); Toledo
Scale Co. v. Computing Scale Co., 261 U.S. 399, 426–28
(1923) (allowing attorneys’ fees as part of penalty for
willful disobedience of court order); Trustees v. Greenough,
105 U.S. 527, 532–33, 537 (1882) (permitting party recov-
ering fund for the benefit of himself and others to seek
attorneys’ fees from the fund itself or directly from other
parties who enjoyed the benefit); see generally Alyeska
Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 257–
59 (1975). None of these exceptions are implicated here.
8 NANTKWEST, INC. v. IANCU
Only Congress “has the power and judgment to pick
and choose among its statutes and to allow attorneys’ fees
under some, but not others.” Alyeska Pipeline, 421 U.S.
at 263. Congress has not “extended any roving authority
to the Judiciary to allow counsel fees as costs or otherwise
whenever the courts might deem them warranted.”
Id. at 260. Thus, the Supreme Court has held that the
American Rule presumptively applies and any statutory
deviations from it must be “specific and explicit.”
Id. at 260–62, 269.
According to the Supreme Court, one “good example of
the clarity . . . required to deviate from the American
Rule” can be found in the Equal Access to Justice Act’s
attorneys’ fees provision. Baker Botts, 135 S. Ct. at 2164.
That provision commands courts to “award to a prevailing
party other than the United States fees and other expenses
. . . incurred by that party in any civil action,” so long as
certain conditions are met. Id. at 2164 (emphasis added)
(quoting 28 U.S.C. § 2412(d)(1)(A)). As the Supreme
Court explained, “there could be little dispute that this
provision—which mentions ‘fees,’ a ‘prevailing party,’ and
a ‘civil action’—is a ‘fee-shifting statut[e]’ that trumps the
American Rule.” Id. (alteration in original).
Not all fee-shifting statutes follow this template
though. For example, the Supreme Court has a separate
line of precedent “addressing statutory deviations from
the American Rule that do not limit attorney’s fees
awards to the ‘prevailing party.’” Hardt, 560 U.S. at 254.
In Hardt, the Court analyzed whether Congress deviated
from the American Rule when it passed a statute provid-
ing that a “court in its discretion may allow a reasonable
attorney’s fee and costs of action to either party.”
Id. at 251–52 (quoting 29 U.S.C. § 1132(g)(1)). The same
is true in Ruckelshaus v. Sierra Club, where the Court
examined a provision of the Clean Air Act allowing a
court to “award costs of litigation (including reasonable
attorney and expert witness fees) whenever it determines
NANTKWEST, INC. v. IANCU 9
that such an award is appropriate.” 463 U.S. 680, 682–83
(1983) (emphasis omitted) (quoting 42 U.S.C. § 7607(f)).
And while the American Rule sets a high bar for shift-
ing attorneys’ fees, it does not impose a magic words
requirement so long as Congress’s intent is “specific and
explicit.” See Summit Valley Indus., Inc. v. Local 112,
United Bhd. of Carpenters, 456 U.S. 717, 721–22 (1982).
As the Supreme Court acknowledged in Key Tronic Corp.
v. United States, “[t]he absence of [a] specific reference to
attorney’s fees is not dispositive if the statute otherwise
evinces an intent to provide for such fees.” 511 U.S. 809,
815 (1994); see Baker Botts, 135 S. Ct. at 2165 (discussing
statute providing for “reasonable compensation for actual,
necessary services rendered by” various “professional
person[s],” including “attorney[s]” (emphasis omitted)
(quoting 11 U.S.C. § 330(a)(1)(A))).
II
This brings us to the procedural background of the
current case. In 2001, Dr. Hans Klingemann filed a
patent application directed to a method for treating
cancer using natural killer cells. Dr. Klingemann’s appli-
cation was eventually assigned to NantKwest, Inc. The
examiner rejected the application as obvious in 2010, and
the Board affirmed the rejection in 2013.
Pursuant to § 145, NantKwest challenged the Board’s
decision by filing a complaint against the Director of the
PTO in the U.S. District Court for the Eastern District of
Virginia. Discovery ensued and the PTO moved for sum-
mary judgment that the application’s claims would have
been obvious. The district court granted the PTO’s mo-
tion, and we affirmed. See NantKwest, Inc. v. Lee,
686 F. App’x 864, 865 (Fed. Cir. 2017). After prevailing
on the merits, the PTO filed a motion for reimbursement
of the “expenses of the proceedings” under § 145. The
$111,696.39 sum sought by the PTO included $78,592.50
in attorneys’ fees—calculated based on the pro rata sala-
10 NANTKWEST, INC. v. IANCU
ries of the two PTO attorneys and one paralegal who
worked on the case—and $33,103.89 in expert witness
fees.
The district court denied the PTO’s motion with re-
spect to attorneys’ fees, citing the American Rule.
Nan[tK]west, Inc. v. Lee, 162 F. Supp. 3d 540, 542–43
(E.D. Va. 2016). In the court’s view, “Congress’s reference
to ‘all . . . the expenses’ merely points to a collection of the
expenses used, commonly understood to encompass . . .
printing, travel, and reasonable expert witness expenses.”
Id. at 543. The district court noted that “[i]n § 145 Con-
gress neither used the phrase ‘attorneys’ fees’ nor ‘fees’
nor any alternative phrase demonstrating a clear refer-
ence to attorneys’ fees.” Id. at 545. It then concluded that
the “ambiguity regarding the exact reach of the term
‘expenses’ means § 145 does not meet the Supreme
Court’s Baker Botts standard and therefore, cannot devi-
ate from the American Rule.” Id.
The PTO appealed the denial of its motion to recover
attorneys’ fees, and a divided panel of this court reversed
the district court’s judgment. The majority relied on the
Fourth Circuit’s opinion in Shammas v. Focarino, which
interpreted a nearly identical provision of the Lanham
Act, 15 U.S.C. § 1071(b)(3). 784 F.3d 219, 223–24
(4th Cir. 2015). There, the Fourth Circuit held that the
American Rule only applies to statutes that refer to a
“prevailing party.” Id. at 223. Referring to this language,
the majority here voiced “substantial doubts” that § 145
implicates the American Rule because it imposes the
PTO’s expenses on applicants without referring to a
“prevailing party.” NantKwest, Inc. v. Matal, 860 F.3d
1352, 1355 (Fed. Cir. 2017). Nevertheless, the majority
assumed the American Rule applied for purposes of its
analysis and concluded that the word “expenses” “‘specif-
ic[ally]’ and ‘explicit[ly]’ authorizes an award of fees.”
Id. at 1356 (alterations in original) (quoting Alyeska
Pipeline, 421 U.S. at 260). For support, the majority
NANTKWEST, INC. v. IANCU 11
relied on dictionaries defining “expenses” as “expendi-
ture[s] of money, time, labor, or resources to accomplish a
result,” id. (alteration in original) (quoting Black’s Law
Dictionary 698 (10th ed. 2014)), and a statement from
Taniguchi v. Kan Pacific Saipan, Ltd., distinguishing
“taxable costs” from “nontaxable expenses,” id. at 1357
(quoting 566 U.S. 560, 573 (2012)). Finally, the majority
rejected NantKwest’s contention that pro-rata salaries of
the PTO’s employees were not “expenses of the proceed-
ings.” Id. at 1359. 3
Our court voted sua sponte to hear the appeal en banc
and vacated the panel’s judgment. NantKwest, Inc. v.
Matal, 869 F.3d 1327 (Fed. Cir. 2017). We requested
briefing on a single question: whether the panel “correctly
determine[d] that 35 U.S.C. § 145’s ‘[a]ll the expenses of
the proceedings’ provision authorizes an award of the
[PTO’s] attorneys’ fees.” Id. at 1327. In addition to the
parties’ briefs and argument, we received seven amicus
briefs, none of which support the PTO’s position. We now
affirm the judgment of the district court.
III
We review de novo a district court’s interpretation of a
statute. Boston Sci. Scimed, Inc. v. Medtronic Vascular,
3 Following issuance of this Court’s NantKwest de-
cision, the PTO requested and received attorneys’ fees in
at least one § 145 action. See, e.g., Realvirt, LLC v. Lee,
220 F. Supp. 3d 695, 704 (E.D. Va. 2016) (awarding more
than $48,000 in attorneys’ fees in § 145 action). The PTO
also convinced a district court to impose a $40,000 bond
on a pro se plaintiff who filed suit under § 145. Taylor v.
Lee, No. 1:15-CV-1607, 2016 WL 9308420, at *2 (E.D. Va.
July 12, 2016) (requiring payment of bond before permit-
ting § 145 action to proceed, but noting uncertainty sur-
rounding applicant’s finances).
12 NANTKWEST, INC. v. IANCU
Inc., 497 F.3d 1293, 1296 (Fed. Cir. 2007). Unless other-
wise defined, words in a statute “will be interpreted as
taking their ordinary, contemporary, common meaning.”
Summit Valley, 456 U.S. at 722 (quoting Perrin v. United
States, 444 U.S. 37, 42 (1979)).
According to the PTO, the American Rule does not
govern our interpretation of § 145. Even if it does, the
PTO and the dissent aver that the statutory text suffices
to displace this long-standing, common-law rule. We
disagree on both counts and address each issue in turn.
A
At the outset, we hold that the American Rule applies
to § 145. As noted, the American Rule provides that each
litigant bears its own attorneys’ fees, win or lose, and a
statute must use “specific and explicit” language to depart
from this rule. The Supreme Court in Baker Botts em-
phasized that the American Rule is the starting point
whenever a party seeks to shift fees from one side to the
other in adversarial litigation. 135 S. Ct. at 2164 (ex-
plaining that “when considering the award of attorney’s
fees,” the American Rule constitutes the “basic point of
reference” (quoting Hardt, 560 U.S. at 252–53)). Because
the PTO contends that § 145 should be construed to shift
its attorneys’ fees to the patent applicants bringing suit,
the American Rule necessarily applies. Accordingly, we
must be able to discern from § 145’s text a “specific and
explicit” congressional directive to make an award of
attorneys’ fees available. Alyeska Pipeline, 421 U.S.
at 260.
We are not persuaded by the PTO’s contrary argu-
ments for why the American Rule should not apply to
litigation under § 145. The PTO begins by relying on the
Fourth Circuit’s Shammas opinion for the proposition
that the American Rule only governs the interpretation of
statutes that shift fees from a prevailing party to a losing
party. Because § 145 imposes “[a]ll the expenses” on the
NANTKWEST, INC. v. IANCU 13
applicant, win or lose, the PTO asserts it is not a fee-
shifting statute that falls within the American Rule’s
ambit. We disagree. Given the primary purpose of the
American Rule—protection of access to courts—the PTO’s
alleged distinction makes little sense. We submit that the
policy behind the American Rule would be even more
strongly implicated where attorneys’ fees would be im-
posed on a winning plaintiff.
In Shammas, a divided panel of the Fourth Circuit
awarded attorneys’ fees to the PTO under 15 U.S.C.
§ 1071(b)(3)—the trademark analogue to § 145—which
also refers to “all the expenses of the proceeding.” The
Shammas court reached this decision only by first holding
that the American Rule does not apply to § 1071(b)(3).
784 F.3d at 223. Based on a narrow interpretation of the
Supreme Court’s statement in Alyeska Pipeline, the
Fourth Circuit held that “the American Rule provides
only that ‘the prevailing party may not recover attorneys’
fees’ from the losing party.” Id. (quoting Alyeska Pipeline,
421 U.S. at 245). The Fourth Circuit also relied on the
Supreme Court’s observation in Ruckelshaus that “virtu-
ally every one of the more than 150 existing federal fee-
shifting provisions predicates fee awards on some success
by the claimant” to conclude that a statute mandating fees
without regard to a party’s success is not a fee-shifting
statute governed by the American Rule. Id. (quoting
Ruckelshaus, 463 U.S. at 684).
We respectfully submit that Shammas’s holding can-
not be squared with the Supreme Court’s line of non-
prevailing party precedent applying the American Rule.
Although Alyeska Pipeline does refer to the American
Rule in the context of a “prevailing party,” the rule is not
so limited. Rather, the Supreme Court has consistently
applied the rule broadly to any statute that allows fee
shifting to either party, win or lose. For example, the
Supreme Court in Hardt evaluated a request for attor-
neys’ fees under 29 U.S.C. § 1132(g)(1), which grants
14 NANTKWEST, INC. v. IANCU
courts authority to award “reasonable attorney’s fee[s] . . .
to either party” at the court’s “discretion.”
560 U.S. at 251–52. The Supreme Court held that “a fee
claimant need not be a ‘prevailing party’ to be eligible for
an attorney’s fees award under § 1132(g)(1)” because the
statutory text contained no such limitation. Id. at 252.
But the absence of a “prevailing party” requirement did
not render the American Rule inapplicable to the fee-
shifting inquiry. Instead, the Court “interpret[ed]
§ 1132(g)(1) in light of [its] precedents addressing statuto-
ry deviations from the American Rule that do not limit
attorney’s fees awards to the ‘prevailing party.’” Id.
at 254.
Our decision is in keeping with Ruckelshaus, relied on
by the Fourth Circuit in Shammas. While the Court in
Ruckelshaus acknowledged that the vast majority of fee-
shifting provisions impose a “success” requirement, the
Court made clear that its absence does not render the
American Rule inapplicable. Instead, the Court applied
the American Rule even though the district court awarded
fees to a “party that achieved no success on the merits”
based on a statute that authorized “reasonable attorney
. . . fees[] whenever [the court] determines that such an
award is appropriate.” Ruckelshaus, 463 U.S. at 682–85
(emphasis omitted) (quoting 42 U.S.C. § 7607(f)). Accord-
ingly, we think that the Fourth Circuit’s reliance on
Ruckelshaus to support its view that the American Rule
does not apply to statutes lacking a success requirement
is misplaced.
Our understanding is likewise confirmed by numerous
other cases that applied the American Rule to a variety of
statutes that did not mention a “prevailing party.” The
Supreme Court applied the American Rule to a bankrupt-
cy statute allowing “reasonable compensation for actual,
necessary services rendered by the trustee . . . or attor-
ney.” Baker Botts, 135 S. Ct. at 2165 (emphasis omitted).
An environmental statute permitting the recovery of any
NANTKWEST, INC. v. IANCU 15
“necessary costs of response,” including “enforcement
activities” was also analyzed by the Court under the
American Rule. Key Tronic, 511 U.S. at 813, 819. So too
with a statute authorizing an injured person to “recover
the damages by him sustained and the cost of the suit.”
Summit Valley, 456 U.S. at 722. The Court likewise held
that the American Rule governed an attorneys’ fees
request under a statute authorizing the recovery of “sums
justly due.” F. D. Rich Co., 417 U.S. at 128, 130–31.
The PTO also cites the Supreme Court’s decision in
Sebelius v. Cloer, which interpreted a statute requiring
the payment of attorneys’ fees regardless of the party’s
litigation success without expressly discussing the Ameri-
can Rule. 569 U.S. 369 (2013). This, the PTO argues,
shows that the American Rule does not apply to statutes
that do not refer to a “prevailing party.” At issue in Cloer
was the National Childhood Vaccine Injury Act of 1986
(“NCVIA”). The statute creates an “unusual scheme for
compensating attorneys who work on NCVIA petitions”: it
requires courts to award “reasonable attorneys’ fees” for a
successful petition, and it grants courts discretion to
make the same award for an unsuccessful petition
“brought in good faith [with] a reasonable basis for the
claim.” Id. at 373–74 & n.1 (quoting 42 U.S.C. § 300aa-
15(e)(1)). Therefore, Congress specifically and explicitly
authorized the award of attorneys’ fees. The only ques-
tion for the Court was whether attorneys’ fees could be
recovered for untimely petitions.
The Court answered this question in the affirmative,
but its analysis does not undercut the American Rule’s
applicability to § 145. First, the Court rejected the gov-
ernment’s argument that an untimely petition was ineli-
gible for fees because it was never “filed” within the
meaning of the statute. Id. at 377–79. The Court then
turned to the government’s argument that common-law
principles, including the American Rule, barred the award
of attorneys’ fees for untimely petitions. Citing the page
16 NANTKWEST, INC. v. IANCU
of the government’s brief discussing the American Rule,
the Court held that the “presumption favoring the reten-
tion of long-established and familiar [common-law] prin-
ciples,” i.e., the American Rule, must “give way” to the
unambiguous statutory language. Id. at 380–81 (altera-
tion in original) (quoting Brief for the Petitioner at 32,
Sebelius v. Cloer, 569 U.S. 369 (2013) (No. 12-236),
2013 WL 75285, *32). Cloer thus stands for the unre-
markable principle that a statute providing for the award
of “attorneys’ fees” can displace the American Rule.
Given the Supreme Court’s line of non-prevailing par-
ty precedent and the inapposite nature of Cloer, we see no
reason why the American Rule would not apply to § 145.
As the Supreme Court has explained, the American Rule
simply provides that each litigant bears its own attorney
fees. Hardt, 560 U.S. at 253. The PTO’s reading of § 145
requires the opposite. Accordingly, § 145 should not
escape the heightened standard required for congressional
departure from this bedrock principle.
B
Having concluded that the American Rule applies, we
now ask whether § 145 displaces it. The Supreme Court
has explained that when, as here, a statutory provision
“does not expressly provide for the recovery of attorney’s
fees . . . we are not presented with a situation where
Congress has made ‘specific and explicit provisions for the
allowance of’ such fees.” Summit Valley, 456 U.S. at 722(quoting Alyeska Pipeline, 421 U.S. at 260 & n.33); see
also Key Tronic, 511 U.S. at 815. But “[t]he absence of [a]
specific reference to attorney’s fees is not dispositive if the
statute otherwise evinces an intent to provide for such
fees.” Key Tronic, 511 U.S. at 815. Congress can convey
this intent through the ordinary meaning of the statutory
term alleged to shift attorneys’ fees—here, “[a]ll the
expenses of the proceedings”—although the ordinary
meaning must supply a “specific and explicit” directive to
NANTKWEST, INC. v. IANCU 17
depart from the American Rule. See Summit Valley,
456 U.S. at 722–23; see also id. at 721, 726 (declining to
deviate from American Rule after finding no “express
statutory authorization” in statute’s text to support
contention that “damages” includes attorneys’ fees); Key
Tronic, 511 U.S. at 819 (requiring “explicit statutory
authority” to depart from American Rule).
In our view, § 145’s statement that “[a]ll the expenses
of the proceedings shall be paid by the applicant” lacks
the “specific and explicit” congressional authorization
required to displace the American Rule. Section 145
contains no reference to attorneys’ fees, “reasonable
compensation for actual, necessary services rendered by
the . . . attorney,” Baker Botts, 135 S. Ct. at 2165 (empha-
sis omitted), PTO attorney salaries, or any other equally
clear language. To satisfy the Supreme Court’s strict
standard, the PTO must show that “[a]ll the expenses of
the proceedings” specifically and explicitly includes attor-
neys’ fees. But this phrase is at best ambiguous as to
attorneys’ fees. As explained below, the cases and defini-
tions relied on by the PTO demonstrate that, at most, this
language is merely capable of implicitly covering attor-
neys’ fees. The American Rule and the “specific and
explicit” requirement demand more than language that
merely can be and is sometimes used broadly to implicitly
cover attorneys’ fees. Moreover, other statutory provi-
sions enacted by Congress demonstrate that ordinarily, a
statutory right to “expenses” does not include an implicit
authorization to award attorneys’ fees. This is further
demonstrated by both contemporaneous and current court
cases and other statutory provisions in the Patent Act.
We begin our analysis with contemporaneous defini-
tions and usages of “expenses.” In 1839, when Congress
introduced the “whole of the expenses” language in § 145’s
predecessor, Act of Mar. 3, 1839, § 10, 5 Stat. at 354, the
ordinary meaning of “expenses” did not implicitly encom-
pass attorneys’ fees. The PTO only cites one dictionary
18 NANTKWEST, INC. v. IANCU
from this time period, which defined “expense” as “[a]
laying out or expending; the disbursing of money, or the
employment and consumption, as of time or labor.”
Appellant Br. 17 (quoting Noah Webster, American Dic-
tionary of the English Language (1st ed. 1828)). Other
1830s dictionaries defined “expense” as “cost; charges;
money expended,” J.E. Worcester, A Comprehensive
Pronouncing and Explanatory Dictionary of the English
Language, with Pronouncing Vocabularies of Classical
and Scripture Proper Names 117 (1830), and as “the
disbursing of money,” “[m]oney expended,” “cost,” and
“[t]hat which is used, employed, laid out, or consumed,”
Noah Webster et al., An American Dictionary of the Eng-
lish Language 319 (Joseph Worcester ed., 1830). These
vague definitions, however, do not establish that a statu-
tory right to “expenses” includes “an implicit authoriza-
tion to award attorney’s fees.” Summit Valley,
456 U.S. at 722.
More compelling than the dictionary definitions,
though, is Congress’s usage of the terms “expenses” and
“attorneys’ fees” in other statutes. These statutes demon-
strate Congress’s understanding that the ordinary mean-
ing of “expenses” does not include attorneys’ fees. Similar
to the Supreme Court’s analysis in West Virginia Univer-
sity Hospitals, Inc. v. Casey, we think the “record of statu-
tory usage” convincingly demonstrates that attorneys’ fees
and expenses are regarded as separate elements unless
specifically identified otherwise. 499 U.S. 83, 88 (1991)
(reviewing statutes using terms “attorney’s fees” and
“expert fees” to understand whether reference to “attor-
ney’s fees” would necessarily shift expert fees as well).
Indeed, Congress has drafted numerous statutes au-
thorizing the award of both “expenses” and “attorneys’
fees.” This first category of statutes list expenses and
attorneys’ fees as separate items of recovery. See, e.g.,
11 U.S.C. § 363(n) (authorizing trustee to recover “any
costs, attorneys’ fees, or expenses incurred” in certain
NANTKWEST, INC. v. IANCU 19
situations); 12 U.S.C. § 1464(d)(1)(B)(vii) (“[C]ourt . . .
may allow to any such party reasonable expenses and
attorneys’ fees.”); 12 U.S.C. § 1786(p) (“[C]ourt . . . may
allow to any such party such reasonable expenses and
attorneys’ fees as it deems just and proper . . . .”);
25 U.S.C. § 1401(a) (discussing “payment of attorney fees
and litigation expenses”); 26 U.S.C. § 6673(a)(2)(A) (allow-
ing recovery of “excess costs, expenses, and attorneys’
fees” against attorney who vexatiously multiplied pro-
ceedings); 15 U.S.C. § 77z-1(a)(6) (discussing “[t]otal
attorneys’ fees and expenses” that can be awarded by
court); 31 U.S.C. § 3730(d)(1) (“Any such person shall also
receive an amount for reasonable expenses which the
court finds to have been necessarily incurred, plus rea-
sonable attorneys’ fees and costs.”); 38 U.S.C. § 4323(h)(2)
(“[T]he court may award any such person who prevails in
such action or proceeding reasonable attorney fees, expert
witness fees, and other litigation expenses.”); Act of
Dec. 23, 1930, ch. 23, § 4, 46 Stat. 1033, 1034 (granting
Court of Claims jurisdiction to “determine a reasonable
fee . . . to be paid the attorney or attorneys employed as
herein provided, together with all necessary and proper
expenses”); Act of Mar. 23, 1932, ch. 90, § 7, 47 Stat. 70,
72 (requiring adequate security to cover “all reasonable
costs (together with a reasonable attorney’s fee) and
expense” before permitting issuance of temporary re-
straining order or temporary injunction). It is hard to
imagine that the ordinary meaning of “expenses” specifi-
cally and explicitly includes “attorneys’ fees” given the
volume of statutory provisions that treat expenses and
attorneys’ fees as separate items. 4 If “expenses” includes
4 The dissent questions the import of these statutes
because they post-date the enactment of § 145’s predeces-
sor. Dissent Op. 6–7 n.1. But Congress distinguished
between attorneys’ fees and expenses during the mid-
1800s too, see, e.g., S.J. Res. 25, 40th Cong. § 1, 15 Stat.
20 NANTKWEST, INC. v. IANCU
attorneys’ fees, then many “statutes referring to the two
separately become an inexplicable exercise in redundan-
cy.” W. Va. Univ., 499 U.S. at 92.
A second category of statutes define expenses to in-
clude attorneys’ fees, but they do so explicitly. These
statutes demonstrate that “expenses” does not necessarily
include attorneys’ fees, else there would be no need to so
define “expenses.” See, e.g., 12 U.S.C. § 5005(b)(2)(B)
(providing that, in absence of breach of warranty, amount
of indemnity shall be sum of “interest and expenses
(including costs and reasonable attorney’s fees and other
expenses of representation)”); 10 U.S.C. § 2409(c)(1)(C)
(permitting agency head to require that contractor pay
“an amount equal to the aggregate amount of all costs and
expenses (including attorneys’ fees and expert witnesses’
fees)” in connection with complaint regarding a reprisal);
15 U.S.C. § 2310(d)(2) (permitting recovery of “a sum
equal to the aggregate amount of cost and expenses
(including attorneys’ fees based on actual time expend-
ed)”); 28 U.S.C. § 1447(c) (“An order remanding the case
may require payment of just costs and any actual expens-
es, including attorney fees, incurred as a result of the
removal.”); 29 U.S.C. § 1370(e)(1) (“[T]he court in its
discretion may award all or a portion of the costs and
expenses incurred in connection with such action, includ-
ing reasonable attorney’s fees . . . .”); 30 U.S.C. § 938(c)
(allowing successful miner to recover “a sum equal to the
aggregate amount of all costs and expenses (including the
attorney’s fees)”); 33 U.S.C. § 1367(c) (“[A] sum equal to
the aggregate amount of all costs and expenses (including
26, 26 (1867) (discussing payment to “agent or attorney
[of] his lawful fees and expenses”). In any event, neither
the PTO nor the dissent suggests that Congress’s under-
standing in this regard changed between 1839 and the
passage of the above-cited statutes.
NANTKWEST, INC. v. IANCU 21
the attorney’s fees) . . . shall be assessed . . . .”); 41 U.S.C.
§ 4705(d)(1)(C) (noting that head of agency may “[o]rder
the contractor to pay the complainant an amount equal to
the aggregate amount of all costs and expenses (including
attorneys’ fees and expert witnesses’ fees) that the com-
plainant reasonably incurred”); 42 U.S.C. § 247d-6d(e)(9)
(permitting party to recover “reasonable expenses in-
curred . . . including a reasonable attorney’s fee”);
2 U.S.C. § 396 (“The committee may allow any party
reimbursement from the applicable accounts of the House
of Representatives of his reasonable expenses of the
contested election case, including reasonable attorneys
fees . . . .”).
Collectively, these statutes encompass diverse catego-
ries of legislation and demonstrate that Congress under-
stood the “ordinary, contemporary, common meaning” of
“expenses” as being something other than “attorneys’
fees” unless expressly specified. See Summit Valley,
456 U.S. at 722 (quoting Perrin, 444 U.S. at 42). Statutes
awarding both expenses and attorneys’ fees suggest that
Congress viewed them as distinct tools in its toolbox of
recovery items that can be shifted at its discretion to
accomplish a policy objective. If “expenses” necessarily
included “attorneys’ fees,” the numerous statutes provid-
ing for both would have superfluous words and, as a
general rule, courts should “avoid an interpretation of a
statute that ‘renders some words altogether redundant.’”
See United States v. Alaska, 521 U.S. 1, 59 (1997) (quoting
Gustafson v. Alloyd Co., 513 U.S. 561, 574 (1995)). Like-
wise, Congress would have no reason to permit the recov-
ery of “expenses”—and then specify whether it included
“attorneys’ fees”—if the former always encompassed the
latter. To us, the logical implication of Congress’s prior
usage is that “attorneys’ fees” are not even ordinarily, let
alone necessarily, included in “expenses” absent an ex-
press expansion of “expenses” to include “attorneys’ fees.”
At best, whether “expenses” includes “attorneys’ fees” is
22 NANTKWEST, INC. v. IANCU
ambiguous. 5 But ambiguity cannot satisfy the exacting
standard erected by the American Rule for shifting attor-
neys’ fees.
In considering whether the ordinary meaning of a
particular statutory provision shifted attorneys’ fees, the
Supreme Court in Key Tronic found it persuasive that
Congress included express provisions for fee awards in
related statutes without including a similar provision in
the statute at issue. 511 U.S. at 817–18. So too here. 6
5 We note that § 145 is not discretionary; it requires
that “[a]ll the expenses of the proceedings shall be paid by
the applicant.” 35 U.S.C. § 145 (emphasis added). To the
extent the phrase “expenses” unambiguously includes
attorneys’ fees, it is unclear why it took the PTO more
than 170 years to appreciate the statute’s alleged clarity
and seek the attorneys’ fees that are statutorily mandated
under its interpretation. The dissent excuses the PTO’s
failure to pursue fees in earlier proceedings, citing “dra-
matic[]” changes in the patent landscape, Dissent Op. 18,
but this does nothing to soften the statute’s mandatory
directive.
6 The dissent cites Key Tronic as an example of the
Supreme Court favorably citing the Eighth Circuit’s
conclusion that a statute’s reference to “necessary costs of
response” and “enforcement activities” constituted a
“sufficient degree of explicitness” to permit the award of
attorneys’ fees. Dissent Op. 15 (quoting Key Tronic,
511 U.S. at 815). But the Supreme Court analyzed the
same statutory language as the Eighth Circuit and held
that it cannot support an award of attorneys’ fees: “To
conclude that a provision that only impliedly authorizes
suit nonetheless provides for attorney’s fees with the
clarity required by Alyeska would be unusual if not un-
precedented.” Key Tronic, 511 U.S. at 818. This decision
was informed in part by the presence of “two express
NANTKWEST, INC. v. IANCU 23
The existence of several Patent Act provisions awarding
“attorneys’ fees” demonstrates Congress’s use of “specific
and explicit” language in the Patent Act to shift fees when
it so desired. For example, § 285 states: “The court in
exceptional cases may award reasonable attorney fees to
the prevailing party.” 35 U.S.C. § 285 (emphasis added).
Other provisions of the Patent Act recognize the availabil-
ity of attorneys’ fees by cross-referencing § 285. See, e.g.,
35 U.S.C. § 271(e)(4) (noting “that a court may award
attorney fees under section 285” as part of remedy for
infringement under § 271(e)(2) (emphasis added));
35 U.S.C. § 273(f) (listing circumstances where “the court
shall find the case exceptional for the purpose of awarding
attorney fees under section 285” (emphasis added)).
Finally, § 297(b)(1) permits customers who have been
defrauded by an invention promoter to recover “reasona-
ble costs and attorneys’ fees” in addition to damages.
35 U.S.C. § 297(b)(1) (emphasis added).
Congress elected in § 145 to provide for the recovery
of the PTO’s “expenses,” not its “attorneys’ fees.” When
“Congress includes particular language in one section of a
statute but omits it in another section of the same Act, it
is generally presumed that Congress acts intentionally
and purposely in the disparate inclusion or exclusion.”
Russello v. United States, 464 U.S. 16, 23 (1983) (quoting
United States v. Wong Kim Bo, 472 F.2d 720, 722 (5th Cir.
1972)). Here, Congress did not award “attorneys’ fees”
under § 145 but did make them available under other
sections of the Patent Act. We presume this was inten-
tional, id., and thus the omission of “attorneys’ fees” from
§ 145 “strongly suggest[s] a deliberate decision not to
authorize such awards.” See Key Tronic, 511 U.S. at 819
provisions for fee awards” in a related statute, which the
Court understood to “strongly suggest a deliberate deci-
sion not to authorize such awards” here. Id. at 818–19.
24 NANTKWEST, INC. v. IANCU
(declining to award fees under provision that did not refer
to “attorneys’ fees,” in part because two other provisions
in related statute contained express authority to shift
fees). 7 We are dubious of the dissent’s attempt to distin-
guish § 285 from § 145 on the ground that § 145 does not
“arise[] in traditional patent litigation.” Dissent Op. 8.
To the contrary, § 145 is titled “Civil action to obtain
patent,” and it provides “remedy by civil action against
the Director in the United States District Court for the
Eastern District of Virginia.” § 145. This statutory
language clearly gives rise to “patent litigation” between
the disappointed patent applicant and the Director of the
PTO.
We have also considered judicial usage of “expenses.”
See W. Va. Univ., 499 U.S. at 92–93 (looking to contempo-
raneous court decisions to determine whether expert fees
7 The patent laws have been amended on numerous
occasions since Congress enacted § 145’s predecessor in
1839. If the PTO’s decision not to seek fees during this
time contradicted Congress’s intent, Congress could have
revised the statute to make its intent more clear. For
example, Congress amended the law in 1946 to permit the
“award [of] reasonable attorney’s fees to the prevailing
party” in infringement actions. Act of Aug. 1, 1946,
ch. 726, 60 Stat. 778, 778 (emphasis added) (creating
predecessor to § 285). Congress could have included
similar language in § 145, but it did not. “When Congress
amends one statutory provision but not another, it is
presumed to have acted intentionally.” Gross v. FBL Fin.
Servs., Inc., 557 U.S. 167, 174 (2009). Although Gross
drew this inference based on Congress’s decision to amend
a provision in one statute but not amend a similar provi-
sion in another statute, we think the inference carries
equal force with respect to two provisions within the same
statutory scheme.
NANTKWEST, INC. v. IANCU 25
were shifted as element of attorneys’ fees). Many courts
and litigants in the 1800s referred to “expenses” and
“attorneys’ fees” as distinct items. See, e.g., Morris v.
Way, 16 Ohio 469, 472 (1847) (referring to statement of
accounts listing “attorney’s fees and expenses”); Hayden v.
Sample, 10 Mo. 215, 221 (1846) (noting defendant’s re-
quest that jury be instructed to ignore evidence of “the
expenses incurred . . . and the fees paid counsel and
attorneys”); Anderson v. Farns, 7 Blackf. 343, 343 (Ind.
1845) (citing party’s request for indemnity from all “pen-
alties, costs, damages, attorney’s fees, and expenses”);
State v. Williams, 13 Ohio 495, 499 (1844) (providing that
trustees had authority to settle “the expense of prosecut-
ing suits, attorney’s fees, etc.”); Bishop v. Day, 13 Vt. 81,
83 (1841) (discussing contract containing indemnity from
“any costs, lawyers’ fees, and expenses”); Hickman v.
Quinn, 14 Tenn. 96, 107 n.1 (1834) (explaining that
defendants deducted “their expenses, attorney’s fees, etc.”
from amount voluntarily given to plaintiff); see also Br. of
Amici Curiae Intellectual Prop. Owners Ass’n 8 (collecting
cases).
This distinction remains evident in recent legal opin-
ions. For example, one court recognized that “[t]he terms
‘costs’ or ‘expenses’ when used in a statute do not ordinar-
ily include attorney’s fees.” Ark. Dep’t of Human Servs.,
Div. of Econ. & Med. Servs. v. Kistler, 320 Ark. 501, 509
(1995); see also Tracy v. T & B Constr. Co., 182 N.W.2d
320, 322 (S.D. 1970) (“Ordinarily the terms ‘costs’ and
‘expenses’ as used in a statute are not understood to
include attorney’s fees.”); McAdam v. Dean Witter Reyn-
olds, Inc., 896 F.2d 750, 776 (3d Cir. 1990) (“[W]e can not
find the vague reference in § 4-207(3) to ‘expenses’ [to be
a] sufficient basis on which to predicate such an award [of
attorneys’ fees].”); Lewis v. Pension Benefit Guar. Corp.,
197 F. Supp. 3d 16, 29 (D.D.C. 2016) (finding no authority
to shift attorneys’ fees under 29 U.S.C. § 1303(f), subsec-
tion (3) of which permits court to “award all or a portion of
26 NANTKWEST, INC. v. IANCU
the costs and expenses incurred in connection with such
action”).
Finally, we emphasize that the PTO’s interpretation
of § 145 would have a patent applicant pay the govern-
ment’s attorneys’ fees even when the patent applicant
succeeds. Other than what we believe to be an incorrect
interpretation of the trademark analogue in Shammas,
we are aware of no statute that requires a private litigant
to pay the government’s attorneys’ fees without regard to
the party’s success in the litigation. Indeed, the PTO
could not identify any statute that shifts the salaries of an
agency’s attorneys onto the party bringing suit to chal-
lenge the agency’s decision. See Oral Arg. at 26:53–27:09,
http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20
16-1794_382018.mp3; see also Br. of Amici Curiae Am.
Bar Ass’n 5 (“Congress has never enacted a fee-shifting
provision that shifts only the government’s fees onto
private parties, much less a provision that does so even if
the government loses the litigation.”). Thus, adopting the
PTO’s interpretation would create a particularly unusual
divergence from the American Rule. Had Congress in-
tended to produce such an anomalous result, we believe
“it would have said so in far plainer language than that
employed here.” Ruckelshaus, 463 U.S. at 694.
The Supreme Court’s reluctance to endorse statutory
interpretations that would create sweeping departures
from the American Rule furthers our conclusion. For
example, even in statutes where Congress has granted
courts broad leeway to shift “attorneys’ fees,” the Supreme
Court has restricted the availability of those awards. See,
e.g., Hardt, 560 U.S. at 251–52, 255 (requiring “some
degree of success on the merits” to recover attorneys’ fees
even though statute permits “court in its discretion [to]
allow a reasonable attorney’s fee and costs of action to
either party” (emphases added)); Ruckelshaus, 463 U.S.
at 682–83, 694 (requiring “some degree of success on the
merits” before shifting attorneys’ fees even though statute
NANTKWEST, INC. v. IANCU 27
allows court to “award costs of litigation (including rea-
sonable attorney and expert witness fees) whenever it
determines that such an award is appropriate” (emphasis
added)); Baker Botts, 135 S. Ct. at 2165 (permitting
recovery of attorneys’ fees for work done during bankrupt-
cy proceeding, but not in fee-defense litigation, under
statute allowing “reasonable compensation for actual,
necessary services rendered by the trustee . . . or attor-
ney” (emphasis omitted)).
And the Court often rejects fee-shifting requests un-
der the American Rule where Congress employs vague
statutory language that might, to a layperson, seem broad
enough to cover attorneys’ fees as well as other items.
See, e.g., Summit Valley, 456 U.S. at 722, 726 (declining
to shift attorneys’ fees under statute permitting recovery
of “the damages by him sustained and the cost of the
suit”); F. D. Rich Co., 417 U.S. at 128, 130–31 (declining
to award attorneys’ fees pursuant to statute authorizing
recovery of “sums justly due”); Fleischmann, 386 U.S.
at 720 (declining to award attorneys’ fees under statute
giving courts authority to award “costs of the action”); Key
Tronic, 511 U.S. at 813, 819 (declining to shift attorneys’
fees pursuant to statute making responsible parties liable
for “any . . . necessary costs of response,” including “en-
forcement activities”). Using these cases as a barometer,
we cannot conclude that a statute awarding “[a]ll the
expenses,” with nothing more, effects such an extreme
departure from the American Rule.
IV
The PTO and the dissent resist our conclusion that
§ 145 does not displace the American Rule. They both
begin—as we do—with the meaning of “expenses.” To
support an expansive reading of “expenses” that includes
attorney fees, the PTO and the dissent cite the Supreme
Court’s statement in Taniguchi that “[t]axable costs are a
fraction of the nontaxable expenses borne by litigants for
28 NANTKWEST, INC. v. IANCU
attorneys, experts, consultants, and investigators.”
566 U.S. at 573 (emphasis added); see generally Appellant
Br. 38–39; Dissent Op. 6. We acknowledge that the word
“expenses” is broad and, like “costs” or “litigation costs,” is
sometimes used in judicial opinions to refer to a variety of
burdens incurred by a litigant, including attorneys’ fees.
But the Supreme Court has never interpreted the phrase
“expenses” or “all the expenses” to authorize a departure
from the American Rule. Indeed, Taniguchi only ana-
lyzed “whether [the phrase] ‘compensation of interpreters’
covers the cost of translating documents.” Id. at 562.
In a similar vein, the PTO relies on a single sentence
from Arlington Central School District Board of Education
v. Murphy, 548 U.S. 291 (2006). See Appellant Br. 39.
There, the Individuals with Disabilities Education Act
(“IDEA”) permitted courts, in their discretion, to award
“reasonable attorneys’ fees as part of the costs” to the
prevailing party. Arlington Central, 548 U.S. at 297(quoting 20 U.S.C. § 1415(i)(3)(B)). Respondents asserted
that “costs” should be interpreted to cover all the costs of
an IDEA proceeding, including expert fees. The Court
rejected respondents’ argument, noting that the statute’s
“use of this term of art [‘costs’], rather than a term such as
‘expenses,’ strongly suggests that § 1415(i)(3)(B) was not
meant to be an open-ended provision that makes partici-
pating States liable for all expenses incurred.” Id. The
PTO seizes on this language, but it omits the end of the
sentence, which provides examples of the “open-ended . . .
expenses” envisioned by the Court: “travel and lodging
expenses or lost wages due to time taken off from work.”
Id. Absent from the list is a reference to attorneys’ fees.
Thus, Arlington Central does not address the interpreta-
tion of a statute containing the word “expenses” in light of
the American Rule. Nor does it stand for the proposition
that the ordinary meaning of “expenses” is broad enough
to include “attorneys’ fees.”
NANTKWEST, INC. v. IANCU 29
The PTO likewise insists that a single sentence in
Baker Botts suggests that a statutory reference to “litiga-
tion costs” alone would suffice to shift attorneys’ fees.
Appellant Br. 39 (quoting 135 S. Ct. at 2164). Specifical-
ly, the Court in Baker Botts stated: “We have recognized
departures from the American Rule” and these departures
“tend to authorize the award of ‘a reasonable attorney’s
fee,’ ‘fees,’ or ‘litigation costs,’ and usually refer to a
‘prevailing party.’” Id. But none of the cited statutes—
either in Baker Botts itself or in the cases Baker Botts
cites—contain a stand-alone reference to “litigation costs.”
See Appellee Br. 24–25. Rather, each of the statutes
expressly provides for the award of attorneys’ fees in
addition to, or as part of, the litigation costs. We there-
fore do not read Baker Botts to stand for the proposition
that the phrase “litigation costs,” by itself, can displace
the American Rule. 8
8 Alyeska Pipeline also cited numerous statutory
examples of “specific and explicit provisions for the allow-
ance of attorneys’ fees.” 421 U.S. at 260–62 & n.33–35.
Again, every cited statute referred to either “fees,” “attor-
neys’ fees,” or “reasonable compensation for services
rendered” by an “attorney.” See id. The same holds true
for the 2008 Congressional Research Service Report in
which Congress compiled the text of several hundred
other fee-shifting provisions. Each of these statutes
referred to “attorneys’ fees,” “fees,” “compensation for . . .
attorney[s],” “fees for attorneys,” “compensation for repre-
sentation . . . equivalent to that provided for court-
appointed representation,” “fees of counsel,” “legal fees,”
or “compensation” for “foreign counsel.” Henry Cohen,
Cong. Research Serv., Awards of Attorneys’ Fees by Feder-
al Courts and Federal Agencies 64–114 (2008), available
at https://fas.org/sgp/crs/misc/94-970.pdf. Notably, § 145
was not included in the statutory compilation.
30 NANTKWEST, INC. v. IANCU
The PTO and dissent next accuse us of transforming a
statute requiring the payment of “[a]ll the expenses” to
one demanding reimbursement for only “some” of the
expenses. Appellant Br. 41; see Dissent Op. 9–10. Both
emphasize the modifier “[a]ll” in arguing that Congress
intended § 145 to be fully remedial. But the word “all”
sheds no light on the breadth of “expenses” vis-à-vis
attorneys’ fees—the crux of the dispute—and serves only
to clarify that, whatever the “expenses” are, all of them
must be paid by the applicant. In addition, at least one
statute expressly identifies “attorneys’ fees” as one of an
enumerated list of “all expenses” recoverable, further
supporting the notion that the phrase “all expenses” does
not carry the weight afforded to it by the PTO and the
dissent. See 50 U.S.C. § 4531(b)(4) (permitting recovery of
“all expenses and losses incurred . . . including . . . attor-
neys’ fees and expenses of litigation”). Finally, we note
that, even if “attorney’s fees are necessary to achieve full
compensation [for the PTO’s involvement in a § 145
action], this justification alone is not sufficient to create
an exception to the American Rule in the absence of
express congressional authority.” Summit Valley,
456 U.S. at 724 (emphasis added). The argument by the
PTO is “nothing more than a ‘restate[ment] of one of the
oft-repeated criticisms of the American Rule.’” Id. at 725(alteration in original) (quoting F. D. Rich Co., 417 U.S.
at 128).
The dissent next invokes “legislative history and the
purpose of § 145” for displacing the American Rule.
Dissent Op. 10–13. At the outset, we question the role of
legislative history in this context where the very point of
the “specific and explicit” standard is to demand clarity in
the statute’s text. See Baker Botts, 135 S. Ct. at 2164
(“We have recognized departures from the American Rule
only in ‘specific and explicit provisions for the allowance
of attorneys’ fees under selected statutes.’” (quoting
Alyeska Pipeline, 421 U.S. at 260)); cf. Conroy v. Aniskoff,
NANTKWEST, INC. v. IANCU 31
507 U.S. 511, 519 (1993) (Scalia, J., concurring) (“The law
as it passed is the will of the majority of both houses, and
the only mode in which that will is spoken is in the act
itself . . . .” (emphasis in original) (quoting Aldridge v.
Williams, 44 U.S. (3 How.) 9, 24 (1844))). Where the
textual indications are unclear, we are skeptical of what
legislative history and policy could add to satisfy this
standard. But even if we set these concerns aside, the
dissent’s legislative history fails to advance its interpreta-
tion of § 145.
The dissent points to an expense reimbursement pro-
vision in the 1870 amendments to the patent laws, which
it notes is similar to the language employed by Congress
in § 145’s predecessor. Dissent Op. 11. Initial versions of
the House bill limited the reimbursement by using the
word “costs” and capping it at $25. See H.R. 1714, 41st
Cong. § 52 (as passed by House, Apr. 25, 1870). The
Senate, however, changed “costs” to “expenses” and re-
moved the $25 cap. See H.R. 1714, 41st Cong. § 52 (as
amended by Senate, May 31, 1870). The enacted version
reflects the Senate amendments, see Act of July 8, 1870,
ch. 230, § 52, 16 Stat. 198, 205, which according to the
dissent, “demonstrates—or at least strongly suggests—
that Congress specifically intended that ‘expenses’ be
broader than ‘costs.’” Dissent Op. 12. We do not contest
that “expenses” is broader than “costs.” But the breadth
of expenses relative to costs has no relevance here. Our
task is to determine whether “expenses” includes attor-
neys’ fees, and the dissent’s legislative history is silent on
this crucial point.
The PTO and the dissent also direct our attention to
§ 9 of the 1836 patent statute—a budgetary provision that
uses the word “expenses.” Appellant Br. 27–28; Dissent
Op. 4. Section 9 requires that money paid by patent
applicants into the Treasury be used “for the payment of
the salaries of the officers and clerks herein provided for,
and all other expenses of the Patent Office.” Act of July 4,
32 NANTKWEST, INC. v. IANCU
1836, ch. 357, § 9, 5 Stat. 117, 121. In the dissent’s view,
this establishes that Congress “understood salaries to be
within the scope of ‘expenses.’” Dissent Op. 4. But as the
dissent recognizes, context is important when interpreting
a statute. Dissent Op. 7. Here, § 9 is an accounting
provision that earmarks money the PTO receives to cover
various “expenses of the Patent Office”; it does not ad-
dress how “expenses of the proceedings” are to be allocat-
ed in the context of adversarial litigation involving the
PTO. Moreover, it is doubtful (or at least uncertain)
whether any of the salaries of the particular “officers and
clerks herein provided for” under § 9 included the salaries
of PTO attorneys and paralegals who engaged in litigation
on the agency’s behalf. § 9, 5 Stat. at 121 (emphasis
added); see id. §§ 1–2, 5 Stat. at 117–18 (creating roles for
Commissioner of Patents, Chief Clerk of Patent Office, an
examining clerk, and two “other” clerks). Accordingly, § 9
at most supports the idea that “expenses” can be broad
enough to cover salaries of some PTO employees in an
unrelated context. But, even then, Congress felt it neces-
sary to expressly enumerate “salaries of the officers and
clerks” in addition to “all other expenses,” demonstrating
again that the ordinary meaning of expenses does not
include attorney salaries.
Both the dissent and the PTO contend that it would
not make sense for Congress to use the phrase “attorneys’
fees” in the context of § 145 actions because it is more
accurate to classify the salaries of the PTO’s attorneys as
personnel “expenses.” Appellant Br. 42; Dissent Op. 8. In
light of other statutes providing for the government’s
recoupment of attorneys’ fees, as opposed to personnel
expenses, in enforcement actions, we do not find this
argument convincing. See, e.g., 42 U.S.C. § 7413(d)(5)
(“Any person who fails to pay on a timely basis a civil
penalty ordered or assessed under this section shall be
required to pay . . . the United States enforcement ex-
penses, including but not limited to attorneys fees and
NANTKWEST, INC. v. IANCU 33
costs incurred by the United States for collection proceed-
ings . . . .”); 33 U.S.C. § 1319(g)(9) (similar). Indeed, aside
from the trademark analogue at issue in Shammas, the
PTO did not identify a single statute that awards to the
government prorated portions of its attorneys’ salaries
without using the phrase “attorneys’ fees.”
Finally, the PTO and the dissent paint § 145 actions
as a scourge on other patent applicants. Appellant
Br. 21–25; Dissent Op. 12, 17–18. They claim it is unfair
to burden all applicants with the additional costs caused
by those who voluntarily initiate § 145 proceedings. But
this policy debate on the value of § 145 actions is best left
for Congress. And, as various amici indicate, Congress
already addressed the debate by rebuffing an attempt to
repeal § 145. Br. of Amici Curiae Intellectual Prop.
Owners Ass’n 21 n.3; Br. of Amici Curiae Ass’n of Amicus
Counsel 14. In any event, the dissent’s concerns appear
to us exaggerated. A back-of-the-envelope calculation
elucidates the minuscule impact of these proceedings on
the overall cost of a patent application. Although neither
party could provide an exact tally of the § 145 proceed-
ings, at the panel stage the PTO estimated that there
were four to five of these proceedings in the last three
years. See Oral Arg. at 19:19–20:10,
http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20
16-1794.mp3. If we were to take a conservative estimate
of ten § 145 actions per year (five times the rate estimated
by the PTO) and assume that the PTO expended $100,000
in attorneys’ fees defending each action ($20,000 more
than the amount the PTO incurred in this case), the total
expense for fiscal year 2018 would be $1 million. The
PTO estimates that it will receive more than 627,000
patent applications during this same time period. See
U.S. Patent and Trademark Office, Fiscal Year 2018
Congressional Justification 11 (2017),
https://www.uspto.gov/sites/default/files/documents/fy18p
br.pdf. When spread amongst the 627,000+ applications,
34 NANTKWEST, INC. v. IANCU
the $1 million price tag amounts to less than $1.60 per
application.
V
The general rule in the United States is that each
party pays for its own attorneys. To deviate from the
status quo embodied in the American Rule, Congress
must draft legislation—“specific and explicit” legislation—
demonstrating its intent to make the award of attorneys’
fees available under that statute. Awarding “[a]ll the
expenses” simply cannot supply the “specific and explicit”
directive from Congress to shift attorneys’ fees, and
nothing else in the statute evinces congressional intent to
make them available. Other than Shammas’s interpreta-
tion of the trademark analogue, we are not aware of any
statute requiring a private litigant to pay the govern-
ment’s attorneys’ fees without regard to the party’s suc-
cess in the litigation. We are unwilling to “invade the
legislature’s province by redistributing litigation costs” in
a way that would create such an anomalous statute here.
See Alyeska Pipeline, 421 U.S. at 271. The judgment of
the district court is affirmed.
AFFIRMED
COSTS
Costs to Appellee.
United States Court of Appeals
for the Federal Circuit
______________________
NANTKWEST, INC.,
Plaintiff-Appellee
v.
ANDREI IANCU, UNDER SECRETARY OF
COMMERCE FOR INTELLECTUAL PROPERTY
AND DIRECTOR OF THE UNITED STATES
PATENT AND TRADEMARK OFFICE,
Defendant-Appellant
______________________
2016-1794
______________________
Appeal from the United States District Court for the
Eastern District of Virginia in No. 1:13-cv-01566-GBL-
TCB, Judge Gerald Bruce Lee.
______________________
PROST, Chief Judge, dissenting, with whom DYK, REYNA,
and HUGHES, Circuit Judges, join.
The question for the en banc court is whether 35
U.S.C. § 145, which provides that “[a]ll the expenses of
the proceedings shall be paid by the applicant,” requires
the applicant to pay all the expenses of the proceedings,
including the PTO’s personnel expenses, or just some of
the expenses. When Congress said, “[a]ll the expenses,” I
believe it meant all the expenses. The Fourth Circuit
agrees. Shammas v. Focarino, 784 F.3d 219 (4th Cir.
2015), cert. denied sub nom. Shammas v. Hirshfeld, 136 S.
2 NANTKWEST, INC. v. IANCU
Ct. 1376 (2016). The majority opinion creates an unfortu-
nate and unnecessary conflict between the circuits. I
respectfully dissent.
I
When electing to pursue its § 145 action, NantKwest,
a disappointed patent applicant, had two options for
judicial review of the Patent Trial and Appeal Board’s
decision. See Kappos v. Hyatt, 566 U.S. 431, 434 (2012).
NantKwest could have “either: (1) appeal[ed] the decision
directly to [this court], pursuant to § 141; or (2) file[d] a
civil action against the Director of the PTO in the United
States District Court for the [Eastern District of Virginia]
pursuant to § 145.” Id. at 434 & n.1. Litigation in district
court is expensive and time-consuming, much more so
than direct appeals to this court limited to the adminis-
trative record. Section 145, unlike § 141, requires the
applicant to pay “[a]ll the expenses of the proceedings,” 35
U.S.C. § 145, “regardless of the outcome,” Hyatt v. Kap-
pos, 625 F.3d 1320, 1337 (Fed. Cir. 2010) (en banc), aff’d
and remanded, 566 U.S. 431 (2012). Section 145 actions
are also uncommon. Id. (noting that “the vast majority of
applicants pursue an on-the-record appeal [under § 141]
instead of a § 145 action”).
In defending the § 145 proceedings initiated by
NantKwest, the PTO incurred expenses for expert wit-
nesses and personnel expenses—that is, the expense of
diverting agency attorneys and paralegals from other
matters to this § 145 action. The district court ordered
NantKwest to reimburse the agency’s expenses for its
expert witness but not its personnel. The parties do not
dispute that “[a]ll the expenses of the proceedings” in-
cludes the PTO’s expert witness expenses. On appeal, the
PTO seeks reimbursement under § 145 for personnel
expenses it incurred.
NANTKWEST, INC. v. IANCU 3
II
I start, as I must, with the language of the statute.
E.g., United States v. Ron Pair Enters., Inc., 489 U.S. 235,
241 (1989). And its plain text provides our answer. See
SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348, 1354 (2018).
When § 145 says “[a]ll the expenses of the proceedings
shall be paid by the applicant” it means the applicant
must pay all the expenses of the proceedings. “Absent
persuasive indications to the contrary, we presume Con-
gress says what it means and means what it says.”
Simmons v. Himmelreich, 136 S. Ct. 1843, 1848 (2016).
Here, neither the majority opinion nor NantKwest’s
arguments give me any reason to doubt what I see as the
plain-text result in this case. Id.A
Initially, I note that the PTO did not retain outside
counsel to assist in defending this § 145 action. Instead,
it used its salaried government lawyers. These lawyers
incurred expenses because the time they devoted to this
case was not available for other work. See Wis. v. Hotline
Indus., Inc., 236 F.3d 363, 365 (7th Cir. 2000) (“[S]alaried
government lawyers, like in-house and non-profit counsel,
do incur expenses if the time and resources they devote to
one case are not available for other work.”). Additionally,
the PTO is not seeking reimbursement for its lawyers’
time at market rate. Rather, the PTO seeks personnel
expenses it actually incurred in these proceedings. Com-
pare J.A. 83–84 (the PTO’s request for the actual expens-
es it incurred in this § 145 action by calculating a
proportional share of its attorneys’ salaries (citing Hotline
Indus., 236 F.3d at 368)), with, e.g., Raney v. Fed. Bureau
of Prisons, 222 F.3d 927, 933 (Fed. Cir. 2000) (“[A] non-
profit legal services organization is entitled to receive a
prevailing market rate pursuant to a statute that author-
izes the prevailing party to be awarded ‘a reasonable
4 NANTKWEST, INC. v. IANCU
attorney[s’] fee as part of the cost.’” (citing Blum v. Sten-
son, 465 U.S. 886, 894–96 (1984)).
Thus, the question in this case is whether “[a]ll the
expenses of the proceedings” includes the personnel
expenses the PTO actually incurred for attorneys in
defending these § 145 proceedings. I conclude that it
does.
B
To determine whether the phrase “[a]ll the expenses”
includes the PTO’s personnel expenses, I first look to the
meaning of “expenses.” Although the statute does not
expressly define that term, the Patent Act of 1836 did use
the term “expenses” in a provision discussing application
fees. That provision, which was retained when Congress
added the expense-reimbursement language in 1839, read
in relevant part:
[T]he applicant shall pay into the Treasury of the
United States, or into the Patent Office, or into
any of the deposite banks to the credit of the
Treasury . . . the sum of thirty dollars . . . . And
the moneys received into the Treasury under this
act shall constitute a fund for the payment of the
salaries of the officers and clerks herein provided
for, and all other expenses of the Patent Office, and
to be called the patent fund.
Patent Act of 1836, ch. 357, § 9, 5 Stat. 117, 121 (empha-
sis added). Congress understood “salaries of the officers
and clerks” as one kind of “expense.” To be sure, there is
a difference between “expenses of the Patent Office” and
“expenses of the proceedings,” but the point is that Con-
gress, at the time it enacted the precursor to § 145, un-
derstood salaries to be within the scope of “expenses.”
When a term goes undefined in a statute, we give the
term its ordinary meaning. Taniguchi v. Kan Pac. Sai-
pan, Ltd., 566 U.S. 560, 566 (2012). The ordinary mean-
NANTKWEST, INC. v. IANCU 5
ing of “expenses” encompasses expenditures for personnel.
Dictionaries in use when Congress enacted § 145’s precur-
sor generally defined “expenses” as an expenditure of
money, time, labor, or resources. For example, in 1830
“expense” was defined as “1. [a] laying out or expending;
the disbursing of money, or the employment and consump-
tion, as of time or labor.” Noah Webster, An American
Dictionary of the English Language 319 (3d ed. 1830)
(emphasis added). The majority points to other 1830s
dictionary definitions, which defined “expense” as “cost;
charges; money expended,” J.E. Worcester, A Comprehen-
sive Pronouncing and Explanatory Dictionary of the
English Language, with Pronouncing Vocabularies of
Classical and Scripture Proper Names 117 (1830), and as
“the disbursing of money,” “2. Money expended,” “cost,”
and “3. That which is used, employed, laid out or con-
sumed,” Noah Webster, An American Dictionary of the
English Language 319 (3d ed. 1830). Based on these
definitions, I agree with the government that the ordinary
or common meaning of “expenses” includes personnel
expenditures. It also includes out-of-pocket attorneys’
fees.
Although the PTO did not retain outside counsel in
this case, the statute’s history suggests that Congress
intended “expenses” to also include attorneys’ fees for the
PTO’s retained outside counsel. At the time the expense-
reimbursement provision appeared, proceedings in equity
seem to have been quite rare. And when they occurred, it
seems that the PTO incurred the expense of employing
outside counsel. This conclusion is drawn from the Report
of the Commissioner of Patents for the Year 1845, in
which the Commissioner explained that “[t]wo suits in
equity are now pending against the Commissioner in the
circuit court for the district of Pennsylvania, in which, as
it has not been necessary for me to attend, I have em-
ployed counsel.” REPORT OF THE COMMISSIONER OF
6 NANTKWEST, INC. v. IANCU
PATENTS FOR THE YEAR 1845, H. Doc. No. 29-140, at
8 (1st Sess. 1846).
The plain and ordinary meaning that the Supreme
Court has ascribed to the word “expenses” comports with
my reading of the dictionary definitions cited above. For
example, the Court has recognized that “expenses” (as
compared to taxable costs) contemplates the full range of
expenditures a party must make in litigation (including
attorneys). Taniguchi, 566 U.S. at 573 (“Taxable costs are
a fraction of the nontaxable expenses borne by litigants
for attorneys, experts, consultants, and investigators.”).
In other words, the Supreme Court has told us that the
plain and ordinary meaning of the word “expenses” in the
litigation context includes those incurred for attorneys.
Although NantKwest and the majority do not deny
that “expenses” is broad enough to cover the PTO’s per-
sonnel expenses, they contend that the term “is merely
capable of implicitly covering attorneys’ fees” and “is at
best ambiguous as to attorneys’ fees.” Majority Op. 17.
As support, NantKwest and the majority rely on other
federal statutes under various titles where Congress has
employed the term “expenses” to authorize attorneys’ fees
either in addition to expenses (e.g., “expenses and attor-
neys’ fees”), or as a component of them (e.g., “expenses
including attorneys’ fees”). 1 The majority contends that
1 When the Supreme Court examines the “record of
statutory usage” it focuses on contemporaneous statutes.
See W. Va. Univ. Hosps., Inc. v. Casey, 499 U.S. 83, 88
(1991) (reviewing statutes enacted the same year as the
statute at issue, and in one case a statute enacted “just
over a week prior”); see also id. at 88–89 & n.4 (reviewing
statutes enacted within a few years of the statute at
issue). The majority acknowledges that its cited statutes
were not enacted contemporaneously with Congress’s
NANTKWEST, INC. v. IANCU 7
“[t]hese statutes demonstrate Congress’s understanding
that the ordinary meaning of ‘expenses’ does not include
attorneys’ fees.” Majority Op. 18.
Certainly, “a definition [being] broad enough to en-
compass one sense of a word does not establish that the
word is ordinarily understood in that sense.” Taniguchi,
566 U.S. at 568. But even if I were to agree with
NantKwest and the majority’s characterization of what
“expenses” ordinarily means, here the statutory context in
which “expenses” appears indicates that it includes per-
sonnel expenditures for attorneys. See id. at 569 (observ-
ing that the context in which a word appears may over-
override the word’s ordinary meaning). As noted, the
word “expenses” showed up one other time in the Patent
Act of 1836—where the Act expressly characterized the
salaries of PTO officers and clerks as “expenses.” Patent
Act of 1836, ch. 357, § 9, 5 Stat. 117, 121.
The majority addresses the statutory context by point-
ing to 35 U.S.C. § 285, which provides that “[t]he court in
exceptional cases may award reasonable attorney fees to
the prevailing party.” The majority suggests that because
this provision of the Patent Act specifically mentions
attorneys’ fees, Congress must have intended to exclude
them from “expenses” in § 145. Majority Op. 22–24. I
disagree.
enactment of § 145’s precursor, so it points to an 1867
statute that distinguishes between an individual attor-
ney’s fees and his or her expenses. Majority Op. 19 n.4.
This distinction hardly suggests that “[a]ll the expenses of
the proceedings” does not include the PTO’s personnel
expenses. Regardless, my point is that because statutory
interpretation depends very much on context, I would not
assign the same probative value to unrelated, later-
enacted statutes as does the majority.
8 NANTKWEST, INC. v. IANCU
First, Congress intended a broader compensation
scheme under § 145 than under § 285. Compare § 145
(“[a]ll the expenses of the proceedings”), with § 285 (“rea-
sonable attorneys’ fees”). For example, NantKwest does
not contest that the language of § 145 includes the PTO’s
expert witness expenses. In § 285, Congress chose not to
award all the expenses to the prevailing party, but only
attorneys’ fees. Congress can certainly employ a broad
word over other narrower alternatives if it so chooses.
Second, as salaried employees, the PTO’s attorneys do
not bill individual hours for their work, nor do they collect
fees from those whom they represent. In this context, the
overhead associated with the PTO’s attorneys’ work is
more aptly characterized as an “expense” to the PTO than
a “fee.” Compare Expense, Black’s Law Dictionary (10th
ed. 2014) (defining “expense” as “expenditure[s] of money,
time, labor, or resources to accomplish a result”), with
Attorney’s fee, Black’s Law Dictionary (10th ed. 2014)
(defining “attorney’s fee” as “[t]he charge to a client for
services performed for the client, such as an hourly fee, a
flat fee, or a contingent fee”). I would not require Con-
gress to mimic § 285 and use the phrase “attorneys’ fees”
when, in this context, “expenses” is the more apt term.
Third, the § 145 and § 285 provisions are implicated
in different settings. Section 285 arises in traditional
patent litigation, and authorizes a district court to award
attorneys’ fees to the prevailing party. See Octane Fit-
ness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749,
1752 (2014). In contrast, § 145 proceedings are, “in fact
and necessarily, a part of the application for the patent.”
Gandy v. Marble, 122 U.S. 432, 439 (1887). The “[a]ll the
expenses” contemplated by § 145 are a direct counterpart
to the application fees that are designed to reimburse the
PTO’s examination expenses—application fees that, like
the “[a]ll the expenses” of § 145, the applicant must pay
regardless of whether it receives a patent. Congress’s use
of different phrases therefore makes sense in these differ-
NANTKWEST, INC. v. IANCU 9
ent settings. And Congress’s choice to depart from the
model of a related statute is a choice we may not disre-
gard. 2 SAS Inst., 138 S. Ct. at 1355.
But I need not rely on the word “expenses” alone.
Congress did not simply provide for “expenses of the
proceedings” in § 145—it clarified that it was requiring
the applicant to pay “[a]ll the expenses of the proceed-
ings.”
The majority maintains that “the word ‘all’ sheds no
light on the breadth of ‘expenses,’” and reasons that “all”
“serves only to clarify that, whatever the ‘expenses’ are,
all of them must be paid by the applicant.” Majority Op.
30. I disagree. Such an interpretation leaves little work
for “all” to do; simply saying “the expenses” would seem to
do just as well. While this latter, more limited phrasing
2 The majority proposes that Congress should have
amended § 145 to include the “attorneys’ fees” language
when it amended the Patent Act in 1946 to permit the
“award [of] reasonable attorney’s fees to the prevailing
party” in infringement actions (i.e., the precursor to
§ 285). Majority Op. 24 n.7 (quoting Patent Act of 1946,
ch. 726, 60 Stat. 778, 778 (emphasis added)). In other
words, the majority would require Congress to review and
amend § 145, its already-clear expense-reimbursement
statute, so as to make it extra clear. This just can’t be
right. Especially not when, as I have detailed, the stat-
utes are implicated in different settings and intentionally
provide for compensation schemes of varying breadth.
The majority seems to infer that because Congress added
other statutory provisions (which arise in different cir-
cumstances), that it necessarily intended to not provide
for the PTO’s personnel expenses in those provisions it did
not amend. This inference is far too attenuated to have
any persuasive force.
10 NANTKWEST, INC. v. IANCU
would still not explicate the breadth of “expenses,” neither
would it, by itself, provide a basis for excluding anything
properly regarded as an “expense.” In my view, Congress
used the word “all” to broadly and comprehensively cap-
ture anything fairly regarded as an “expense,” resolving
any lingering doubt in favor of inclusion. The majority
acknowledges that the term “expenses” is capable of
including attorneys’ fees and cites to several statutes that
list attorneys’ fees as part of expenses. Majority Op. 20–
21 (citing ten such statutes). In § 145, Congress’s use of
the word “all” indicated its desire to broadly and compre-
hensively include all of the expenses as it commonly
understood them, which includes the personnel expenses
the PTO incurs in defending § 145 actions.
C
Both the legislative history and the purpose of § 145
support my reading of the statutory text and context.
The majority questions the relevance of legislative
history in interpreting fee statutes. Majority Op. 30–31.
I note, however, that the Supreme Court has examined
legislative history in cases implicating fee-shifting and
the American Rule. E.g., Ruckelshaus v. Sierra Club, 463
U.S. 680, 686–91 (1983); Summit Valley Indus., Inc. v.
Local 112, United Bhd. of Carpenters & Joiners of Am.,
456 U.S. 717, 723–24 (1982).
Consideration of the history of § 145 suggests that
Congress intended “expenses” to capture broadly, not
narrowly. As the parties have noted, the “expenses”
provision arose (in slightly different form) in the 1839
Amendments to the Patent Act, which provided that an
applicant bringing a proceeding in equity to contest an
adverse decision of the Patent Office would be required to
pay “the whole of the expenses of the proceeding . . .
whether the final decision shall be in his favor or other-
wise.” Patent Act of 1839, ch. 88, § 10, 5 Stat. 353, 354.
NANTKWEST, INC. v. IANCU 11
When Congress revised the Patent Act in 1870, it
used expense-reimbursement language very similar to the
language used in the previously enacted 1839 statute.
Initial versions of the House bill sought to limit the reim-
bursement provision by using the word “costs” instead of
“expenses” and by limiting any reimbursement to $25.
But these changes were rejected and the word “expenses”
was retained. The version of the bill reported in the
House and referred to the Senate read, in relevant part:
SEC. 52. And be it further enacted, That when the
Commissioner of Patents is the only defendant in
any such suit, all costs shall be paid by the com-
plainant, and whole amount of costs taxed against
the complainant shall not exceed the sum of twen-
ty-five dollars . . . .
H.R. 1714, 41st Cong. § 52 (as referred to the S. Commit-
tee on Patents, Apr. 25, 1870) (emphasis added). The
Senate made significant amendments to the bill, includ-
ing changing Section 52 to use “expenses” rather than
“costs” and by removing the $25 cap. The version passed
by the Senate read, in relevant part:
SEC. 52. And be it further enacted, That whenev-
er a patent on application is refused, for any rea-
son whatever, either by the Commissioner or by
the supreme court of the District of Columbia up-
on appeal from the Commissioner, the applicant
may have remedy by bill in equity; . . . . And in all
cases where there is no opposing party a copy of
the bill shall be served on the Commissioner, and
all the expenses of the proceeding shall be paid by
the applicant, whether the final decision is in his
favor or not.
H.R. 1714, 41st Cong. § 52 (as amended by the Senate,
May 31, 1870) (emphasis added). The House disagreed
with the Senate amendments and asked for a conference.
Ultimately, the House members dropped their objections
12 NANTKWEST, INC. v. IANCU
to the Senate amendments to § 52, and the enacted ver-
sion reflected the Senate’s version using the word “ex-
penses.” This demonstrates—or at least strongly
suggests—that Congress specifically intended that “ex-
penses” be broader than “costs.”
The statute’s purpose also confirms that Congress in-
tended all of the expenses associated with § 145 proceed-
ings to be borne by the applicants who elect them—not by
taxpayers or other PTO users whose fees fund the agen-
cy’s operations. Section 145 proceedings are an optional
extension of the application process. See Gandy, 122 U.S.
at 439–40 (referring to § 145’s precursor as “in fact and
necessarily, a part of the application for the patent” and
“clearly a branch of the application for the patent”). And
litigation in district court is expensive and time-
consuming, much more so than the direct appeals limited
to the administrative record also available to disappointed
applicants. Proceedings under § 145 force the PTO and
its employees to dedicate time and effort to conducting
discovery, interviewing witnesses, filing and responding
to motions, and addressing new evidence. PTO’s En Banc
Br. 22.
Indeed, even in 1838, Congress was aware that pro-
ceedings in equity were adding to the Patent Office’s
expenses—including labor expenses. H.R. Rep. No. 25-
797, at 3 (1838) (discussing the 1839 Act). A letter from
the Commissioner of Patents annexed to the House Re-
port stated:
The judicial decisions on interfering applications,
subsequent to the examination, on application,
will, both in number and importance, exceed all
the patent cases before the United States courts.
On the first of January three cases were pending
a hearing, valued at upwards of $100,000 each.
The evidence is voluminous, and the arguments
often lengthy. The subject of appeals is beginning
NANTKWEST, INC. v. IANCU 13
to add considerably to the labor of the office, and
the litigated cases demand many long copies.
Id. (emphasis added).
An applicant’s choice to proceed under § 145 diverts
the agency’s resources from the PTO’s principal mission of
examining patent and trademark applications at the
agency. The purpose of § 145’s expense-reimbursement
provision is to ensure that these expenses fall on the
applicants who elect the more expensive district court
proceedings over the standard appeal route.
III
The majority concludes that the text of § 145 fails to
provide the necessary congressional directive to overcome
the American Rule’s bar against shifting attorneys’ fees.
Under the American Rule, “the prevailing litigant is
ordinarily not entitled to collect a reasonable attorneys’
fee from the loser.” Alyeska Pipeline Serv. Co. v. Wilder-
ness Soc’y, 421 U.S. 240, 247 (1975). Courts uniformly
recognize an exception to this general proposition, howev-
er: when the statute itself “specific[ally]” and “explic-
it[ly]” authorizes an award of fees, the prevailing party
may be entitled to collect its fees. Alyeska, 421 U.S. at
260.
I note that the Fourth Circuit reviewed 15 U.S.C.
§ 1071(b)(3), which contains language nearly identical to
the relevant language in § 145, and concluded that the
statute is “not a fee-shifting statute that operates against
the backdrop of the American Rule” because it “mandates
the payment of attorneys[’] fees without regard to a
party’s success.” Shammas, 784 F.3d at 223. While I
assume that the American Rule applies here, I share the
Fourth Circuit’s doubt that the Rule applies in this con-
text—i.e., where Congress has simply assigned payment
responsibility to the applicant, consistent with the various
14 NANTKWEST, INC. v. IANCU
other application-related fees Congress has assigned to
the applicant.
But even assuming the American Rule applies here, I
still disagree with the majority’s analysis. For example,
the majority attempts to create ambiguity by focusing on
the word “expenses” in a vacuum. But, as I’ve discussed,
Congress did not simply provide that under § 145 an
applicant pays “expenses.” Nor did it say “may pay” or
something that could be less than “all.” Congress said
that the applicant “shall” pay “[a]ll the expenses of the
proceedings.”
It is also well established that “[t]he absence of specif-
ic reference to attorney[s’] fees is not dispositive if the
statute otherwise evinces an intent to provide for such
fees.” Key Tronic Corp. v. United States, 511 U.S. 809,
815 (1994). Although the majority gives lip service to this
principle, as a practical matter, it still seems to require a
statute’s use of the magic words “attorneys’ fees” to meet
the American Rule’s heightened demands. 3 For example,
the majority spends pages contrasting § 145 unfavorably
with other statutes that explicitly mention attorneys’ fees.
3 When asked during oral argument to propose oth-
er language that Congress could have employed to over-
come the American Rule, NantKwest offered “including,
without limitation, the time spent by lawyers working on
the particular matter from the Solicitor’s office . . . and
outside counsel” or “persons providing lawyer services
who are hired internally or externally by the Patent
Office” as the only alternatives. Oral Argument No. 2016-
1794 (Mar. 8, 2018) 40:45–41:23, 43:57–44:05,
http://www.cafc.uscourts.gov/oral-argument-recordings. I
do not believe the American Rule requires such labored
descriptions, when “[a]ll the expenses of the proceedings”
suffices in this context.
NANTKWEST, INC. v. IANCU 15
Majority Op. 18–24. It further cites a Congressional
Research Service Report compiling the text of other fee-
shifting statutes. The majority notes that each of these
statutes recites either the magic words “attorneys’ fees,”
or the (slightly) less magical “fees,” “fees for attorneys,”
“compensation . . . for attorney[s],” “fees of counsel,” and
the like. Majority Op. 29 n.8.
But again, the absence of “attorneys’ fees” is not dis-
positive. In making clear that “[t]he absence of specific
reference to attorney[s’] fees is not dispositive if the
statute otherwise evinces an intent to provide for such
fees,” the Supreme Court pointed to an Eighth Circuit
decision, stating that “[t]he Eighth Circuit, for example,
found ‘a sufficient degree of explicitness’ in [the Act’s]
references to ‘necessary costs of response’ and ‘enforce-
ment activities’ to warrant the award of attorney[s’] fees
and expenses.” Key Tronic, 511 U.S. at 815. The Court
then contrasted these sufficiently explicit phrases with
“[m]ere ‘generalized commands,’ . . . [which would] not
suffice to authorize such fees.” Id. Surely, “[a]ll the
expenses of the proceedings” is just as, if not more, explic-
it than “necessary costs of response” or “enforcement
activities” in reference to personnel expenses.
In sum, contrary to the majority’s views, the language
of § 145 evinces Congress’s “specific and explicit” intent to
depart from the American Rule and to impose upon the
applicant payment of all the expenses of the proceedings,
including the PTO’s personnel expenses.
IV
The majority also references certain policy justifica-
tions for its interpretation of § 145. First, the majority
cites the access-to-justice concern underlying the Ameri-
can Rule. Majority Op. 6. I am unconvinced that these
disappointed applicants’ access to justice is lacking.
Applicants have the option to forgo § 145 actions alto-
gether and pursue appeals before this court under § 141—
16 NANTKWEST, INC. v. IANCU
a choice the overwhelming majority of applicants make.
See Hyatt, 625 F.3d at 1337 (observing that “the vast
majority of applicants pursue an on-the-record appeal
[under § 141] instead of a § 145 action”). These disap-
pointed applicants only reach the point of electing a § 145
action after an extended application examination process
before the PTO. A patent examiner first determines
whether the application satisfies the statutory prerequi-
sites for granting a patent. Kappos, 566 U.S. at 434
(citing 35 U.S.C. § 131). If the examiner denies the appli-
cation, the applicant may then file an administrative
appeal with the PTO’s Patent Trial and Appeal Board.
See id. If the Board also denies the application, only then
is the disappointed applicant faced with electing between
an appeal under § 141 or a § 145 action. Id.
Second, and relatedly, the majority expresses special
solicitude for “small businesses and individual inventors,”
Majority Op. 6–7, presumably because they may be less
able to afford the PTO’s personnel expenses. This possi-
bility is entirely speculative. And, even if it were always
the case, it is of no moment. “Our unwillingness to soften
the import of Congress’[s] chosen words even if we believe
the words lead to a harsh outcome is longstanding.”
Baker Botts L.L.P. v. ASARCO LLC, 135 S. Ct. 2158, 2169
(2015) (quoting Lamie v. United States Tr., 540 U.S. 526,
538 (2004)).
While I do not deny that the PTO’s personnel expens-
es may, in some cases, amount to substantial sums, it is
important to view these amounts against those expenses
that applicants must undisputedly pay if they elect a
§ 145 action. For example, the parties do not dispute that
“[a]ll the expenses of the proceedings” includes the PTO’s
expert witness expenses. In Booking.com B.V. v. Matal,
aside from the $51,472.53 in personnel expenses, the
applicant was required to pay $21,750 in expert witness
expenses. No. 1:16-CV-425, 2017 WL 4853755, at *4 n.3
(E.D. Va. Oct. 26, 2017). In Realvirt, LLC v. Lee, the
NANTKWEST, INC. v. IANCU 17
expert witness expenses amounted to more than the
$48,454.62 in PTO personnel expenses, costing the appli-
cant $50,160. 220 F. Supp. 3d 695, 704 (E.D. Va. 2016).
Finally, in Taylor v. Lee, the court made it clear that the
PTO’s motion for the $40,000 bond cited by the majority
should be granted, even if the PTO’s $45,000 in personnel
expenses were not included because the other anticipated
expenses, including expert witness expenses, were rea-
sonably expected to exceed $40,000. No. 1:15-CV-1607,
2016 WL 9308420, at *2 n.1 (E.D. Va. July 12, 2016).
Further, unless the applicant is proceeding pro se, it
is of course quite likely that its own attorneys’ fees would
vastly exceed the PTO’s personnel expenses. 4 Indeed, I
wonder who the majority seeks to protect: the hypothet-
ical applicant who would pay its own attorneys and the
PTO’s expert witness expenses, yet balk at the PTO’s
personnel expenses.
And while it may be true that the PTO’s personnel
expenses in some cases might amount to a significant sum
for applicants who choose to proceed down the optional
§ 145 route, those expenses have to be paid by someone.
As the PTO observes, at Congress’s direction, the PTO
now must operate entirely as a user-funded agency.
PTO’s En Banc Br. 23. All applicants pay a number of
fees throughout the patent-examination process to cover
the PTO’s expenses of operation. Id. at 24. Thus, in
asking this court to exclude personnel expenses from “[a]ll
the expenses of the proceedings,” NantKwest asks this
4 For example, in this case, the PTO’s calculations
indicated that its attorneys earned only $78.55 per hour,
yet the district court has authorized a range of rates for
private attorneys between $300 and $600 per hour.
J.A. 84 & n.7 (citing Tech Sys., Inc. v. Pyles, No. 1:12-CV-
374, 2013 WL 4033650, at *7 (E.D. Va. Aug. 6, 2013)).
18 NANTKWEST, INC. v. IANCU
court to require other PTO applicants to pay the PTO’s
personnel expenses incurred in response to its § 145
complaint, rather than NantKwest itself. This contra-
venes Congress’s intent. The statutory language is clear:
it is the applicant that voluntarily chooses a § 145 action,
and not other PTO users, who must pay “[a]ll the expens-
es of the proceedings.” Thus, the question of the equitable
allocation of burdens is one that Congress has already
addressed in the language of the statute. It is not this
court’s job to allocate those burdens differently based on
our own policy preferences.
Finally, much is made of the fact that the PTO re-
frained from seeking reimbursement for its personnel
expenses until recently, despite the provision’s 170-year
existence. Notably, however, while the PTO has histori-
cally refrained from seeking reimbursement of these
expenses, it has never affirmatively disclaimed that
authority. Given how dramatically the patent and litiga-
tion landscapes have changed since the provision was first
enacted, it is hardly surprising that the PTO would have
felt compelled in recent years to change its strategy. The
PTO’s past decisions to not seek reimbursement for its
personnel expenses may be related to the fact that it is so
rarely confronted by these cases. The PTO now points,
however, to how § 145 proceedings have become more
common and more expensive. PTO’s En Banc Br. 30.
Accordingly, the PTO has become increasingly reluctant
to require other PTO users to subsidize the expenses of
these optional proceedings, in light of Congress’s mandate
that the PTO fund itself exclusively through fees.
Even within the more rigorous administrative rule-
making environment, “[a]gencies are free to change their
existing policies as long as they provide a reasoned expla-
nation for the change.” Encino Motorcars, LLC v. Navar-
ro, 136 S. Ct. 2117, 2125 (2016). Further, even where
longstanding policies may have engendered reliance
interests, an agency may still change its position as long
NANTKWEST, INC. v. IANCU 19
as it shows that there are good reasons for the new policy.
Id. at 2126. The PTO has done so here.
* * *
Because Congress meant all the expenses of the pro-
ceedings when it said “[a]ll the expenses of the proceed-
ings,” I respectfully dissent.