__ U.S. __, 18-801, Peter v. Nantkwest, Inc.

Docket Nº:18-801
Citation:__ U.S. __, 140 S.Ct. 365
Opinion Judge:SOTOMAYOR, Justice.
Party Name:Laura PETER, Deputy Director, Patent and Trademark Office, Petitioner v. NANTKWEST, INC.
Attorney:Malcolm L. Stewart for the petitioner Morgan Chu, Los Angeles, CA, for the respondent. Sarah Harris, General Counsel, Thomas W. Krause, Solicitor, William LaMarca, Thomas L. Casagrande, Mai-Trang Dang, Associate Solicitors, United States Patent and, Trademark Office, Alexandria, VA, Noel J. Franc...
Case Date:December 11, 2019
Court:United States Supreme Court
 
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Page __

__ U.S. __

140 S.Ct. 365

Laura PETER, Deputy Director, Patent and Trademark Office, Petitioner

v.

NANTKWEST, INC.

No. 18-801

United States Supreme Court

December 11, 2019

Argued October 7, 2019

Syllabus

[*]

The Patent Act provides two mutually exclusive methods for challenging an adverse [140 S.Ct. 368] decision by the Patent and Trademark Office (PTO). A dissatisfied applicant may appeal directly to the Federal Circuit, 35 U.S.C. § 141, or, as relevant here, may file a new civil action against the PTO Director in the United States District Court for the Eastern District of Virginia, § 145. Under this second proceeding, the applicant must pay "[a]ll the expenses of the proceedings." Ibid.

Respondent NantKwest, Inc., filed a § 145 civil action after its patent application was denied. The District Court granted summary judgment to the PTO, and the Federal Circuit affirmed. The PTO moved for reimbursement of expenses, including the pro rata salaries of PTO attorneys and a paralegal who worked on the case. The District Court denied the motion, concluding that the statutory language referencing expenses was not sufficient to rebut the "American Rule" presumption that parties are responsible for their own attorney’s fees. The en banc Federal Circuit affirmed.

Held : The PTO cannot recover the salaries of its legal personnel under § 145. Pp. 370 - 374.

(a) The "American Rule"— the bedrock principle that "[e]ach litigant pays his own attorney’s fees, win or lose, unless a statute or contract provides otherwise," Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 253, 130 S.Ct. 2149, 176 L.Ed.2d 998— provides the starting point for assessing whether § 145 authorizes payment of the PTO’s legal fees. Contrary to the Government’s view, this Court has never suggested that any statute is exempt from the presumption against fee shifting or limited its American Rule inquiries to prevailing party statutes. Rather, it has developed a line of precedents addressing statutory deviations from the American Rule that do not limit attorney’s fees awards to prevailing parties. See, e.g., id., at 254, 130 S.Ct. 2149. The presumption against fee shifting is particularly important here because reading § 145 to permit an unsuccessful government agency to recover attorney’s fees from a prevailing party "would be a radical departure from longstanding fee-shifting principles adhered to in a wide range of contexts." Ruckelshaus v. Sierra Club, 463 U.S. 680, 683, 103 S.Ct. 3274, 77 L.Ed.2d 938. Pp. 370 - 372.

(b) Section 145’s plain text does not overcome the American Rule’s presumption against fee shifting. Definitions of "expenses," while capacious enough to include attorney’s fees, provide scant guidance. The mere failure to foreclose a fee award "neither specifically nor explicitly authorizes courts to shift [fees]." Baker Botts L. L. P. v. ASARCO LLC, 576 U.S. 121, __, 135 S.Ct. 2158, 2165, 192 L.Ed.2d 208. The complete phrase "expenses of the proceeding" would not have been commonly understood to include attorney’s fees at the time § 145 was enacted. Finally, the modifier "all" does not transform "expenses" to reach an outlay it would not otherwise include.

In common statutory usage, the term "expenses" alone has never been considered to authorize an award of attorney’s fees with sufficient clarity to overcome the American Rule presumption. The appearance of "expenses" and "attorney’s fees" together across various statutes indicates that Congress understands the terms to be distinct and not inclusive of each other. See, e.g., 11 U.S.C. § 363(n). Other statutes that refer to attorney’s fees as a subset of expenses show only that "expenses" can include attorney’s fees when so defined. See, e.g., 28 U.S.C. § 361. Nor do this Court’s cases further the Government’s position that the Court has used "expenses" to mean "attorney’s fees." See, e.g., [140 S.Ct. 369] Taniguchi v. Kan. Pacific Saipan, Ltd., 566 U.S. 560, 573, 132 S.Ct. 1997, 182 L.Ed.2d 903.

The Patent Act’s history reinforces that Congress did not intend to shift attorney’s fees in § 145 actions. There is no evidence that the original Patent Office ever paid its personnel from sums collected from adverse parties. Neither has the PTO, until this litigation, sought its attorney’s fees under § 145. When Congress intended to provide for attorney’s fees in the Patent Act, it has stated so explicitly. See, e.g., 35 U.S.C. § 285. Pp. 372 - 374.

898 F.3d 1177, affirmed.

[140 S.Ct. 367] Malcolm L. Stewart for the petitioner

Morgan Chu, Los Angeles, CA, for the respondent.

Sarah Harris, General Counsel, Thomas W. Krause, Solicitor, William LaMarca, Thomas L. Casagrande, Mai-Trang Dang, Associate Solicitors, United States Patent and, Trademark Office, Alexandria, VA, Noel J. Francisco, Solicitor General, Joseph H. Hunt, Assistant Attorney, General, Malcolm L. Stewart, Deputy Solicitor General, Matthew Guarnieri, Assistant to the Solicitor, General, Mark R. Freeman, Charles W. Scarborough, Jaynie Lilley, Attorneys, Department of Justice, Washington, DC, for the Petitioner.

Morgan Chu, Gary N. Frischling, Alan J. Heinrich, Lauren N. Drake, Michael D. Harbour, John P. Long, Irell & Manella LLP, Los Angeles, CA, for Respondent NantKwest, Inc.

OPINION

SOTOMAYOR, Justice.

Section 145 of the Patent Act affords applicants "dissatisfied with the decision of the Patent Trial and Appeal Board" an opportunity to file a civil action in the United States District Court for the Eastern District of Virginia. 35 U.S.C. § 145. The statute specifies that "[a]ll the expenses of the proceedings shall be paid by the applicant." Ibid. The question presented in this case is whether such "expenses" include the salaries of attorney and paralegal employees of the United States Patent and Trademark Office (PTO). We hold that they do not.

I

A

The Patent Act creates two mutually exclusive pathways to challenge an adverse decision by the PTO. The first permits judicial review by direct appeal to the United States Court of Appeals for the Federal Circuit. § 141. There is "no opportunity for the...

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