Laura Peter,

Deputy Direction, Patent and Trademark Office

v.
NantKwest, Inc.

Whether the phrase “[a]ll the expenses of the proceedings” in 35

U.S.C. 145 encompasses the personal expenses the United States Patent
and Trademark Office incurs when its employees, including attorneys,
defend the agency in Section 145 litigation.
 When the United States Patent and Trademark Office (USPTO) denies
a patent application, the Patent Act gives the unsuccessful applicant
two avenues for seeking judicial review of the agency’s decision. The
applicant may appeal directly to the Federal Circuit, 35 U.S.C. 141,
which “shall review the decisions from which an appeal is taken on the
record before the [USPTO],” 35 U.S.C. 144. Alternatively, the
applicant may bring a civil action against the Director of the USPTO
in district court, where the applicant may present additional
evidence. 35 U.S.C. 145. If the applicant elects to bring such an
action, “[a]ll the expenses of the proceedings shall be paid by the
applicant.” Ibid.
The Patent Act thus provides two mutually exclusive methods for
challenging an adverse decision by the USPTO. As relevant here, a
dissatisfied applicant may file a new civil action against the USPTO
Direction in the United States District Court for the Eastern District
of Virginia, sec. 145. Under this proceeding, the application must pay
“[a]ll the expenses of the proceedings.” Ibid.
Respondent NantKwest, Inc. filed a sec. 145 civil action after
its patent application was denied. The District Court granted summary
judgment to the USPTO, and the Federal Circuit affirmed. The USPTO
moved for reimbursement of expenses, including the pro rata salaries
of USPTO attorneys and a paralegal who worked on the case. The
District Court denied the motion, concluding 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.
A plain-text reading of sec. 145 establishes that “[a]ll
expenses” does include attorney’s fees. This is coherent with the
Court’s precedent. The Court established that the “American Rule”
provides 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. This is our
starting point for determining whether sec. 145 authorizes payment of
the USPTO’s legal fees.
Contrary to the government’s argument, the 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. However, sec. 145’s plain text overcomes the American Rule’s
presumption against fee shifting. Definitions of “expenses” are
capacious enough to include attorney’s fees, and the full term
“expenses of the proceedings” would reasonably be interpreted to mean
primarily attorney’s fees. Finally, the modifier “all” reinforces
“expenses” to include precisely all outlays resulting from the
proceedings
 “[I]t is not at all unusual for a government to pay an
unsuccessful adversary’s counsel fees.” Ruckelshaus v. Sierra Club,
463 U.S. 680 (Stevens, J., dissenting). Although in Ruckelshaus, the
case was in converse to the facts here, the principle remains that
same. The bulk of expenses of proceedings derive from the attorney’s
fees. To construe that the term “[a]ll the expenses of the
proceedings” does not include attorney’s fees is simply a
nullification of Congressional intent.
The judgement of the Federal Circuit is reverse, and the case is
remanded to the District Court.