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SUPREME COURT OF THE UNITED STATES
_________________
No. 18–801
_________________
LAURA PETER, DEPUTY DIRECTOR, PATENT AND
TRADEMARK OFFICE, PETITIONER
v. NANTKWEST, INC.
on writ of certiorari to the united states
court of appeals for the federal circuit
[December 11, 2019]
Justice Sotomayor delivered the opinion of the
Court.
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 applicant to offer new evidence” in a §141 proceeding, and
the Federal Circuit “must review the PTO’s decision on the same
administrative record that was before the [agency].”
Kappos
v.
Hyatt,
566 U.S.
431, 434 (2012); 35 U. S. C. §144.
The second pathway allows applicants to file a
new civil action against the Director of the PTO in federal
district court. §145. Unlike §141, §145 “permits the applicant to
present new evidence . . . not presented to the PTO.”
Kappos, 566 U. S
., at 435. The district court
“acts as a factfinder when new evidence is introduced in a §145
proceeding” and must make
de novo determinations that
take into account “both the new evidence and the administrative
record before the PTO.”
Id., at 444, 446. The parties may
appeal the district court’s final decision to the Federal Circuit.
28 U. S. C. §1295(a)(4)(C).
Because §145 does not limit an applicant’s
ability to introduce new evidence to challenge the denial of a
patent,
Kappos, 566 U. S., at 439, it can result in
protracted litigation. As a condition for permitting such extensive
review, the Patent Act requires applicants who avail themselves of
§145 to pay “[a]ll the expenses of the proceedings.” 35
U. S. C. §145.
B
After the PTO denied respondent NantKwest,
Inc.’s patent application directed to a method for treating cancer,
NantKwest filed a complaint against the PTO Director in the Eastern
District of Virginia under §145. The District Court granted summary
judgment to the PTO, and the Federal Circuit affirmed.
NantKwest, Inc. v.
Lee, 686 Fed. Appx. 864 (2017).
The PTO moved for reimbursement of expenses that included—for the
first time in the 170-year history of §145—the pro rata
salaries of PTO attorneys and a paralegal who worked on the
case.
The District Court denied the PTO’s motion to
recover its pro rata legal fees as “expenses” of the §145
proceeding. The court concluded that the statutory language
referencing expenses was not clear enough to rebut the “American
Rule”—the background principle that parties are responsible for
their own attorney’s fees.
NantKwest, Inc. v.
Lee,
162 F. Supp. 3d 540, 542 (ED Va. 2016). A divided Federal
Circuit panel reversed, with Judge Stoll dissenting.
NantKwest,
Inc. v.
Matal, 860 F.3d 1352 (2017). The majority
expressed “substantial doub[t ]” that §145 even implicated the
American Rule’s presumption against fee shifting in a case in which
the payment was not made to a prevailing party.
Id., at
1355. The majority concluded that, even assuming the American Rule
presumption applied, the term “expenses” in §145 “specific[ally]”
and “explicit[ly]” authorized an award of fees.
Id., at
1356.
The en banc Federal Circuit voted
sua sponte to rehear the case and reversed the panel
over a dissent.
NantKwest, Inc. v.
Iancu, 898 F.3d
1177, 1184 (2018). The majority opinion—now authored by Judge
Stoll—held that the American Rule presumption applied to §145
because it is “the starting point whenever a party seeks to shift
fees from one side to the other in adversarial litigation.”
Id., at 1184 (citing
Baker Botts L. L. P. v.
ASARCO LLC, 576 U.S. 121, ___ (2015)). After examining the
plain text and statutory history of §145, the judicial and
congressional understanding of similar language, and overarching
policy considerations, the majority concluded that “[a]warding
‘[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.” 898 F. 3d, at 1196 (quoting
Alyeska
Pipeline Service Co. v.
Wilderness Society,
421 U.S.
240, 260 (1975)). We granted certiorari, 586 U. S. ___
(2019), and now affirm.
II
This Court’s “ ‘basic point of reference’
when considering the award of attorney’s fees is the bedrock
principle known as the ‘ “American Rule” ’: Each 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, 252–253 (2010) (quoting
Ruckelshaus v.
Sierra
Club,
463 U.S.
680, 683 (1983)). The American Rule has “roots in our common
law reaching back to at least the 18th century.”
Baker
Botts, 576 U. S., at ___ (slip op., at 3) (citing
Arcambel v.
Wiseman, 3 Dall. 306 (1796)); see also
Summit Valley Industries, Inc. v.
Carpenters,
456 U.S.
717, 721 (1982) (observing that the American Rule “has been
consistently followed for almost 200 years”);
Alyeska
Pipeline, 421 U. S., at 257 (referring to the presumption
against shifting attorney’s fees as a “general” rule).
The Government does not dispute this principle
or its pedigree, but argues instead that it does not apply at all.
Because the American Rule presumption is most often overcome when a
statute awards fees to a “prevailing party,” the Government
maintains, the presumption applies only to prevailing-party
statutes. And because §145 requires one party to pay all expenses
regardless of outcome, the argument goes, it is not a statute
subject to the presumption.
That view is incorrect. This Court has never
suggested that any statute is exempt from the presumption against
fee shifting. Nor has it limited its American Rule inquiries to
prevailing-party statutes. Indeed, the Court has developed a “line
of precedents” “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; see also
Baker Botts, 576 U. S., at ___–___ (slip op., at 5–7)
(analyzing a bankruptcy provision that did not mention prevailing
parties under the American Rule’s presumption against fee
shifting).
Sebelius v.
Cloer,
569 U.S.
369 (2013), confirms that the presumption against fee shifting
applies to all statutes—even those like §145 that do not explicitly
award attorney’s fees to “prevailing parties.” In
Cloer, the
Court interpreted a provision of the National Childhood Vaccine
Injury Act that permitted courts to “award attorney’s fees
. . . ‘incur- red [by a claimant] in any proceeding on’
an unsuccessful vaccine-injury ‘petition . . . brought in
good faith [with] a reasonable basis for the claim.’ ” 569
U. S.
, at 371 (quoting 42 U. S. C.
§300aa–15(e)(1)). The Court held that the provision’s clear
language authorized attorney’s fees, even though the statute
exclusively applied to unsuccessful litigants. 569 U. S., at
372.
Cloer establishes two points: First,
contrary to the Government’s suggestion, Congress has indeed
enacted fee-shifting statutes that apply to nonprevailing parties.
Second, and again contrary to the Government’s view, the American
Rule applies to such statutes. The Government itself argued in
Cloer that the presumption against fee shifting applied by
default, but maintained that the statute “depart[ed] so far from
background principles about who pays a litigant’s attorney’s fees
that it [could not] be justified without a clearer statement than
the Act can supply.’ ” Brief for Petitioner in
Sebelius
v.
Cloer, O. T. 2012, No. 12–236, p. 32. The Court
acknowledged the Government’s position but concluded that the
“rul[e ] of thumb” against fee shifting gave way because the
“words of [the] statute [were] unambiguous.”
Cloer, 569
U. S., at 380–381 (citing the Government’s brief ).
The dissenting en banc Federal Circuit Judges
also doubted that the American Rule could apply to a §145 action.
They characterized the proceeding as an intermediate step in
obtaining a patent and the payment of legal fees as a portion of
the application costs. 898 F. 3d, at 1200 (opinion of Prost,
J.). Yet §145 has all the marks of the kind of adversarial
litigation in which fee shifting, and the presumption against it,
is common; the statute authorizes filing a separate civil action
where new evidence can be introduced for
de novo review
by a district judge. Thus, the presumption against fee shifting not
only applies, but is particularly important because §145 permits an
unsuccessful government agency to recover its expenses from a
prevailing party. Reading §145 to award attorney’s fees in that
circumstance “would be a radical departure from longstanding
fee-shifting principles adhered to in a wide range of contexts.”
Ruckelshaus, 463 U. S., at 683.
The American Rule thus provides the starting
point for assessing whether §145 authorizes payment of the PTO’s
legal fees.
III
To determine whether Congress intended to
depart from the American Rule presumption, the Court first “look[s]
to the language of the section” at issue.
Hardt, 560
U. S., at 254 (internal quotation marks omitted). While “[t]he
absence of [a] specific reference to attorney’s fees is not
dispositive,”
Key Tronic Corp. v.
United States,
511 U.S.
809, 815 (1994), Congress must provide a sufficiently “specific
and explicit” indication of its intent to overcome the American
Rule’s presumption against fee shifting.
Alyeska Pipeline,
421 U. S., at 260.
A
The reference to “expenses” in §145 does not
invoke attorney’s fees with the kind of “clarity we have required
to deviate from the American Rule.”
Baker Botts, 576
U. S., at ___ (slip op., at 4).
Definitions of “expenses” provide scant
guidance. The term, standing alone, encompasses wide-ranging
“expenditure[s] of money, time, labor, or resources to accomplish a
result,” Black’s Law Dictionary 698 (10th ed. 2014), “charges or
costs met with in . . . doing one’s work,” Webster’s New
World College Dictionary 511 (5th ed. 2014), and “outlay[s]” for
labor, Merriam-Webster’s Dictionary of Law 180 (1996); see also N.
Webster, An American Dictionary of the English Language 319 (3d ed.
1830) (defining the term broadly to include “the employment and
consumption, as of time or labor,” or the “disbursing of money”).
Though these definitions are capacious enough to include attorney’s
fees, the mere failure to foreclose a fee award “neither
specifically nor explicitly authorizes courts to shift [fees].”
Baker Botts, 576 U. S., at ___ (slip op., at 6).
Reading the term “expenses” alongside
neighboring words in the statute, however, supports a conclusion
excluding legal fees from the scope of §145. The complete phrase
“expenses of the proceeding” is similar to the Latin
expensæ
litis, or “expenses of the litigation.” This term has long
referred to a class of expenses commonly recovered in litigation to
which attorney’s fees did not traditionally belong. See Black’s Law
Dictionary 461 (1891) (defining “
expensæ litis” to mean
“generally allowed” costs); 1 J. Bouvier, Law Dictionary 392 (1839)
(defining the term to mean the “costs which are generally allowed
to the successful party”);
id., at 244 (excluding from the
definition of “costs” the “extraordinary fees [a party] may have
paid counsel”). These definitions suggest that the use of
“expenses” in §145 would not have been commonly understood to
include attorney’s fees at its enactment.
Finally, the modifier “all” does not expand
§145’s reach to include attorney’s fees. Although the word conveys
breadth, it cannot transform “expenses” to reach an outlay it would
not otherwise include. Cf.
Rimini Street, Inc. v.
Oracle
USA, Inc., 586 U. S. ___, ___–___ (2019) (slip op., at
6–7) (“The adjective ‘full’ in §505 therefore does not alter the
meaning of the word ‘costs.’ Rather, ‘full costs’ are all the
‘costs’ otherwise available under law”).
Section 145’s plain text thus does not overcome
the American Rule’s presumption against fee shifting to permit the
PTO to recoup its legal personnel salaries as “expenses of the
proceedings.”
B
“The record of statutory usage” also
illustrates how the term “expenses” alone does not authorize
recovery of attorney’s fees. See
West Virginia Univ. Hospitals,
Inc. v.
Casey,
499 U.S.
83, 88 (1991) (looking to statutory usage to determine whether
attorney’s fees and expert fees were distinct expenses in the
fee-shifting context).
That “expenses” and “attorney’s fees” appear in
tandem across various statutes shifting litigation costs indicates
that Congress understands the two terms to be distinct and not
inclusive of each other. See,
e.g., 898 F. 3d, at 1188
(quoting 11 U. S. C. §363(n) (allowing trustee to recover
“any costs, attorneys’ fees, or expenses incurred”); 12
U. S. C. §1786(p) (permitting courts to “allow to any
such party such reasonable expenses and attorneys’ fees as it deems
just and proper”); 25 U. S. C. §1401(a) (allowing
distribution of funds after payment of “attorney fees and
litigation expenses”); 26 U. S. C. §6673(a)(2)(A)
(authorizing recovery of “costs, expenses, and attorneys’ fees”
against an attorney who “unreasonably and vexatiously” multiplies
proceedings); 31 U. S. C. §3730(d)(1) (permitting
recovery of “reasonable expenses . . . plus reasonable
attorneys’ fees and costs”); 38 U. S. C. §4323(h)(2)
(allowing courts to award “reasonable attorney fees, expert witness
fees, and other litigation expenses”) (all internal quotation marks
omitted)).
While some other statutes refer to attorney’s
fees as a subset of expenses, they show only that “expenses” can
include attorney’s fees when so defined. See,
e.g., 28 U. S.
C. §361 (authorizing “reasonable expenses, including attorneys’
fees”); §1447(c) (“An order remanding the case may require payment
of just costs and any actual expenses, 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 including reasonable attorney’s fees”); 42
U. S. C. §247d–6d(e)(9) (allowing a party to recover
“reasonable expenses incurred . . . , including a
reasonable attorney’s fee”).
The Government cites several decisions to argue
how, on occasion, this Court has used the term “expenses” to mean
“attorney’s fees.” None of the cases furthers its position. See,
e.g.,
Rimini Street, 586 U. S., at ___, ___
(slip op., at 4, 11) (reasoning that the term “costs” in the
general federal costs statutes does not include attorney’s fees);
Taniguchi v.
Kan Pacific Saipan, Ltd.,
566 U.S.
560, 573 (2012) (mentioning that a party may bear “expenses”
related to attorneys, without specifying whether these “expenses”
include attorney’s fees);
Arlington Central School Dist. Bd. of
Ed. v.
Murphy,
548 U.S.
291, 297–303 (2006) (distinguishing “attorney’s fees” from
“costs” and “costs” from “expenses,” without indicating whether
“expenses” encompasses attorney’s fees);
Casey, 499
U. S., at 99 (suggesting that an explicit reference to “expert
witness fees” or “litigation expenses” could shift expert fees in
addition to attorney’s fees—not that the term “litigation expenses”
alone could shift attorney’s fees).
Simply put, 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.
C
In fact, the Patent Act’s history reinforces
that Congress did not intend to shift fees in §145 actions.
There is no evidence that the Patent Office, the
PTO’s predecessor, originally paid its personnel from sums
collected from adverse parties in litigation, or that the Office
initially even employed attorneys. See Act of July 4, 1836, §9,
5Stat. 121 (“[T]he 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”). That
salaries of PTO employees might have qualified as an “expense” of
the agency, however, does not mean that they are an “expense” of a
§145 proceeding. Neither has the PTO, until this litigation, sought
its attorney’s fees under §145. That the agency has managed to pay
its attorneys consistently suggests that financial necessity does
not require reading §145 to shift fees, either.
In later years, when Congress intended to
provide for attorney’s fees in the Patent Act, it stated so
explicitly. See,
e.g., 35 U. S. C. §285 (“The
court in exceptional cases may award reasonable attorney fees to
the prevailing party”); §271(e)(4) (“[A] court may award attorney
fees under section 285”); §273(f ) (same); §296(b) (same);
§297(b)(1) (“Any customer . . . who is found by a court
to have been injured by any material false or fraudulent statement
. . . may recover . . . reasonable costs and
attorneys’ fees”). Because Congress failed to make its intention
similarly clear in §145, the Court will not read the statute to
“contravene fundamental precepts of the common law.”
United
States v.
Rodgers,
461 U.S.
677, 716 (1983).
The history of the Patent Act thus reaffirms the
Court’s view that the statute does not specifically or explicitly
authorize the PTO to recoup its lawyers’ or paralegals’
pro rata salaries in §145 civil actions.
* * *
For the foregoing reasons, we conclude that
the PTO cannot recover the pro rata salaries of its legal personnel
under §145 and therefore affirm the judgment of the Court of
Appeals for the Federal Circuit.
It is so ordered.
