Filing challenge to PTAB outcome in district court under § 145 will not incur attorneys' fees
The en banc CAFC court in NANTKWEST, INC. v. IANCU determined that 35 U.S.C. § 145 does not authorize an award of attorneys' fees, in accord with the district court, but not in accord with the decision of the three judge panel, which had supported the position of the PTO:
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.
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When the United States Patent and Trademark Office’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 challenge 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 predecessor, the agency argues that § 145 also compels applicants 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 “specific and explicit” directive from Congress. The phrase “[a]ll the expenses of the proceedings” falls short of this stringent standard. Accordingly, we affirm the district court’s judgment.
Of part of the PTO argument, the CAFC noted a conspicuous omission:
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 participating 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 interpretation 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.”
Of the use of legislative history:
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, 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 interpretation of § 145. The dissent points to an expense reimbursement provision 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.
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.
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When the United States Patent and Trademark Office’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 challenge 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 predecessor, the agency argues that § 145 also compels applicants 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 “specific and explicit” directive from Congress. The phrase “[a]ll the expenses of the proceedings” falls short of this stringent standard. Accordingly, we affirm the district court’s judgment.
Of part of the PTO argument, the CAFC noted a conspicuous omission:
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 participating 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 interpretation 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.”
Of the use of legislative history:
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, 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 interpretation of § 145. The dissent points to an expense reimbursement provision 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.
posted by Lawrence B. Ebert at 9:41 AM
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