Attorney’s Fees
American Rule
Baker Botts, 576 U. S., at ___ (slip op., at …)
Patents
Pathways to challenge an adverse decision by the
United States Patent and Trademark Office (PTO)
Salaries of attorney and paralegal employees of
the PTO
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.
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 “all
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.
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 “all the expenses of the proceedings.” 35 U. S. C.
§145.
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.
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).
(…) 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.”
(…) §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.
To determine whether Congress intended to depart
from the American Rule presumption, the Court first “looks to the language of
the section” at issue. Hardt, 560 U. S., at 254. While “the 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.
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).
(…) Reading the term “expenses” alongside
neighboring words in the statute, however, supports a conclusion excluding
legal fees from the scope of §145.
(…) 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.”
(…) 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.
(…) 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).
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.
Because Congress failed to make its intention (…)
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).
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.
(U.S. Supreme Court, December 11, 2019, Peter v.
NantKwest, Inc., Docket No. 18-801, J. Sotomayor, Unanimous)
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