from the United States District Court for the Eastern
District of Virginia in No. 1:13-cv-01566-GBL-TCB, Judge
Gerald Bruce Lee.
J. Heinrich, Irell & Manella LLP, Los Angeles, CA, argued
for plaintiff-appellee. Also represented by Morgan Chu,
Lauren Nicole Drake, Gary N. Frischling; Sandra Haberny,
Newport Beach, CA.
Randall Lilley, Appellate Staff, Civil Division, United
States Department of Justice, Washington, DC, argued for
defendant-appellant. Also represented by Mark R. Freeman,
Dana J. Boente, Benjamin C. Mizer; Nathan K. Kelley, Thomas
W. Krause, Scott C. Weidenfeller, Thomas L. Casagrande,
Office of the Solicitor, United States Patent and Trademark
Office, Alexandria, VA.
N. Mutterperl, Zeisler PLLC, New York, NY, for amicus curiae
International Trademark Association.
Prost, Chief Judge, Dyk and Stoll, Circuit Judges.
Inc. appeals from a decision of the United States District
Court for the Eastern District of Virginia granting-in-part
and denying-in-part the United States Patent and Trademark
Office ("USPTO") Director's motion for fees. In
its order, the district court granted the Director's
requested witness' fees but denied the requested
attorneys' fees. The Director appeals the court's
denial of attorneys' fees. We reverse.
2001, Dr. Hans Klingemann filed a patent application directed
to a method of treating cancer by administering natural
killer cells. After several years of examination, the USPTO
rejected Dr. Klingemann's application on obviousness
grounds. The Patent and Trial Appeal Board ("PTAB")
affirmed the examiner's rejection and Nantkwest, as
assignee of the application, appealed to the district court
under 35 U.S.C. § 145. We have provided a summary of the
technology and the proceedings at the USPTO and district
court in Nantkwest's companion appeal. Nantkwest,
Inc. v. Michelle K. Lee, No. 2015-2095, slip op. at 2-5
(Fed. Cir. May 3, 2017).
145 provides that an applicant dissatisfied with the
PTAB's decision may appeal directly to the United States
District Court for the Eastern District of Virginia in lieu
of immediate appeal to this court. 35 U.S.C. § 145. The
statute further provides that the applicant must pay
"[a]ll of the expenses of the proceeding, "
id., "regardless of the outcome, "
Hyatt v. Kappos, 625 F.3d 1320, 1337 (Fed. Cir.
2010) (en banc), aff'd and remanded, 132 S.Ct.
1690 (2012). After prevailing at the district court on the
merits, the Director filed a motion to recover $111, 696.39
of the USPTO's fees under the § 145 expense
provision. See J.A. 84 (seeking $78, 592.50 in
attorneys' fees (including paralegal fees) and $33,
103.89 in expert fees).
the district court granted the USPTO's expert fees, it
denied its requested attorneys' fees, citing the
"American Rule." J.A. 10-11. Under this Rule,
litigants pay their own attorneys' fees, win or lose,
unless a statute or contract provides otherwise. Hardt v.
Reliance Standard Life Ins. Co., 560 U.S. 242, 252-53
(2010). Applying this Rule, the court found that in order to
recover these fees, "[d]efendants must be able to
articulate a statutory provision that clearly and explicitly
allows them to recovery attorneys' fees from
Plaintiff." J.A. 3-4. The district court concluded that
the "[a]ll expenses" provision of the statute was
neither sufficiently specific nor explicit enough for the
authorization of attorneys' fees under this Rule.
Id. On appeal, the Director argues that the district
court erred by excluding the USPTO's attorneys' fees
under § 145. We have jurisdiction under 28 U.S.C. §
principal issue on appeal is whether § 145's
"[a]ll expenses of the proceedings" provision
authorizes an award of the USPTO's attorneys' fees
under this section.
review a district court's interpretation of a statute de
novo. Weatherby v. Dep't of the Interior, 466
F.3d 1379, 1383 (Fed. Cir. 2006). "In construing a
statute or regulation, we begin by inspecting its language
for plain meaning." Meeks v. West, 216 F.3d
1363, 1366 (Fed. Cir. 2000) (citation omitted). In the
absence of a definition of a term, courts give the words
their "ordinary, contemporary, common meaning."
Williams v. Taylor, 529 U.S. 420, 421 (2000).
35 U.S.C. § 145,
[a]n applicant dissatisfied with the decision of the [PTAB] .
. . may, unless appeal has been taken to the United States
Court of Appeals for the Federal Circuit, have remedy by
civil action against the Director in the United States
District Court for the Eastern District of Virginia . . . .
All the expenses of the proceedings shall be paid by the
Id. (emphasis added).
outset, we observe that we have previously construed other
portions of § 145. See, e.g., Hyatt, 625 F.3d
at 1322. Although Hyatt resolved a different issue
than the one presented here, we based our holding, in part,
on our recognition of the breath of the "all
expenses" provision and the substantial financial burden
that applicants must bear for initiating § 145 appeals.
Id. at 1337. "To deter applicants from exactly
the type of procedural gaming that concerns the Director,
Congress imposed on the applicant the heavy economic burden
of paying '[a]ll the expenses of the proceedings'
regardless of the outcome." Id. (alteration in
original) (citing 35 U.S.C. § 145). Put another way,
Congress intended that all applicants unconditionally assume
this financial burden when seeking review directly in
district court-whether they win, or lose. We thus concluded
that Congress drafted this provision without requiring any
degree of success on the merits (much less a prevailing
party) as a necessary precedent for shifting this "heavy
economic burden" onto the applicant. Id.
determining whether § 145 authorizes an award of the
USPTO's attorneys' fees, we first address the
government's argument that the American Rule does not
apply to these proceedings. Like the Fourth Circuit, we have
substantial doubts that this provision even implicates this
Rule. See Shammas v. Focarino, 784 F.3d 219, 223
(4th Cir. 2015), cert. denied sub nom. Shammas v.
Hirshfeld, 136 S.Ct. 1376 (2016) (concluding that a
nearly identical statutory provision governing Trademark
appeals (15 U.S.C. § 1071(b)(3)) does not
"operate against the backdrop of the American
Rule" because that provision made no reference to
response to the government's arguments, Nantkwest relies
on Baker Botts L.L.P. v. ASARCO LLC to support its
position that the American Rule applies whenever a
litigant seeks to recover attorneys' fees. 135 S.Ct.
2158, 2164 (2015). Baker
Botts, however, does not stand for a general proposition
that courts must apply the American Rule's specific and
explicit requirements to all fee statutes
irrespective of a prevailing party as Nantkwest contends.
Rather, it demonstrates that a statute must meet these
requirements before a party may recover its fees when
attempting to extend its reach to ancillary litigation
Congress never intended. See id. at 2165.
Nevertheless, despite our doubts as to the applicability of
the American Rule here, we analyze § 145's
"[a]ll expenses of the proceeding" provision
assuming the Rule applies, as we conclude that even under
this Rule, the expenses at issue here include the USPTO's
the American Rule, "the prevailing litigant is
ordinarily not entitled to collect a reasonable
attorneys' fee from the loser." Alyeska Pipeline
Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 247
(1975). Courts uniformly recognize an exception to this
general proposition, however: when the statute itself
"specific[ally]" and "explicit[ly]"
authorizes an award of fees, the prevailing party may be
entitled to collect its fees. Id. at 260. In
agreement with two other circuits, we conclude that
"expenses" here includes attorneys' fees.
See Shammas, 784 F.3d at 222- 23 (holding that the
term "expenses" covers the USPTO's
attorneys' fees); United States v. 110-118 Riverside
Tenants Corp., 886 F.2d 514, 520 (2d Cir. 1989)
(observing that attorneys' fees are "expenses of the
proceedings" under § 6342 of the Internal Revenue
definitions and explanations that standard legal dictionaries
and treatises provide for the term "expense"
support this conclusion. Wright & Miller on
Federal Practice and Procedure, for example, defines this
term as "includ[ing] all the expenditures actually made
by a litigant in connection with the action, " including
"attorney's fees." 10 Charles Alan Wright et
al., Federal Practice and Procedure § 2666 (3d
ed. 1998). Similarly, Black's Law Dictionary
defines "expenses" as "expenditure[s] of
money, time, labor, or resources to accomplish a
result." Black's Law Dictionary 698 (10th
ed. 2014) ("Black's") (emphasis
dissent summarily dismisses these definitions, declaring that
"they are not contemporaneous with Congress's
introduction of the word 'expenses' into the Patent
Act in 1839." Dissenting Op. 14. Relying on Nineteenth
Century dictionaries instead, the dissent concludes that
"the words 'expense, ' 'cost, ' and
'damage' were considered synonymous around the time
of the 1839 Amendments."Id. at 6. Not so. The Patent Act
of 1836 specifically distinguished among these three terms.
Compare Act of July 4, 1836, ch. 357, 5 Stat. 117,
§ 9 ("[M]oneys received into the Treasury under
this act shall constitute a fund for the payment of salaries
of the officers and clerks herein provided for, and all other
expenses of the Patent Office." (emphasis
added)), with id. § 14 ("[W]henever, in
any action for damages for making, using, or selling the
thing whereof the exclusive right is secured by any patent .
. ., a verdict shall be rendered . . ., it shall be in the
power of the court to render judgment for any sum above the
amount found by such verdict as the actual damages
sustained . . ., not exceeding three times the amount
thereof, according to the circumstances of the case, with
costs." (emphases added)). The historical
statute that the dissent relies on simply does not support
its conclusion. If anything, this statute lends support to
the majority's position by expressly characterizing the
salaries of USPTO officers and clerks and as
"expenses." Id. § 9. The Supreme
Court has observed the distinction between
"expenses" and "costs" recently,
providing an interpretation that comports with the modern
definitions that the dissent disregards.
Taniguchi v. Kan.Pacific Saipan, Ltd., the Court
recognized the distinction between costs and fees;
determining that the term "fees" includes
"expenses borne by litigants for attorneys." 132
S.Ct. 1997, 2006 (2012). There, the Court distinguished
"expenses" from the more limited term "costs,
" which represent only a fraction of expenses, relying
specifically on the 1998 Wright & Miller treatise cited
Although costs has an everyday meaning synonymous with
expenses, the concept of taxable costs . . . is more limited
. . . . Taxable costs are limited to relatively minor,
incidental expenses[;] . . . such items as clerk fees, court
reporter fees, expenses for printing and witnesses, expenses
for exemplification and copies, docket fees, and compensation
of court-appointed experts. . . . Taxable costs are a