Amicus Curiae Brief — Laura Peter, Deputy Director, Patent and Trademark Office, Petitioner v. NantKwest, Inc.

No. 18-801

IN THE

Supreme Court of the United States

_________

LAURA PETER, DEPUTY DIRECTOR,

PATENT AND TRADEMARK OFFICE,

v.

Petitioner,

NANTKWEST, INC.,

Respondent.

_________

On Writ of Certiorari to the

United States Court of Appeals

for the Federal Circuit

_________

BRIEF FOR AMICUS CURIAE

AMERICAN INTELLECTUAL PROPERTY

LAW ASSOCIATION

IN SUPPORT OF AFFIRMANCE

_________

JEFFREY I.D. LEWIS

SHELDON H. KLEIN

President

Counsel of Record

AMERICAN INTELLECTUAL

NORTON ROSE FULBRIGHT

PROPERTY LAW ASSOCIATION US LLP

1400 Crystal Drive, Ste. 600 1301 Avenue of the Americas

New York, NY 10019

Arlington, VA 22202

(212) 318-3363

PETER B. SIEGAL

jeffrey.lewis@

NORTON ROSE FULBRIGHT

nortonrosefulbright.com

US LLP

799 9th Street, N.W.,

Ste. 1000

Washington, D.C. 20001

Counsel for Amicus Curiae

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ..................................... iii

INTEREST OF AMICUS CURIAE............................ 1

SUMMARY OF THE ARGUMENT ........................... 2

ARGUMENT .............................................................. 6

I. The American Rule Exists To

Encourage The Vindication Of Rights

Through Adversarial Litigation ...................... 6

II. Exceptions To The American Rule Do

Not Burden Rights-Vindicating

Litigation, They Encourage It ....................... 10

A. Exceptions Exist To Encourage—

Not Penalize—Rights-Vindicating

Litigation .................................................. 11

B. Congress Has Never Used Fee

Shifting To Discourage The GoodFaith Pursuit Of Potentially

Meritorious Claims................................... 15

III.The Government Cannot Carry Its

Burden Of Demonstrating That Section

145 Authorizes Litigation-Discouraging

Fee Awards .................................................... 17

A. Section 145 Does Not Avoid The

American Rule .......................................... 18

B. The Government’s Interpretation Of

Section 145 Invades The Common

Law And Therefore Requires A Clear

Textual Authorization .............................. 21

ii

TABLE OF CONTENTS—Continued

Page

C. Section 145 Does Not Clearly

Authorize Attorneys’-Fee Awards ........... 22

CONCLUSION ......................................................... 25

iii

TABLE OF AUTHORITIES

Page(s)

CASES:

Alyeska Pipeline Serv. Co. v. Wilderness

Soc’y, 421 U.S. 240 (1975) .................... 3, 7, 9, 21

Arcambel v. Wiseman, 3 U.S. (3 Dall.)

306 (1796) ........................................................ 4, 9

Baker Botts L.L.P. v. ASARCO LLC, 135

S. Ct. 2158 (2015).......................................passim

Bill Johnson’s Rests., Inc. v. N.L.R.B.,

461 U.S. 731 (1983) ........................................... 19

Boddie v. Connecticut, 401 U.S. 371

(1971) ................................................................. 19

Booking.com B.V. v. U.S. Patent &

Trademark Office, 915 F.3d 171 (4th

Cir. 2019), as amended (Feb. 27, 2019),

petition for cert. docketed, No. 18-1309 .............. 3

Buckhannon Bd. & Care Home, Inc. v.

W. Va. Dep’t of Health & Human Res.,

532 U.S. 598 (2001) ....................................... 4, 22

Cal. Motor Transp. Co. v. Trucking

Unltd., 404 U.S. 508 (1972) .............................. 15

Christiansburg Garment Co. v. EEOC,

434 U.S. 412 (1978) ........................................... 14

eBay Inc. v. MercExchange, L.L.C., 547

U.S. 388 (2006).................................................. 20

Empire State Ins. Co. v. Chafetz, 302

F.2d 828 (5th Cir. 1962).................................... 21

Farmer v. Arabian Am. Oil Co., 379 U.S.

227 (1964) ............................................................ 9

Fleischmann Distilling Corp. v. Maier

Brewing Co., 386 U.S. 714 (1967) ........ 3, 6, 9, 20

iv

TABLE OF AUTHORITIES—Continued

Page(s)

Fogerty v. Fantasy, Inc., 510 U.S. 517

(1994) ................................................................. 23

Halo Elecs., Inc. v. Pulse Elecs., Inc., 136

S. Ct. 1923 (2016).............................................. 16

Hardt v. Reliance Std. Life Ins. Co., 560

U.S. 242 (2010).................................................... 3

Highmark Inc. v. Allcare Health Mgmt.

Sys., 572 U.S. 559 (2014) .................................. 16

Hyatt v. Shalala, 6 F.3d 250 (4th Cir.

1993) .................................................................. 21

Kappos v. Hyatt, 566 U.S. 431 (2012) ............... 2, 4

NAACP v. Button, 371 U.S. 415 (1963) .............. 14

Nat’l Cable & Telecomms. Ass’n v. Brand

X Internet Servs., 545 U.S. 967 (2005) ............. 23

Newman v. Piggie Park Enters., Inc., 390

U.S. 400 (1968).................................................. 14

Nken v. Holder, 556 U.S. 418 (2009)................... 21

Norfolk Redev. & Hous. Auth. v.

Chesapeake & Potomac Tel. Co. of Va.,

464 U.S. 30 (1983) ............................................. 21

Octane Fitness, LLC v. ICON Health &

Fitness, Inc., 572 U.S. 545 (2014) ..................... 16

Prof’l Real Estate Inv’rs, Inc. v.

Columbia Pictures Indus., Inc., 508

U.S. 49 (1993).............................................. 16, 19

Rimini St., Inc. v. Oracle USA, Inc., 139

S.Ct. 873 (2019)............................................. 2, 22

Ruckelshaus v. Sierra Club, 463 U.S. 680

(1983) ............................................................. 5, 19

v

TABLE OF AUTHORITIES—Continued

Page(s)

Russello v. United States, 464 U.S. 16

(1983) ................................................................. 23

Samantar v. Yousuf, 560 U.S. 305 (2010) .......... 21

Sebelius v. Cloer, 569 U.S. 369

(2013) ................................................. 5, 15, 18, 20

Shammas v. Focarino, 784 F.3d 219 (4th

Cir. 2015)....................................................... 3, 18

Taniguchi v. Kan Pac. Saipan, Ltd., 566

U.S. 560 (2012).................................................. 21

Trustees v. Greenough, 105 U.S. 527

(1881) ................................................................. 11

United States v. Texas, 507 U.S. 529

(1993) ................................................................. 21

STATUTES:

Act of Feb. 4, 1887, 24 Stat. 379 ......................... 13

Act of May 31, 1870, 16 Stat. 140,

repealed by Act of Feb. 8, 1894, 28 Stat.

36 ....................................................................... 13

Act of Feb. 26, 1853, ch. 80, 10 Stat. 161

(codified as amended at 28 U.S.C.

§§ 1920, 1923(a) (1988)) .................................... 10

Civil Rights Attorney’s Fee Awards Act

of 1976, Pub. L. No. 94-559, 90 Stat.

2641 (1976) ........................................................ 13

Equal Access to Justice Act, Pub. L. No.

96-481, 94 Stat. 2321 (1980) ............................. 13

Sherman Antitrust Act, 26 Stat. 209

(1890) ................................................................. 13

vi

TABLE OF AUTHORITIES—Continued

Page(s)

20 U.S.C. § 1617 (1982) ....................................... 13

28 U.S.C. § 1821 ................................................... 2

28 U.S.C. § 1920 .................................................... 2

35 U.S.C. § 145 .............................................passim

35 U.S.C. § 271 .................................................... 24

35 U.S.C. § 273 .................................................... 24

35 U.S.C. § 285 ....................................... 16, 23, 24

35 U.S.C. § 297 .................................................... 24

42 U.S.C. § 300aa-11 ........................................... 14

42 U.S.C. § 300aa-15 ........................................... 15

42 U.S.C. § 2000e................................................. 13

42 U.S.C. § 7607 .................................................. 13

RULES:

Fed. R. Civ. P. 11(c)(2) ......................................... 15

LEGISLATIVE MATERIALS:

Cong. Globe, 32d Cong., 2d Sess. 207

(1853) ................................................................... 7

OTHER AUTHORITIES:

Calvin A. Kuenzel, The Attorney’s Fee:

Why Not a Cost of Litigation, 49 Iowa

L. Rev. 75 (1963) ................................................. 8

George D. Hornstein, The Counsel Fee in

Stockholders Derivative Suits, 39

Colum. L. Rev. 784 (1939) ................................ 12

vii

TABLE OF AUTHORITIES—Continued

Page(s)

Harry Kalven, Jr. & Maurice Rosenfeld,

The Contemporary Function of the

Class Suit, 8 U. Chi. L. Rev. 684 (1941) .......... 12

James R. Maxeiner, Cost & Fee

Allocation in Civil Procedure, 58 Am. J.

Comp. L. 195 (2010) .......................................... 17

John F. Vargo, The American Rule on

Attorney Fee Allocation: The Injured

Person’s Access To Justice, 41 Am. U.

L. Rev. 1567 (1993) ....................................... 6, 10

John Leubsdorf, Toward a History of the

American Rule on Attorney Fee

Recovery, 47 L. & Contemp. Probs. 9

(1984) ..........................................................passim

Owen M. Fiss, The Civil Rights

Injunction (1978)............................................... 14

Phyllis A. Monroe, Financial Barriers to

Litigation: Attorney Fees and the

Problem of Legal Access, 46 Alb. L.

Rev. 148 (1981) ............................................... 7, 8

Roscoe Pound, The Spirit of the Common

Law (1921) .......................................................... 7

INTEREST OF AMICUS CURIAE

The

American

Intellectual

Property

Law

1

Association (“AIPLA”) is a national bar association

representing the interests of approximately 12,000

members engaged in private and corporate practice,

government service, and academia. AIPLA’s members

represent a diverse spectrum of individuals,

companies, and institutions involved directly or

indirectly in the practice of patent, trademark,

copyright, and unfair competition law, as well as other

fields of law affecting intellectual property. Our

members represent both owners and users of

intellectual property. AIPLA’s mission includes

providing courts with objective analyses to promote an

intellectual property system that stimulates and

rewards invention, creativity, and investment while

accommodating the public’s interest in healthy

competition, reasonable costs, and basic fairness.

AIPLA has no stake in any of the parties to this

litigation or in the result of this case. AIPLA’s only

interest is in seeking correct and consistent

1

Pursuant to Supreme Court Rule 37.6, AIPLA states that this

brief was not authored, in whole or in part, by counsel to a party,

and that no monetary contribution to the preparation or

submission of this brief was made by any person or entity other

than AIPLA and its counsel. Specifically, after reasonable

investigation, AIPLA believes that: (i) no member of its Board or

Amicus Committee who voted to file this brief, or any attorney in

the law firm or corporation of such a member, represents a party

to the litigation in this matter; (ii) no representative of any party

to this litigation participated in the authorship of this brief; and

(iii) no one other than AIPLA, or its members who authored this

brief and their law firms or employers, made a monetary

contribution to the preparation or submission of this brief. The

parties have consented to the filing of this brief.

2

interpretation of the law as it relates to intellectual

property issues.

SUMMARY OF THE ARGUMENT

In Kappos v. Hyatt, 566 U.S. 431 (2012), aff’g 625

F.3d 1320 (Fed. Cir. 2010), this Court recognized the

important right provided by 35 U.S.C. § 145. That

statute permits a patent applicant to develop a full

evidentiary record on district court review of a

decision by the Patent Trial & Appeal Board (the

“PTAB”) of the U.S. Patent & Trademark Office

(“PTO”) denying patent protection. In exchange, the

statute requires the applicant-appellant to pay “[a]ll

the expenses of the proceedings.” 35 U.S.C. § 145.

For more than a century after Section 145 was

enacted, the meaning of “expenses” in that phrase was

undisputed: private litigants, the PTO, and courts all

interpreted it to require payment only for the

Government’s out-of-pocket expenses, including

printing costs, counsel’s deposition travel costs, court

reporter fees, and certain expert witness fees.2 No one,

until recently, has ever taken the position that it

included attorneys’ fees. In fact, when Congress

amended Section 145 in other respects in 2011, it did

nothing to cast doubt on that longstanding,

unanimous view.

Then, in 2013, the PTO unilaterally departed from

the longstanding consensus that the term “expenses,”

as used in the statute, excludes attorneys’ fees from

what “shall be paid by the applicant.” See 35 U.S.C.

§ 145; Brief For The Petitioner (filed May 17, 2019)

2

This Court held last March that, absent express authority,

courts may not award litigation expenses that are not specified

in the general “costs” statutes at 28 U.S.C. §§ 1821 and 1920.

Rimini St., Inc. v. Oracle USA, Inc., 139 S.Ct. 873, 877-78 (2019).

3

(“Pet’r Br.”) 7. Disavowing its prior position, the PTO

began asserting that an applicant challenging a PTAB

decision under Section 145 must also pay pro rata for

PTO attorney and staff time, even if the applicant’s

challenge is successful. The PTO applied this new

reading in patent cases (including the instant civil

action for review of an adverse PTAB decision) and in

cases arising under a similar statute addressing

trademark-related review of PTO decisions. See

Booking.com B.V. v. U.S. Patent & Trademark Office,

915 F.3d 171 (4th Cir. 2019), as amended (Feb. 27,

2019), petition for cert. docketed, No. 18-1309; see also

Shammas v. Focarino, 784 F.3d 219 (4th Cir. 2015)

(awarding pro rata PTO attorney and staff time for

review of a Trademark Trial & Appeal Board

decision)).

This Court should reject the PTO’s new

interpretation as an affront to the American Rule.

Under that rule, “[e]ach litigant pays his own

attorneys’ fees, win or lose, unless a statute or

contract provides otherwise.” Hardt v. Reliance Std.

Life Ins. Co., 560 U.S. 242, 252-53 (2010) (citation

omitted); accord Fleischmann Distilling Corp. v.

Maier Brewing Co., 386 U.S. 714, 717 (1967)

(American Rule is an intentional divergence from the

English Rule that loser pays); see Alyeska Pipeline

Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 249-50

(1975) (citing cases from 1796, 1852, 1872, 1873, 1879,

1967, and 1974). As the U.S. Court of Appeals for the

Federal Circuit recognized, the principal policy

underlying the American Rule is society’s desire to

avoid burdening a litigant’s exercise of First

Amendment rights by imposing, as a penalty for

invoking judicial review, the opposing party’s

attorneys’ fees. Pet. App. 4a-5a. Because the rule—

4

and that policy—are “entitled to the respect of the

court, till [the rule] is changed, or modified, by statute,”

Arcambel v. Wiseman, 3 U.S. (3 Dall.) 306, 306 (1796),

the Court has departed from them only where a

statute reflects an “explicit” grant of authority from

Congress to do so. Baker Botts L.L.P. v. ASARCO LLC,

135 S. Ct. 2158, 2164 (2015) (emphasis supplied)

(quoting Buckhannon Bd. & Care Home, Inc. v. W. Va.

Dep’t of Health & Human Res., 532 U.S. 598, 602

(2001)). Section 145 contains no explicit authorization

to shift attorneys’ fees, and the Government’s view

should be rejected for that reason alone.

Moreover, the PTO’s view would make Section 145

an anomaly even among fee-shifting statutes. In the

Government’s view, Section 145 uses attorneys’ fees

as a cudgel to penalize litigants, no matter the merits

of their claims, for seeking district-court review under

Section 145 instead of resting on the more limited

PTAB record3 in a direct appeal to the Federal Circuit

under 35 U.S.C. §§ 141 and 144. Although numerous

exceptions to the American Rule exist, those

exceptions are not designed to cut back on the

American Rule’s core policy by discouraging litigation.

Rather, the exceptions are aimed at enabling parties

who initiate potentially meritorious litigation to

3

For instance, as noted in Hyatt, “the PTO generally does not

accept oral testimony.” 566 U.S. at 435. Accordingly, in most

instances, the district court record will be more complete than

the administrative record considered by PTAB. See id. at 444,

446; see also Pet’r Br. 3-4. Before the PTO, an applicant does not

have the ability to require an unwilling party to provide

evidence; in a Section 145 proceeding in district court, witnesses

can be compelled to appear. Similarly, the district court can

assess the reliability and veracity of the testimony and evidence

submitted, while PTAB’s ability to do so on an administrative

record is much more limited.

5

recover attorneys’ fees, encouraging rightsvindicating suits. The Government’s interpretation

therefore would make this unique among the

exceptions; it makes a Section 145 civil action a

significant obstacle in front of the courthouse doors,

rendering the statute not merely “unusual,” as the

government

concedes

(Pet’r

Br.

16),

but

unprecedented. See infra pp. 10-24.

In fact, the Government’s interpretation, if adopted,

would be unprecedented in another respect as well. In

the Government’s view, even successful Section 145

action applicants must pay the Government’s

attorneys’ fees. AIPLA is aware of no area of the

law—and the Government identifies none4—in which

a losing defendant or appellee has been authorized to

collect attorneys’ fees from its successful opponent.

See Ruckelshaus v. Sierra Club, 463 U.S. 680, 693

(1983) (“[E]stablished principles requir[e] that a fee

claimant attain some success on the merits before it

may receive an award of fees.”). In that respect as well,

the Government’s view would render Section 145 a

radical departure from longstanding American

practice.

In light of those considerations, the Government’s

argument that the phrase “all * * * expenses” could,

4

See Pet. App. 26a (“[W]e are aware of no statute that requires

a private litigant to pay the government's attorneys’ fees without

regard to the party’s success in the litigation.”). The only area

that the Government identifies that comes even close to

providing a loser with attorneys’ fees is the vaccine compensation

statute at issue in Sebelius v. Cloer, 569 U.S. 369 (2013). That

statute, as discussed infra pp. 14-15, expressly requires that the

Government pay the attorneys’ fees of a losing applicant, and as

such Congress’s exception is fully supportive of the American

Rule and its underlying policies.

6

in a vacuum, be construed also to encompass

attorneys’ fees is beside the point. Cf. Pet’r Br. 14, 1824. What matters is that the phrase neither clearly

nor expressly requires the departure from

longstanding practice—a departure that the

Government now advocates.

And because the

American Rule’s history, PTO’s longstanding views,

and Congress’s approval of the exclusion of attorneys’

fees from “expenses” that governed prior to 2013 all

support a reading that excludes attorneys’ fees, the

departure the Government proposes should be

rejected. The court of appeals’ understanding, under

which Section 145 authorizes the shifting of costs

(which is common in American litigation), but not fees,

is the only one that accords with the history of and the

general policy common to the American Rule and its

exceptions. The Court should therefore affirm.

ARGUMENT

I. THE AMERICAN RULE EXISTS TO

ENCOURAGE THE VINDICATION OF

RIGHTS THROUGH ADVERSARIAL

LITIGATION.

1. The American Rule is an intentional divergence

from the English rule, under which the winning

litigant is generally entitled to recoup attorneys’ fees

from the loser. Fleischmann Distilling, 386 U.S. at

717. The divergence “took root in colonial America

and matured during the nineteenth century,” as

“attorneys freed themselves from legislative

constraints on fees.” John F. Vargo, The American

Rule on Attorney Fee Allocation: The Injured Person’s

Access to Justice, 42 Am. U. L. Rev. 1567, 1575 (1993).

As fees came to be set by agreement, rather than by

statutory fee schedules, the practice of requiring one

7

opponent to reimburse the other came to be seen as

unfair and impractical. See, e.g., infra p. 8.

The repudiation of fee schedules and abandonment

of the English rule reflected American democraticlibertarian traditions. As Dean Pound observed,

American conceptions of individualism led to a system

in which “questions of the highest social import” came

to be tried “as mere private controversies between

John Doe and Richard Roe.” See Roscoe Pound, The

Spirit of the Common Law 13-14 (1921). In such a

system, “[l]itigation was seen as a ‘fair fight[,]’ with

the outcome dependent upon the individual initiative

of the parties as much as the relative strengths of

their legal positions.” Phyllis A. Monroe, Financial

Barriers to Litigation: Attorney Fees and the Problem

of Legal Access, 46 Alb. L. Rev. 148, 153 (1981)

(quoting Pound, supra, at 13-14).

That view came to “negat[e] the idea that the losing

party was necessarily the wrongdoer” and

undermined the rationale for requiring the loser to

shoulder the costs of the strategies that had been

employed to defeat him. Monroe, supra, at 153. In an

influential speech to the Senate just before Congress

codified the American Rule, Senator Bradbury

emphasized the individualized nature of litigation

strategy, arguing that fee shifting had become “a

matter of serious complaint,” since “in some cases [the

reimbursable] costs have been swelled to an amount

exceedingly oppressive to suitors, and altogether

disproportionate to the magnitude and importance of

the causes in which they are taxed, or the labor

bestowed.” Cong. Globe, 32d Cong., 2d Sess. 207

(1853), quoted in Alyeska Pipeline Serv., 421 U.S. at

251 n.24. Thus, the move away from fee-shifting

reflected, in part, an American view that litigants

8

should be free to spend as much as they deem

appropriate, but that their opponents should neither

have to foot that bill nor be concerned that their

adversary’s spending will unduly raise the amount in

dispute (thereby chilling those of lesser means from

opposing deep-pocketed opponents).

Senator Bradbury’s speech also reflects a second,

perhaps “more important,” theme in the development

of the American Rule: encouraging rights-vindicating

litigation. See Monroe, supra, at 153. From the

Republic’s early days, that encouragement was

necessary to foster a society in which private disputes

were settled peacefully and with respect for law. See,

e.g., Calvin A. Kuenzel, The Attorney’s Fee: Why Not a

Cost of Litigation, 49 Iowa L. Rev. 75, 81 (1963)

(arguing that American Rule furthered the “new

government[’s]” interest in “the creation of a

willingness in its citizenry to submit to the system

designed and established for the resolution of their

disputes”). But the encouragement also reflected the

“unique American concern that an individual’s basic

rights never be diminished,” and an associated belief

that “[u]nfettered access to the courts was * * * an

essential element in the protection of such rights.”

Monroe, supra, at 153.

Because it was assumed that “litigants would more

willingly assume their own costs than risk liability for

an opponent’s legal fees,” the American Rule

encouraged resort to the courts, especially by “the

poor litigant who could least afford incurring liability

for an opponent’s costs.” Monroe, supra, at 154. Thus,

“to the extent the American Rule reduced the financial

risks of litigation, it served the democratic goal of

maximized legal access.” Ibid.

9

2. The Court often has venerated the American Rule

and emphasized its role in encouraging rightsvindicating litigation, and for more than two hundred

years has repudiated the English rule as standing “in

opposition to * * * the general practice of the United

States.” Baker Botts, 135 S. Ct. at 2169 (quoting

Arcambel, 3 U.S. at 306). In 1967, rejecting a claim

that there was an implied right to attorneys’ fees in

trademark actions, the Court explained the impetus

for the American Rule as follows:

[S]ince litigation is at best uncertain one should

not be penalized for merely defending or

prosecuting a lawsuit, and * * * the poor might

be unjustly discouraged from instituting

actions to vindicate their rights if the penalty

for losing included the fees of their opponents’

counsel.

Fleischmann Distilling, 386 U.S. at 718 (summarizing

arguments made “[i]n support of the American rule”);

see Pet. App. 4a (“The rationale supporting the

American Rule is rooted in fair access to the legal

system * * *.”). In so observing, the Court echoed an

earlier concurrence by Justice Goldberg, which noted

“[i]t has not been [an] accident that the American

litigant must bear his own cost of counsel and other

trial expense save for minimal court costs, but a

deliberate choice to ensure that access to the courts be

not effectively denied those of moderate means.”

Farmer v. Arabian Am. Oil Co., 379 U.S. 227, 237

(1964) (Goldberg J., concurring).

The Court’s statements find ample support in

Congress’s actions concerning attorneys’ fees. As the

Court recognized in Alyeska Pipeline Service,

Congress’s 1853 codification of the American Rule was

motivated in part by a concern “that losing litigants

10

were being unfairly saddled with exorbitant fees for

the victor’s attorneys.” 421 U.S. at 251. The concern

led to “a far-reaching Act * * * limit[ing] allowances

for attorney’s fees that were to be charged

to * * * losing parties.” Id. at 252. Indeed, under the

1853 fee bill, the only compensation recoverable by a

winning litigant is a docket fee ranging from five to

twenty dollars. See Act of Feb. 26, 1853, ch. 80, 10

Stat. 161 (codified as amended at 28 U.S.C. §§ 1920,

1923(a) (1988)). And because the 1853 fee bill has not

been repealed or materially modified to this day, it

continues to set the limit for fee recoveries in the

absence of statutory or judicial exception. Vargo,

supra, at 1578.

Thus, in the eyes of both the Court and Congress,

and as reflected by its historical pedigree, the

American Rule exists to encourage plaintiffs seeking

redress in the courthouse. And it accomplishes that

goal by assuring those who initiate litigation that,

even if they lose, they will owe only their own lawyers’

fees.

II. EXCEPTIONS TO THE AMERICAN RULE

DO NOT BURDEN RIGHTS-VINDICATING

LITIGATION, THEY ENCOURAGE IT.

Exceptions to the American Rule do not undermine

the policy the Rule reflects. Rather, Congress’s

exceptions are designed to further pursue that policy

by further encouraging rights-vindicating litigation.

The Government’s newfound interpretation of Section

145 would mark an unprecedented departure from

that practice.

11

A. Exceptions Exist To Encourage—Not

Penalize—Rights-Vindicating Litigation.

Exceptions to the American Rule have been enacted

by Congress to further encourage resort to the courts.

Those exceptions vary in operation and by subject

matter, but they all undermine, rather than reinforce,

the Government’s contention that Congress enacted

Section 145 to discourage meritorious litigation

through the use of fee shifting. Cf. Pet’r Br. 39-42.

1. One important set of exceptions to the American

Rule involves diffusing the costs of legal work among

its beneficiaries. An early example is the “common

fund” theory, see, e.g., Trustees v. Greenough, 105 U.S.

527, 533 (1881), whereby “a party who had created or

preserved a fund was entitled to recoup part of the

legal expenses of doing so from the fund’s beneficiaries

by paying his lawyer out of the fund.” See John

Leubsdorf, Toward a History of the American Rule on

Attorney Fee Recovery, 47 L. & Contemp. Probs. 9, 24

(1984). The impetus for the exception is that a lawyer

who creates or preserves a fund serves the fund and

its beneficiaries as much as a nominal client, therefore

recovering fees from them is “like recovery of

customary fees by a lawyer from his own client, not

like recovery from an opposing party.” Ibid. (citing

Trustees, 105 U.S. at 535). Thus, to the extent it

marks a departure from the American Rule, the

common-fund theory encourages court access and the

productive, efficient use of legal work by spreading the

costs of that work among its beneficiaries.

These principles are also reflected in other, more

modern exceptions:



During the 1930s, commentators justified the

derivative suit as a mechanism of spreading

12

the costs of ferreting out corporate

wrongdoing among the beneficiaries of such

oversight. See, e.g., George D. Hornstein, The

Counsel Fee in Stockholder’s Derivative Suits,

39 Colum. L. Rev. 784, 786 (1939) (observing

that it is “perfectly consistent” with the

American Rule to hold that “when a party

institutes litigation for the benefit of a class

of which he is a member, i.e., salvages assets

which others will share, the fund or property

should be charged with the necessary

expenses incurred in the litigation”).



In more recent years, payment of class-action

lawyers’ fees from funds common to the class

has become routine. E.g., Leubsdorf, supra,

at 29 (as “ways to promote the enforcement of

the law through mass litigation”) (citing

Harry Kalven, Jr. & Maurice Rosenfeld, The

Contemporary Function of the Class Suit, 8 U.

Chi. L. Rev. 684, 715-16 (1941)).

Each exception furthers the basic policy of the

American Rule: encouraging legal access by

dispersing the costs of obtaining legal services among

those who will benefit from them. In that manner, the

exceptions eliminate what might otherwise serve as a

hindrance on the vindication of important groupbased rights. Thus, these exceptions to the American

Rule encourage, rather than discourage, access to

justice.

2. Beginning in the second half of the nineteenth

century, Congress recognized that litigants might be

more likely to pursue socially desirable litigation if

the attorneys’ fees burden were placed elsewhere. It

therefore passed three statutes that foreshadowed a

wave of exceptions to the American Rule: the voting

13

rights legislation of 1870, Interstate Commerce Act of

1887, and Sherman Act of 1890.

Under each,

successful plaintiffs could recover attorneys’ fees in

addition to costs, liquidated damages, or actual (i.e.,

ordinary) or treble damages. Leubsdorf, supra, at 25

(citing Act of May 31, 1870, §§ 2, 3, 16 Stat. 140, 14041, repealed by Act of Feb. 8, 1894, 28 Stat. 36; Act of

Feb. 4, 1887, § 8, 24 Stat. 379, 382; Sherman Antitrust

Act, § 7, 26 Stat. 209, 210 (1890)). During the same

period numerous states enacted similar provisions.

Ibid. Because these fee-shifting provisions sought to

encourage plaintiffs filing suit as flagbearers for social

policy, they were “usually one-way: the successful

plaintiff recovered a realistic fee, but the successful

defendant did not.” Ibid.

By the 1960s, “the accumulation of federal fee

statutes turned into a deluge which radically

transformed the financing of much federal litigation.”

Leubsdorf, supra, at 30. Congress included feeshifting provisions in “[v]irtually all the major civil

rights and environmental statutes” it passed in that

period. Ibid. (citing 20 U.S.C. § 1617 (1982) (school

desegregation); 42 U.S.C. § 7607(f) (1981) (Clean Air

Act); 42 U.S.C. § 2000e(5)(k) (1976) (employment

discrimination)). In later years, unsatisfied with

statute-by-statute

implementation,

Congress

“enact[ed] provisions that swept whole areas of

litigation into the fee award system.” Ibid. (citing

Civil Rights Attorney’s Fee Awards Act of 1976, Pub.

L. No. 94-559, 90 Stat. 2641 (1976); Equal Access to

Justice Act, Pub. L. No. 96-481, 94 Stat. 2321 (1980)).

This legislation was meant to endorse “a policy of

social reform through litigation – especially through

litigation that does not yield plaintiffs a financial

reward from which a contingent fee may be paid.”

14

Leubsdorf, supra, at 30 (citing NAACP v. Button, 371

U.S. 415 (1963); Owen M. Fiss, The Civil Rights

Injunction (1978)). Consistent with that purpose,

modern courts “have read fee statutes broadly,

and * * * drawn from them an underlying rationale

that civil rights fee statutes should encourage

enforcement by ‘private attorneys general’.” Leubsdorf,

supra, at 30 (emphasis added). In order to encourage

“private attorneys general,” courts granted fees to

“virtually all prevailing plaintiffs [under the statutes]

while denying them to virtually all prevailing

defendants.” Ibid. (citing Christiansburg Garment

Co. v. EEOC, 434 U.S. 412, 420-22 (1978); Newman v.

Piggie Park Enters., Inc., 390 U.S. 400 (1968)); see also

ibid. (noting that neither the legislatures nor the

courts have “shown the slightest sign of replacing the

American [R]ule with the English rule,” and have

instead continued to apply fee-shifting statutes

according to a “one-sided” approach, “holding out the

prospect of fees to one class of litigants (usually

plaintiffs) while denying it to the other”).

Congress has thus authorized fee shifting for

successful litigants—generally plaintiffs—in a variety

of areas.

3. No similar history exists with respect to meritsindifferent fee shifting such as the Government urges

here. To the contrary, the parties in this litigation

have identified only one instance of merits-indifferent

shifting of attorneys’ fees—and it is contrary to the

Government’s position.

The National Childhood Vaccine Injury Act of 1986

(“NCVIA”) allows individuals claiming vaccinerelated injuries to seek compensation from the

Government in the Court of Federal Claims. See 42

U.S.C. § 300aa-11.

The statute “unambiguously

15

authorizes the payment of attorney’s fees even to

unsuccessful litigants,” Pet’r Br. 37, by permitting

discretionary awards including “ * * * (A) reasonable

attorneys’ fees, and (B) other costs, incurred in any

proceeding on such petition,” 42 U.S.C. § 300aa15(e)(1), for petitions “brought in good faith” with “a

reasonable basis,” Cloer, 569 U.S. at 373-74 (quoting

id.). In other words, in the only circumstance in which

Congress authorized payment by a winning litigant of

its losing opponent’s attorneys’ fees, it did so to

subsidize litigation, i.e. encourage judicial review, by

requiring that the Government pay the fees of privateparty plaintiffs who sued it, the Government’s fees are

not included in this statute.

B. Congress Has Never Used Fee Shifting To

Discourage The Good-Faith Pursuit Of

Potentially Meritorious Claims.

In the rare instances Congress has employed fee

shifting to discourage litigation-related conduct, it has

done so only in ways that pose no threat to the policy

underlying the American Rule.

1. There is a longstanding tradition of awarding fees

to penalize bad faith litigation conduct, see, e.g., Fed.

R. Civ. P. 11(c)(2),5 but that tradition has no bearing

on the good-faith, potentially meritorious litigation

the American Rule is designed to encourage. Feeshifting to prevent bad faith litigation does not

operate, as the Government’s interpretation of Section

5

Bad faith litigation conduct is illegitimate litigant behavior

that abuses the judicial process. See Cal. Motor Transp. Co. v.

Trucking Unlimited, 404 U.S. 508, 513 (1972); see also, e.g.,

Leubsdorf, supra, at 29 (“The ‘bad faith’ doctrine” awards

attorney fees “for the obvious purpose of deterring illegitimate

behavior in the courtroom, and sometimes outside it.”).

16

145 here would, to discourage the good-faith pursuit

of legitimate, litigation-related objectives. See, e.g.,

Prof’l Real Estate Inv’rs, Inc. v. Columbia Pictures

Indus., Inc., 508 U.S. 49, 65 (1993) (attorneys’ fees

inappropriate as long as litigation reflects an

“objectively plausible effort to enforce rights”).

2. The Patent Act shifts fees “in exceptional cases,”

but that too provides no precedent for fee-shifting to

discourage legitimate litigation conduct. See 35

U.S.C. § 285 (“The court in exceptional cases may

award reasonable attorney fees to the prevailing

party.”). An “exceptional” patent case is “one that

stands out from others with respect to the substantive

strength of a party’s litigating position (considering

both the governing law and the facts of the case) or

the unreasonable manner in which the case was

litigated.” Octane Fitness, LLC v. ICON Health &

Fitness, Inc., 572 U.S. 545, 554 (2014); see Highmark

Inc. v. Allcare Health Mgmt. Sys., 572 U.S. 559, 563

(2014) (same); accord Halo Elecs., Inc. v. Pulse Elecs.,

Inc., 136 S. Ct. 1923, 1935 (2016) (district courts

should have discretion to award enhanced damages in

“egregious cases of misconduct beyond typical

infringement.”). 6 Although Section 285 permits fee

awards in a broader range of “exceptional cases” than

are covered by the “bad faith” doctrine of Rule 11, it

still does not discourage good-faith, potentially

meritorious litigation.

6

In assessing whether a case is exceptional, courts must rely

on factors akin to those that are appropriate for determining bad

faith. See Octane, 572 U.S. at 554 & n.6 (“factors” to consider

include “frivolousness, motivation, objective unreasonableness

(both in the factual and legal components of the case) and the

need in particular circumstances to advance considerations of

compensation and deterrence”).

17

3. Nor does the authority to charge costs against

parties who engage in legitimate, litigation-related

conduct provide any precedent for an award of

attorneys’ fees against such parties. It is wellunderstood (and has long been the case in American

practice) that, unlike attorneys’ fees, costs are

routinely shifted among litigants. See, e.g., James R.

Maxeiner, Cost & Fee Allocation in Civil Procedure, 58

Am. J. Comp. L. 195, 195 (2010) (“Court costs in

American civil procedure are allocated to the loser

(‘loser pays’) as elsewhere the civilized world.”). Thus,

contrary to the Government’s argument (e.g., Pet’r Br.

24-29), Section 145’s imposition of costs on

meritorious plaintiffs is unremarkable, and therefore

offers no evidence that Congress intended to take the

further, extraordinary step of including attorneys’ fees

in the awarded “expenses” to discourage the

vindication of rights in court.

III. THE GOVERNMENT CANNOT CARRY ITS

BURDEN OF DEMONSTRATING THAT

SECTION 145 AUTHORIZES LITIGATIONDISCOURAGING FEE AWARDS.

Because both the American Rule and its exceptions

are designed to encourage, rather than discourage,

the vindication of rights in court, the Government’s

interpretation of Section 145 would mark a

substantial departure from historical practice. To

prevail in its efforts for that departure, the

Government must show an “explicit” Congressional

exception. Baker Botts, 135 S. Ct. at 2164. The

Government cannot meet that burden.

18

A. Section 145 Does Not Avoid The

American Rule.

The Government seeks to characterize Section 145

as a sui generis provision that does not implicate the

American Rule because it purportedly “operates not

as a form of fee-shifting * * * but rather as ‘an

unconditional compensatory charge imposed on’ all

applicants who invoke Section 145.” Pet’r Br. 33-38

(quoting Shammas, 784 F.3d at 221). But the Court

has already rejected that distinction. In Baker Botts,

the Court made clear that any provision that would

“forc[e] one side to pay the other’s attorney’s fees”

implicates the American Rule. 135 S. Ct. at 2169.

Contrary to the Government’s position, the fact that

the “Court did not mention the American Rule” in

Cloer does not undermine the Baker Botts holding.

Cf. Pet’r Br. 37. As the Government concedes, the

statute at issue in Cloer (NCVIA) provides that the

Government pay those fees “unambiguously,” ibid.,

thus rendering any analysis concerning the American

Rule’s “clear statement” requirement irrelevant. See

Pet. App. 14a-15a (Cloer stands only “for the

unremarkable principle that a statute providing for

the award of ‘attorney’s fees’ can displace the

American Rule”). Cloer therefore provides no support

for the Government’s assertion that this Court did not

mean what it said in Baker Botts.

In any event, the Government’s effort to avoid the

American Rule here makes little sense on its own

terms.

To conceptualize Section 145 as an

“unconditional expense-reimbursement requirement,”

as the Government does (Pet’r Br. 16), only highlights

that the Government’s interpretation of Section 145

serves to damage the American Rule even more than

a success-based provision would. Cf. supra pp. 14-15

19

(discussing merits-indifferent, plaintiff-friendly fee

shifting).7 Whereas a success-based provision would

burden

only

unsuccessful

plaintiffs,

an

“unconditional” attorneys’ fees requirement would

burden every litigant who sought judicial review, even

if successful.

Far from rendering the American Rule inapplicable,

that characteristic presents an a fortiori case for

application of a clear-statement requirement. See,

e.g., Baker Botts, 135 S. Ct. at 2164 (“explicit statutory

authority” required before “deviat[ing]” from “longestablished and familiar legal principles”) (quotations

and alterations omitted). The Court has made clear

that merits-indifferent fee shifting reflects such an

extreme departure from traditional practice that it

will not be adopted in the absence of certainty that it

is what Congress intended. See Ruckelshaus, 463 U.S.

at 685 (noting that if the history of fee shifting in this

Country reflects one “consistent, established rule,” it

is that “a successful party need not pay its

unsuccessful adversary’s fees”). Indeed, although

there exists some, limited statutory precedent for

plaintiff-friendly fee shifting without regard to the

7

If the Government were correct that Section 145 was enacted

to burden the good-faith pursuit of meritorious litigation by

private parties, the statute would raise grave First Amendment

concerns. See, e.g., Bill Johnson’s Rests., Inc. v. N.L.R.B., 461

U.S. 731, 741 (1983) (“[T]he right of access to the courts is an

aspect of the First Amendment right to petition the Government

for redress of grievances.”); Boddie v. Connecticut, 401 U.S. 371,

374 (1971) (holding that state-court fees that denied access to

courts constituted undue burden on exercise of constitutional

rights). Cf. Prof’l Real Estate Inv’rs, 508 U.S. at 56 (refusing,

when interpreting the Sherman Act, to “impute to Congress an

intent to invade the First Amendment right to petition”)

(quotation omitted).

20

underlying merits (and, even then, only where the

entity paying is the Government), cf. Cloer, 569 U.S.

373-74, the Government has not pointed to any

precedent in American history for a merits-agnostic,

defendant-friendly provision. Cf. supra pp. 10-17

(discussing Congress’s historical preference for

employing fee shifting to favor plaintiffs). Skepticism

that Section 145 refers to attorneys’ fees is therefore

all the more appropriate in light of the statute’s

indifference to the merits of any given case.

2. At its core, the Government’s argument is that

district court review of PTO decisions should be

subject to a special rule, not the American Rule. As

the Court has made clear, intellectual property

litigation does not have its own rules; it is treated the

same as other litigations. 8 The Government is not

entitled to its own exception—its own special

exemption from the American Rule—for review of

PTO decisions, absent a clear and explicit

Congressional mandate.

8

See, e.g., eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388,

391-94 (2006) (“These familiar [injunction] principles apply with

equal force to disputes arising under the Patent Act. * * *

Nothing in the Patent Act indicates that Congress intended such

a departure. * * * This approach is consistent with our treatment

of injunctions under the Copyright Act. * * * And as in our

decision today, this Court has consistently rejected invitations to

replace traditional equitable considerations with a rule that an

injunction automatically follows a determination that a

copyright has been infringed. * * * [S]uch discretion must be

exercised consistent with traditional principles of equity, in

patent disputes no less than in other cases governed by such

standards.); see also Fleischmann Distilling, 386 U.S. at 718-21

(in accord for trademark law).

21

B. The Government’s Interpretation Of

Section 145 Invades The Common Law

And Therefore Requires A Clear Textual

Authorization.

Setting aside the American Rule, the Government

cannot deny that its interpretation of Section 145

invades the common law. As the Court has repeatedly

emphasized, statutes will not be interpreted to invade

the common law in the absence of explicit language.

See, e.g., Samantar v. Yousuf, 560 U.S. 305, 320 n.13

(2010) (“[W]e interpret the statute with the

presumption that Congress intended to retain the

substance of common law.”); Nken v. Holder, 556 U.S.

418, 433 (2009); United States v. Texas, 507 U.S. 529,

534 (1993); Norfolk Redevelopment & Hous. Auth. v.

Chesapeake & Potomac Tel. Co. of Va., 464 U.S. 30, 35

(1983). Indeed, it was deviation from the common

law—and not merely from the American Rule itself—

that drove the outcome in Baker Botts. 135 S. Ct. at

2164 (clear-statement requirement applied because

rule against fee shifting “has roots in our common law

reaching back to at least the 18th century”).

At common law, cost-shifting (other than for badfaith litigation practices) was “not allowed.”

Taniguchi v. Kan Pac. Saipan, Ltd., 566 U.S. 560, 564

(2012) (citing Alyeska Pipeline Serv., 421 U.S. at 24748); see Empire State Ins. Co. v. Chafetz, 302 F.2d 828,

830 (5th Cir. 1962) (“There was no common law right

to attorneys’ fees.”); Hyatt v. Shalala, 6 F.3d 250, 254

(4th Cir. 1993) (“The common law allows awards of

attorneys’ fees in only a few exceptional cases, such as

when the losing party has willfully disobeyed a court

order or has acted in bad faith, vexatiously, wantonly,

or for oppressive reasons.”). It follows, therefore, that

even if the Government were correct that merits-

22

indifferent fee shifting does not implicate the

American Rule—an unsupportable position—the

Government’s interpretation of Section 145 still would

invade the common law and require a clear statement

from Congress. The Government does not address

this

well-established

principle

of

statutory

construction.

C. Section 145 Does Not Clearly Authorize

Attorneys’-Fee Awards.

Because the Government’s interpretation of Section

145 reflects a radical break from the American Rule

and the common law, the question for the Court is

whether Section 145 is susceptible to only that

interpretation. See, e.g., Buckhannon Bd. & Care

Home, 532 U.S. at 602. It is not.

1.

As the respondent explains, the phrase

“expenses” can easily be (and, in fact, most naturally

is) interpreted to refer only to litigation outlays that

are traditionally the subject of cost-shifting. See Brief

Of Respondent NantKwest, Inc. (filed July 15, 2019)

(“Resp. Br.”) 15-29. As the Court recently made clear,

using an inclusive modifier (in this instance, “all”)

does not expand the noun’s meaning. See Rimini St.,

139 S. Ct. at 878-79 (in phrase “full costs,” “[t]he

adjective ‘full’ * * * does not alter the meaning of the

word ‘costs.’”). As a straightforward textual matter,

the statute is therefore easily susceptible to an

interpretation that excludes attorneys’ fees.

2. The PTO’s own longstanding interpretation of the

word “expenses” belies any claim that the statute

clearly authorizes fee shifting. Until 2013, it was the

PTO’s view that the phrase “all * * * expenses” did not

encompass attorneys’ fees; now the PTO says it does.

The existence of such conflicting interpretations

23

forecloses the Government from demonstrating that

Section 145 unambiguously provides for attorneys’

fees, as the Government must in order to prevail. See

Baker Botts, 135 S. Ct. at 2164. See generally, e.g.,

Nat’l Cable & Telecomms. Ass’n v. Brand X Internet

Servs., 545 U.S. 967, 982-83 (2005) (agency may only

adopt interpretation of statute that conflicts with

prior interpretation where statute is “ambiguous”).

3. Congressional practice favors affirmance, as well.

In the America Invents Act of 2011, Congress made

substantive changes to Section 145’s venue provisions

for PTAB review, but kept the “expenses” language at

issue here intact. That amendment took place two

years before the PTO adopted its current position, and

at a time when Congress knew the PTO interpreted

“all * * * expenses” to exclude attorneys’ fees. Since

“Congress is presumed to be aware of an

administrative or judicial interpretation of a statute

and to adopt that interpretation when it reenacts a

statute without change * * * ,” Fogerty v. Fantasy,

Inc., 510 U.S. 517, 527 (1994) (citations omitted), the

pre-2013 treatment of Section 145 was validated by

the 2011 Act.

4. In addition to shedding light on the policy

underlying the exceptions to the American Rule, see

supra pp. 10-17, the fee provision of 35 U.S.C. § 285

also demonstrates that “all * * * expenses” does not

include attorney’s fees. See Pet. App. 22a-23a; Resp.

Br. 26-29. “Where Congress includes particular

language in one section of a statute but omits it in

another section of the same Act, it is generally

presumed that Congress acts intentionally and

purposely in the disparate inclusion or exclusion.”

Russello v. United States, 464 U.S. 16, 23 (1983)

(citation and alteration omitted). As the court of

24

appeals noted, Section 285 contains precisely the sort

of clear language this Court’s precedents require

before shifting of attorneys’ fees will be authorized.

See Pet. App. 23a (citing 35 U.S.C. §§ 271(e)(2), (4),

273(f), and 297(b)(1), and noting that, when provisions

of the Patent Act other than Section 285 impose

attorneys’ fees, they do so by expressly referring to

Section 285). Congress employed no such language in

Section 145. Thus, Section 285 further emphasizes

that the expenses provided for in Section 145 do not

include attorneys’ fees and pro rata staff

expenditures.

25

CONCLUSION

For the foregoing reasons and those in the

respondent’s brief, the judgment should be affirmed.

Respectfully submitted,

SHELDON H. KLEIN

JEFFREY I.D. LEWIS

President

Counsel of Record

AMERICAN INTELLECTUAL NORTON ROSE FULBRIGHT US LLP

PROPERTY LAW ASSOC. 1301 Avenue of the Americas

1400 Crystal Drive,

New York, NY 10019

Suite 600

(212) 318-3363

jeffrey.lewis@

Arlington, VA 22202

nortonrosefulbright.com

(703) 415-0780

PETER B. SIEGAL

NORTON ROSE FULBRIGHT US LLP

799 9th Street, N.W.,

Suite 1000

Washington, D.C. 20001

(202) 662-4663

JULY 22, 2019

Counsel for Amicus Curiae