Amicus Curiae Brief — Laura Peter, Deputy Director, Patent and Trademark Office, Petitioner v. NantKwest, Inc.
Supreme Court briefJul 22, 2019
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NO. 18-801
In the
Supreme Court of the United States
________________
LAURA PETER, DEPUTY DIRECTOR,
UNITED STATES PATENT AND TRADEMARK
OFFICE,
Petitioner,
v.
NANTKWEST, INC.,
Respondent.
________________
On Writ of Certiorari to the United States
Court of Appeals for the Federal Circuit
________________
BRIEF OF THE INTERNATIONAL
TRADEMARK ASSOCIATION AS
AMICUS CURIAE
IN SUPPORT OF RESPONDENT
_______________
LAWRENCE K. NODINE
Counsel of Record
DAVID S. FLEMING
CHITTAM U. THAKORE
BRINKS GILSON & LIONE
ALAN WHITE
NBC Tower
BALLARD SPAHR LLP
455 N. Cityfront Plaza Dr. 999 Peachtree St., NE
Suite 3600
Suite 1000
Chicago, IL 60611
Atlanta, GA 30309
(312) 321.4200
(678) 420-9300
Counsel for Amicus Curiae
The International Trademark Association
i
TABLE OF CONTENTS
Page
INTERESTS OF THE AMICUS CURIAE ................ 1
SUMMARY OF ARGUMENT.................................... 5
LEGAL BACKGROUND ........................................... 9
PROCEDURAL HISTORY ...................................... 10
ARGUMENT ............................................................ 10
1. THE FEDERAL CIRCUIT CORRECTLY
REJECTED SHAMMAS AND INSTEAD
APPLIED THE AMERICAN RULE ............. 10
2. BECAUSE
CONGRESS
EXPLICITLY
AUTHORIZED AN AWARD OF ATTORNEY’S
FEES IN OTHER PARTS OF THE PATENT
AND LANHAM ACTS, THIS COURT
SHOULD PRESUME THAT CONGRESS
ACTED
INTENTIONALLY
AND
PURPOSELY IN OMITTING SUCH A
PROVISION FROM SECTION 145 ............. 16
3. THE FEDERAL CIRCUIT CORRECTLY
HELD THAT “EXPENSES OF THE
PROCEEDING” IS AMBIGUOUS. .............. 18
ii
4. THE LEGISLATIVE HISTORY DOES NOT
SHOW THAT CONGRESS EXPLICITLY AND
CLEARLY INTENDED “EXPENSES” TO
INCLUDE ATTORNEY’S FEES IN EITHER
THE PATENT OR LANHAM ACT ............... 22
5. THE GOVERNMENT HAS NOT JUSTIFIED
THE USPTO’S NEW INTERPRETATION OF
SECTION 145 OR SECTION 21(b)(3) .......... 36
CONCLUSION ......................................................... 40
iii
TABLE OF AUTHORITIES
Cases
Already, LLC v. Nike, Inc.,
568 U.S. 85 (2013).................................................. 2
Alyeska Pipeline Serv. Co. v. Wilderness Soc’y,
421 U.S. 240 (1975).............................................. 11
Arcambel v. Wiseman,
3 U.S. (3 Dall.) 306 (1796) ............................. 11, 24
B&B Hardware, Inc. v. Hargis Indus., Inc.,
135 S. Ct. 1293 (2015)............................................ 2
Baker Botts L.L.P. v. ASARCO LLC,
135 S. Ct. 2158 (2015).......................................... 10
Buckhannon Bd. & Care Home, Inc. v. West Virginia
Dept. of Health and Human Resources,
532 U.S. 598 (2001)......................................... 10-11
Chloe v. Queen Bee of Beverly Hills, LLC,
616 F.3d 158 (2d Cir. 2010) ................................... 3
Christian Louboutin S.A. v.
Yves Saint Laurent Am. Holding, Inc.,
696 F.3d 206 (2d Cir. 2012) ................................... 3
Colonial Press Intern., Inc. v. U.S.,
788 F.3d 1350 (Fed. Cir. 2015) ............................ 22
Dastar Corp. v. Twentieth Century Fox Film Corp.,
539 U.S. 23 (2003).................................................. 3
iv
Dickinson v. Zurko,
527 U.S. 150 (1999)................................................ 3
Exxon Mobil Corp. v. Allapattah Servs., Inc.,
545 U.S. 546 (2005)......................................... 27-28
Ferring B.V. v. Watson Labs., Inc.-Fla.,
764 F.3d 1382 (3d Cir. 2014) ................................. 3
Fla. Prepaid Postsecondary Educ. Expense Bd. v.
Coll. Sav. Bank,
527 U.S. 627 (1999)................................................ 3
Fleischer Studios, Inc. v. A.V.E.L.A., Inc.,
654 F.3d 958 (9th Cir. 2011) ................................. 3
Fleischmann Distilling Corp. v. Maier Brewing Co.,
386 U.S. 714 (1967).................................. 29, 35, 39
Fogerty v. Fantasy, Inc.,
510 U.S. 517 (1994).............................................. 33
Fourth Estate Pub. Benefit Corp. v.
Wall-Street.com, LLC,
586 U.S. ___ (2019) ................................................ 2
Hana Fin., Inc. v. Hana Bank,
135 S. Ct. 907 (2015).............................................. 2
Hardt v. Reliance Standard Life Ins. Co.,
560 U.S. 242 (2010)........................................ 10, 15
Iancu v. Brunetti,
588 U.S. ___ (2019) ................................................ 2
v
ITC Ltd. v. Punchgini, Inc.,
482 F.3d 135 (2d Cir. 2007) ................................... 3
K Mart Corp. v. Cartier, Inc.,
486 U.S. 281 (1988)................................................ 3
Kappos v. Hyatt,
566 U.S. 431 (2012).............................................. 24
Keene Corp. v. United States,
508 U.S. 200 (1993).............................................. 18
KP Permanent Make-Up, Inc. v.
Lasting Impression I, Inc.,
543 U.S. 111 (2004)............................................. 2-3
Levi Strauss & Co. v.
Abercrombie & Fitch Trading Co.,
633 F.3d 1158 (9th Cir. 2011) ............................... 3
Louis Vuitton Malletier S.A. v.
Haute Diggity Dog, LLC,
507 F.3d 252 (4th Cir. 2007) ................................. 3
Matal v. Tam,
137 S. Ct. 1744 (2017)............................................ 2
McLaren v. Fleischer,
256 U.S. 477 (1921).............................................. 21
Mission Product Holdings, Inc. v. Tempnology, LLC,
587 U.S. ___ (2019) ................................................ 2
Moseley v. V Secret Catalogue, Inc.,
537 U.S. 418 (2003)................................................ 3
vi
NantKwest, Inc. v. Iancu,
898 F.3d 1177 (Fed. Cir. 2018) .................... passim
Nantkwest, Inc. v. Matal,
860 F.3d 1352 (Fed. Cir. 2017) ............................ 39
Pom Wonderful LLC v. Coca-Cola Co.,
573 U.S. 102 (2014)................................................ 2
Qualitex Co. v. Jacobson Prods. Co.,
514 U.S. 159 (1995)................................................ 3
Rimini Street Inc. v. Oracle USA, Inc.,
139 S. Ct. 873 (2019)................................ 16, 19, 33
Rosetta Stone Ltd. v. Google, Inc.,
676 F.3d 144 (4th Cir. 2012) ................................. 3
Ruckelshaus v. Sierra Club,
463 U.S. 680 (1983).................................. 13, 14, 15
Russello v. United States,
464 U.S. 16 (1983)................................................ 18
Shammas v. Focarino,
784 F.3d 219 (4th Cir. 2015) ....................... passim
Starbucks Corp. v. Wolfe’s Borough Coffee, Inc.,
588 F.3d 97 (2d Cir. 2009) ..................................... 3
Summit Valley Indus. Inc. v. Local 112, United Bhd.
of Carpenters & Joiners of Am.,
456 U.S. 717 (1982).............................................. 39
Test Masters Educ. Servs., Inc. v. Singh,
428 F.3d 559 (5th Cir. 2005) ................................. 3
vii
TrafFix Devices, Inc. v. Mktg. Displays, Inc.,
532 U.S. 23 (2001).................................................. 3
Two Pesos, Inc. v. Taco Cabana, Inc.,
505 U.S. 763 (1992)................................................ 3
United States v. Wong Kim Bo,
472 F.2d 720 (5th Cir. 1972) ............................... 18
Wal-Mart Stores, Inc. v. Samara Bros.,
529 U.S. 205 (2000)................................................ 3
Statutes and Other Authorities
12 U.S.C. § 1464(d)(1)(B)(vii) .................................... 16
12 U.S.C. § 1786(p) ................................................... 17
15 U.S.C. § 1071 ................................................ passim
15 U.S.C. § 1071(a).................................................... 30
15 U.S.C. § 1071(b)............................................ passim
15 U.S.C. § 1071(b)(3) ....................................... passim
15 U.S.C. § 1114(2)(D)(iv) ......................................... 17
15 U.S.C. § 1116(d)(11) ............................................. 17
15 U.S.C. § 1117(a).................................................... 17
15 U.S.C. § 1117(b).................................................... 17
15 U.S.C. § 1122(c) .................................................... 17
viii
28 U.S.C. § 1447(c) .............................................. 17, 20
35 U.S.C. § 145 .................................................. passim
35 U.S.C. § 271(e)(4) ................................................. 17
35 U.S.C. § 273(f) ...................................................... 17
35 U.S.C. § 285 .......................................................... 17
133 Cong. Rec. S16546-54 (Nov. 19, 1987) ............... 32
Ch. 88, § 10, 5 Stat. 353–54 (1839) ........................... 24
H.R. Doc. No. 25-80 (3d Sess. 1839) ............. 24, 25, 37
H.R. Doc. No. 29-52 (2d Sess. 1847) ......................... 26
Kara W. Swanson, The Emergence of the Professional
Patent Practitioner, 50 Tech & Culture 519
(2009).................................................................... 23
Patent Act of 1836, ch. 337, § 9, 5 Stat. 117 ............ 22
Pub. L. No. 87-772, 76 Stat. 769 (1962) ................... 29
Pub. L. No. 93-596, 88 Stat. 1949 (1975) ................. 28
Pub. L. No. 93-600, 88 Stat. 1955 (1975) ........... 28, 29
Pub. L. No. 97-164, 96 Stat. 25 (1982) ..................... 28
Pub. L. No. 98-620, 98 Stat 3335 (1984) .................. 28
Pub. L. No. 100-667, 102 Stat. 3935 (1988) ..... passim
Pub. L. No. 106-113, 113 Stat. 1501 (1999) ....... 27, 37
ix
Pub. L. No. 111-146, 124 Stat. 66 (2010) ................. 27
Pub. L. No. 112-29, 125 Stat. 284 (2011) ........... 27, 36
Pub. L. No. 114–13, 129 Stat. 2290 .......................... 37
R. Leighton, Awarding Attorneys’ Fees in
“Exceptional” Lanham Act Cases: A Jumble of
“Murky” Law, 102 Trademark Reporter 849
(2012).................................................................... 11
S. Rep. No. 93 1400 (1974), reprinted in
1974 U.S.C.C.A.N. 7132 ................................. 29-30
S. Rep. No. 100-515, (1988), reprinted in
1988 U.S.C.C.A.N. 5577 .................... 32, 33, 34, 35
Sup. Ct. R. 31(1) .......................................................... 4
Sup. Ct. R. 37.3(a) ....................................................... 1
Sup. Ct. R. 37.6 ........................................................... 1
U.S. Patent and Trademark Office, U.S. Dep’t of
Commerce, The Story of the U.S. Patent and
Trademark Office (1988) ..................................... 23
AMICUS CURIAE BRIEF OF THE
INTERNATIONAL TRADEMARK
ASSOCIATION IN SUPPORT OF
RESPONDENT
The undersigned amicus curiae respectfully
submits this brief in support of Respondent
NantKwest, Inc., and urges affirmance of the decision
below in NantKwest, Inc. v. Iancu, 898 F.3d 1177 (Fed.
Cir. 2018).1
INTERESTS OF THE AMICUS CURIAE
Amicus curiae the International Trademark
Association (“INTA”) is a not-for-profit global
organization dedicated to the support and
advancement of trademarks and related intellectual
property. Founded in 1878, INTA has more than
7,200 member organizations from 191 countries. Its
members include trademark and brand owners, as
1 Pursuant to Supreme Court Rule 37.6, this brief was authored
solely by INTA and its counsel, and no part of this brief was
authored by counsel for a party. No party or counsel for a party,
nor any other person or entity other than amicus curiae, its
members, and its counsel, made a monetary contribution
intended to fund the preparation or submission of this brief.
Pursuant to Supreme Court Rule 37.3(a), both Petitioner and
Respondent have provided written consent to INTA’s filing of this
brief.
2
well as law firms and other professionals who
regularly assist in the creation, registration,
protection, and enforcement of trademarks. All INTA
members share the goal of promoting an
understanding of the essential role that trademarks
play in fostering effective commerce, fair competition,
and informed decision-making by consumers.
INTA (formerly known as the United States
Trademark Association) was founded in part to
encourage the enactment of federal trademark
legislation following invalidation on constitutional
grounds of the United States’ first trademark act.
Since then, INTA has been instrumental in making
recommendations and providing assistance to
legislators in connection with major trademark and
related legislation. INTA also has participated as
amicus curiae in numerous cases in this Court and
other courts across the country involving significant
Lanham Act issue.2 Moreover, INTA’s members are
2 Cases in which INTA has filed amicus briefs include: Iancu v.
Brunetti, 588 U.S. ___ (2019); Mission Product Holdings, Inc. v.
Tempnology, LLC, 587 U.S. ___ (2019); Fourth Estate Pub.
Benefit Corp. v. Wall-Street.com, LLC, 586 U.S. ___ (2019); Matal
v. Tam, 137 S. Ct. 1744 (2017); Hana Fin., Inc. v. Hana Bank,
135 S. Ct. 907 (2015); B&B Hardware, Inc. v. Hargis Indus., Inc.,
135 S. Ct. 1293 (2015); Pom Wonderful LLC v. Coca-Cola Co., 573
U.S. 102 (2014); Already, LLC v. Nike, Inc., 568 U.S. 85 (2013);
KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543
3
frequent participants in litigation both in courts and
in administrative proceedings before the United
States Patent and Trademark Office (“USPTO”) and
the Trademark Trial and Appeal Board (“TTAB”),
with respect to the Lanham Act. INTA and its
members have a deep and powerful interest in the
development of clear, consistent, and equitable
principles of trademark law.
U.S. 111 (2004); Dastar Corp. v. Twentieth Century Fox Film
Corp., 539 U.S. 23 (2003); Moseley v. V Secret Catalogue, Inc., 537
U.S. 418 (2003); TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532
U.S. 23 (2001); Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S.
205 (2000); Fla. Prepaid Postsecondary Educ. Expense Bd. v.
Coll. Sav. Bank, 527 U.S. 627 (1999); Dickinson v. Zurko, 527
U.S. 150 (1999); Qualitex Co. v. Jacobson Prods. Co., 514 U.S.
159 (1995); Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763
(1992); K Mart Corp. v. Cartier, Inc., 486 U.S. 281 (1988);
Shammas v. Focarino, 784 F.3d 219 (4th Cir. 2015); Ferring B.V.
v. Watson Labs., Inc.-Fla., 764 F.3d 1382 (3d Cir. 2014);
Christian Louboutin S.A. v. Yves Saint Laurent Am. Holding,
Inc., 696 F.3d 206 (2d Cir. 2012); Rosetta Stone Ltd. v. Google,
Inc., 676 F.3d 144 (4th Cir. 2012); Fleischer Studios, Inc. v.
A.V.E.L.A., Inc., 654 F.3d 958 (9th Cir. 2011); Levi Strauss & Co.
v. Abercrombie & Fitch Trading Co., 633 F.3d 1158 (9th Cir.
2011); Chloe v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158 (2d
Cir. 2010); Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., 588
F.3d 97 (2d Cir. 2009); ITC Ltd. v. Punchgini, Inc., 482 F.3d 135
(2d Cir. 2007); Louis Vuitton Malletier S.A. v. Haute Diggity Dog,
LLC, 507 F.3d 252 (4th Cir. 2007); Test Masters Educ. Servs., Inc.
v. Singh, 428 F.3d 559 (5th Cir. 2005).
4
INTA’s Focus on Trademark Issues
INTA has a substantial interest in this matter
because the outcome may have a significant impact on
trademark law. For this reason, INTA has filed four
amicus briefs3 addressing the issues on appeal—two
in Shammas v. Focarino, 784 F.3d 219 (4th Cir. 2015),
and two when the instant case was before the Federal
Circuit.
Mindful of this Court’s admonition that an
amicus brief should bring “to the attention of the
Court relevant matter not already brought to its
attention by the parties,” Sup. Ct. R. 31(1), INTA will
focus on the history that Patent Act Section 145, 35
U.S.C. § 145 (hereinafter, “Section 145”), shares with
the analogous Lanham Act Section 21(b)(3), 15 U.S.C.
§ 1071(b)(3) (hereinafter “Section 21(b)(3)”), which the
Government acknowledges, but otherwise largely
ignores. Lanham Act Section 21(b)(3) is derived from
Patent Act Section 145. The Patent Act and the
Lanham Act both offer a disappointed applicant the
option of filing a civil action in district court as an
alternative to a direct appeal to the circuit court.
3 INTA acknowledges the substantial work of the INTA
members who authored all four of INTA’s prior amicus briefs on
the present issue—Anthony Dreyer (Skadden, Arps, Slate,
Meagher, & Flom LLP) and Mark Mutterperl (Zeisler PLLC).
The present brief is built on their work.
5
Under both the patent and trademark statutes, an
applicant choosing to file in the district court must pay
“all the expenses” of the proceedings. Compare 35
U.S.C. § 145 and 15 U.S.C. § 1071(b)(3).
Because the language of Section 21(b)(3) is
materially the same as the Patent Act Section 145
under review, this Court should consider both statutes
when it interprets Section 145 at issue. INTA submits
that any construction of Section 145 of the Patent Act
must consider input from, and harmonize with, the
Lanham Act. Accordingly, INTA offers this amicus
brief to focus light on the trademark legislative and
judicial history that the parties may not emphasize.
SUMMARY OF ARGUMENT
Courts of the United States were already
following the American Rule that each litigant pays
its own attorney’s fees when, in 1839, Congress
allowed patent applicants to appeal to the district
court, provided they pay the “whole expenses of the
proceeding” without any mention of attorney’s fees.
For 174 years, the Patent Office did not interpret its
right to recover “expenses of the proceedings” to
authorize it to recover its attorney’s fees, but in 2013
the USPTO changed its mind and secured an award of
fees from a trademark applicant that appealed to the
district court under Section 21(b) of the Lanham Act.
6
A divided panel of the Fourth Circuit affirmed,
Shammas v. Focarino, 784 F.3d 219 (4th Cir. 2015),
ruling that the American Rule only applied to statutes
that shifted fees to a prevailing party. Lanham Act
Section 21(b)(3) did not do this, but instead required
that the appealing party always pay the government’s
expenses. Therefore, the Shammas panel majority
held, the “heightened clarity” required by the
American rule was not required.
In the patent case now before this Court, the
Federal Circuit en banc majority rejected Shammas
and held that the American Rule applied. NantKwest,
Inc. v. Iancu, 898 F.3d 1177, 1184 (Fed. Cir. 2018).
The Federal Circuit was correct to reject
Shammas. Most fundamentally, even assuming that
the American Rule does not apply to a statute that
awards attorney’s fees to the Government regardless
of who wins, it does not follow that this should lead to
less scrutiny of the statute. On the contrary, a statute
that purports to require that a party must always pay
the opponent’s attorney’s fees regardless of who wins
should be subject to greater scrutiny, not less.
The Federal Circuit correctly held that
“expenses of the proceedings” is ambiguous and
therefore failed the American Rule’s requirement that
7
Congress must be clear and explicit if it wants to
deviate from the American Rule.
The USPTO has in effect admitted its own
uncertainty about the meaning of “expenses” in
Section 145 by not seeking attorney’s fees in a patent
case for 174 years and for nearly 75 years after
Congress incorporated analogous provisions into the
Lanham Act.
The legislative history of Section 145 does not
indicate that Congress intended “expenses” to include
attorney’s fees. The Government’s reliance on the
1836 Act’s treatment of “salaries” as “expenses” is
misplaced because there is no indication the Patent
Office employed any attorneys at that time or, for that
matter, for many decades.
Likewise, the legislative history of Section
21(b)(3) of the Lanham Act does not indicate that
Congress intended “all expenses of the proceeding” to
include an award of attorney’s fees.
Congress
amended the Lanham Act, and Section 21(b)(3) in
particular, on several occasions—in 1962, 1975, and
1988. All of these dates are long before the USPTO’s
surprise new interpretation in 2013.
On two separate occasions, Congress amended
Section 21 of the Lanham Act, but did not add an
explicit attorney’s fees provision, even though the
8
legislative history reflects clear awareness of the
application of the American Rule to the Lanham Act.
The Government has not justified the USPTO’s
new interpretations of Section 145 and Section
21(b)(3). The Government argues that, after 174
years of not seeking attorney’s fees pursuant to
Section 145, the USPTO is nonetheless entitled to
change its interpretation because the USPTO’s
aggregate operating expenses have increased in the
patent area as a result of the complex litigation
attending the America Invents Act. This argument
has no factual basis. Congress has never instructed
the USPTO that the costs of defending such appeals
should be funded by recovering the USPTO’s
attorney’s fees as Section 145 “expenses.” Congress
has always instructed and expected the USPTO to set
fees sufficient to fund its overall operations, including
the defense of Section 45 and Lanham Act Section 21
actions.
Finally, public policy does not support the
Government’s interpretation.
The Government’s
proposed approach would have a chilling effect and
introduce such a prohibitive expense that it would
effectively remove district court review under Section
145—and also under Section 21(b)(3)—as a viable
procedure for all but the wealthiest applicants.
9
Most importantly, this Court will undermine
decades of American Rule jurisprudence if it holds
that a statute authorizing recovery of “expenses” is
sufficient to authorize an award of attorney’s fees.
The result would be a flood of specious attorney’s fees
claims based on thin statutory language.
LEGAL BACKGROUND
The
Government’s
“Legal
Background”
Statement Sections 1 and 2 (Pet’r’s Br. 2–5) is
thorough and accurate. Any further comment about
those sections is not necessary.
However, the Government’s discussion of the
Lanham Act (Pet’r’s. Br. Sec. 3, at. 6) is incomplete
because it overlooks significant amendments to
Section 21(b)(3), which amendments are relevant to
the constriction of “expenses.” INTA supplements the
Government’s discussion of the Lanham Act. INTA
addresses the significance of these amendments in
Section 4.2, below.
The Government attempts to justify the
USPTO’s decision in 2013 to change its interpretation
of Section 145 of the Patent Act. These justifications
are flawed and will be rebutted below in Section 5
below.
10
PROCEDURAL HISTORY
INTA adopts the Government’s Procedural
Statement.
ARGUMENT
1.
THE FEDERAL CIRCUIT CORRECTLY
REJECTED SHAMMAS AND INSTEAD
APPLIED THE AMERICAN RULE
1.1
The American Rule
Any discussion of attorney’s fees awards must
begin with 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.’” Baker Botts L.L.P. v. ASARCO LLC, 135
S. Ct. 2158, 2164 (2015) (quoting Hardt v. Reliance
Standard Life Ins. Co., 560 U.S. 242, 252–253 (2010)).
The presumption that parties pay their own attorney’s
fees, win or lose, is not easily overcome, as this Court
has recently re-emphasized: “We consequently will
not deviate from the American Rule ‘absent explicit
statutory authority.’ We have recognized departures
from the American Rule only in ‘specific and explicit
provisions for the allowance of attorneys’ fees under
selected statutes.’” Baker Botts, 135 S. Ct. at 2164
(emphasis added) (internal citations omitted) (quoting
Buckhannon Bd. & Care Home, Inc. v. West Virginia
11
Dept. of Health and Human Resources, 532 U.S. 598,
602 (2001); Alyeska Pipeline Serv. Co. v. Wilderness
Soc’y, 421 U.S. 240, 260 (1975).
The American Rule is not new and predates the
1839 enactment of the predecessor of Section 145.
Arcambel v. Wiseman, 3 Dall. 306 (1796); Alyeska
Pipeline Service Co., 421 U.S. 240. “[S]ince shortly
after the first Congress began legislating, the
Supreme Court has consistently declared attorneys’
fees ordinarily are not recoverable in the absence of a
statute or enforceable contract that provides
therefor.” R. Leighton, Awarding Attorneys’ Fees in
“Exceptional” Lanham Act Cases: A Jumble of
“Murky” Law, 102 Trademark Reporter 849, 852
(2012)).
1.2
This Court Granted Certiorari to
Resolve the Conflict Between
Nantkwest and Shammas
The Government’s petition for certiorari was
based in substantial part on the conflict between the
Federal Circuit’s en banc ruling in the instant case
that Patent Act Section 145 “expenses” did not include
attorney’s fees and the Fourth Circuit’s inconsistent
holding in Shammas v. Focarino, 784 F.3d 219 (4th
Cir. 2015) that the corresponding language in the
Lanham Act did include attorney’s fees. Cert. Pet. 12,
12
23. But the Government’s merits brief largely ignores
the Fourth Circuit’s analysis in Shammas.
The Federal Circuit en banc majority rejected
the analysis in Shammas and instead held, correctly,
that the American Rule applied. NantKwest, Inc. v.
Iancu, 898 F.3d 1177, 1184 (Fed. Cir. 2018). The
dissent assumed that the rule applied, but “share[d]
the Fourth Circuit’s doubt that the Rule applies in this
context—i.e., where Congress has simply assigned
payment responsibility to the applicant” regardless of
who prevails. 898 F.3d at 1202.
1.3
The Federal Circuit Correctly
Rejected the Fourth Circuit’s
Misguided Shammas Decision
The Federal Circuit’s en banc majority correctly
rejected Shammas, where a divided panel ruled that
Lanham Act Section 21(b)(3) authorized an award of
attorney’s fees to the USPTO.
To reach this
conclusion, the Shammas panel majority ruled that
the American Rule did not apply:
The requirement that Congress speak with
heightened
clarity
to
overcome
the
presumption of the American Rule thus applies
only where the award of attorneys fees turns on
whether a party seeking fees has prevailed to
at least some degree. . . . Therefore, even
13
assuming that a statute must explicitly provide
for the shifting of attorneys fees to overcome the
presumption of the American Rule, that
requirement is not applicable here.
784 F.3d at 223. The en banc majority in NantKwest
rejected this holding. For three reasons, the Federal
Circuit was correct.
First, and most fundamentally, even assuming
that the American Rule does not apply to a statute
that awards attorney’s fees to the Government
regardless of who wins, it does not follow that this
should lead to less scrutiny of the statute. On the
contrary, a statute that purports to require that a
party must always pay the opponent’s attorney’s fees
regardless of who wins should be subject to greater
scrutiny, not less. Consequently, the Fourth Circuit’s
strained effort to evade the American Rule does not
avoid the need for “heightened clarity.”
Second, the Shammas panel misapplied or
misinterpreted this Court’s opinion in Ruckelshaus v.
Sierra Club, 463 U.S. 680 (1983). The Shammas
majority quoted the following language from
Ruckelshaus:
[W]hen Congress has chosen to depart from the
American Rule by statute, virtually every one
of the more than 150 existing federal fee-
14
shifting provisions predicates fee awards on
some success by the claimant; while these
statutes contain varying standards as to the
precise degree of success necessary for an
award of fees[,] . . . the consistent rule is that
complete failure will not justify shifting
fees . . . .
784 F.3d at 223 (emphasis omitted) (alterations in
original). From virtually this language alone, the
Shammas majority held (incorrectly) that “a statute
that mandates the payment of attorneys fees without
regard to a party’s success is not a fee-shifting statute
that operates against the backdrop of the American
Rule.” Id. Ruckelshaus, however, does not support
the Shammas holding.
Ruckelshaus is not on point because the statute
at issue there, unlike the Sections 145 or 21(b)(3),
explicitly authorized an award of attorney’s fees.
More importantly, the Ruckelshaus Court required “a
clear showing” that Congress intended to award fees
without requiring success.
Put simply, ordinary conceptions of just returns
reject the idea that a party who wrongly
charges someone with violations of the law
should be able to force that defendant to pay the
costs of the wholly unsuccessful suit against it.
15
Before we will conclude Congress abandoned
this established principle that a successful
party need not pay its unsuccessful adversary’s
fees—rooted as it is in intuitive notions of
fairness and widely manifested in numerous
different contexts—a clear showing that this
result was intended is required.
463 U.S. at 685 (emphasis added) and n.7 (“Indeed,
when Congress has desired such a change, it has said
so expressly . . . .”) (emphasis in original). For these
reasons, it is difficult to understand why the
Shammas majority concluded that Ruckelshaus
supported its holding. It plainly supports Respondent
here because the Ruckelshaus Court did not consider
it enough merely to mention “attorney’s fees.” This
Court still required a “clear showing” that Congress
intended this result, Ruckelshaus, 463 U.S. at 685,
and thereby demonstrates that, regardless of whether
the American Rule applies, this Court still requires a
clear and specific authorization to award attorney’s
fees. See also Hardt v. Reliance Standard Life Ins.
Co., 560 U.S. 242, 255 (2010) (“As in the statute in
Ruckelshaus,
Congress
failed
to
indicate
clearly . . . that it ‘meant to abandon historic feeshifting principles and intuitive notions of fairness.’”)
(quoting Ruckelshaus, 463 U.S. at 686)).
16
Third, the Shammas court was mistaken in
attaching
significance
to
Section
21(b)(3)’s
requirement that “all expenses” be paid. 784 F.3d at
224. This Court rejected a similar argument in Rimini
Street Inc. v. Oracle USA, Inc., 139 S.Ct. 873, 878–79
(2019), when it held that “full costs” did not expand
the meaning of “costs.” This reasoning should apply
here as well. Awarding “all expenses” does not expand
the interpretation of “expenses.”
For these three reasons, the Federal Circuit
correctly rejected Shammas.
2.
BECAUSE
CONGRESS
EXPLICITLY
AUTHORIZED
AN
AWARD
OF
ATTORNEY’S FEES IN OTHER PARTS OF
THE PATENT AND LANHAM ACTS, THIS
COURT SHOULD PRESUME THAT
CONGRESS ACTED INTENTIONALLY
AND PURPOSELY IN OMITTING SUCH A
PROVISION FROM SECTION 145
When Congress means to authorize an award of
attorney’s fees, it is careful to do so explicitly and
separately. This pattern permeates the federal law,4
4 See NantKwest, 898 F.3d at 1188–89
(“[C]ourt . . . may allow to
any such party reasonable expenses and attorneys’ fees”)
(quoting 12 U.S.C. § 1464(d)(1)(B)(vii) (alternation in original);
(“[C]ourt . . . may allow to any such party such reasonable
17
but it is especially apparent in the statutes at issue
here. Congress explicitly provided for attorney’s fees
in several sections of the Patent Act. See NantKwest,
898 F.3d at 1190 (“The court in exceptional cases may
award reasonable attorney fees to the prevailing
party”) (quoting 35 U.S.C. § 285) (emphasis omitted);
(“[A] court may award attorney fees under section
285 . . . .”) (quoting 35 U.S.C. § 271(e)(4); (“[T]he court
shall find the case exceptional for the purpose of
awarding attorney fees under section 285”)) (quoting
35 U.S.C. § 273(f)) (emphasis omitted).
Congress
has
also
provided
explicit
authorization for attorney’s fees in several sections of
the Lanham Act. See, e.g., 15 U.S.C. §§ 1114(2)(D)(iv)
(“damages, including costs and attorney’s fees”);
1116(d)(11) (“a reasonable attorney’s fee”); 1117(a)
(“The court in exceptional cases may award
reasonable attorney fees to the prevailing party.”);
1117(b) (“damages . . . together with a reasonable
attorney’s fee”); 1122(c) (“costs and attorney’s fees”).
“[W]here
Congress
includes
particular
language in one section of a statute but omits it in
expenses and attorneys’ fees as it deems just and proper . . . .”)
(quoting 12 U.S.C. § 1786(p) (alternation in original); (“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.”) (quoting 28 U.S.C. § 1447(c)).
18
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)
quoting United States v. Wong Kim Bo, 472 F.2d 720,
722 (5th Cir. 1972); see also Keene Corp. v. United
States, 508 U.S. 200, 208 (1993) (noting the “duty to
refrain from reading a phrase into the statute when
Congress has left it out”).
This canon of construction applies here, in
particular, because, as noted below in the discussion
of the legislative history, Congress has had many
opportunities to consider the language of Lanham Act
Section 21.
Because Congress explicitly added
attorney’s fees to other sections of the Lanham Act,
but not to Section 21, this Court may presume that
Congress acted intentionally. This presumption
should be extended to Section 145, given the
intertwined history of the Section 21(b)(3) and Patent
Act Section 145.
3.
THE FEDERAL CIRCUIT CORRECTLY
HELD THAT “EXPENSES OF THE
PROCEEDING” IS AMBIGUOUS.
The requirement that applicants bringing
actions under Section 145 of the Patent Act pay “all
expenses of the proceedings” is not a specific and
19
explicit indication that Congress intended to require
that applicants pay the Government’s attorney’s fees.
The Federal Circuit ruled that the meaning of
expenses in Section 145 was “at best ambiguous” and,
therefore, did not satisfy the requirement that
deviations from the American Rule be explicit and
clear. NantKwest, 898 F.3d at 1187–88. In its brief
here, the Government counters that the plain
meaning of “expenses” is broad enough to encompass
salaries, including salaries of attorneys, and that this
plain meaning should control. Pet’r’s Br. 18–23. In
addition, the Government observes that “[s]tatutes
that treat attorney’s fees as a form of expense, as by
authorizing courts to award ‘reasonable expenses,
including attorneys’ fees,’ 28 U.S.C. 361, assume that
the term ‘expenses’ encompasses those fees. That
formulation is common.” Pet’r’s Br. 40 and n.7 (listing
statutes that use phrase expense or costs “including
attorneys’ fees”) (emphasis omitted).
The
Government dismisses as harmless redundancy those
statutes that list attorney’s fees separately as if they
are not a subset of any other broader category (as in
“costs and attorneys’ fees”): “[S]ome redundancy is
hardly unusual.” Pet’r’s Br. 41, quoting Rimini St.,
139 S. Ct. at 881.
There are two major flaws in the Government’s
argument.
20
First, the fact that Congress consistently
makes separate provision for attorney’s fees is
evidence that Congress lacks confidence that less
explicit language will satisfy the American Rule. The
Government says the use of phrases like “expenses,
including attorneys’ fees” or “attorneys’ fees and other
expenses” is an admission that attorney’s fees are
merely a type of expense. Petr’s Br. 40–41. But
Congress’s repeated decision to remove doubt by
explicitly listing “attorney’s fees” separately 5 is an
admission that Congress concluded that clarification
was necessary. This is what it means to be “explicit.”
It hardly matters whether Congress sometimes says
“including attorneys’ fees” and at other times says
“and attorneys’ fees.”
In both cases, Congress
consistently and explicitly provides for “attorney’s
fees” as a separate and distinct category, obviously not
content to rely on any general term like expenses. In
fact, Congress’s inconsistency (sometimes “including”
and sometimes “and” and sometimes neither term)
contributes to the uncertainty and supports the
Federal Circuit’s conclusion that Section 145 is
ambiguous.
Second, the USPTO has in effect admitted its
own uncertainty about the meaning of “expenses” in
As in 28 U.S.C. 1447(c) (“any actual expenses, including
attorney fees”). See other examples listed at Pet’r’s. Br. 40 n.7.
5
21
Section 145 by not seeking attorney’s fees until 2013,
174 years after Congress added (in 1839) the
precursor to Section 145 to the Patent Act and nearly
75 years after Congress incorporated analogous
provisions into the Lanham Act. The Government
says, without any record support, that this was merely
forbearance and an exercise of discretion, as if to say
that the USPTO always knew it had the right to
collect attorney’s fees but it exercised discretion to
give applicants a break.
It would be more candid to concede that the
USPTO simply did not consider the term “expenses”
sufficiently explicit to cover attorney’s fees. At a
minimum, a 174 year track record is evidence that
many generations of Patent and Trademark Office
administrators have harbored doubts about the
meaning and scope of the phrase “all expenses of the
proceedings.” These doubts, inferred from the long
delay, support the conclusion that the statutes are
ambiguous, and therefore inadequate to satisfy the
American Rule requirement that the authority to
award attorney fees be clearly and explicitly stated.
See McLaren v. Fleischer, 256 U.S. 477, 480–81 (1921)
(“[T]he practical construction given to an act of
Congress, fairly susceptible of different constructions,
by those charged with the duty of executing it is
entitled to great respect and, if acted upon for a
number of years will not be disturbed except for cogent
22
reasons.”); Colonial Press Intern., Inc. v. U.S., 788
F.3d 1350, 1357–58 (Fed. Cir. 2015) (using practical
construction as a tool of statutory interpretation).
4.
THE LEGISLATIVE HISTORY DOES NOT
SHOW THAT CONGRESS EXPLICITLY
AND CLEARLY INTENDED “EXPENSES”
TO INCLUDE ATTORNEY’S FEES IN
EITHER THE PATENT OR LANHAM ACT
4.1
The legislative history of Patent Act
Section 145 does not indicate that
Congress intended “all expenses of
the
proceedings”
to
include
authority to award attorney’s fees
The Federal Circuit dissent observed, 898 F.3d
at 1198, and the Government now argues, Pet’r’s. Br.
13, that the 1836 Patent Act provided that application
fees would be paid into a fund to pay “salaries of the
officers and clerks herein provided for, and other
expenses of the Patent Office.” Patent Act of 1836, ch.
337, § 9, 5 Stat. 117, 121. The Government says this
shows that “salaries” are “expenses.” This argument
is flawed for two reasons.
First, it misses the question, which is whether
the statute authorized recovery of attorney’s fees, not
whether salaries are expenses. Even if salaries are
expenses, the American Rule would still require that
23
salaries that represent attorney’s fees must be treated
differently.
Second, there is no evidence that the 1836
Patent Office employed any attorneys, or, if it did, that
any of them acted as attorneys during their
employment at that time. INTA has found no
evidence that the patent clerks employed in 1836 were
lawyers. Then, as now, patent clerks, or, in today’s
parlance, Patent Examiners, need not be attorneys
and were more likely scientists or engineers. See,
Kara W. Swanson, The Emergence of the Professional
Patent Practitioner, 50 Tech & Culture 519, 530–32 &
n.42 (2009) (explaining that “conspicuously lacking
during the antebellum period was any reference to
legal training as part of the ideal skills of a patent
practitioner, or much attempt by members of the bar
to occupy that space,” and noting but a single
“antebellum examiner with any legal training”); U.S.
Patent and Trademark Office, U.S. Dep’t of
Commerce, The Story of the U.S. Patent and
Trademark Office, 10 (1988) (observing that by 1856,
“[t]he Patent Office staff consist[ed] of a
Commissioner, a chief clerk, 12 examiners, 12
assistant examiners, a draftsman, an agricultural
clerk, a machinist, a librarian, and about 50 clerical
employees,” but not mentioning either attorneys or
lawyers on staff).
24
Furthermore, by 1839 Congress was already
legislating against the backdrop of the American Rule
and would have included a reference to attorney’s fees
if it intended to include them as a component of
“expenses.” See Arcambel v. Wiseman, 3 U.S. (3 Dall.)
306, 306 (1796) (“We do not think that this charge [of
attorney’s fees] ought to be allowed. The general
practice of the United States is in opposition to it; and
even if that practice were not strictly correct in
principle, it is entitled to the respect of the court, till
it is changed, or modified, by statute.”).
In the 1839 Patent Act, Congress allowed
disappointed patent applicants to appeal by filing a
bill in equity to the district court, with the
requirement that the applicant pay the “whole of the
expenses of the proceeding.” Ch. 88, § 10, 5 Stat. 353–
54 (1839). Concerned about a backlog of appeals to
the Patent Office’s Board of Examiners, 6 the Patent
Office proposed in its 1838 Annual Report to allow an
appeal by bill of equity to the courts. Henry L.
Ellsworth, Rep. from the Comm’r of Patents, H.R. Doc.
6 Caused in part by applicants who added additional evidence to
the record. Henry L. Ellsworth, Rep. from the Comm’r of Patents,
H.R. Doc. No. 25-80, at 2 (3d Sess. 1839). This is comparable to
the facts that gave rise to Kappos v. Hyatt, 566 U.S. 431 (2012),
where Section 145 parties were permitted to add evidence not
submitted during examination, and shows, yet again, that there
is nothing new about the USPTO’s current challenges.
25
No. 25-80, at 2 (3d Sess. 1839). But as the Report
shows, there is no evidence that the Patent Office
foresaw the need for the Patent Office to be
represented by counsel in these proceedings or any
need to employ counsel in the proceedings. The only
“expense” that it expected was the need to compensate
the Chief Judge for his time and that expense was in
subsequent years paid out of the general fund. The
1838 Report explained:
I beg leave to suggest, as a substitute for the
board of examiners, the expediency of allowing
an appeal to the chief justice of this District,
giving him power to examine and determine the
matter summarily at chambers, or otherwise,
on the evidence had before the Commissioner.
From the experience had, thus far, it may be
presumed that the judge would have but few
cases to examine, and that those would not
materially interfere with his other judicial
duties. A reasonable compensation for such
duty may be made from the patent fund.
H.R. Doc. No. 25-80, at 2 (emphasis added). A review
of the Patent Office Annual Reports for 1838–1845
does not reflect salaries paid to any attorneys or any
payments to counsel.
The Annual Reports do,
however, show annual payments to the court out of
the Patent Office’s general account funded by collected
26
application fees. The Annual Report for 1846 includes
“fees paid to counsel in two suits in equity recently
pending against the Commissioner,” but these are
described as “expenses of the office” (versus “of the
proceedings”) and were paid out of the general fund.
Edmund Burke, Rep. of the Comm’r of Patents, H.R.
Doc. No. 29-52, at 1 (2d Sess. 1847). There is no
indication on this occasion (or any other) that the
Patent Office collected any money from applicants as
expenses to cover Patent Office attorney’s fees.
The point is that there was nothing in the text
of the Patent Office proposal for the bill of equity
appeal (found in the 1838 Annual Report) or in the
Patent Office Annual Reports issued over the
following decade that reflects the slightest intention
to recover attorney’s fees paid by the Patent Office for
representation in bill of equity appeals. Given that
United States courts had already made clear their
skepticism about shifting attorney’s fees, the absence
of any reference to attorney’s fees or legal
representation in the equity courts undermines any
suggestion that Congress clearly and explicitly
intended the phrase “expenses of the proceeding” to
include the Patent Office’s attorney fees.
27
4.2
The legislative history of Lanham
Act Section 21(b)(3) does not
indicate that Congress intended “all
expenses of the proceeding” to
include
authority
to
award
attorney’s fees
The Lanham Act became law in 1946 and that
is the relevant date to begin the study of its legislative
history.
Thereafter, Congress focused on and
amended the Lanham Act, and Section 21(b) in
particular, in 1962, 1975, and 1988. All of these dates
are long before the USPTO’s surprise new
interpretation in 2013 that an applicant appealing a
USPTO decision pursuant to Section 21(b)(3) would be
required to pay the USPTO’s attorney’s fees
regardless of which party won. There is no suggestion
that Congress ever discussed attorney’s fees when
deliberating on any of these amendments. The issue
did no arise when the Patent Act’s language was first
imported into the Lanham Act, or in the numerous
times Section 21 of the Lanham Act was amended in
the interim. 7 See Exxon Mobil Corp. v. Allapattah
7 See Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 9,
125 Stat. 284, 316 (2011); Trademark Technical and Conforming
Amendment Act of 2010, Pub. L. No. 111-146, § 3, 124 Stat. 66,
67 (2010); Consolidated Appropriations Act, 2000, Pub. L. No.
106-113, Div. B, § 1000(a)(9), 113 Stat. 1501, 1536 (1999);
Trademark Law Revision Act of 1988, Pub. L. No. 100-667, § 120,
28
Servs., Inc., 545 U.S. 546, 568 (2005) (“Extrinsic
materials have a role in statutory interpretation . . .
to the extent they shed a reliable light on the enacting
Legislature’s understanding of otherwise ambiguous
terms.”).
When Congress enacted the Lanham Act in
1946, it simply adopted by reference Patent Act
Section 145. This was more than 100 years after the
1839 amendment to the Patent Act that created the
statutory predecessor to the Section 145 appeal to the
district court. At no time during that century had the
Patent Office sought to recover attorney’s fees as
“expenses” under Section 145. Accordingly, Congress
was not on notice when it passed the 1946 Lanham
Act that the adopted language could be stretched to
require trademark applicants appealing to the district
court to pay the government’s attorney’s fees.
In 1962, Congress amended the Lanham Act to
dispense with the cross reference and instead added
Section 21(b)(3) to customize the Section 145 appellate
structure to fit trademark procedure, but it kept the
102 Stat. 3935, 3942 (1988); Trademark Clarification Act of 1984,
Pub. L. No. 98-620, § 414, 98 Stat 3335 (1984); Federal Courts
Improvement Act of 1982, Pub. L. No. 97-164, § 162, 96 Stat. 25
(1982); Act of Jan. 2, 1975, Pub. L. No. 93-600, § 2, 88 Stat. 1955
(1975); Act of Jan. 2, 1975, Pub. L. No. 93-596, 88 Stat. 1949
(1975).
29
substance of Section 145. Pub. L. No. 87-772, § 12, 76
Stat. 769, 771-72 (1962). In particular, Congress
adopted the Patent Act’s requirement that “all the
expenses of the proceedings shall be paid by the party
bringing them, whether the final decision is in his
favor or not.” Id. Of course, the Patent Office had not
changed its interpretation of Section 145 by this date,
so Congress had no reason to clarify any
interpretation of “expenses” in the Lanham Act and it
certainly took no steps to explicitly authorize an
award of attorney’s fees.
In 1975, Congress enacted two amendments to
the Lanham Act. Pub. L. No. 93-600. One of the
amendments added to Section 35 a provision explicitly
authorizing the recovery of attorney’s fees in
trademark infringement actions under Section 35(a)
of the Lanham Act. This amendment was a response
to this Court’s Fleischmann Distilling Corp. v. Maier
Brewing Co., 386 U.S. 714 (1967), decision, which held
that the American Rule barred awarding attorney’s
fees as “damages” to a prevailing plaintiff in a
trademark infringement action. The accompanying
Senate Report on the bill discusses, with respect to the
attorney’s fees amendment, the American Rule
presumption against awarding attorney’s fees absent
explicit statutory authorization. See S. Rep. No.
30
93-1400 (1974), reprinted in 1974 U.S.C.C.A.N. 7132,
7134–36.8
Importantly, the same 1975 law amended
Section 21(a) procedures 9 for direct appeals to the
circuit court, but made no changes regarding Section
21(b) appeals to the district court.
8 The Senate Report shows that Congress was well aware of the
American Rule when it passed the 1974 amendments:
The general rule in United States judicial proceedings is
that, absent specific authority by statute or contract,
attorney fees are not recoverable in ordinary actions at
law or in equity by either a successful plaintiff or
defendant. This American departure from the ‘English
rule,’ under which attorney fees are generally awarded,
arose
early
in
this
country’s
judicial
development. . . . Prior to 1967, the courts in trademark
infringement and unfair competition cases had developed
an equitable doctrine holding that attorney fees are
recoverable by a successful plaintiff, notwithstanding the
absence of express statutory authority under the
Lanham Act. This doctrine was overruled, however, by
the Supreme Court decision in Fleischmann Distilling
Corp. v. Maier Brewing Co., 386 U.S. 714 (1967).
1974 U.S.C.C.A.N. 7132, 7135–36.
The amendment eliminated “as archaic the existing
requirement that socalled ‘reasons of appeal’ be filed with the
Patent Office when appealing” to the circuit court. Id. at 7132.
9
31
These 1975 amendments gave Congress a clear
opportunity to incorporate an explicit reference to
attorney’s fees into Section 21(b).
Congress’s
amendment of Section 35 to add an attorney’s fee
provision shows that Congress was fully aware that
the American Rule required explicit authorization of
attorney’s fees. It is a fair inference that Congress did
not see any need to clarify Section 21(b)(3) because it
either did not conceive that “expenses” could be
stretched to include attorney’s fees or it did not intend
to authorize an attorney’s fee recovery.
In 1988 Congress amended Section 21(b)(3) to
insert the phrase “unless the court finds the expenses
to be unreasonable” immediately before the language
borrowed from Section 145. Trademark Law Revision
Act of 1988, Pub. L. No. 100-667, § 120, 102 Stat. 3935,
3942 (1988). After this amendment, Section 21 reads:
“unless the court finds the expenses to be unreasonable,
all the expenses of the proceeding shall be paid by the
party bringing the case, whether the final decision is
in favor of such party or not.” 15 U.S.C. § 21(b)(3)
(added language italicized).10
The 1988 amendment to Section 21(b)(3) is
especially important because it shows that, even with
The amendment also changed plural “proceedings” the
singular “proceeding.” No reason was given.
10
32
focused attention to the language at issue and with
full awareness of the American Rule, Congress still
did not add language explicitly requiring payment of
attorney’s fees.
Moreover, the legislative history commentary
demonstrates that Congress did not have any clue
that “expenses” in Section 21(b)(3) might be stretched
to include attorney’s fees. When Senator DeConcini
introduced the bill in 1987, he explained that the
proviso added to Section 21(b)(3) “gives the courts
discretion to refrain from charging the party bringing
an ex parte appeal all the costs of such a proceeding.
The . . . provision will assure that the PTO seriously
considers the need for incurring certain expenses in ex
parte cases.” 133 Cong. Rec. S16546-54 (Nov. 19,
1987) (Senator DeConcini introducing the Trademark
Law Revision Act) (emphasis added). The Senate
Report recommending passage of the amendments
explained that the added language “clarifies and
revises the first sentence of Section 21(b)(3) [15 U.S.C.
21(b)(3)] of the [Lanham] Act to assure that the Patent
and Trademark Office seriously considers the need for
incurring certain expenses when defending an ex
parte decision. The committee amended the statute to
impose a statutory ‘reasonableness’ standard.” S. Rep.
No. 100-515, at 36 (1988), reprinted in 1988
U.S.C.C.A.N. 5577, 5578.
33
This legislative history does not evidence any
Congressional intent to make the applicant
responsible for the Government’s attorney’s fees.
Senator DeConcini’s remarks equate “expenses” and
“costs,” which, of course, is a narrow term of art that
does not include attorney fees. Rimini St., 139 S.Ct. at
879. The 1988 Judiciary Committee Report explains
that the committee added the proviso to discourage
the USPTO from “incurring” unnecessary expenses
“when defending an ex parte decision.” S. Rep. No.
100-515. The message is that Congress wants to
reduce the burden on the appealing applicant. Given
this manifest message, the absence of any reference to
attorney fees is glaring. See Fogerty v. Fantasy, Inc.,
510 U.S. 517, 534 (1994) (“Such a bold departure from
traditional practice [i.e., the American Rule] would
have surely drawn more explicit statutory language
and legislative comment.”).
It is important to put the 1988 amendments in
context. The 1988 Trademark Law Revision Act was
a comprehensive overhaul of the Lanham Act. Citing
a study by INTA (then the “United States Trademark
Association”), the Judiciary report recommending
passage observed:
The bill, based on the results of an extensive
study conducted by the U.S. Trademark
Association’s Review Commission, was the
34
product of more than 2 years of analysis, debate
and consensus-building by trademark owners,
attorneys,
and
other
private
sector
experts. . . . Throughout the process, input
from diverse public and private interests served
by the Lanham Act was sought. Hundreds of
trademark owners and practitioners, more than
50 organizations, Government officials in the
United States and abroad, and eminent
scholars in the fields of constitutional,
commercial,
trademarks
and
unfair
competition law contributed to the project.
S. Rep. No. 100-515, at 2–3.
Despite the vast scale of the 1988 review of the
Lanham Act, INTA is not aware of any evidence that
Congress, the USPTO or any stakeholder observed
that Section 21(b)(3) authorized an award of the
attorney’s fees. This is true even though Congress
was plainly paying attention to Section 21(b)(3)
specifically.
Moreover, Congress and the trademark
community stakeholders were well aware in 1988 that
Congress must explicitly and clearly grant authority
to award attorney’s fees.
The Senate Report
recommending passage of the Trademark Law
Revision Act observed:
35
For the act’s first 30 years, there was only one
substantive change made in the law. . . . In
more recent times, court decisions have often
prompted Lanham Act amendments. In 1975,
Congress responded to the Supreme Court
decision in Flieshmann Distillery Corp. v.
Maier Brewing Co., 386 U.S. 714 (1967), which
held that the Act did not authorize an award of
attorney’s fees to the prevailing party in an
infringement action. Aligning the trademark
law with the patent and copyright statutes,
Congress passed H.R. 8981 and changed
Section 35 to allow the award of fees in
“exceptional” cases.
S. Rep. No. 100-515, at 2. The Report’s reference to
Fleishmann and the 1975 amendments shows that
Congress was fully aware in 1988 that if it wanted to
authorize attorney’s fees under Section 21(b)(3), it
needed to be clear and explicit, especially when it was
otherwise amending the Section. Congress’s failure to
do so in 1988 when it amended Section 21(b)(3) is
evidence either that Congress was unaware that the
“expenses” provision could be stretched to include
attorney’s fees or that it did not intend to authorize
attorney’s fees under that Section.
36
5.
THE
GOVERNMENT
HAS
NOT
JUSTIFIED
THE
USPTO’S
NEW
INTERPRETATION OF SECTION 145 OR
SECTION 21(b)(3)
The Government argues that the USPTO is
entitled to change its interpretation of Section 145
because Congress has directed it to set fees at a level
sufficient to cover the USPTO’s aggregate operating
expenses. Pet’r’s Br. 7–8, 13, 31–32. The Government
says that recovering attorney’s fees from Section 145
appellants avoids shifting the cost of Section 145
proceedings to patent applicants. There are several
flaws with this argument.
First and foremost, this rationale does not
justify a change in the interpretation of Lanham Act
Section 21(b)(3). It would seem that the USPTO is
paying for the more complex and expensive Section
145 appeals in patent cases by recovering attorney’s
fees from applicants appealing trademark decisions.
Second, Congress has not instructed the
USPTO to pay for the defense of the Commissioner in
Section 145 proceedings by recovering attorney’s fees
pursuant to Section 145. In the 2011 Leahy-Smith
America Invents Act (the “AIA”), Pub.L. No. 112-29,
125 Stat. 284 (2011), Congress gave the USPTO
authority to set its fees by regulation. Before then,
37
Congress had set the fees by legislation. But whether
by law or rulemaking, the Patent Office has always
from its inception been self-funding based on its
collected fees. Both before and after the AIA, the
USPTO has set its fees, and requested corresponding
appropriations in an aggregate amount sufficient to
cover “necessary expenses of the Patent and
Trademark Office provided for by law, including the
defense of suits against the Commissioner of Patents,
and Trademarks.” Compare Pub. L. No. 106-113, App.
A, 113 Stat. 1501A-28 (Consolidated Appropriations
Act, 2000), with Pub. L. No. 114–13, 129 Stat. 2290
(Consolidated Appropriations Act, 2016) (emphasis
added).
Moreover, the Patent Office has always faced
financial pressures that would have motivated
recovering attorney’s fees if the authority to do so had
existed. Indeed it was precisely this sort of pressure
that motivated the Patent Office in 1838 to propose
moving appeals out of the Patent Office and to the
Courts, which proposal lead in 1839 to the precursor
to Section 145. See H.R. Doc. No. 25-80, at 2; see also
supra pp. 23–25 and n.5.
Despite the ever present financial pressure, the
Patent Office never sought attorney’s fees until 2013.
Since 1839, the Patent Office has funded the defense
of its decisions out of its general budget funded by
38
diverse application fees.
Respectfully, it is not
credible to suggest that recent changes in patent law
complexity have so fundamentally altered the
landscape that the USPTO should be permitted to
reinterpret Section 145 and create a new funding
source.
Finally, if the AIA spawned more complex
patent appeals pursuant to Section 145, then it follows
that Congress could have explicitly required payment
of the Government’s attorney’s fees when it passed the
AIA. Even though the AIA contains many provisions
authorizing the USPTO to set fees at a level sufficient
to cover the predicted high cost of implementing the
AIA, there is not a whisper about recovering its
Section 145 attorney’s fees.
5.1
Public Policy Does Not Support the
Government’s Interpretation
The Government’s narrow interpretation of the
American Rule would effectively eliminate the right to
district court review for many patent and trademark
applicants.
Imposing the significant and
unpredictable cost of the USPTO’s attorney’s fees on
any patent or trademark applicant who exercises its
rights under Section 145 or Lanham Act Section 21
will cause exactly the sort of evils the American Rule
exists to prevent. As Judge Stoll observed in her
39
dissent from the Federal Circuit’s panel decision, the
“high and uncertain costs” of attorney’s fees “would
likely deter applicants, particularly solo inventors and
other smaller entities.” Nantkwest, Inc. v. Matal, 860
F.3d 1352, 1366 (Fed. Cir. 2017).
Limiting application of the American Rule to
“prevailing party” statutes is contrary to the policies
underlying the Rule: “[O]ne of the primary
justifications for the American Rule is that ‘one should
not be penalized for merely defending or prosecuting
a lawsuit.’” Summit Valley Indus. Inc. v. Local 112,
United Bhd. of Carpenters & Joiners of Am., 456 U.S.
717, 724 (1982) (quoting Fleischmann Distilling Corp.
v. Maier Brewing Co., 386 U.S. 714, 718 (1967)). But
that is precisely the result that would occur if this
Court adopts the Government’s position. As the en
banc majority recognizes, the Government’s position
“would have a patent applicant pay the government’s
attorneys’ fees even when the patent applicant
succeeds.” NantKwest, 898 F.3d at 1191.
Finally, and perhaps most important, a holding
that authorizing an award of “expenses” is enough to
satisfy the American Rule would signal to Congress
that there is no need to be explicit in order authorize
attorney’s fees, as it has repeatedly done in diverse
federal statutes. This message would undermine
40
decades of efforts by this Court to send exactly the
opposite message.
CONCLUSION
For the foregoing reasons, the Court should
affirm the Federal Circuit’s interpretation of the
American Rule and Section 145 of the Patent Act and
hold that attorney’s and paralegal’s fees are not
included within the scope of “all the expenses of the
proceedings” under Section 145.
Respectfully submitted,
LAWRENCE K. NODINE
Counsel of Record
DAVID S. FLEMING
CHITTAM U. THAKORE
BRINKS GILSON & LIONE
ALAN WHITE
NBC Tower
BALLARD SPAHR LLP
455 N. Cityfront Plaza Dr. 999 Peachtree St., NE
Suite 3600
Suite 1000
Chicago, IL 60611
Atlanta, GA 30309
(312) 321.4200
(678) 420-9300
Counsel for amicus curiae
July 22, 2019
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.