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, UNITED

STATES PATENT AND TRADEMARK OFFICE,

Petitioner,

v.

NANTKWEST, INC,

Respondent.

On Writ of Certiorari to the United States

Court of A ppeals for the Federal Circuit

AMICUS CURIAE BRIEF OF THE

ASSOCIATION OF AMICUS COUNSEL,

INFOTECH LAW OFFICES, ISSHIKI &

CO., AND LAW OFFICES OF HIRAIDE &

TAKAHASHI IN SUPPORT OF RESPONDENT

Charles E. Miller

Counsel of Record

The A ssociation of A micus Counsel

c/o Leichtman Law PLLC

228 East 45th Street, Suite 605

New York, New York 10017

(212) 419-5210

cmiller@leichtmanlaw.com

Counsel for Amici Curiae

Additional Counsel are Listed on the Signature Page

July 22, 2019

289685

i

TABLE OF CONTENTS

Page

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . i

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

STATEMENT OF INTEREST OF AMICI

CURIAE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

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

I.

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

II. Judging a Statute; The Singularity of the

Issues in NantKwest and Booking.Com . . . . . . . 3

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

I.

T he Ava i l abi l it y of D e Novo

Adjud ic at ion of USP TO Den ia ls of

Patent and Trademark Applications

Should be Fully Preserved as a Viable

Recourse for Aggrieved Applicants . . . . . . . . . . 9

II. The Patent Case: The NantKwest Saga . . . . . . 16

III. The Trademark Case: The Booking.Com

Saga . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

IV. The Federal Circuit En Banc Decision

in NantKwest is Correctly Based on

the A mer ica n Ru le P resu mpt ion

Against the Shifting of Legal Costs . . . . . . . . . 21

ii

Table of Contents

Page

V.

Exceptions to the American Rule Are

Nowhere to be Found in Section 145

or in Section 1071(b)(3) . . . . . . . . . . . . . . . . . . . . 23

VI. T h e R a t i o n a l e o f t h e E n B a n c

Decision in NantKwest Operates with

Equal Force in Booking.Com . . . . . . . . . . . . . . . 25

VII. The Split of Authority in the Circuits

Ju s t i f i e s D e c i d i n g Na n t Kw e s t

Together With Booking.Com . . . . . . . . . . . . . . . 28

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

iii

TABLE OF CITED AUTHORITIES

Page

Cases

Alaska Rent-A-Car, Inc. v.

Avis Budget Group, Inc.,

738 F.3d 972 (9th Cir. 2013) . . . . . . . . . . . . . . . . . . . . 23

Alyeska Pipeline Svc. Co. v. Wilderness Soc’y,

421 U.S. 240, 95 S. Ct. 1612 (1975) . . . . . . . . . . . . . . 23

Arcambel v. Wiseman,

3 U.S. (3 Dall.) 306 (1796) . . . . . . . . . . . . . . . . . . . . . . 23

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

135 S. Ct. 2158 (2015) . . . . . . . . . . . . . . . . . . . . . . 23, 29

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

461 U.S. 731 (1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Booking.Com B.V. v. USPTO et al.,

278 F. Supp. 3d 891(E.D.Va. 2017), aff ’d,

915 F.3d 171 (4th Cir. 2019) . . . . . . . . . . . . . . . . passim

BTG Int’l Ltd. v. Kappos,

No.1:12-cv-00682, 2012 WL 6082910

(E.D. Va. Dec. 2, 2012) . . . . . . . . . . . . . . . . . . . . . . . . 12

CAE Inc. v. Clean Air Eng’g Inc.,

267 F.3d 660 (7th Cir. 2001) . . . . . . . . . . . . . . . . . . . . 11

Chevron Inc. v.

Natural Resources Defense Council,

467 U.S. 837 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

iv

Cited Authorities

Page

Dickinson v. Zurko,

527 U.S. 150 (1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Fanning, Phillips & Molner v. West,

160 F.3d 717 (Fed. Cir. 1998) . . . . . . . . . . . . . . . . . . . . 8

Fleischmann Distilling Corp. v.

Maier Brewing Co.,

386 U.S. 714 (1967) . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Gandy v. Marble,

122 U.S. 432 (1887) . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Halozyme v. Iancu,

No. 1:16-cv-1580, 128 U.S.P.Q.2d 1445

(E.D. Va. 2018) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Hardt Reliance Std, Life Ins.Co.,

560 U.S. 242 (2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Henry Schein, Inc. v. Archer & White Sales, Inc.,

586 U.S. ___, 139 S. Ct. 524 (2019) . . . . . . . . . . . . . . 28

Hyatt v. Kappos,

625 F.3d 1320 (Fed. Cir. 2010) . . . . . . . . . . . . . . . 14, 15

Kappos v. Hyatt,

566 U.S. 431 (2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

NantKwest, Inc. v. Iancu,

898 F.3d 1177 (Fed. Cir. 2018) . . . . . . . . . . . . . . . 18, 25

v

Cited Authorities

Page

NantKwest, Inc. v. Lee,

162 F. Supp. 3d 540 (E.D. Va. 2016) . . . . . . . . . . . . . . 17

NantKwest, Inc. v. Lee,

686 F.3d 864 (Fed. Cir. 2018). . . . . . . . . . . . . . . . . . . 16

NantKwest, Inc.v. Matal,

860 F.3d 1352 (Fed. Cir. 2017) . . . . . . . . . . . . . . . . . . 18

NantKwest, Inc.v. Matal,

869 F.3d 1327 (Fed. Cir. 2017) . . . . . . . . . . . . . . . . . . 18

Octane Fitness LLC v.

ICON Health & Fitness, Inc.,

572 U.S. __(2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Oelrichs v. Spain,

82 U.S. (15 Wall.) 211 (1872) . . . . . . . . . . . . . . . . . . . . 23

Realvirt LLC v. Iancu,

No. 2017-1159 (Fed. Cir.) . . . . . . . . . . . . . . . . . . . . . . . 30

Return Mail, Inc. v.

United States Postal Service, Inc.,

139 S. Ct. 628 (2019) . . . . . . . . . . . . . . . . . . . . . . . . . 3, 4

Rimini Street, Inc. v. Oracle USA, Inc.,

139 S. Ct. 873 (2019) . . . . . . . . . . . . . . . . . . . . . . . . 3, 21

Roberts v. Sea-Land Services, Inc.,

132 S. Ct. 1350 (2012) . . . . . . . . . . . . . . . . . . . . . . . . . . 4

vi

Cited Authorities

Page

Runyon v. McCrary,

427 U.S. 160 (1976) . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Sandifer v. United States Steel Corp.,

571 U.S. 220 (2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Shammas v. Focarino,

784 F.3d 219 (4th Cir. 2015), cert. denied sub.

nom. Shammas v. Hirshfeld, 136 S. Ct. 1376

(2016) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim

Stewart v. Sonneborn,

98 U.S. 187 (1878) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Sturgeon v. Frost,

136 S. Ct. 1061 (2016) . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Summit Valley Indus. v. Local 312, United Bhd.

of Carpenters and Joiners of America,

486 U.S. 717 (1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Taylor v. Lee,

No. 1:15-cv-1607 (E.D. Va),

2016 U.S. Dist. LEXIS 191677 . . . . . . . . . . . . . . . . . .30

Troy v. Samson Mfg. Corp.,

755 F.3d 1322 (Fed. Cir. 2014) . . . . . . . . . . . . . . . . . . 12

Vermont Agency of Natural Resources v. United

States ex rel. Stevens,

529 U.S. 765 (2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

vii

Cited Authorities

Page

Statutes and Other Authorities

5 U.S.C. § 701 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

5 U.S.C. § 3109 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

15 U.S.C. § 1071(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

15 U.S.C. § 1071(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

15 U.S.C. § 1071(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

15 U.S.C. § 1071(b) . . . . . . . . . . . . . . . . . . . . . . . . . . passim

15 U.S.C. § 1071(b)(3) . . . . . . . . . . . . . . . . . . . . . . . . passim

17 U.S.C. § 505 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

28 U.S.C. §§ 514-519 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

28 U.S.C. § 543 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

28 U.S.C. § 544 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

28 U.S.C. § 1291 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

28 U.S.C. § 1294(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

28 U.S.C. § 1295(a)(4)(C) . . . . . . . . . . . . . . . . . . . . . . 13, 14

viii

Cited Authorities

Page

28 U.S.C. § 1821 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

28 U.S.C. § 1920 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 21

28 U.S.C. § 1923 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

28 U.S.C. § 2412(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

35 U.S.C. § 3(b)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

35 U.S.C. § 101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

35 U.S.C. § 102 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

35 U.S.C. § 103 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

35 U.S.C. § 112 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

35 U.S.C. § 141(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

35 U.S.C. § 143 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

35 U.S.C. § 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

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

35 U.S.C. § 285 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

37 C.F.R. § 42.12(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ix

Cited Authorities

Page

Fed. R. Civ. P. 37(a)(5)(A) . . . . . . . . . . . . . . . . . . . . . . . . . 13

Fed. R. Civ. P. 37(a)(5)(B) . . . . . . . . . . . . . . . . . . . . . . . . . 13

Fed. R. Civ. P. 37(d)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Fed. R. Civ. P. 37(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Fed. R. Civ. P. 54(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Fed. R. Civ. P. 54(d)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Fed. R. Civ. P. 54(d)(2) . . . . . . . . . . . . . . . . . . . . . . . . 13, 24

Sup. Ct. R. 37 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

H.R. 3309 (113th Congress) . . . . . . . . . . . . . . . . . . . . . . 15

1

STATEMENT OF INTEREST OF AMICI CURIAE1

The Association of Amicus Counsel (“AAC”) is an

independent, unincorporated, non-profit organization

of lawyers having diverse affiliations and law practices.

Members of the AAC are committed to serving the public

interest, and by training, scholarship, experience, and

discernment in their respective areas of the law, they

possess the requisite abilities in appellate advocacy and

proficiency in preparing and submitting amicus curiae

briefs that are helpful to decisionmakers in cases involving

issues of contention by calling attention to pertinent

matters and viewpoints not previously recognized or

addressed. Neither the AAC nor any of its members on

this brief represents a party in this litigation or has a

direct financial stake in its outcome. The AAC expresses

views on issues in precedent-setting adjudications

whose outcomes will affect the public interest. It is for

these reasons that the AAC was conceived, established,

and exists for the purpose of advancing the science of

jurisprudence by submitting briefs in cases of controversy

in order to advocate, promote, and assist in the informed

judicial development of the law in the time-honored

tradition of “friends of the court”.

InfoTech Law Offices, Isshiki & Co., and Law Offices

of Hiraide & Takahashi are independent law firms founded

1. No party or its counsel authored this brief in whole or in

part, and no such party or counsel made a monetary contribution

intended to fund the preparation or submission of this brief.

No persons other than the amici curiae or their counsel made

a monetary contribution to its preparation or submission. The

parties were provided with proper notice and have consented to

the filing of this brief.

2

and located in Japan each of whose law practices includes

the handling of legal matters for a diversity of clients.

Such clients include those who are actively interested in

the development, procurement, and protection of property

rights including intellectual property in inventions and

trademarks in a full range of technologies, goods, and

services in various jurisdictions, including the United

States. None of the aforesaid law firms nor to their

knowledge do any of their clients or affiliates have a

financial stake in any of the parties to this litigation or in

the outcome of this case. As named amici curiae herein,

InfoTech Law Offices, Isshiki & Co., and Law Offices of

Hiraide & Associates, like many other firms throughout

the world, are interested in the correct and consistent

interpretation of laws as they relate to intellectual

property issues of concern to themselves and their clients.

The herein-identified amici curiae submit this brief

pursuant to Spm. Ct. R. 37 in support of the affirmance of

the decision of the Federal Circuit in favor of NantKwest,

Inc.

SUMMARY OF ARGUMENT

I.

Introduction

The susceptibility of human language to imprecision

often gives rise to ambiguities that are not immediately

obvious or discernible, resulting in differing or skewed

understandings of words and phrases which may in turn

lead to misperceptions. Apropos of the present case, the

ubiquitous statutory terms ‘fees’, ‘attorney fees’, ‘costs’,

‘full costs’, ‘expenses’, and ‘all the expenses’, are prone to

being misread and conflated unless attention is paid to the

3

underlying legislative “scaffolding,” 2 judicial precedents,

and governing contexts.

In statutory construction, the correct meaning of a

polysemous word or phrase that is not expressly defined

depends on the surrounding context in which it is used. To

misunderstand or ignore that context is to invite judicial

holdings that contradict public policies and purposes by

extrapolating beyond the lawmakers’ intent. Thus, and

as this Court has held in the term just passed, “context”

is critical for statutory construction. Return Mail, Inc. v.

United States Postal Service, Inc., 139 S. Ct. 628 (2019);

Rimini Street, Inc. v. Oracle USA Inc., 139 S. Ct. 873

(2019).

II. Judging a Statute; The Singularity of the Issues in

NantKwest and Booking.Com

1

Courts throughout the United States regard the

construing of statutes as being matters of law which

judges are called upon to decide and act upon every day.

Judicial construction can set precedent that significantly

disrupts established reliance interests and expectations,

often with unintended, unforeseen, and sometimes

devastating consequences. Hence, when addressing a

disputed provision in a statute that hasn’t been previously

2. Neither the Dictionary Act, Title 1, secs. 1 through 8

(“General Provisions”) of the United States Code which defines

a number of terms that establish a default legislative baseline or

scaffold for congressional enactments, nor the patent or trademark

statutes, define the term at issue in the statutory provisions

involved in the present controversy.

4

construed, a jurist analyzes the relevant context to avoid

inappropriate results. Not just the statute itself in terms

of the prima facie meanings of the words in it, but also

the etymology and lexicology of the origin, evolution, and

current modalities of their usage; the intendment, purpose,

and placement of them in the legislative scheme; the type

of circumstances for which the statute is designed; the

motives of those advocating particular interpretations

of it; and relevant public policies and common-law rules,

principles, and doctrines that set boundary conditions

on the analysis of the statute and guide its application

through rational, common-sense interpolations. What

might seem unclear or ambiguous from a textualist, facial

reading of a statute “as written” may, in atextual reality,

be pellucidly unambiguous and therefore not subject to

reinterpretation when viewed through the lens of an

informed judicial perspective having due regard for all

operative factors. 3

In short, it is the context – the enemy of ambiguity –

that governs meaning.

3. Sturgeon v. Frost, 136 S.Ct. 1061, 1070 (2016). (“The [lower]

court’s reading of the [particular statute at issue in the case] may

be plausible in the abstract, but it is ultimately inconsistent with

both the text and context of the statute as a whole. Statutory

language ‘cannot be construed’ in a vacuum. It is a fundamental

canon of statutory construction that the words of a statute must be

read in their context and with a view to their place in the overall

statutory scheme” [citing Roberts v. Sea-Land Services, Inc., 132

S.Ct. 1350, 1357 (2012)); Sandifer v. United States Steel Corp., 571

U.S. 220, 227 (2014); Return Mail, Inc. v. United States Postal

Service, Inc., 139 S.Ct. 628 (2019) (slip Op. at 9-10). .

5

2

a. These hermeneutical principles are at work in two

intellectual-property cases currently before the Court.

Both present the same question originating in separate

proceedings against the U.S. Patent and Trademark Office

(“USPTO” or “Agency”). In the present case, which is on

a granted petition for a writ of certiorari to the Federal

Circuit, an applicant for a patent, unwilling to accept the

Agency’s refusal to grant the application, sought judicial

recourse in U.S. district court pursuant to Section 145 of

the Patent Act (35 U.S.C. §145). In the other case, which is

on a pending petition for a writ of certiorari to the Fourth

Circuit in Booking.Com B.V. v. USPTO et al.,4 an applicant

for a series of trademark registrations, dissatisfied

with the Agency’s rejections, sought judicial recourse

pursuant to Section 1071(b) of the Trademark Act (15

U.S.C. §1071(b)). Together, these cases have polemicized

the meaning and scope of the word “expenses” currently

residing in the following provision in the last sentence of

35 U.S.C. §145 which requires that

“[a]ll the expenses of the proceedings shall be

paid by the applicant,”

and in the following provision in the first sentence of 15

U.S.C. §1071(b)(3) which requires that

“all the expenses of the proceeding shall be paid

by the party bringing the case...”

4. 915 F.3d 171 (4th Cir. 2019), U.S. Spm. Ct. Case No. 18-1309

docketed April 16, 2019.

6

If the Court grants Booking.Com B.V.’s petition for

certiorari, then it will have the opportunity to decide

definitively once-and-for-all and across-the-board, a

singular issue of first impression in the Court’s intellectual

property jurisprudence which was expressly addressed

in conflicting opinions by two U.S. courts of appeal.

Specifically, the question presented for decision by this

Court in both cases can be stated as follows:

In de novo adjudication in U. S. district court of

USPTO denials of patent and trademark applications,

does the term “all the expenses” in the foregoing enabling

statutes exclude legal costs, particularly the pro rata

salaries of the Agency’s in-house attorneys and paralegal

employees?

Deciding the cases together would focus the Court’s

attention in resolving, in a balanced and expeditious way,

the split of authority between the Federal Circuit’s 2018

divided en banc ruling in NantKwest, and the Fourth

Circuit’s 2015 divided panel ruling in a trademark case,

Shammas v. Focarino5 which the Court declined to review

in 2016 and whose holding was followed in the Fourth

Circuit’s 2019 panel ruling in Booking.Com.

b. As is typical when construing statutes, the solution

to the problem of ascertaining the meaning and scope of

the expense-shifting (or reimbursement or recoupment)

provisions in Section 145 and Section 1071(b)(3) reduces

to mapping and navigating the contours of the phrase “all

the expenses of the proceeding(s)” within the governing

statutory context.

5. 784 F.3d 219, 221, 225, 227 (4th Cir. 2015), cert. denied sub.

nom. Shammas v. Hirshfeld, 136 S.Ct. 1376 (2016).

7

3

The courts in Shammas and in NantKwest were

tasked with deciphering the meaning and scope of “all

the expenses of the proceeding(s)” recoverable by the

USPTO in defending Section 145 and Section 1071(b) civil

actions, respectively, and particularly whether the term

encompasses the relevant (pro- rata) salary amounts paid

to legal-staff attorneys and paralegal assistants employed

in the USPTO’s Office of the Solicitor. The issues in those

cases (including now Booking.Com) are indistinguishable.

4

Having granted the USPTO’s petition for certiorari in

NantKwest and given the potential granting of Booking.

Com’s petition, the Court appears poised to decide whether

the American Rule against fee-shifting is pertinent

when interpreting the phrase “[a]ll the expenses of the

proceeding(s)” in Sections 145 and 1071(b)(3), and the

collateral question of whether that phrase, in its statutory

context, aside from the American Rule, can be interpreted

to require the awarding of legal costs, and specifically the

compensation paid by the USPTO to its in-house legal and

paralegal personnel who assisted in defending the Agency.

That is precisely and expressly all that the USPTO in

NantKwest and in Booking.Com seeks to recover in its

motions for legal costs qua “expenses”. In other words, the

USPTO asserts that, under the two statutes, it is entitled

to mandatory reimbursement for the pro-rata salaries of

its legal staff: in-house attorneys and paralegal assistants

in the Agency’s Office of the Solicitor. Yet the Agency’s

merits brief in NantKwest is replete with references to

USPTO “personnel” without the qualifying adjectives

8

‘legal’ (as in ‘legal personnel’) or “attorney” (as in ‘attorney

personnel’). It thus conflates the pro rata salaries of its

legal/attorney personnel with the salaries of its non-legal/

attorney personnel, with paralegal salaries bridging the

gap between the two categories.

The implications of the issue as thus framed and

argued by the USPTO are problematic The USPTO’s nonlegal/attorney personnel salaries cannot be “expenses”

qua litigation costs for the same reason that legal/

attorney personnel salaries are not. If personnel salaries

are adjudged to be expenses without partitioning

them between legal costs and litigation costs, then

reimbursement would be also required for invoiced fees

paid to outside lawyers that might be incurred by the

Agency in future cases.6

5

The legal implications and real-world business and

financial consequences of the Court’s forthcoming decision

for inventors, trademark originators and owners, their

assigns, and others in the worldwide business community

will be far-reaching and of exceptional, fundamental

importance to the entire class of stakeholders in the U.S.

intellectual property system. That this is especially true

6. The USPTO’s argument attempts to equate the pro rata

salaries of the Agency’s relevant legal staff, i.e., its in-house

attorneys and paralegals who worked on the case, with litigation

costs as though they were somehow qualified as being “expenses”.

However, under the case law, legal staff salaries are deemed to

be within the category of legal costs qua “attorney fees” and not

litigation costs qua non-attorney employee salaries. See, Fanning,

Phillips & Molner v. West, 160 F.3d 717, 720-22 (Fed. Cir. 1998).

9

for individuals and start-up companies having limited

financial resources, and other organizations both in

the United States and in other countries for whom U.S.

patents and trademarks are valuable assets, cannot be

overstated.

ARGUMENT

I.

The Availability of De Novo Adjudication of USPTO

Denials of Patent and Trademark Applications

Should be Fully Preserved as a Viable Recourse

for Aggrieved Applicants

Congress created access to the federal court system

for patent and trademark applicants who were unsuccessful

at the administrative stage, by giving them a choice of

two options for exercising their constitutional right “to

petition the Government for a redress of [their] grievances”

by recourse to judicial intervention.7 Both the patent and

trademark statutes enable such access through (i) direct

appellate review by the court of appeals, or alternatively, (ii)

adversary adjudication in district court, of USPTO refusals

to grant patents or to register trademarks.

NantKwest, Inc. was entitled to choose between the

two options for judicial recourse when the USPTO affirmed

the examiner’s rejection based on an administrative

determination that some of the claims in the patent

application were not patentable. Booking.Com had a

similar choice when the USPTO affirmed the rejections

of its applications because the marks were deemed not

registrable.

7. See, Bill Johnson’s Restaurants, Inc. v. N.L.R.B., 461

U.S. 731,741 (1983).

10

1

a. One option would have been to appeal directly from

the USPTO to the Federal Circuit. Under the enabling

statutes, the court “shall review the decision [of the

USPTO based solely] on the record [of the issues, evidence,

and arguments that were presented and decided] before

the [Agency]”. 8 With the exception of commonly known,

self-evident information that would qualify for judicial

notice, the scope of review is cabined by the administrative

record transmitted from the Agency to the court, which

may be less than complete.9 On that basis, the court must

decide the appeal in accordance with the highly deferential

“substantial evidence” standard of review under the

Administrative Procedure Act.10 For these reasons, such

review is often futile.

b. When deciding these appeals, the court reviews

the Agency’s legal conclusions de novo; but it will defer to

and adopt the Agency’s fact-findings if they appear to be

reasonably supported by at least a scintilla of probative (i.e.,

substantial) evidence in the record. At the conclusion of the

appeal, litigation costs (known colloquially as ‘hard costs’)

some of which are defined in 28 U.S.C. 1920 and which are

exclusive of legal costs (a term often used interchangeably

with ‘attorney fees’), are awardable (taxable). Legal costs

may at the court’s discretion be awarded.

8. For patent cases, see 35 U.S.C. §141(a) and §144. The

corresponding provisions for trademark cases are in 15 U.S.C.

§1071(a) (1) and (a) (4).

9. 35 U.S.C. 143 and 15 U.S.C. 1071(a)(3).

10. 5 U.S.C. §701 et seq.; Dickinson v. Zurko, 527 U.S. 150,

152 (1999).

11

c. In these appeals, the appellee-USPTO is usually

represented primarily by its own salaried, legal staff in

the Agency’s Office of the Solicitor.11

2

a. The other option, which informs the context of

the present controversy, is a review ‘de novo’ by civil

action against the USPTO in federal district court in

which the applicant and the USPTO can supplement the

administrative record. Both NantKwest and Booking.

Com chose this route for that purpose. Such civil actions

are adversary adjudications between the USPTO and

aggrieved applicants enabled by Sections 145 and 1071(b)

which confer jurisdiction in the district court (venued

specifically in the Eastern District of Virginia in patent

cases) which “may adjudge that such applicant is entitled

to receive a patent [or a trademark registration] . . . as

the facts in the case may appear . . . .”

b. In these actions the role of the district court is

duplex: on the one hand, the court functions as an external

tribunal positioned at the post-examination, pre-issuance

stage of the overall prosecution schemes of patent and

trademark applications, and as such it has oversight of

the Agency’s final decisions;12 on the other hand, the

proceeding is a plenary, Article III proceeding wherein

new or additional issues, information, and evidentiary

11. 35 U.S.C. §3(b)(3). Under 5 U.S.C. 3109, the USPTO can

hire experts, including outside attorneys.

12. Gandy v. Marble, 122 U.S. 432, 439 (1887); CAE Inc. v.

Clean Air Eng’g Inc., 267 F.3d 660, 673-74 (7th Cir. 2001); Kappos

v. Hyatt, 566 U.S. 431, 434 (2012).

12

modalities – testimonial and demonstrative as well as

documentary, obtained through discovery or otherwise –

pertinent to the application may be presented by either

party and received in evidence and considered. The issue(s)

on which the court may entertain additional evidence

include any that were or could have been raised and

considered at the administrative stage, e.g., in the case of

patent applications: patent eligibility; claim construction;

the utility, novelty, and obviousness of the invention; double

patenting; and the adequacy of the invention disclosure

in the application specification.13

c. The district court in these cases arrives at its

own fact-findings and determines for itself, based on the

administrative record coupled with new submissions, what

the operative law is separate from and independent of

the conclusions reached by the USPTO. The adjudication

is thus de novo as to both the facts and the law, without

deference to the USPTO’s administrative findings of fact

and legal conclusions.14 In contrast to the first option

of appealing directly from the USPTO to the court of

appeals, a civil action can culminates in a non-jury (bench)

trial.

d. In all cases, the USPTO is represented, usually

free of charge as to legal costs, by lawyers in the U.S.

Attorney’s Office of the Department of Justice (“DOJ”).

They serve as lead litigation/trial counsel, with the

cooperation and assistance as needed from the legal staff

13. 35 U.S.C. §§101, 102, 103, 112. See, Troy v. Samson Mfg.

Corp., 755 F.3d 1322, 1327 (Fed. Cir.2014).

14. See, BTG Int’l Ltd. v. Kappos, No.1:12-cv-00682, 2012

WL 6082910, at *4 (E.D. Va. Dec.2, 2012).

13

in the Solicitor’s Office of the Agency who are statutorily

relegated to the subordinate role of associate counsel.15

e. After the proceedings are concluded, the court

judges the case holistically, taking into account the issues,

evidence, and arguments submitted. If the plaintiffapplicant prevails, then it could have been able, under the

1980 Equal Access to Justice Act (“EAJA”),16 to seek an

award, pursuant to Fed.R.Civ.P. 54(d) [“Costs; Attorney’s

Fees”], of litigation costs under (d)(1) [“Costs Other

than Attorney’s Fees”] were it not for the now explicit

statutory expense-shifting in favor of the USPTO in

Section 145 and in Section 1071(b)(3). The plaintiff might

also have been able to seek reimbursement of its legal

costs under (d)(2) [“Attorney’s Fees”] but for the USPTO’s

recent contention that such costs are part of “all the

expenses of the proceeding” and are to be mandatorily

awarded to the Agency in every instance.17

f. It should be noted that these civil actions are an

intermediate stage in the adjudication process because

judgments of the district court are reviewable in the court

of appeals where DOJ lawyers continue to represent and

guide the USPTO, again without charging the Agency

15. See 28 U.S.C. §§514-519, 543, 544, 1291, 1294(1), and

1295(a)(4)(C).

16. See 28 U.S.C. §2412(d).

17. The Federal Rules of Civil Procedure consistently

differentiate litigation costs on the one hand, and attorney fees

as being legal costs on the other. See, e.g., Fed.R.Civ.P. 37(a)

(5)(A) & (B), (d)(3), and (f) [“reasonable expenses . . . including

attorney’s fees].

14

for the DOJ’s legal costs.18 As in direct appeals from the

USPTO to the Federal Circuit under the first option,

litigation costs – but rarely legal costs – associated with

appeals from the district court to the court of appeals may

be assessed and awarded to the prevailing party.

3

The foregoing comparison reveals why the continued

availability of Article III recourse from adverse USPTO

rulings via plenary civil action is both necessary

and indeed, vitally important for applicants whose

administrative appeals may have been wrongly decided

because the evidence in the record was incomplete for

whatever reason. For example, the evidence may not have

existed, or was otherwise unavailable, unappreciated,

or deemed unnecessary or inappropriate to submit at

the administrative stage, or could not be presented in a

form that the Agency would have had an opportunity or

been able or willing to assimilate and assess fairly, either

in the application at hand or in a requested continued

examination of it, or in a continuing application or reissue

application. Thus, the right of civil action provides

stakeholders in the U.S. patent and trademark systems

with a meaningful, practical, expansive, and altogether

irreplaceable alternative to the streamlined – i.e., less

comprehensive if not cheaper - direct review in the

Federal Circuit. To ignore this dichotomy, or to argue that

civil actions merely serve only to give an applicant with

deep pockets a mulligan in the prosecution process - a

18. 28 U.S.C. §1295(a)(4)(C). Hyatt v. Kappos, 625 F.3d 1320,

1337 (Fed. Cir. 2010) (en banc), aff’d, 566 U.S. 431, 444, 446, 132

S.Ct. 1690, 1694, 182 L.Ed.2d 704 (2012).

15

redundant, unnecessary, and hence dispensible alternative

to direct appeals from the USPTO to the Federal Circuit

would be either naïve or disingenuous.

4

Hence, the availability – and viability – of the existing

right of de novo adjudication of USPTO denials of patent

and trademark applications should be fully preserved

against unwarranted incursions that would stifle that

right. Beginning in 2012, this Court in Kappos v .Hyatt

and its progeny changed the landscape of judicial review

of agency action by rejecting the USPTO’s argument

that in Section 145 civil actions the district court can

and should exclude evidence no matter how relevant and

hence admissible under the Federal Rules of Evidence,

if it somehow “could have been” introduced at the

administrative stage. Disappointed, the USPTO sought

to eliminate Section 145 altogether through legislative

lobbying which failed.19 Then it hit upon the idea of

interpreting the expense-shifting provision in Section 145

(as well as in Section 1071(b)(3)) to include the mandatory

awarding of the Agency’s legal costs by shifting them

to the plaintiff-applicant in every instance, thereby

accomplishing by financial deterrence in court what it

could not achieve in the halls of Congress.

19. H.R. 3309 (113th Congress) introduced Oct. 23, 2013 titled

INNOVATION ACT. Its purpose was “to amend title 35, United

States Code, and the Leahy-Smith America Invents Act to make

improvements and technical corrections and for other purposes”.

16

II. The Patent Case: The NantKwest Saga

In 2001, European immunologist Dr. Hans Klingemann

described a method for treating cancer and claimed it in

U. S. non-provisional patent application no. 10/008.955

titled “Natural Killer Cell Lines and Methods of Use,”

which was assigned to NantKwest, Inc.’s predecessor,

CoNKwest, Inc.

In October 2013, the PTAB affirmed part of the

examiner’s December 2010 obviousness rejection of

several claims in the application.

On December 20, 2013, in order to present additional

evidence of patentability in traversal of the PTAB’s

adverse ruling on obviousness, the applicant instituted a

Section 145 civil action (Case No. 1:13-cv-1566) for de novo

review in the Eastern District of Virginia.

On September 2, 2015, in an unpublished Memorandum

Opinion and Order, the district court granted the USPTO’s

motion for summary judgment on the substantive merits of

patentability, holding that the additional evidence, taken

together with the administrative record, did not overcome

the obviousness rejection. That summary judgment was

affirmed by a divided Federal Circuit panel on May 3, 2017.

NantKwest, Inc. v. Lee, 686 F.3d 864. 865 (Fed. Cir. 2018).

On September 16, 2015, fourteen days lster, the

DOJ attorneys for the USPTO filed a “Motion For

Reimbursement Of [the Government’s] Expenses And

Attorney Fees” totaling $111,656.39 pursuant to the

Agency’s expansive interpretation of the “[a]ll the

expenses of the proceedings shall be paid by the applicant”

17

provision of Section 145. (Note the Government’s use

of the conjunctive “And” as opposed to “Including”,

which suggests the implicit acknowledgement that, in

this context, “expenses” on the one hand and “attorney

fees” on the other are indeed qualitatively separate and

independent terms. 20

On February 5, 2016, in a Memorandum Opinion

and Order, the court, in accordance with the “all the

expenses” provision” in Section 145, granted that portion

of the Government’s motion seeking an award of the

USPTO’s litigation costs in the form of expenditures for

expert witnesses in the amount of $33,103.89. However,

the court denied the rest of the motion as being, inter

alia, unauthorized by Section 145 and in derogation of

the common-law doctrine in this country known as the

American Rule (discussed below) against the shifting

of attorney fees, insofar as the Government sought

reimbursement of its legal costs in the form of salaries

of the USPTO’s in-house law personnel attributed prorata to two attorneys and a paralegal assistant who were

“diverted” from their tasks on other matters in order to

work on the case. NantKwest, Inc. v. Lee, 162 F.Supp.3d

540, 541-43, 546 (E.D. Va. 2016). On April 1, 2016, the

Government appealed to the Federal Circuit which heard

oral arguments on February 9, 2017.

20. USPTO Cert. Petition, pp. 7-8. The USPTO differentiates

“expenses’ from “attorney fees” in its own rulemaking. Thus, 37

C.F.R. 42.12 (b) lists the sanctions against misconduct which the

PTAB may impose upon parties appearing before it, including

“(6) An order providing for compensatory expenses, including

attorney fees;”.

18

On June 23, 2017 a divided three-judge Federal

Circuit panel reversed the district court’s denial of

the Government’s motion for reimbursement insofar

as it requested an award of the USPTO’s legal costs.

NantKwest, Inc. v. Matal, 860 F.3 1352 (Fed. Cir. 2017).

The majority had been persuaded that “all the expenses”

to be awarded against (“shifted” to) the plaintiff-applicant

under Section 145 must include the pro-rata salaries

of the USPTO’s in-house legal staff who assisted the

DOJ attorneys in the case, regardless of whether or

to what extent the Agency prevailed on the underlying

merits of the civil action, and without any analysis of the

reasonableness of those salaries attributable to the time

spent on the case.

On August 31, 2017, an 11-member majority of the

regular active judges on the Federal Circuit voted sua

sponte to vacate the June 23, 2017 panel decision, and

reinstate and re-adjudicate the Government’s appeal of the

district court’s February 5, 2016 decision. The case was set

for en banc hearing with submission of new merits briefs

of the parties strictly limited to the issue of whether 35

U.S.C. §145’s “[a]ll expenses of the proceedings” provision

requires the shifting of the defendant-USPTO’s legal costs

to the plaintiff-applicant in all instances. NantKwest,

Inc. v. Matal, 869 F.3d 1327 (Fed. Cir. 2017) (en banc).

At the court’s invitation, briefs were also submitted by

amici curiae, including the AAC, advocating affirmance

of the district court decision and on March 3, 2018, oral

arguments were heard by the full court.

On July 27, 2018 the Federal Circuit issued a divided

(7-4) en banc affirmance of the district court’s denial of

the Government’s motion for legal costs. NantKwest, Inc.

v. Iancu, 898 F.3d 1177 (Fed. Cir. 2018).

19

On December 21, 2018 the Government, on behalf of

the USPTO, appealed the en banc ruling by filing a timely

petition for a writ of certiorari to the Federal Circuit which

this Court granted on Mach 4, 2019.

III. The Trademark Case: The Booking.Com Saga

1

In 2011 and 2012, Booking.Com filed a series of

applications in the USPTO to register variations of

“BOOKING.COM.” The trademark examiner rejected

the applications, and the USPTO affirmed the rejections.

Booking.Com appealed under Section 1071(b) to the

Eastern District of Virginia (Case No. 1:16-cv-425) and

submitted survey evidence of secondary meaning to

establish distinctiveness and hence registrability of the

marks. The district court reversed the USPTO, and the

Fourth Circuit affirmed. Booking.Com B.V. v. USPTO et

al., 278 F.Supp.3d 891(E.D.Va. 2017), aff’d, 915 F.3d 171

(4th Cir. 2019). Separately, the Fourth Circuit granted

Booking.Com’s request for a stay of the mandate on

its adverse decision in Booking.Com’s cross-appeal on

the issue of legal costs pending this Court’s decision in

NantKwest.

On April 10, 2019, Booking.Com filed a petition for

a writ of certiorari (No. 18-1309) aimed at overturning

that portion of the Fourth Circuit’s decision affirming

the district court’s granting of the Government’s posttrial motion for an award, inter alia, of the Agency’s

legal costs. 2017 WL 4853755. Citing the divided panel

holding in Shammas v. Focarino as binding precedent

in that circuit, the district court and the Fourth Circuit

20

bought into the USPTO’s argument that such costs must

be awarded to the Agency as part of “all the expenses”

it incurred in the civil action - even though Booking.Com

won on the merits of registrability.

On July 5, 2019 the USPTO filed a petition for

certiorari (Spm. Ct. Case No. 19-46) to overturn the

Fourth Circuit’s February 4, 2019 panel decision (after en

banc rehearing was denied on April 5, 2019) on the merits

of registrability of the BOOKING.COM trademarks.

2

The Supreme Cour t in the coming term may

(1) before deciding the present NantKwest case, grant or

deny Booking.Com’s petition for certiorari, or (2) postpone

acting on the petition until it decides NantKwest, and

then, depending on the outcome, (i) deny Booking.Com’s

petition, or (ii) grant the petition and issue a per curiam

opinion summarily reversing or affirming the Fourth

Circuit’s decision in Booking.Com, or (iii) issue a grantvacate-remand (“GVR”) order in Booking.Com which

would effectively overrule Shammas sub silentio..

Another possibility, requested by Booking.Com in its

petition, and which the AAC urged in a supporting brief

filed May 16, 2019, would be to grant certiorari in Booking.

Com, and then decide it together with NantKwest backto-back on the issue, thereby fostering consistency in the

outcomes. Deciding the cases separately (presumably

beginning with NantKwest) could, in all fairness,

potentially hinder the USPTO’s reliance upon the holding

in Shammas which the Court had already signaled its

intention to re-consider in NantKwest.

21

IV. The Federal Circuit En Banc Decision in

NantKwest is Correctly Based on the American

Rule Presumption Against the Shifting of Legal

Costs

1

In the greater context of Section 145 litigation and the

American Rule, the word “expenses” - with or without the

prefatory adjective “all” – is unambiguous and connotes

what it had always been understood to mean and nothing

else, namely, the Agency’s case-specific disbursements

for mundane items like court filing and docketing fees,

witnesses (including court-appointed experts), and for

travel, printing, copying, and mailing. Such expenses

are litigation costs, including those that are taxable to

a non-prevailing party under 28 U.S.C. §§1821, 1920,

and 1923. 21 These “hard costs” are separate and distinct

from, and in practice are often relatively minor compared

to, “legal costs”, i.e., payments of invoiced fees and pro

rata salaries attributable to the professional services of

lawyers and their paralegal staffs in connection with the

case. Because legal costs are normally considered nontaxable, they are not to be shifted to a party that did not

21. In copyright infringement cases, “full costs” in 17 U.S.C.

§505 are confined to the six categories of litigation costs specified

in 28 U.S.C. §§1821 & 1920. In Rimini Street, Inc. v. Oracle USA,

Inc., 879 F.3d 948 (Fed. Cir. 2018), aff’d, 139 S. Ct. 873, 878-79

(2019) this Court rejected an expansive approach to the meaning

of “full” and held that the word changes the “quantity or amount”

of costs without enlarging the categories or kinds of expenses that

may be awarded. In the words of Justice Kavanaugh, “A ‘full moon’

means the moon, not Mars. A ‘full breakfast’ mean breakfast, not

lunch. A’full season ticket plan’ mean tickets, not hot dogs

22

incur them absent a clear basis in the law for doing so.

In other words, litigation costs may be within the validly

interpretable scope of “all the expenses” awardable under

Section 145 whereas legal costs are not. 22 In affirming the

district court’s decision consistent with this principle, the

en banc Federal Circuit ruled that plaintiff-applicants in

Section 145 civil actions, whether they win or lose on the

merits, are not, under the expense-shifting requirement

of the statute, obligated to reimburse the USPTO for its

legal costs because there was no legally supportable basis

for doing so under the Federal Rules.

2

The court based its en banc ruling in large part on

the common-law doctrine in this country known as the

“American Rule” in which each party is presumptively

required, in the absence of a clear, direct, and explicit

abrogation or exception, to bear both its own legal costs

as well as litigation costs regardless of the outcome of the

case. The Rule is grounded on the policy that seeks to

facilitate access to the courts by mitigating a significant

disincentive against the bona fide filing and defense of

lawsuits that would otherwise significantly increase a

party’s burden – and apprehension - with regard to the

financial downside of litigating. (In many other countries,

courts ordinarily courts ordinarily require a losing party

in a litigation to pay for both legal costs and litigation costs

of the prevailing party - under the so-called “loser pays

rule” or “English Rule”.

22. See, Fleischmann Distilling Corp. v. Maier Brewing

Co., 386 U.S. 714 (1967) and Summit Valley Indus. v. Local 312,

United Bhd. of Carpenters and Joiners of America, 486 U.S. 717,

722-23 (1982), holding that “costs” do not include attorney fees.

23

The American Rule arose in the 18th Century and

became established as an enduring “bedrock principle”

of this country’s jurisprudence long before the 1839

enactment of the original version of the expense-shifting

provisions of Section 145 and Section 1071(b)(3). It remains

as such to this day in federal and most state courts. 23 And

until now, during the entire 180 years of being able to seek

reimbursement of “all [its] expenses” in defending civil

actions under Section 145 and its predecessor statutes, and

later under Section 1071(b), the USPTO always acquiesced

in the American Rule by not seeking to recoup its legal

costs in these cases.

V. Exceptions to the American Rule Are Nowhere to

be Found in Section 145 or in Section 1071(b)(3)

1

Like most doctrines, the American Rule has exceptions

– judicial, contractual, procedural, and statutory. They

occur often and in various settings, but the rationale

behind the rule itself hasn’t changed since its inception.

And the exceptions are limited: they are narrow and their

boundaries have been constrained by statutory precedent

and by rulemaking. The “judicial” or “litigation” exception

23. E.g., Arcambel v. Wiseman, 3 U.S. (3 Dall.) 306 (1796);

Oelrichs v. Spain, 82 U.S. (15 Wall.) 211, 231 (1872); Stewart v.

Sonneborn, 98 U.S. 187, 197 (1878); Alyeska Pipeline Svc. Co. v.

Wilderness Soc’y, 421 U.S. 240, 260, 95 S.Ct. 1612 (1975); Hardt

Reliance Std, Life Ins.Co., 560 U.S. 242, 252-53 (2010); Baker

Botts L.L.P. v. ASARCO LLC, 135 S. Ct. 2158, 2164 (2015). The

American rule has been adhered to as part of the common law in

all jurisdictions in this country except Alaska. See, Alaska RentA-Car, Inc. v. Avis Budget Group, Inc., 738 F.3d 972 (9th Cir. 2013).

24

stems from the inherent common-law power of a court,

either with or without express statutory authority, acting

sua sponte or on motion, to sanction a losing party that

engages in frivolous conduct or bad-faith behavior in

bringing or litigating a meritless suit or at trial. The court

does this by awarding a non-offending party its reasonable

attorney fees in whole or in part, subject to an abuse-ofdiscretion standard of appellate oversight. 24 Contractual

exceptions arise by agreement of the contracting parties.

A procedural exception can be found in Fed.R.Civ.P. 54(d)

(2). An example of a statutory exception apposite to the

present issue is the EAJA pursuant to which plaintiffs

who sue federal agencies may under certain conditions

be awarded their attorney fees.

2

The en banc Federal Circuit recognized that the

phrase “all [the USPTO’s] expenses of the [Section 145]

proceeding shall be paid by the applicant” is not like a

nose of wax to be bent merely because the plain dictionary

meaning of the word “expenses” is broad sense. Rather,

it must be understood and consistently applied in the

context of judicial interpretation of the statute in light of

the American Rule which is not an option: either it governs

or it doesn’t. To that point, settled law requires that any

statutory exception to the Rule be stated in “specific and

explicit” terms that unambiguously manifests a legislative

intent to shift a party’s burden of paying its legal costs

onto an opposing party. Although the presumption is not

24. See, e.g., Octane Fitness LLC v. ICON Health & Fitness,

Inc., 572 U.S. __(2014) empowering district courts by statute, i.e.,

35 U.S.C. 285, to award reasonable attorney fees to prevailing

parties in patent cases that “stand out from the others”.

25

a hard and fast rule of exclusion, it may be disregarded

only upon an affirmative showing of statutory intendment

to the contrary. 25

Taking a strict “plain meaning” approach, the

USPTO, on the other hand, relied on non-contextual

dictionary definitions to argue that the word “expenses” is

so broad as to be ambiguous. In advancing its unfettered

and expansive approach, the Agency contends that the

predicate “all” is not just a quantitative modifier – but

also a qualitative one that enlarges the categories or

kinds of expenses that may be awarded, such that “all

the expenses” should include legal costs in addition to

litigation costs, and hence qualifies as an exception to

the American Rule. Such an argument swallows the rule

by isolating the term “all the expenses” in a vacuum

and then ignoring the legislative history under which

the congressional authors intended it to operate, or the

boundary conditions of specificity imposed on any wouldbe exceptions to the Rule.

VI. The Rationale of the En Banc Decision in

NantKwest Operates with Equal Force in Booking.

Com

1

In rejecting the USPTO’s argument, the Federal

Circuit en banc majority held that, in light of the history

25. Runyon v. McCrary, 427 U.S. 160, 185 (1976) (No special

words or terms of art are required to create an exception to the

American rule; rather, whatever words are used must be “sufficiently

clear” to manifest the legislature’s intent to do so.); Vermont Agency

of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765,

781 (2000) ; NantKwest, Inc. v. Iancu, at 898 F.3d at 1387.

26

of Supreme Court jurisprudence, the American Rule

precludes the shifting of legal costs in Section 145

proceedings regardless of whether the shifting is in favor

of the prevailing or non-prevailing parties. In doing so,

the majority explained that the term “all the expenses” in

Section 145 unambiguously “falls short of [the] stringent

standard of explicit specificity required by Congress and

by the governing context and operation of the American

Rule in order to constitute an exception”. The court cited

Congress’ long history of conjunctive usage of “expenses”

and “attorney fees,” both in the Patent Act and elsewhere

as further grounds for treating them as separate and

distinct concepts applicable to a variety of statutes in

diverse types of cases that allow fee-shifting, win or lose,

as well as court decisions applying the American Rule

independently of who the prevailing and non-prevailing

(winning versus losing) parties are.

2

The court rightly buttressed its reasoning by noting

that a mandatory (non-discretionary) award to the USPTO

of its legal costs in every case, on top of its litigation costs

regardless of the degree of the Agency’s success or failure

on the merits would set an anomalous precedent, because

an aggrieved applicant who appeals to the district and

wins – as Booking.Com did - would have to compensate

the loser’s (i.e., the USPTO’s) lawyers for their services in

failing to successfully defend the Agency. Such a result,

aside from being not only awkward but grossly unfair,

would be absurdly bizarre, disturbing, and fundamentally

flawed: it flies in the face of not only the American Rule

(which, according to the USPTO’s own argument, would

otherwise apply) but also the “loser pays” English Rule as

27

well. To penalize a plaintiff for achieving a hard-earned

victory by forcing it to pay its adversary’s lawyers would

hardly be the right way to vindicate a just cause. It would

simply make no sense. There is no valid principle rooted

in American litigation jurisprudence that supports taking

money from a winner’s purse and giving it to the loser’s

lawyers as a reward for failure.

3

Thus, the USPTO’s argument cannot withstand

scrutiny – it doesn’t add up and should be seen for what it

really is, to wit, politically motivated legerdemain aimed at

marginalizing civil actions by raising the financial bar for

aggrieved applicants in need of de novo recourse. Having

failed repeatedly to lobby Congress to abolish legislatively

the 180-year-old right of de novo recourse by civil action,

the USPTO is now creating needless tension with the

American Rule by going against Congress’s purpose in

enacting the EAJA.

If the Court decides the issue correctly, then the

USPTO can no longer demand that the district court in

all Section 145 and Section 1071(b) civil actions impose a

non-discretionary, confiscatory tax in derogation of both

the American Rule and the EAJA. No longer could the

Agency flout the EAJA, whose purpose is to mitigate the

risk of exposing plaintiff-applicants to the Government’s

legal costs and consequent financial deterrence for those

who otherwise would not be able to afford the appeal.

By any logic, it would simply be wrong for the USPTO’s

interpretation to prevail because a win for the Agency

would violate the “equity-of-the-statute rule” against

construing a statute contrary to its legislative purpose

28

when doing so would create injustice by erecting a perverse

and entirely unjust financial barrier as a confiscatory tax

designed to exact an unpredictable and uncapped toll that

would undermine Section 145 by discouraging aggrieved

applicants from exercising their statutory right to seek

de novo judicial review of adverse USPTO decisions..

4

Only Congress – not the USPTO nor the courts has the power to change or rewrite a statute that the

lawmakers enacted and which was signed into law by the

President. Only an Article III court – not the USPTO - can

interpret a statute that Congress enacted and which the

Agency neither administers nor has the power to construe

in a manner contrary to how the statute was continuously

understood and applied over the decades since its

enactment so as to in effect fashion a new statute. 26

VII. The Split of Authority in the Circuits Justifies

Deciding NantKwest Together With Booking.Com

1

The granting of the USPTO’s petition for certiorari

has set the stage for resolving a binary, inter-circuit

split of authority – both horizontal and vertical - between

the Federal Circuit decision in the present case, and

the earlier Fourth Circuit decision in Shammas.in

which a divided panel bought into the PTO’s expansive

26. Chevron Inc. v. Natural Resources Defense Council, 467

U.S. 837 (1984); Henry Schein, Inc. v. Archer & White Sales, Inc.,

586 U.S. ___, 139 S.Ct. 524 (2019).

29

interpretation of the expense-shifting language in Section

1071(b)(3). The district court and the Fourth Circuit in

Booking.Com were in turn obligated to follow the holding

in Shammas because of stare decisis. The vertical split

stems from a judicial fault line separating the different

appellate jurisdictions of the Fourth Circuit and the

Federal Circuit over judgments of the Eastern District

of Virginia under Section 1071(b) of the Lanham Act,

and Section 145 of the Patent Act, respectively. Thus, in

Booking.Com, the district court was bound by the Fourth

Circuit panel decision in the Shammas trademark case,

whereas the same district court in NantKwest was not so

bound because of the Federal Circuit’s exclusive appellate

jurisdiction in Section 145 cases.

2

The en banc Federal Circuit majority in NantKwest

characterized the panel holding in Shammas as an overly

expansive and “incorrect interpretation” of the expenseshifting provision in Section 1071(b)(3) which, being

applicable only to cases arising under the Trademark

Act, is therefore not controlling authority in Section 145

patent cases. On the other hand, the dissent in NantKwest

characterized the circuit split as “unfortunate and

unnecessary” because the majority did not expressly

hold that Baker Botts had overruled Shammas; had the

majority done so, then it would have effectively done away

with the split by eliminating Shammas from being any

kind of precedent. It is to be expected that, the present

state of affairs will soon be righted in view of the granting

of certiorari in NantKwest and the possible granting of

certiorari in Booking.Com. There are other, apposite cases

waiting in the wings and more of them will undoubtedly

30

wend their way through the courts. 27 Hence, the Court’s

forthcoming review – and hopefully its affirmance - of the

Federal Circuit’s en banc holding in NantKwest and its

consequent implicit extension to Shammas, or the direct

overruling of Shammas via Booking.Com would be keenly

welcomed across the spectrum of intellectual property

stakeholders.

CONCLUSION

Having granted certiorari in NantKwest, and given

the possibility of certiorari being granted in Booking.

Com, the Court is poised to decide across-the-board an

exceptionally important question of first impression in

both patent and trademark law. The Court’s back-to-back

resolution of these cases - by consolidating or deciding

them together to ensure mutually consistent outcomes

– would promote the proper and orderly development of

federal jurisprudence at the intersection of intellectual

property and administrative law.

NantKwest and Booking.Com together are the right

setting for the Court to answer broadly and definitively a

singular question framed by a precise, clear, inter-circuit

split of authority. NantKwest involves a patent application;

Booking.Com involves a trademark registration application

as did Shammas. The Federal Circuit’s en banc holding

in NantKwest is diametrically opposite to, and therefore

is in clear conflict with, the Fourth Circuit’s decision in

Shammas whose holding was adhered to by the Fourth

27. See, Realvirt LLC v. Iancu, No. 2017-1159 (Fed. Cir.);

Taylor v. Lee, No.1:15-cv-1607 (E.D. Va), 2016 U.S. Dist. LEXIS

191677; Halozyme v. Iancu, No. 1:16-cv-1580, 128 U.S.P.Q.2d 1445

(E.D.Va. 2018).

31

Circuit in Booking.Com under stare decisis. The Court

can now decide across-the-board which of them will

remain the law of the land by judging two counterpart

statutes affecting the world-wide community of applicants

for U.S. patents and trademark registrations.

For the foregoing reasons and cited authorities, it is

respectfully submitted that the Court should affirm the

Federal Circuit en banc decision in NantKwest and reverse

the Fourth Circuit panel decision in Booking.Com, thereby

overturning the misbegotten holding in Shammas.

Respectfully submitted,

Robert J. Rando

Charles E. Miller

Associated Counsel

Counsel of Record

The A ssociation

The A ssociation

of A micus Counsel

of A micus Counsel

c/o The Rando Law Firm P.C.

c/o Leichtman Law PLLC

6800 Jericho Turnpike,

228 East 45th Street, Suite 605

Suite 120W

New York, New York 10017

Syosset, New York 11791

(212) 419-5210

(516) 799-9800

cmiller@leichtmanlaw.com

Kelly L. Morron

Associated Counsel

The A ssociation

of A micus Counsel

c/o Law Offices

of K elly L. Morron

846 Ridgefield Road

Wilton, CT 06897

(917) 292-5620

Christopher A. Colvin

Associated Counsel

The A ssociation

of A micus Counsel

c/o Colvin IP PC

543 East 17th Street

Brooklyn, New York 11226

(917) 767- 7425

Counsel for Amici Curiae

32

A lan M. Sack

Associated Counsel

The A ssociation

of A micus Counsel

c/o Sack IP Law P.C.

Five Penn Plaza , 23rd Floor

New York, New York 10001

(212) 500-1310

Hanna Madbak

Associated Counsel

The A ssociation

of A micus Counsel

c/o Siber Law LLP

54 West 40th Street, 1st Floor

New York, New York 10036

(646) 822-2271

Takashi B. Yamamoto

Associated Counsel

Infotech Law Offices

Urban Toranomon Building,

6th Floor

16-4, Toranomon 1-chome

Minato-ku, Tokyo 105-0001

Japan

81-3-3593-0313

Toshimasa Takahashi

Associated Counsel

The Law Offices of

Hiraide & Takahashi

Nihonbashi Kato Building,

6th Floor

1-14 Nihonbashi 2-chome

Chuo-ku, Tokyo 103-0027

Japan

81-3-3517-7007