The American Rule

• Jurisdiction: United States,Federal
• Citation: Vol. 46 No. 4
• Publication year: 2021
• Author: D. Benjamin Borson
• topic: Patent law,Civil Procedure

THE AMERICAN RULE

D. Benjamin Borson
Borson Law Group P.C.

Peter v. NantKwest, Inc. 140 S. Ct. 365 (US Supreme Court 2019) and Hyatt v. Hirshfeld, Slip. Op. 2020-2321, -2323, -2324 and -2325 (Fed. Cir. 2021).

INTRODUCTION

This article briefly discusses two cases in which the USPTO attempted to have the USPTO costs paid by the other party.

BACKGROUND

The Supreme Court has weighed in on several cases in which reimbursement of attorney's fees was at issue.

THE AMERICAN RULE

The American Rule holds that each party will pay its own costs. This is different from some other (non-U.S.) jurisdictions that require the loser to pay the prevailing party's costs. This article addresses only the American Rule.

Peter v. NantKwest

In Peter v. NantKwest 140 S. Ct. 365 (U.S. Supreme Court 2019) (herein after, NantKwest), Justice Sotomayor for a unanimous Supreme Court addressed the American Rule. "The Patent Act provides two mutually exclusive methods for challenging an adverse decision by the Patent and Trademark Office,...appeal directly to the Federal Circuit under 35 U.S.C. § 141 or, as relevant here, a new civil action against the PTO Director in the US District Court for the Eastern District of Virginia, § 145." NantKwest at 368.

The American Rule—the "bedrock principle that each litigant pays his own attorney's fees, win or lose, unless statute or contract provides otherwise." Id. at 370.

The Court applied the American Rule to § 145. "[T]he presumption against fee shifting applies to all statutes-even those like § 145 that do not explicitly award attorney's fees to 'prevailing parties.' While the focus of the Supreme Court's inquiry in NantKwest was attorney's fees, as described below, the American Rule also applies to non-shifting of expert witness fees. Turning to the issues in this case, Justice Sotomayor described:

To determine whether Congress intended to depart from the American Rule presumption, the Court first "look[s] to the language of the section at issue.... While [t]he absence of [a] specific reference to attorney's fees is not dispositive, Congress must provide a sufficiently "specific and explicit"

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indication of its intent to overcome the American Rule's presumption against fee shifting." Id.
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The references to "expenses" in § 145 does not invoke attorney's fees with the kind of "clarity we have required to deviate from the American Rule."
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Reading the term "expenses" alongside neighboring words in the statute, however, supports a conclusion excluding legal fees from the scope of § 145. The complete phrase "expenses of the proceeding" is similar to the Latin expense litis, or "expenses of the litigation." This term has long referred to a class of expenses commonly recovered in litigation to which attorney's fees did not traditionally belong.
...
Finally, the modifier "all" does not expand § 145's reach to include attorney's fees. Although the word conveys breadth, it cannot transform "expenses to reach an outlay it would not otherwise include." Id. at 392 bridging to 373.

Justice Sotomayor then addressed the PTO's contention that it is entitled to receive reimbursement of its attorney's fees.

There is no

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