Peter v. NantKwest, Inc.

In Peter v. NantKwest, Inc., the U.S. Supreme Court addressed whether the United States Patent and Trademark Office (USPTO) could recover its attorney’s fees under 35 U.S.C. § 145, which requires a patent applicant challenging a USPTO decision in district court to pay “all expenses of the proceedings.” NantKwest, Inc., a biotech company, filed a § 145 action after its patent application was rejected. The USPTO argued that “all expenses” includes attorney’s fees, but the district court and Federal Circuit disagreed. On December 11, 2019, the Supreme Court unanimously affirmed, holding that the phrase “all expenses” does not authorize the recovery of attorney’s fees. The Court relied on the American Rule, which presumes each party bears its own fees unless Congress specifically and explicitly states otherwise. The decision resolved a circuit split and clarified the scope of fee-shifting in patent litigation against the federal government.

The Supreme Court affirmed the Federal Circuit’s judgment, ruling unanimously that “all expenses” does not encompass attorney’s fees, and the USPTO is not entitled to recover its legal fees under § 145. The American Rule requires a clear and explicit congressional statement to shift such fees.

Whether the term “all expenses of the proceedings” in 35 U.S.C. § 145 authorizes the USPTO to recover its attorney’s fees from a patent applicant who challenges a rejected patent application in a federal district court.

The decision preserved patent applicants' access to de novo review in district court under § 145 by eliminating the risk of paying the government's attorney’s fees, which could be prohibitively expensive. It reinforced the strong presumption of the American Rule in federal statutes, preventing the chilling effect that fee-shifting might have on small inventors and startups seeking to protect their intellectual property. The ruling also clarified the interpretation of “expenses” across the U.S. Code.