In Nantkwest, Inc. v. Iancu, No. 2016-1794 (Fed. Cir. July 27, 2018), the Federal Circuit, sitting en banc (excl. Chen, C.J.), affirmed the district court’s decision that a patent applicant is not required to pay the USPTO’s attorneys’ fees when challenging the USPTO’s decision in district court under 35 U.S.C. § 145.

The PTAB affirmed a rejection of Nantkwest’s patent application, and Nantkwest filed suit in E.D. Va. under 35 U.S.C. § 145 contesting the rejection. Section 145 states that “[a]ll the expenses” of a challenge under this Section “shall be paid by the applicant.” The USPTO prevailed and moved for reimbursement of its litigation expenses, including attorneys’ fees. The district court denied the USPTO’s motion in-part with respect to attorneys’ fees.

The panel on appeal reversed the district court; however, the en banc Federal Circuit vacated the panel opinion, affirming the district court’s decision. The Federal Circuit found that Section 145 is subject to the American Rule, which provides that each litigant bears its own attorneys’ fees regardless of who prevails, absent clear contrary instruction from Congress. Because “expenses” generally does not include attorneys’ fees, and attorneys’ fees appears as a separate category of reimbursement in other sections of the Patent Act, the USPTO could not recover attorneys’ fees under Section 145.