The U.S. Supreme Court will weigh whether the Patent and Trademark Office can demand attorneys’ fees from patent applicants who challenge rejections in district court.

The court March 4 granted the PTO’s petition to review the U.S. Court of Appeals for the Federal Circuit’s ruling in NantKwest Inc. v. Iancu. The ruling held the agency can’t recover attorneys’ fees in district court challenges, making it easier for patent applicants to contest agency decisions.

The court may clarify whether federal law allows the patent office to seek attorneys’ fees from applicants who go to court. The high court’s eventual ruling may affect how often applicants file such challenges, which can be expensive to litigate.

The interpretation of “all the expenses of the proceedings shall be paid by the applicant,” under federal patent law is at the heart of the case. The law allows applicants to challenge a patent office rejection in district court, where they can provide additional evidence.

Biotechnology company NantKwest sued the PTO after an examiner rejected its cancer treatment patent. NantKwest doesn’t have to pay the agency’s legal fees just because the company opted to go to district court, the Federal Circuit ruled.

Patent applicants that want to challenge rejections can go to either district court or the Federal Circuit. If they opt for district court, they should have to cover “all expenses,” including the agency’s legal fees, regardless of the final outcome, the PTO argued in its Supreme Court petition.

Litigants generally pay their own attorneys’ fees whether they win or lose, unless there’s an explicit exception. The concept is known as the American Rule.

There isn’t an American Rule exception to 35 U.S.C. 145, the patent statute at center of the NantKwest dispute, the Federal Circuit ruled. It’s not clear whether expenses includes lawyers’ fees because, in many statutes, Congress refers to both expenses and attorneys’ fees as separate matters, it said. That conclusion is “flawed,” the PTO said in its high court petition.

“This Court has never held that Congress must use the specific term ‘attorney’s fees’ in order to authorize recoupment of money spent on attorney services as part of a larger award of litigation expenses,” the agency said.

The statute only allows for reimbursed expenses and never mentions attorneys’ fees, NantKwest said in its opposition brief. NantKwest argued that neither the statute’s language nor its legislative history shows Congress intended to deviate from the American Rule.

The case is Andrei Iancu v. NantKwest Inc., U.S., 18-801, Cert granted 3/4/19.