Milo Shammas v. Margaret Focarino
Filing
PUBLISHED AUTHORED OPINION filed. Originating case number: 1:12-cv-01462-TSE-TCB. [999570237]. [14-1191]
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 1 of 27
PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-1191
MILO SHAMMAS,
Plaintiff - Appellant,
v.
MARGARET A. FOCARINO, Commissioner of Patents,
Defendant - Appellee,
and
DAVID KAPPOS, Director of the United States Patent and
Trademark Office; TERESA STANEK REA, Acting Director of the
United States Patent and Trademark Office,
Defendants.
----------------------------------INTERNATIONAL TRADEMARK ASSOCIATION,
Amicus Supporting Appellant.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.
T. S. Ellis, III, Senior
District Judge. (1:12-cv-01462-TSE-TCB)
Argued:
December 10, 2014
Decided:
April 23, 2015
Before WILKINSON, NIEMEYER, and KING, Circuit Judges.
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 2 of 27
Affirmed by published opinion.
Judge Niemeyer
majority opinion, in which Judge Wilkinson joined.
wrote a dissenting opinion.
wrote the
Judge King
ARGUED: Aaron M. Panner, KELLOGG, HUBER, HANSEN, TODD, EVANS &
FIGEL, P.L.L.C., Washington, D.C., for Appellant.
Jaynie
Randall Lilley, UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for Appellee.
ON BRIEF: William C. Steffin, Armin Azod,
STEFFIN LELKES AZOD LLP, Century City, California; Wendy McGuire
Coats, MCGUIRE COATS LLP, Lafayette, California; W. Joss
Nichols, KELLOGG, HUBER, HANSEN, TODD, EVANS & FIGEL, P.L.L.C.,
Washington, D.C.; John N. Jennison, JENNISON & SHULTZ, P.C.,
Arlington,
Virginia,
for
Appellant.
Nathan
K.
Kelley,
Solicitor, Thomas W. Krause, Deputy Solicitor, Christina J.
Hieber, Associate Solicitor, Thomas L. Casagrande, Associate
Solicitor,
UNITED
STATES
PATENT
AND
TRADEMARK
OFFICE,
Alexandria, Virginia; Stuart F. Delery, Assistant Attorney
General, Mark R. Freeman, Civil Division, UNITED STATES
DEPARTMENT OF JUSTICE, Washington, D.C.; Dana J. Boente, Acting
United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY,
Alexandria, Virginia, for Appellee.
Anthony J. Dreyer, Jordan
A. Feirman, Katelyn N. Andrews, SKADDEN, ARPS, SLATE, MEAGHER &
FLOM LLP, New York, New York; Mark N. Mutterperl, David J. Ball,
Jessica S. Parise, BRACEWELL & GIULIANI LLP, New York, New York,
for Amicus Curiae.
2
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 3 of 27
NIEMEYER, Circuit Judge:
The Lanham Act, 15 U.S.C. §§ 1051-1141n, provides that a
dissatisfied trademark applicant may seek review of an adverse
ruling
on
his
trademark
application
either
by
appealing
the
ruling to the Court of Appeals for the Federal Circuit, id.
§ 1071(a)(1), or by commencing a de novo action in a federal
district court, id. § 1071(b)(1).
district
court
and
no
adverse
If he elects to proceed in a
party
opposed
his
application
before the Patent and Trademark Office (“PTO”), the applicant
must name the Director of the PTO as a defendant and pay “all
the
expenses
action
or
of
the
not,
proceeding,”
unless
the
whether
expenses
are
he
succeeds
in
unreasonable.
the
Id.
§ 1071(b)(3) (emphasis added).
In this case, Milo Shammas, a dissatisfied applicant in an
ex parte trademark proceeding, elected to commence a de novo
action in the district court.
At the end of the proceeding, the
Director of the PTO sought “all the expenses of the proceeding”
from Shammas, including salary expenses of the PTO attorneys and
a
paralegal
district
who
court
were
required
granted
the
to
defend
Director’s
the
Director.
request
and
The
ordered
Shammas to pay the PTO a total of $36,320.49 in expenses.
On appeal, Shammas argues that the district court erred in
“shifting”
the
PTO’s
attorneys
fees
to
him,
contrary
to
the
“American Rule” under which each party bears his own attorneys
3
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 4 of 27
fees, because the governing statute does not expressly provide
for the shifting of attorneys fees.
We reject this argument and affirm, concluding that the
imposition
of
all
expenses
on
a
plaintiff
in
an
ex
parte
proceeding, regardless of whether he wins or loses, does not
constitute fee-shifting that implicates the American Rule but
rather
an
unconditional
dissatisfied
district
applicant
court
compensatory
who
elects
proceeding.
charge
And
on
a
engage
to
imposed
the
in
a
we
conclude
PTO
that
this
compensatory charge encompasses the PTO’s salary expenses for
the attorneys and paralegals who represent the Director.
I
In June 2009, Shammas filed a federal trademark application
for the mark “PROBIOTIC” for use in connection with fertilizer
products manufactured by his company, Dr. Earth, Inc.
In an ex
parte proceeding, a trademark examining attorney for the PTO
denied
Shammas’
application
generic and descriptive.
on
the
ground
that
the
term
was
The Trademark Trial and Appeal Board
affirmed.
Rather
than
appeal
the
adverse
ruling
to
the
Federal
Circuit, as allowed by 15 U.S.C. § 1071(a)(1), Shammas elected
to commence this de novo civil action against the PTO in the
district court, pursuant to § 1071(b)(1).
4
The district court
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 5 of 27
granted the PTO’s motion for summary judgment by order dated
October 15, 2013, holding that Shammas had failed to cast doubt
on the finding that “PROBIOTIC” was a generic term.
At
the
motion,
conclusion
pursuant
to
of
§
the
proceeding,
1071(b)(3),
the
for
PTO
filed
reimbursement
a
of
$36,320.49 in expenses that it had incurred in the proceeding,
including the prorated salaries of two attorneys, in the amount
of $32,836.27, and one paralegal, in the amount of $3,090.32.
The PTO calculated these sums by dividing the employees’ annual
salaries
number
by
of
2,000
hours
hours
expended
and
by
multiplying
the
the
employees
action, a total of 518 hours in this case.
results
in
by
the
defending
the
The PTO also claimed
$393.90 for photocopying expenses.
Shammas opposed the motion, arguing that the PTO was in
essence seeking attorneys fees and that § 1071(b)(3) did not, in
authorizing
the
recovery
of
all
expenses
of
the
proceeding,
explicitly provide for the shifting of attorneys fees as, he
argued, would be required to overcome the American Rule.
Following a hearing, the district court granted the PTO’s
motion in its entirety.
It reasoned:
[T]he plain meaning of the term “expenses,” by itself,
would clearly seem to include attorney’s fees. But if
any doubt remains about that inclusion, it is removed
by Congress’s addition of the word “all” to clarify
the breadth of the term “expenses.”
When the word
“expenses” is prefaced with the word “all,” it is
pellucidly clear Congress intended that the plaintiff
5
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 6 of 27
in such an action pay for all the resources expended
by the PTO during the litigation, including attorney’s
fees.
Shammas
v.
Focarino,
990
F.
Supp.
2d
587,
591-92
(E.D.
Va.
2014).
From the district court’s order, dated January 3, 2014,
Shammas
filed
authority
to
this
award
appeal,
challenging
attorneys
fees
and
the
district
paralegals
court’s
fees
under
§ 1071(b)(3).
II
Section 1071(b)(3) provides in relevant part, “In any case
where there is no adverse party, . . . all the expenses of the
proceeding shall be paid by the party bringing the case, whether
the final decision is in favor of such party or not.”
While
Shammas
acknowledges
that
“expenses”
is
a
sufficiently broad term that, “in ordinary parlance,” includes
attorneys fees, he argues that in the context of the American
Rule
--
i.e.,
that
“the
prevailing
party
may
not
recover
attorneys’ fees as costs or otherwise,” Alyeska Pipeline Serv.
Co. v. Wilderness Soc’y, 421 U.S. 240, 245 (1975) -- the statute
is not sufficiently clear to reverse the presumption created by
that Rule.
federal
He argues that “a district court may not read a
statute
to
authorize
attorney-fee-shifting
6
unless
the
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 7 of 27
statute makes Congress’s intention clear by expressly referring
to attorney’s fees.”
We
agree
(Emphasis added).
with
Shammas
that,
in
ordinary
parlance,
“expenses” is sufficiently broad to include attorneys fees and
paralegals fees.
See American Heritage Dictionary 624 (5th ed.
2011) (defining expense as “[s]omething spent to attain a goal
or accomplish a purpose,” such as “an expense of time and energy
on [a] project”); Black’s Law Dictionary 698 (10th ed. 2014)
(defining expense as “[a]n expenditure of money, time, labor, or
resources to accomplish a result”); accord U.S. ex rel. Smith v.
Gilbert Realty Co., 34 F. Supp. 2d 527, 529-30 (E.D. Mich. 1998)
(noting
that
“a
legal
fee
would
certainly
seem
to
be”
an
“expense[] which a person incurs in bringing an action” under
the plain meaning of that phrase).
Congress
modified
clearly
indicating
the
term
that
Moreover, in this statute,
“expenses”
the
common
“expenses” should not be limited.
with
the
meaning
term
of
the
“all,”
term
And even though the PTO’s
attorneys in this case were salaried, we conclude that the PTO
nonetheless incurred expenses when its attorneys were required
to
defend
the
Director
in
the
district
court
proceedings,
because their engagement diverted the PTO’s resources from other
endeavors.
See Wisconsin v. Hotline Indus., Inc., 236 F.3d 363,
365 (7th Cir. 2000) (“[S]alaried government lawyers . . . do
7
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 8 of 27
incur expenses if the time and resources they devote to one case
are not available for other work” (emphasis added)).
Shammas’ argument in this case depends on the assumption
that if § 1071(b)(3) were to be construed to include attorneys
fees, it would constitute a fee-shifting statute that would need
to refer explicitly to attorneys fees in order to overcome the
presumption of the American Rule.
This assumption, however, is
misplaced under the circumstances of this case.
To be sure, where the American Rule applies, Congress may
displace it only by expressing its intent to do so “clearly and
directly.”
Cir.
In re Crescent City Estates, 588 F.3d 822, 855 (4th
2009).
prevailing
losing
But
party
party.
the
may
American
not
Alyeska
Rule
recover
Pipeline,
provides
attorneys’
421
U.S.
only
fees”
at
245
that
from
“the
the
(emphasis
added); see also, e.g., Buckhannon Bd. & Care Home, Inc. v. W.
Va. Dep’t of Health & Human Res., 532 U.S. 598, 602 (2001)
(“[T]he prevailing party is not entitled to collect [attorneys
fees] from the loser”); E. Associated Coal Corp. v. Fed. Mine
Safety & Health Review Comm’n, 813 F.2d 639, 643 (4th Cir. 1987)
(similar).
The requirement that Congress speak with heightened
clarity to overcome the presumption of the American Rule thus
applies only where the award of attorneys fees turns on whether
a party seeking fees has prevailed to at least some degree.
the Supreme Court has explained,
8
As
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 9 of 27
[W]hen Congress has chosen to depart from the American
Rule by statute, virtually every one of the more than
150
existing
federal
fee-shifting
provisions
predicates fee awards on some success by the claimant;
while these statutes contain varying standards as to
the precise degree of success necessary for an award
of fees[,] . . . the consistent rule is that complete
failure will not justify shifting fees . . . .
Ruckelshaus v. Sierra Club, 463 U.S. 680, 684 (1983) (emphasis
added); see also W. Va. Highlands Conservancy, Inc. v. Norton,
343 F.3d 239, 244 (4th Cir. 2003) (requiring some degree of
success, even though the statute authorized courts to award fees
whenever
they
deemed
it
appropriate).
mandates
the
payment
of
attorneys
party’s
success
is
not
a
fees
fee-shifting
Thus,
a
without
statute
statute
regard
that
that
to
a
operates
against the backdrop of the American Rule.
With that understanding of the American Rule, it becomes
clear
that
§
1071(b)(3)
is
not
a
fee-shifting
statute
purports to rebut the presumption of the Rule.
imposing
expenses
based
on
whether
the
PTO
that
Rather than
prevails,
§ 1071(b)(3) imposes the expenses of the proceeding on the ex
parte plaintiff, “whether the final decision is in favor of such
party or not.”
(Emphasis added).
Thus, even if Shammas had
prevailed in the district court, he still would have had to pay
all of the PTO’s expenses.
Because the PTO is entitled to
recover its expenses even when it completely fails, § 1071(b)(3)
need not be interpreted against the backdrop of the American
9
Appeal: 14-1191
Doc: 40
Rule.
Filed: 04/23/2015
Pg: 10 of 27
Therefore, even assuming that a statute must explicitly
provide
for
presumption
the
of
shifting
the
of
American
attorneys
Rule,
fees
that
to
overcome
requirement
is
the
not
applicable here.
Since § 1071(b)(3) does not implicate the presumption of
the American Rule, Shammas’ argument that the term “expenses”
must
explicitly
include
attorneys
fees
fails,
and
we
are
therefore left with giving the phrase “all the expenses of the
proceeding” its ordinary meaning without regard to the American
Rule.
Construing
the
plain
language
of
§
1071(b)(3),
we
conclude that an ex parte litigant who elects to initiate a de
novo proceeding in the district court must pay all reasonable
expenses of the proceeding, including attorneys fees, whether he
wins or loses.
As an alternative argument, Shammas contends that “expenses
of the proceeding,” taken in context, should “most naturally
[be] read as synonymous with ‘costs of the proceeding’ -- that
is, taxable costs” -- and that the term “taxable costs” is a
legal term of art that does not include attorneys fees.
He
provides no explanation, however, for why we should replace the
statutory
words
“all
the
expenses”
with
the
words
“taxable
costs.”
Moreover,
nearly
we
identical
rejected
statutory
this
argument
language
10
in
requiring
the
a
context
of
dissatisfied
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 11 of 27
patent applicant who opts to challenge the denial of his patent
application in an ex parte proceeding in a district court to pay
“all the expenses of the proceeding.”
46
F.2d
766,
government
769
(4th
attorney’s
deposition).
Cir.
1931)
expenses
See Robertson v. Cooper,
(permitting
associated
recovery
a
attending
with
of
a
In Robertson, we reversed the district court’s
holding that “the word ‘expenses’ in the statute practically
meant ‘costs,’” concluding instead that “[t]he evident intention
of Congress in the use of the word ‘expenses’ was to include
more
than
that
‘costs.’”
S.
Ct.
which
is
ordinarily
included
in
the
word
Id.; see also Taniguchi v. Kan Pac. Saipan, Ltd., 132
1997,
2006
(2012)
(“Taxable
costs
relatively minor, incidental expenses . . . .
are
limited
to
Taxable costs are
a fraction of the nontaxable expenses borne by litigants for
attorneys, experts, consultants, and investigators.”); Arlington
Cent. Sch. Dist. Bd. of Educ. v. Murphy, 548 U.S. 291, 297
(2006)
(“The
use
of
[‘costs’],
rather
than
a
term
such
as
‘expenses,’ strongly suggests that [20 U.S.C.] § 1415(i)(3)(B)
was
not
meant
to
be
an
open-ended
provision
that
makes
participating States liable for all expenses incurred”).
Apart from the linguistic distinction between expenses and
costs, the use of both terms in § 1071(b)(3) also suggests that
they were not intended to be read synonymously.
immediately
following
the
“all
11
the
In the sentence
expenses”
language,
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 12 of 27
§ 1071(b)(3) provides that the administrative record “shall be
admitted on motion of any party, upon such terms and conditions
as to costs, expenses, and the further cross-examination of the
witnesses as the court imposes.”
the
“‘cardinal
principle
of
(Emphasis added).
statutory
In light of
construction’
that
‘a
statute ought, upon the whole, to be so construed that . . . no
clause, sentence, or word shall be superfluous,’” TRW Inc. v.
Andrews, 534 U.S. 19, 31 (2001) (quoting Duncan v. Walker, 533
U.S.
167,
174
(2001)),
and
the
“normal
rule
of
statutory
construction that identical words used in different parts of the
same act are intended to have the same meaning,” Sullivan v.
Stroop, 496 U.S. 478, 484 (1990) (quoting Sorenson v. Sec’y of
Treasury, 475 U.S. 851, 860 (1986)) (internal quotation marks
omitted),
we
conclude
that
Congress
did
not
intend
for
“expenses” to be interchangeable and coextensive with “costs.”
III
Our
reading
that
§
1071(b)(3)
imposes
a
unilateral,
compensatory fee, including attorneys fees, on every ex parte
applicant who elects to engage the resources of the PTO when
pursuing a de novo action in the district court, whether the
applicant
wins
or
loses,
is
confirmed
structure and legislative history.
12
by
the
Lanham
Act’s
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 13 of 27
A
Under
appeal
the
a
statutory
trademark
scheme,
examiner’s
a
trademark
final
applicant
decision
may
denying
registration of a mark to the Trademark Trial and Appeal Board.
See 15 U.S.C. § 1070.
Thereafter, a dissatisfied applicant is
given two choices for proceeding further.
decision
directly
to
the
Federal
He can appeal the
Circuit,
pursuant
to
§ 1071(a)(1), or he can commence a de novo civil action in a
federal district court, pursuant to § 1071(b)(1).
Should he
choose the former, the appeal is taken “on the record” before
the PTO, id. § 1071(a)(4), and the court will uphold the PTO’s
factual
findings
unless
they
are
“unsupported
by
substantial
evidence,” see, e.g., Recot, Inc. v. Becton, 214 F.3d 1322, 1327
(Fed.
Cir.
2000).
Should
he
choose
instead
to
commence
an
action in a district court, not only is the record of the PTO
admissible into evidence on the motion of either party, but the
parties may also conduct discovery and submit further testimony
and
other
new
evidence.
§ 1071(b)(3);
Swatch
AG
Wholesale, LLC, 739 F.3d 150, 155 (4th Cir. 2014).
v.
Beehive
The district
court reviews all the evidence de novo and acts as the trier of
fact.
See
Swatch,
739
F.3d
at
155.
Moreover,
collateral
issues, such as claims for infringement and unfair competition,
may be presented and decided as authorized by the Federal Rules
of Civil Procedure.
Id.
13
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 14 of 27
De novo civil actions under § 1071(b)(1) thus contemplate a
more
fulsome
requires
an
and
ex
expensive
parte
procedure.
applicant
to
Since
name
the
the
PTO
as
statute
a
party
defendant to such a proceeding, the PTO is required to expend
substantially greater time and effort and incur substantially
greater expense than it would otherwise in an appeal to the
Federal Circuit.
By requiring the dissatisfied applicant to pay
“all the expenses of the proceeding,” whether the applicant wins
or loses, Congress obviously intended to reduce the financial
burden on the PTO in defending such a proceeding.
this
purpose,
it
makes
good
sense
to
construe
In light of
“expenses”
to
include attorneys fees and paralegals fees because the time that
PTO employees spend in defending the Director will constitute
the majority of the PTO’s expenses in such a proceeding -- in
this
case,
over
98%
of
its
expenses.
Of
course,
if
the
dissatisfied applicant does not wish to pay the expenses of a de
novo civil action, he may appeal the adverse decision of the PTO
to the Federal Circuit.
Shammas argues that because defending decisions in federal
court
“is
part
of
the
ordinary
duty
of
any
administrative
agency,” awarding personnel expenses to the PTO would “impose a
burden unlike anything else in the law.”
But this argument
fails to recognize that agencies tasked with defending their
actions in federal court are ordinarily able to limit the record
14
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 15 of 27
in court to the agency record and to have their factfinding
reviewed deferentially.
See, e.g., Corey v. Sec’y, U.S. Dep’t
of Housing & Urban Dev. ex rel. Walter, 719 F.3d 322, 325 (4th
Cir.
2013)
(“Pursuant
to
the
Administrative
Procedures
Act,
‘federal courts can overturn an administrative agency’s decision
. . . if it is arbitrary, capricious, an abuse of discretion,
. . . otherwise not in accordance with the law, or unsupported
by substantial evidence’” (omissions in original) (quoting Knox
v. U.S. Dep’t of Labor, 434 F.3d 721, 723 (4th Cir. 2006)));
Trinity Am. Corp. v. U.S. Envtl. Prot. Agency, 150 F.3d 389, 401
n.4 (4th Cir. 1998) (“Review of agency action is limited to the
administrative
decision”).
record
before
the
agency
when
it
makes
its
To be sure, it is relatively rare for statutes to
allow aggrieved persons to choose between parallel proceedings
to challenge agency action.
But see 26 U.S.C. §§ 6213-6214,
7422 (granting aggrieved taxpayers a similar choice of forum).
But
regardless
incentivizes
of
trademark
its
obscurity,
applicants
denials to the Federal Circuit.
to
§ 1071(b)(3)
appeal
routine
plainly
trademark
Cf. Hyatt v. Kappos, 625 F.3d
1320, 1337 (Fed. Cir. 2010) (en banc) (noting that “Congress
imposed on the applicant the heavy economic burden of paying
‘[a]ll
the
expenses
of
the
proceedings’
regardless
of
the
outcome” under the parallel patent provision in order to deter
15
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 16 of 27
applicants from “procedural gaming” (alteration in original)),
aff’d and remanded, 132 S. Ct. 1690 (2012).
B
Our reading of § 1071(b)(3) is further supported by the
statute’s legislative history, which indicates that § 1071(b)(3)
was intended as a straightforward funding provision, designed to
relieve the PTO of the financial burden that results from an
applicant’s election to pursue the more expensive district court
litigation.
cases
was
(addressing
The
“all
adopted
the
from
patents),
expenses”
which
for
parallel
a
provision
provision
in
in
is
turn
rooted
trademark
Title
in
amendment to the Patent Act of 1836 (the “1836 Act”).
an
35
1839
The 1836
Act established “a fund for the payment of the salaries of the
officers and clerks herein provided for, and all other expenses
of the Patent Office.”
Act of July 4, 1836, ch. 357, § 9, 5
Stat. 117, 121 (emphasis added).
Office
in
1836,
Congress
Thus, in funding the Patent
understood
the
term
“expenses”
include the salaries of the Office’s employees.
to
In addition,
the 1836 Act distinguished “expenses” from “costs,” a term that
the
Act
used
in
a
manner
consistent
with
the
traditional
understanding of court costs, as indicated by a provision that
permitted courts in patent infringement actions “to adjudge and
award as to costs as may appear to be just and equitable.”
§
15,
5
Stat.
at
123
(emphasis
16
added).
With
Id.
these
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 17 of 27
understandings of the relevant terms, Congress amended the 1836
Act in 1839 to provide that “in all cases where there is no
opposing party, a copy of the bill shall be served upon the
Commissioner of Patents, when the whole of the expenses of the
proceeding shall be paid by the applicant, whether the final
decision shall be in his favor or otherwise.”
Act of March 3,
1839, ch. 88, § 10, 5 Stat. 353, 354 (emphasis added).
It is
therefore reasonable to conclude that “the whole of the expenses
of the proceeding” included the Patent Office’s salaries and did
not refer only to court costs.
With
the
passage
“incorporate[d]
by
of
the
Lanham
reference”
the
Act
in
procedures
1946,
Congress
for
appellate
review of patent application denials in trademark proceedings.
S. Rep. No. 87-2107, at 7 (1962), reprinted in 1962 U.S.C.C.A.N.
2844, 2850; see also Lanham Act, ch. 540, § 21, 60 Stat. 427,
435 (1946) (codified as amended at 15 U.S.C. § 1071(b)(3)) (“Any
applicant for registration of a mark . . . who is dissatisfied
with the decision of the Commissioner may appeal to the United
States Court of Customs and Patent Appeals or may proceed under
section 4915, Revised Statutes, as in the case of applicants for
patents, under the same conditions, rules, and procedure[s] as
are prescribed in the case of patent appeals or proceedings so
far
as
they
are
applicable
.
.
.”).
In
1962,
Congress
eliminated the cross-reference to Title 35 and, in its place,
17
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 18 of 27
added to the Lanham Act language substantially similar to the
language
pertaining
to
the
procedures
for
review
of
patent
denials and to the payment of the PTO’s associated expenses.
See S. Rep. No. 87-2107, at 7 (explaining that the amendment
“incorporate[d], with necessary changes in language, the various
provisions of title 35 relating to such appeals and review”).
Subsequent changes to § 1071(b)(3) have been mainly cosmetic and
have not altered Congress’ continued intent as to the payment of
“all the expenses.”
Thus, Congress’ original understanding of “expenses” with
respect to the 1836 Patent Act and the 1839 amendments provides
substantial support for our interpretation of “expenses” as used
in § 1071(b)(3).
IV
At
bottom,
we
conclude
that
§
1071(b)(3)
requires
a
dissatisfied ex parte trademark applicant who chooses to file an
action in a district court challenging the final decision of the
PTO,
to
pay,
as
“all
the
expenses
of
the
proceeding,”
the
salaries of the PTO’s attorneys and paralegals attributed to the
defense of the action.
Accordingly, we affirm the judgment of
the district court.
AFFIRMED
18
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 19 of 27
KING, Circuit Judge, dissenting:
The
Lanham
Act
provision
at
issue
here,
15
U.S.C.
§ 1071(b)(3), makes no reference to attorney’s fees awards and
does not reflect a Congressional intention to authorize such
awards.
Nevertheless, the panel majority affirms the district
court’s attorney’s fees award to the PTO under § 1071(b)(3), in
contravention of the American Rule.
As Justice White explained
for the Supreme Court in 1975, the American Rule “is deeply
rooted in our history and in congressional policy; and it is not
for us to invade the legislature’s province by redistributing
litigation costs.”
See Alyeska Pipeline Serv. Co. v. Wilderness
Soc’y, 421 U.S. 240, 271 (1975).
applies
and
the
PTO
should
bear
Because the American Rule
its
own
attorney’s
fees,
I
respectfully dissent.
A.
Our judiciary strongly disfavors awards of attorney’s fees
that
are
authorized
solely
by
the
courts
—
a
tradition dating almost to our Nation’s founding.
v.
Wiseman,
practice
3
of
U.S.
the
(3
United
Dall.)
306,
States
306
[courts]
well-settled
See Arcambel
(1796) (“The
is
in
general
opposition
to
[attorney’s fees awards]; and even if that practice were not
strictly correct in principle, it is entitled to the respect of
the court.”).
In recognition of the “power and judgment” of
Congress, the federal courts defer to the legislative branch to
19
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 20 of 27
determine if a “statutory policy [authorizing such awards] is
deemed so important that its enforcement must be encouraged.”
See
Alyeska,
421
U.S.
at
263-64.
Thus,
as
we
recently
emphasized, absent “explicit statutory authority,” the courts
presume that the litigants will “bear their own legal costs, win
or lose.”
See In re Crescent City Estates, LLC v. Draper, 588
F.3d 822, 825 (4th Cir. 2009).
That principle — commonly known
as the American Rule — should be recognized and applied here. 1
The only issue we must resolve today is whether 15 U.S.C.
§ 1071(b)(3) “clearly and directly” provides for attorney’s fees
awards.
See Crescent City, 588 F.3d at 825.
For at least three
compelling reasons, the statute fails to authorize such awards.
First,
the
§ 1071(b)(3).
words
“attorney’s
fees”
are
not
found
in
Second, the statute otherwise provides no “clear
support” for awards of such fees.
See Unbelievable, Inc. v.
N.L.R.B., 118 F.3d 795, 801 (D.C. Cir. 1997) (explaining that a
court may not “infer a congressional intent to override the
presumption that the American Rule erects against the award of
attorney’s fees without ‘clear support’ either on the face or in
the legislative history of the statute”).
Third, the background
and history of § 1071(b)(3) fail to show that Congress intended
1
The American Rule is the antithesis of the rule utilized
in England, whereby successful litigants are entitled to recover
their attorney’s fees from the losing parties. See Ruckelshaus
v. Sierra Club, 463 U.S. 680, 684 (1983).
20
Appeal: 14-1191
to
Doc: 40
authorize
Filed: 04/23/2015
such
fee
Pg: 21 of 27
awards.
See
id.
Accordingly,
§ 1071(b)(3) cannot overcome the presumption against fee awards
embodied in the American Rule, and the district court’s award of
attorney’s fees should be vacated.
1.
As an initial matter, Congress failed to use any language
in
§ 1071(b)(3)
awards.
of
Indeed,
§ 1071(b)(3).
exercised
its
attorney’s
fees
Of
Title
the
term
great
“explicit
awards
15
in
that
authorizes
“attorney’s
importance,
statutory
at
least
attorney’s
fees
is
from
fees”
however,
absent
Congress
authority”
to
five
provisions
other
authorize
Chapter 22 (Trademarks) of Title 15:
•
15 U.S.C. § 1114(2)(D)(iv) (imposing liability on
party making material misrepresentations “for any
damages, including costs and attorney’s fees”);
•
15 U.S.C. § 1116(d)(11) (authorizing, in action
for wrongful seizure of goods or marks, award of
“reasonable attorney’s fee”);
•
15 U.S.C. § 1117(a) (authorizing, in “exceptional
cases,” awards of “reasonable attorney fees” to
prevailing parties);
•
15 U.S.C. § 1117(b) (authorizing recovery of
“reasonable attorney’s fee” in counterfeit mark
litigation); and
•
15 U.S.C. § 1122(c) (specifying remedies of
prevailing party as including “actual damages,
profits, costs and attorney’s fees”).
21
has
of
Appeal: 14-1191
Doc: 40
Because
Filed: 04/23/2015
Congress
attorney’s
fees
made
Pg: 22 of 27
multiple
awards
in
explicit
Chapter
22
of
authorizations
Title
15
—
of
but
conspicuously omitted any such authorization from § 1071(b)(3) —
we must presume that it acted “intentionally and purposely in
the disparate . . . exclusion.”
See Clay v. United States, 537
U.S. 522, 528 (2003) (internal quotation marks omitted).
Furthermore, Congress has consistently shown that it knows
how to draft a statute that authorizes attorney’s fees awards.
See, e.g., Stephens ex rel. R.E. v. Astrue, 565 F.3d 131, 138
(4th
Cir.
2009).
For
example,
Congress
has
on
multiple
occasions authorized such fee awards, independently of expenses
and costs:
•
•
12 U.S.C. § 1464(d)(1)(B)(vii) (requiring federal
savings associations to pay “reasonable expenses
and attorneys’ fees” in enforcement actions);
•
26 U.S.C. § 6673(a)(2)(A) (requiring lawyers who
cause excessive costs to pay “excess costs,
expenses, and attorneys’ fees”); and
•
On
11
U.S.C.
§ 363(n)
(authorizing
trustee
to
recover “any costs, attorneys’ fees, or expenses
incurred”);
31 U.S.C. § 3730(d)(4) (authorizing “reasonable
attorneys’ fees and expenses” to prevailing
defendant in false claims suit).
occasion,
Congress
has
explicitly
authorized
recover attorney’s fees as part of expenses.
a
party
to
See 12 U.S.C.
§ 5009(a)(1)(B) (holding party at fault liable for “interest and
22
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 23 of 27
expenses (including costs and reasonable attorney’s fees and
other expenses of representation)”); Fed. R. Civ. P. 37(a)(5)(A)
(requiring
party
at
fault
including attorney’s fees”).
to
pay
“reasonable
expenses . . .
And, consistent with the American
Rule, Congress excluded attorney’s fees from the costs that are
generally recoverable by prevailing parties in
proceedings.
than
See Fed. R. Civ. P. 54(d)(1) (“[C]osts — other
attorney’s
party.”).
federal civil
fees
—
should be
allowed
to the
prevailing
The clear message of the foregoing is simple:
if
Congress had intended to authorize attorney’s fees awards to the
PTO
under
§ 1071(b)(3),
it
would
have
said
so.
Because
subsection (b)(3) does not mention attorney’s fees, we have no
right to judicially conjure up such a provision.
2.
Next, the plain terms of § 1071(b)(3) fail to show that
Congress
desired
to
provide
for
attorney’s
fees
awards.
Although “expenses” under § 1071(b)(3) is not defined, in its
dictionary form the term “expenses” is generally synonymous with
the word “costs.”
1990)
(equating
See Black’s Law Dictionary 345, 577 (6th ed.
“cost”
to
expense
and
“expense”
to
cost);
Merriam Webster’s Collegiate Dictionary 282, 440 (11th ed. 2004)
(defining
“costs”
as
“expenses
incurred
in
litigation,”
and
“expense” as “cost”); Oxford Dictionary of English 615 (3d ed.
2010) (defining “expense” as “the cost incurred in or required
23
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
for something”). 2
Pg: 24 of 27
Because Congress declined to add any language
to § 1071(b)(3) to define the term “expenses,” its omission must
be deemed intentional.
3.
In view of the foregoing principles, the PTO’s claim that
it is entitled to recover its attorney’s fees can only succeed
“if
an
examination
demonstrates
normal
that
scope”
to
of
the
Congress
the
relevant
intended
phrase
proceeding,” in § 1071(b)(3).
to
“all
legislative
give
the
a
history
broader
expenses
of
than
the
See Summit Valley Indus. Inc. v.
Local 112, 456 U.S. 717, 723 (1982).
The statute’s legislative
history, however, fails to indicate that Congress intended to
authorize attorney’s fees awards. 3
As heretofore explained —
2
Our Court has agreed that Congress could intend the phrase
“all the expenses of the proceeding” to mean “more than that
which is ordinarily included in the word ‘costs.’” Robertson v.
Cooper, 46 F.2d 766, 769 (4th Cir. 1931). In the context of the
trademark statutes, however, the term “expenses” does not
include “attorney’s fees,” in that such fees are explicitly
referenced when authorized.
See 15 U.S.C. §§ 1114(2)(D)(iv),
1116(d)(11), 1117(a), 1117(b), and 1122(c); see also S. Rep. No.
93-1400, at 2 (1974), reprinted in 1974 U.S.C.C.A.N. 7132, 7133
(explaining, in support of amendment to Lanham Act, that
“[e]xisting law since 1967 is that attorney fees are recoverable
only in the presence of express statutory authority”).
3
In 1836, Congress established a new fund for the Patent
Office — financed by the application fees of patent applicants
— which it designated for the “salaries of the officers and
clerks . . . and all other expenses” of the Office. See Patent
Act of 1836, ch. 357, § 9, 5 Stat. 117, 121.
The majority
suggests that, in the 1836 Act, “Congress understood the term
(Continued)
24
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 25 of 27
and with repetition sometimes being healthy — Congress knows
how to provide for awards of attorney’s fees when it wants to do
so.
The absence of supportive legislative history regarding the
recovery
of
attorney’s
fees
under
§ 1071(b)(3)
is
telling,
particularly in light of the Supreme Court’s 1975 decision in
Alyeska.
Congress responded to Alyeska, as the Court recognized
in 1987, by “broadening the availability of attorney’s fees in
the federal courts.”
Crawford Fitting Co. v. J. T. Gibbons,
Inc., 482 U.S. 437, 444 (1987) (emphasis added).
Alyeska, Congress could readily
broaden
or
proceeding.”
explain
the
In the wake of
have amended § 1071(b)(3) to
phrase
“all
the
expenses
of
the
The only substantive amendment made by Congress,
however, actually narrowed the scope of subsection (b)(3).
See
Trademark Law Revision Act of 1988, Pub. L. No. 100-667, § 120,
102 Stat. 3935, 3942 (barring court from awarding “unreasonable”
expenses). 4
Accordingly,
the
legislative
history
of
‘expenses’ to include the salaries of the Office’s employees,”
including the salaries of its attorneys.
See Ante at 16. The
1836 enactment shows, however, that when Congress intended to
authorize attorney’s fees as a subset of “all . . . expenses,”
it so provided.
4
Shammas contends here — and the PTO does not dispute —
that, prior to 2013, the PTO had never sought an attorney’s fee
award under the patent and trademark laws.
If such awards had
(Continued)
25
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
§ 1071(b)(3) is
Pg: 26 of 27
insufficient to overcome the
American Rule’s
presumption against fee shifting, and the majority’s decision is
erroneous.
B.
There is no reason for our Court to disregard the American
Rule in this case.
is
that
a
prosecuting
party
a
Indeed, a primary justification for the Rule
“‘should
lawsuit.’”
not
be
penalized
Summit
Valley,
for
456
merely . . .
U.S.
at
724
(quoting Fleischmann Distilling Corp. v. Maier Brewing Co., 386
U.S.
714,
718
(1967)
(explaining
that
“the
poor
might
be
unjustly discouraged from instituting actions to vindicate their
rights if the penalty for losing included the fees of their
opponents’ counsel”)).
By requiring Shammas to pay “all the
expenses of the proceeding,” my friends in the majority simply
penalize him for seeking vindication of his trademark rights.
In that circumstance, § 1071(b)(3) should not escape application
of the American Rule.
Under today’s ruling, the PTO will collect its attorney’s
fees even if Shammas prevails on the merits.
flies
in
the
face
of
the
American
Rule
and
Such a result
must
overcome the Rule’s presumption against fee shifting.
therefore
As the
been generally available, the PTO’s silence in the face of such
authority is more than passing strange.
26
Appeal: 14-1191
Doc: 40
Filed: 04/23/2015
Pg: 27 of 27
Supreme Court has recognized, “intuitive notions of fairness”
caution
against
requiring
the
litigant
to
pay
the
loser’s
attorney’s fees absent “a clear showing that this result was
intended” by Congress.
See Ruckelshaus v. Sierra Club, 463 U.S.
680, 685 (1983) (emphasis added).
C.
Absent explicit statutory language authorizing attorney’s
fees awards, the courts can only speculate on whether the phrase
“all
the
expenses
attorney’s fees.
of
the
proceeding”
includes
the
PTO’s
Against the backdrop of the American Rule,
however, the courts are not entitled to make educated guesses.
In these circumstances, the American Rule precludes the PTO from
recovering such fees under § 1071(b)(3).
Because I would vacate
the
made
attorney’s
fees
award
that
respectfully dissent.
27
was
to
the
PTO,
I
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?