ILitigator
P
Electronically reprinted from August 2015
Appealing a Trademark Registration
Refusal? Win or Lose, You May
Have to Pay the USPTO’s Legal Fees
Adam Siegartel, Brendan J. O’Rourke, and Lawrence I. Weinstein
Adam Siegartel is a first-chair commercial litigator
with significant intellectual property expertise
at Proskauer in New York, NY. He oversees
and manages the firm’s trademark prosecution
practice and handles a wide variety of litigation,
transactional, and prosecution matters in the
trademark, advertising, copyright, right of publicity,
counterfeiting, and cybersquatting fields. Mr.
Siegartel has been recognized by The Legal 500
United States and served on the International
Trademark Association’s influential Public
Resources and INTA Bulletin Committees, as well
as the New York City Bar’s Trademark and Unfair
Competition Committee. Brendan J. O’Rourke is a partner and co-chair of
the Litigation Department as well as co-head of the
False Advertising & Trademark Group at Proskauer
in New York, NY. He is a nationally recognized
trademark and advertising litigator providing
day-to-day trademark, false advertising, and Lanham
Act counseling to Fortune 500 companies, sports &
entertainment industry clients, as well as start-ups
and entrepreneurs. His experience includes all phases
of trademark and false advertising counseling and
litigation; complex issues involving consumer survey
research and claim substantiation; and inter partes
proceedings before the US Trademark Trial and
Appeal Board and the Federal Circuit.
Lawrence I. Weinstein is a partner in the Litigation
Department, co-head of the Intellectual Property
Litigation Group, and co-head of the renowned False
Advertising & Trademark Practice at Proskauer
in New York, NY. A distinguished trial lawyer and
counselor, Mr. Weinstein represents owners and
advertisers of the world’s most well-recognized
brands. His practice concentrates on Lanham Act
and consumer class action false advertising litigation,
as well as NAD proceedings, trademark, trade secret,
and copyright litigation and sports, art and other
complex commercial cases. He is a founder and
editor of Proskauer’s advertising law blog,
www.ProskauerOnAdvertising.com.
1
The federal Trademark Act (the Lanham Act) instructs
that if an unsuccessful trademark applicant appeals a
refusal to register in federal district court, the applicant
must name the Director of the US Patent & Trademark
Office (USPTO) as a defendant, and applicant also
must pay “all the expenses” of the proceeding that are
reasonable, “whether the final decision is in favor of
[applicant] or not.”1 “Expenses” is not defined and there
is no express guidance regarding whether USPTO legal
fees are included.
The Fourth Circuit recently held in a 2-1 decision that
because the trademark applicant must bear the expenses
regardless of result, this is not a provision requiring
express Congressional intent to shift legal fees, and
that such “expenses” do include USPTO legal fees.
Accordingly, the applicant was ordered to pay approximately $36,000 to compensate the USPTO for its fees,
based on the attorney and paralegal salaries attributable
to defending the appeal.2
The trademark prosecution and procedural context
is as follows: The Lanham Act instructs that if the US
Trademark Trial and Appeal Board (TTAB) affirms the
USPTO’s refusal to register, the applicant may appeal
the TTAB’s decision in either of two different venues
(once one venue is selected, the other option is no longer
available). First, applicant may appeal to the Federal
Circuit Court of Appeals, in which case the record is
not reopened and the appellate court will uphold the
USPTO’s factual findings unless “unsupported by substantial evidence.” Second, applicant may commence an
action in federal district court, in which case the prior
USPTO record remains admissible, but the parties may
conduct additional discovery and submit new evidence
and testimony. The district court reviews all evidence de
novo and acts as trier of fact.
The Lanham Act provision instructing that applicant
must pay all USPTO “expenses” applies only to the district court de novo action, and thus, as the Fourth Circuit
pointed out, “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,” where additional discovery is not permitted and
the USPTO’s financial burden likely will be less.3
IP Litigator JULY/AUGUST 2015
In the instant action, the USPTO refused applicant’s
applied-for PROBIOTIC mark and concluded that the
mark was generic in connection with applicant’s fertilizer products. After the TTAB affirmed, applicant commenced a de novo action against the USPTO in district
court, and the court granted the USPTO’s summary
judgment motion on genericness grounds. After that
decision, the USPTO filed a motion for reimbursement of its expenses and applicant opposed, arguing
that “expenses” did not include attorney fees. The district court rejected applicant’s position and awarded the
USPTO its full requested amount—as mentioned above,
approximately $36,000. This appeal to the Fourth Circuit
followed.
In its decision, the Fourth Circuit acknowledged the
“American Rule” that the prevailing party generally
may not recover attorney fees from the losing party,
and that “[t]o be sure, where the American Rule applies,
Congress may displace it only by expressing its intent
to do so clearly and directly.”4 However, the court
held that the Lanham Act’s silence regarding legal
fees in the “expenses” provision was irrelevant because
“[t]he requirement that Congress speak with heightened
clarity to overcome the presumption of the American
Rule … applies only where the award of attorneys fees
turns on whether a party seeking fees has prevailed at
least to some degree,” and that “a statute that mandates
the payment of attorneys fees without regard to a party’s
success is not a fee-shifting statute that operates against
the backdrop of the American Rule.”5
With that in mind, the Fourth Circuit decided the case
without regard to the American Rule, based on what it
characterized as the “ordinary meaning” of the statutory language “all the expenses.”6 The Fourth Circuit
observed that Congress “modified the term ‘expenses’
with the term ‘all,’ clearly indicating that the common
meaning of the term ‘expenses’ should not be limited.”7
The court also reasoned that although the USPTO
employees were salaried, reimbursement of legal fees
was warranted because “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,” and because time spent defending the
appeal constituted the majority of the USPTO’s costs.8
Finally, the court examined the legislative history and
concluded that this history “indicates that [the provision]
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.”9
Conversely, the dissent argued that the American Rule
applied, and that legal fees were not included because
there was not “clear support” for that conclusion.10 The
dissent emphasized that a legal fees award is expressly
mentioned in at least five other Lanham Act provisions,
and “[b]ecause Congress made multiple explicit authorizations of attorney’s fees in [the Lanham Act]—but
conspicuously omitted any such authorization from
[the provision in question]—we must presume that it
acted intentionally and purposely in the disparate exclusion.”11 In the dissent’s estimation, the legislative history also failed to support the majority, and the dissent
noted that “a party should not be penalized for merely
prosecuting a lawsuit. … By requiring [applicant] to pay
all the expenses of the proceeding, my friends in the
majority simply penalize him for seeking vindication of
his trademark rights.”12 The dissent concluded as follows: “Absent explicit statutory language authorizing
attorney’s fees awards, the courts can only speculate on
whether the phrase ‘all the expenses of the proceeding’
includes the PTO’s attorney’s fees. Against the backdrop of the American Rule, however, the courts are not
entitled to make educated guesses.”13
1. See 15 U.S.C. § 1071(b)(3).
2. See Shammas v. Focarino, No. 14-1191, 2015 U.S. App. LEXIS 6732 (4th
Cir. Apr. 23, 2015).
3. See id. at *14.
4. See id. at *7.
5. See id. at *8-9.
6. See id. at *9.
7. See id. at *7.
8. See id. at *7, *14.
9. See id. at *15.
10. See id. at *20.
11. See id. at *21.
12. See id. at *26.
13. See id. at *26-27.
JULY/AUGUST 2015
IP Litigator Posted from IP Litigator, August 2015, with permission from Aspen Publishers,
a WoltersKluwer Company, New York, NY1-800-638-8437, www.aspenpublishers.com.
For more information on the use of this content, contact Wright’s Media at 877-652-5295.
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