Milo Shammas v. Margaret Focarino ( 2015 )

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.
Affirmed by published opinion. Judge Niemeyer wrote the
majority opinion, in which Judge Wilkinson joined. Judge King
wrote a dissenting opinion.
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
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). If he elects to proceed in a
district court and no adverse 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 of the proceeding,” whether he succeeds in the
action or not, unless the expenses are unreasonable. 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 who were required to defend the Director. The
district court granted the Director’s request and 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
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 compensatory charge imposed on a
dissatisfied applicant who elects to engage the PTO in a
district court proceeding. And we conclude 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 on the ground that the term was
generic and descriptive. 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). The district court
4
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 conclusion of the proceeding, the PTO filed a
motion, pursuant to § 1071(b)(3), for reimbursement 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 by 2,000 hours and multiplying the results by the
number of hours expended by the employees in defending the
action, a total of 518 hours in this case. 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
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 this appeal, challenging the district court’s
authority to award attorneys fees and paralegals 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. He argues that “a district court may not read a
federal statute to authorize attorney-fee-shifting unless the
6
statute makes Congress’s intention clear by expressly referring
to attorney’s fees.” (Emphasis added).
We agree 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). Moreover, in this statute,
Congress modified the term “expenses” with the term “all,”
clearly indicating that the common meaning of the term
“expenses” should not be limited. 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
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.” In re Crescent City Estates, 588 F.3d 822, 855 (4th
Cir. 2009). But the American Rule provides only that “the
prevailing party may not recover attorneys’ fees” from the
losing party. Alyeska Pipeline, 421 U.S. at 245 (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. As
the Supreme Court has explained,
8
[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). Thus, 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.
With that understanding of the American Rule, it becomes
clear that § 1071(b)(3) is not a fee-shifting statute that
purports to rebut the presumption of the Rule. Rather than
imposing expenses based on whether the PTO 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
Rule. Therefore, even assuming that a statute must explicitly
provide for the shifting of attorneys fees to overcome the
presumption of the American Rule, that requirement is 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, we rejected this argument in the context of
nearly identical statutory language requiring a dissatisfied
10
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.” See Robertson v. Cooper,
46 F.2d 766, 769 (4th Cir. 1931) (permitting recovery of a
government attorney’s expenses associated with attending a
deposition). 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 which is ordinarily included in the word
‘costs.’” Id.; see also Taniguchi v. Kan Pac. Saipan, Ltd., 132
S. Ct. 1997, 2006 (2012) (“Taxable costs are limited to
relatively minor, incidental expenses . . . . 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. In the sentence
immediately following the “all the expenses” language,
11
§ 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.” (Emphasis added). In light of
the “‘cardinal principle of statutory 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 by the Lanham Act’s
structure and legislative history.
12
A
Under the statutory scheme, a trademark applicant may
appeal a trademark examiner’s final decision 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. He can appeal the
decision directly to the Federal 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 v. Beehive
Wholesale, LLC, 739 F.3d 150, 155 (4th Cir. 2014). 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
De novo civil actions under § 1071(b)(1) thus contemplate a
more fulsome and expensive procedure. Since the statute
requires an ex parte applicant to name the PTO as 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. In light of
this purpose, it makes good sense to construe “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
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 record before the agency when it makes its
decision”). 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 of its obscurity, § 1071(b)(3) plainly
incentivizes trademark applicants to appeal routine trademark
denials to the Federal Circuit. 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
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. The “all the expenses” provision for trademark
cases was adopted from a parallel provision in Title 35
(addressing patents), which in turn is rooted in an 1839
amendment to the Patent Act of 1836 (the “1836 Act”). 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). Thus, in funding the Patent
Office in 1836, Congress understood the term “expenses” to
include the salaries of the Office’s employees. 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.” Id.
§ 15, 5 Stat. at 123 (emphasis added). With these
16
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 of the Lanham Act in 1946, Congress
“incorporate[d] by reference” the procedures 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
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
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). Because the American Rule
applies and the PTO should bear 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 well-settled
tradition dating almost to our Nation’s founding. See Arcambel
v. Wiseman, 3 U.S. (3 Dall.) 306, 306 (1796) (“The general
practice of the United States [courts] is in 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
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 words “attorney’s fees” are not found in
§ 1071(b)(3). 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
to authorize such fee 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) of Title 15 that authorizes attorney’s fees
awards. Indeed, the term “attorney’s fees” is absent from
§ 1071(b)(3). Of great importance, however, Congress has
exercised its “explicit statutory authority” to authorize
attorney’s fees awards in at least five other provisions of
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
Because Congress made multiple explicit authorizations of
attorney’s fees awards in Chapter 22 of Title 15 — 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:
• 11 U.S.C. § 363(n) (authorizing trustee to
recover “any costs, attorneys’ fees, or expenses
incurred”);
• 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
• 31 U.S.C. § 3730(d)(4) (authorizing “reasonable
attorneys’ fees and expenses” to prevailing
defendant in false claims suit).
On occasion, Congress has explicitly authorized a party to
recover attorney’s fees as part of expenses. See 12 U.S.C.
§ 5009(a)(1)(B) (holding party at fault liable for “interest and
22
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 to pay “reasonable expenses . . .
including attorney’s fees”). And, consistent with the American
Rule, Congress excluded attorney’s fees from the costs that are
generally recoverable by prevailing parties in federal civil
proceedings. See Fed. R. Civ. P. 54(d)(1) (“[C]osts — other
than attorney’s fees — should be allowed to the prevailing
party.”). 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.” See Black’s Law Dictionary 345, 577 (6th ed.
1990) (equating “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
for something”). 2 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 of the relevant legislative history
demonstrates that Congress intended to give a broader than
normal scope” to the phrase “all the expenses of the
proceeding,” in § 1071(b)(3). 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
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). In the wake of
Alyeska, Congress could readily have amended § 1071(b)(3) to
broaden or explain the phrase “all the expenses of the
proceeding.” 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
§ 1071(b)(3) is 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. Indeed, a primary justification for the Rule
is that a party “‘should not be penalized for merely . . .
prosecuting a lawsuit.’” Summit Valley, 456 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. Such a result
flies in the face of the American Rule and must therefore
overcome the Rule’s presumption against fee shifting. As the
been generally available, the PTO’s silence in the face of such
authority is more than passing strange.
26
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 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.
In these circumstances, the American Rule precludes the PTO from
recovering such fees under § 1071(b)(3). Because I would vacate
the attorney’s fees award that was made to the PTO, I
respectfully dissent.
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