PTO Can Recover Attorneys' Fees for Defending TTAB Decision in District Court

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By Shannon Jost

The Lanham Act allows a dissatisfied trademark applicant or registrant to seek review of a TTAB ruling denying registration or cancelling a mark either by appealing the ruling to the Court of Appeals for the Federal Circuit, or by commencing a de novo action in a federal district court.  15 U.S.C. §§ 1071(a)(1), (b)(1).  However, if the dissatisfied party elects to bring a district court action, and there is no adverse party, the plaintiff must serve a copy of the complaint on the Director of the PTO and, “unless the court finds the expenses to be unreasonable, all of 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.”  Id., § 1071(b)(3).  Applying this provision, the Court of Appeals for the Fourth Circuit recently upheld an award of $36,320 in expenses to the PTO, which included $35,927 for the prorated salaries of two PTO attorneys and a PTO paralegal, based on the 518 hours they spent defending the case.  As read by the Fourth Circuit, “§ 1071 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 [ . . . ].”  Because the imposition of fees under the Fourth Circuit’s reading of § 1071 did not turn on whether the PTO prevailed, the majority found that the provision “need not be interpreted against the backdrop of the American Rule.”  Dissenting, Circuit Judge King argued that § 1071 makes no reference to attorneys’ fees, and there is no basis for reading into § 1071 an exception to the general American Rule that absent “explicit statutory authority,” each party should bear its own attorneys’ fees.  Shammas v. Focarino, __ F.3d __ (4th Cir. Apr. 23, 2015).

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