Fourth Circuit: When applicants challenge a trademark denial in district court, they must pay the PTO’s attorneys’ fees

Shammas v. Focarino, No. 14-1191 (4th Cir. Apr. 23, 2015).

The seal of the USPTO (flickr)

The seal of the USPTO (flickr)

When the Patent and Trademark Office, or PTO, denies trademark applications, dissatisfied applicants have two choices. They can appeal the decision to the Federal Circuit, which reviews the PTO’s factual findings under a deferential “substantial-evidence” standard, and whose review is limited to the administrative record created before the PTO. Alternatively, trademark applicants can file a new action in a federal district court, which will act as factfinder and will review the record de novo as long as the applicant submits further evidence (which the applicant almost certainly will). 

If those are the two choices, why wouldn’t disappointed trademark applicants always file a new action in a federal district court? The answer is this: If they do file a new action in federal district court, they have to pay “all the expenses of the proceedingeven if they win

But what does the phrase “all the expenses of the proceeding” mean? In particular, do “expenses” include attorneys’ fees? That’s the question the Fourth Circuit answers here. 

The majority of this Fourth Circuit panel says that the word “expenses” is capacious enough to include attorneys’ fees. To resist this conclusion, the applicant relies on cases saying that when Congress wants to alter the “American rule”—under which both sides bear their own attorneys’ fees—it has to speak clearly. Here, the applicant argues, the word “expenses” isn’t sufficiently clear. But the Fourth Circuit says that this canon of statutory construction applies only to fee-shifting statutes—statutes providing that the losing party must pay the prevailing party. What we have here, says the Fourth Circuit, isn’t a fee-shifting statute. It’s a statute providing that the applicant must pay no matter who wins. So the applicant must pay the PTO’s fees. Judge King dissents, arguing that the American rule is implicated here.