Court Opinion

ID: 2796216
Source: CourtListenerOpinion
Date Created: 2015-04-23 19:00:51.501298+00
Date Added: 2024-06-11T11:29:17.706509
License: Public Domain

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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