Friday, January 10, 2014

District Court Says Applicant Must Pay PTO Attorney's Fees in Section 1071(b) Civil Action, Win or Lose

The U.S. District Court for the Eastern District of Virginia recently ruled that, in a Section 1071(b) civil action for review of an ex parte TTAB decision, the applicant/plaintiff must pay the USPTO's expenses (including attorney and paralegal fees). [Win or lose, said the court, although this case involved only "lose."] The court awarded the USPTO $32,836.27 in attorney salaries, $3,090.32 in paralegal salaries, and $393.90 in photocopying expenses. Shammas v. Focarino, 109 USPQ2d 1320 (E.D. Va. 2014).

On October 25, 2012, the TTAB affirmed a refusal to register the term PROBIOTIC as a trademark for fertilizer, deeming it to be generic. [opinion here]. Applicant Milo Shammas then filed a civil action for review under Section 1071(b). The district court granted summary judgment in favor of the PTO on October 15, 2013, upholding the Board's decision.The PTO moved for an award of fees and expenses.

Section 1071 (b)(3) provides, in pertinent part, the following:

In any case where there is no adverse party ... unless the court finds the expenses to be unreasonable, 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. [Emphasis supplied].

The court faced the issue of whether "all expenses of the proceeding" includes attorney's fees, and it found this to be a question of first impression. However, it also found the question "not difficult" to answer, because it involves a straightforward statutory construction, "with the analysis beginning and ending with the plain language of the statute." If there were any doubt as to the scope of the term "expenses," the inclusion of the word "all" in the statute makes clear the breadth of the term.

When the word "expenses" is prefaced with the word "all," it is pellucidly clear Congress intended that the plaintiff in such action pay for all the resources expended by the PTO during the litigation, including attorney's fees.

The court noted various other statutes in which "attorney's fees" represent a subset of "expenses," and it cited several court decision to support the conclusion that "expenses" include attorney's fees.

The expenses submitted by the PTO were calculated by multiplying the number of hours for each individual by the actual hourly rate of each (calculated from the annual salary of the individual).

The court also awarded to the PTO the sum of $2,280.00 to compensate for expenses incurred in connection with a Rule 37 motion, which sum was separate from and in addition to the Section 1071 (b)(3) award.

Read comments and post your comment here.

TTABlog note:  Well, does this put a whole new spin on how to seek review of a TTAB ex parte decision? An appeal to the CAFC may turn out to be less expensive than a civil action. But the civil action route allows one to add new evidence.

Text Copyright John L. Welch 2014.


At 8:05 AM, Anonymous Frank Herrera said...

Wow. Chilling effect on bringing an appeal in this forum.

At 10:43 AM, Anonymous J Hudis said...

The statute providing attorney fees to the govt., win or lose, has been on the books for a long time. This case is an example of recent enforcement. In fact, there are ongoing efforts to remove from the statute the ability to appeal an ex parte case to district court at all.

At 11:00 AM, Anonymous Anonymous said...

I guess I don't follow the logic. Is there really no adverse party in these proceedings? If so, then how did the government end up spending so much time on this? I can see the sense of this in a social security disability case, but isn't the "no adverse party" a fiction?

At 11:15 AM, Anonymous Anonymous said...

There more to the story here. The government didn't ask to have expenses paid until after the applicant tried to enter new evidence after the deadline. The government had to litigate that issue and presumably didn't like that and then asked for its expenses. So, it could be that what this really means is the government is not going to use this hammer unless it feels like its being jerked around. Maybe the government views this as a sanction mechanism. If they do this all the time, you wont see many district court cases.

At 11:20 AM, Anonymous Anonymous said...

I guess this is another example of getting what you pay for (the opportunity to add evidence).

Isn't there a rule against appealing PATENT decisions issued by the USPTO in U.S. District Courts?

At 12:05 PM, Anonymous Anonymous said...

Actually, the gov't asked for 1071(b)(3) expenses (including attorney fees) early on, in its Answer. The opinion says that the fees for the late disclosed evidence dispute were under FRCP 37, not 1071(b)(3). So they're separate requests.

At 9:39 AM, Blogger John L. Welch said...

NB: The PTO is seeking an award of attorney's fees in the recent INTELLIGENT QUARTZ case, in which applicant won: the EDVA reversed the TTAB's affirmance of a mere descriptiveness refusal.

At 3:53 AM, Anonymous Rob said...

Isn't there a constitutional due process issue with a statute that makes the citizen pay for mistakes the government has done in handling his case?

At 10:23 AM, Anonymous Anonymous said...

A couple of points. First, since when are legal fees "expenses?" Does converting the legal fees into salary make it an expense? Second, do you suppose the applicant's counsel informed the client that they might have to pay expenses? If not, the lawyers probably have to eat this cost.

At 11:45 AM, Anonymous Anonymous said...

If the district court granted summary judgment for the PTO, how does this case "rule" that the applicant must pay the PTO's fees, win or lose? I see that the court said that, but am I missing something?

At 1:35 PM, Anonymous John L. Welch said...

You have a point there. I tacked on the phrase "Win or Lose" at the last minute. Probably should have changed "Rules" to "Says"
As to whether the PTO will collect "expenses" when the applicant/plaintiff wins, keep your eye on the INTELLIGENT QUARTZ case in the ED Va.


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