Plaintiff Liable for PTO Attorney Fees – Win or Lose

The US District Court for the Eastern District of Virginia recently awarded the United States Patent and Trademark Office (PTO) $36,320.49 in legal expenses, including its attorneys’ fees, in a case brought by an applicant appealing the PTO’s refusal to register a mark on the basis that the mark was generic for the goods identified in the application. The applicant was unsuccessful in his appeal, but as it turns out, even if the applicant had been successful, he still would have been on the hook for the legal expenses, and that is what makes this case so extraordinary.

On June 12, 2009, the applicant, Milo Shammas, filed an application for the mark PROBIOTIC that covered various types of fertilizer. The Examining Attorney at the PTO initially refused the application for registration on the basis that the term “probiotic” was descriptive of the goods identified in the application, that is, types of fertilizer, and then finally refused the application on the basis that “probiotic” is a generic term. The applicant then appealed the decision of the Examining Attorney to the Trademark Trial and Appeal Board (TTAB), which affirmed the Examining Attorney’s decision.

At this juncture, applicants have a choice of appealing the TTAB ruling to either the Court of Appeals for the Federal Circuit or a Federal District court. The benefit of filing in a District Court is that the record may be supplemented with additional evidence, which is not permitted in the Court of Appeals. The disadvantage, however, is that under Section 1071(b) of the Lanham Trademark Act, if there is no adverse party, as in this case, “[…] 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.” 15 U.S.C. § 1071(b)(3).

Shammas appealed to the District Court, and lost. The PTO submitted a claim for $47,756.64 in expenses, including attorneys’ fees for the TTAB attorneys who worked on the case. Shammas brought the present action contesting the idea that the phrase “all expenses” noted in the statute includes government attorney salaries. The court denied his request and held that the attorneys’ fees are properly included as an “expense,” and that Shammas would be liable for the expenses, whether he lost or won. Assistance from attorneys with experience in this area can help you determine how to proceed when deciding whether to appeal a TTAB decision.

We are continuing to monitor developments in trademark and TTAB cases. Please contact Elizabeth H. Cohen or James J. Mercurio for more information.