by Dennis Crouch
Earlier this month, the Federal Circuit issued a decision in the case of In re Chestek that, on its face, simply upheld the USPTO’s requirement that trademark applicants provide their domicile address. But contained within the court’s ruling is language that could have some major implications — essentially giving the USPTO carte blanche ability to sidestep administrative rulemaking procedures for any new requirements it imposes, as long as they are deemed “procedural” in nature. And on this point the Federal Circuit appears to establish a wide permissive definition that the rulemaking is procedural so long as does not affect the substantive patent or trademark standards. Of course, the USPTO generally does not have substantive rulemaking authority regarding the patent standards, and so everything is procedure.
Chestek centered around amendments made to trademark regulations in 2019 requiring that applicants provide their domicile address, defined as their permanent legal residence or principal place of business — mailing address is insufficient. The USPTO argued that this new address requirement was needed to help enforce its parallel new rule mandating that foreign applicants retain U.S. licensed counsel. Chestek PLLC, a law firm run by Pamela Chestek and specializing in trademark law, challenged the domicile address rule itself, saying its imposition failed to comply with the notice and comment requirements of the Administrative Procedure Act (APA).
In what appears to be largely a test case, Chestek applied to register the mark CHESTEK LEGAL, but refused to include her personal home address. She argued that for privacy reasons her personal home address is not generally known and that its submission risks major breaches in privacy. But, the USPTO refused to register her mark based upon her failure to comply with the domicile rule. After losing at the USPTO, Chestek appealed to the Federal Circuit.
On the core issue, the Federal Circuit sided resoundingly with the USPTO. The court held that the domicile address rule was clearly procedural in nature rather than substantive, and thus was exempted from APA notice and comment strictures. The key passage from the court reads:
[T]he new rule requires additional information about applicants, i.e., their domicile address. Requiring different or additional information from applicants regarding their addresses merely ‘alter[s] the manner in which the [applicants] present themselves…to the agency.’ It does not alter the substantive standards by which the USPTO evaluates trademark applications.
Chestek at 8 (Quoting JEM Broadcasting Co. v. F.C.C., 22 F.3d 320 (D.C. Cir. 1994). In other words, because the domicile address rule does not itself change the substantive legal criteria for granting or denying trademarks, the court sees it as merely a procedural step in the application process. And crucially, procedural rules are exempt from notice and comment requirements under APA section 553(b)(A).
Under the statute, an agency must publish notice of proposed rules prior to them becoming law. BUT the requirement does not apply “(A) to interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice; or (B) [when] impracticable, unnecessary, or contrary to the public interest.” 5 U.S.C. § 553(b). I.e., the notice-and-comment requirements don’t apply to changes of agency procedure or practice. Although the rule was deemed procedural, it still has substantial impact — i.e., Chestek loses her rights. Of course any lawyer will agree failing to follow procedures can result in major consequences.
In finding the address rule procedural, the court asked the simple question: Does the rule “affect the substantive trademark standards by which the Office examines a party’s application.” Here, the answer is clearly “no” and therefore, according to the Federal Circuit, the rule is procedural and thus exempt from notice-and-comment rulemaking.
Having found the challenged rules within the procedural exception to notice-and-comment rulemaking, we need not address Chestek’s argument that the proposed rule failed to provide sufficient notice of the domicile address requirement.
I am not worried about trademark applicants providing a residential address (although Chestek’s privacy argument seems to have some merit). But, the Federal Circuit’s decision here appears quite sweeping and may provide the USPTO with enough authority avoid almost any future notice-and-comment in its rulemaking.
The notice and comment requirements serve a vital purpose, even when an agency does not incorporate public feedback into the final rule. The process provides transparency by allowing the public to understand what changes an agency is considering and why. It also fosters deliberation – the agency must provide a reasoned explanation if it rejects commenters’ concerns and proceeds to adopt the rule as originally proposed. Additionally, notice and comment creates a record for judicial review. If a party challenges the rule, the court can examine whether the agency fully considered and responded to material critiques raised during the process. An agency does not have free rein just because it technically “considered” comments before rejecting them. The record must substantiate that it took serious public input under advisement and had adequate grounds for sticking with the original course. Simply going through the motions of notice and comment without meaningfully wrestling with opposing views raised by stakeholders risks reversal upon legal challenge – and is bad policy for a nation that sees itself as promoting popular sovereignty. Even if not determinative, airing criticism, gathering diverse perspectives, and requiring a reasoned response uphold good governance norms and the model of administrative law. Allowing agencies to bypass this process denies public participation that bolsters legitimacy.
The logic of this case sweeps broadly and sets up the USPTO to potentially make more “procedural changes” without meaningful external input or following the traditional notice-and-comment approach.
Carl Oppedahl has been writing about the impact of the new .DOCX standard associated with a $400 fee for non-compliance as a typical procedural rule with substantive impact created without notice-and-comment because it merely involves procedural aspects of the patent application process — despite the large penalty for noncompliance. Other potential examples:
- Requiring that every application include a signed statement from the inventor explaining their contribution in detail, or face immediate abandonment.
- Mandating that the background section of specifications provide explicit citations to the closest statement of the problem as found in the prior art
- Imposing a $1000 processing fee for any application that the USPTO deems improperly formatted
None of these hypothetical new rules have any direct bearing on the substantive bases on which the USPTO evaluates patentability. But forcing applicants to jump through more procedural hoops and face steeper penalties would clearly make pursuing and maintaining protection more onerous. Without formal notice and comment, however, aggrieved parties would have little recourse to contest such impositions or to help guide the potential policy decisions.
One potential catch, alluded to in passing in Chestek, is the stipulation that procedural rules cannot “affect individual rights and obligations.” And indeed, one could argue that layered procedural requirements that make the patenting process drastically more expensive or convoluted would impinge on inventors’ substantive rights. Moving forward we will have to see which of these threads of thought the court and the PTO will follow.
To be clear, I believe the Federal Circuit followed administrative law precedent here, and I raise the issue just to recognize the power of the USPTO. We can also recognize that, for the most part, USPTO leadership is generally open to hearing direct feedback and suggestions from constituents. The notice-and-comment approach is not so necessary because the Patent Bar remains much like a small town. where many of us know each other at a personal level. In Chestek, for instance, the USPTO has heard the privacy complaints regarding requiring home address, but ultimately weighed that against the ongoing problems facing the agency from faulty foreign applications. That is effectively the same approach as notice-and-comment. The key difference though, is that USPTO official availability is a choice that might not be made by every administration, whereas notice-and-comment are required by law.
Why the hullabaloo?
Just keep addresses private to the PTO; with access by legal process only (see also, e.g., Post Office Boxes).
Problems solved.
What say you, Director?
If only trademark applicants could provide a PO Box, if only USPTO would protect the privacy of their domicile…
link to linkedin.com
It’s nominally private but the USPTO released personal addresses accidentally in the past.
And their justification, that this is to ensure a non-US client has legal representation fails when the application is filed by a US attorney.
Posted this on LinkedIn but thought it made sense here; This is something I have long been frustrated with. The USPTO had, for historic reasons, long not considered itself subject to the rules of the APA and other agencies with substantive rulemaking authority. That time has passed, but old habits die hard. I have never seen a rules package sent to OIRA, for instance, where the office admits it will be economically significant, despite the fact that the USPTO issues some of the most impactful rules on the US economy, even just in terms of effect on legal practice and compliance.
The procedural/substantive divide is similar. Clearly some rules are procedural, but the APA was not meant to exempt entire regulatory schemes, like the patent application process, from notice and comment review. I am not of the opinion that that exempts them from notice and comment rulemaking, but the agency has, in every single rule I have seen in recent memory, relied on this distinction to say even the most substantive of rules is merely “procedural.”
Exhibit A of this habit is the Iancu Administration’s “BRI” rule. Without caring about the merits of the switch, the Office plainly relied, laughingly in my opinion, on the procedural/substantive dodge to avoid invoking the APA. They wrote:
“A. Administrative Procedure Act (APA): This final rule revises the rules relating to Office trial practice for IPR, PGR, and CBM proceedings. The changes set forth in this final rule will not change the substantive criteria of patentability. These rule changes involve rules of agency procedure and interpretation. …. [citing a number of inapposite cases]. …
Accordingly, prior notice and opportunity for public comment are not required pursuant to 5 U.S.C. 553(b) or (c) (or any other law).”
Of course, they then posted the rules in the Federal Register and sought comment, maintaining the legal fiction that they weren’t required to do so. But come on. The rule literally changed the substantive legal standard for claim construction. The Supreme Court had called it a substantive rule subject to Chevron deference in Cuozzo. (“The upshot is, whether we look at statutory language alone, or that language in context of the statute’s purpose, we find an express delegation of rulemaking authority, a “gap” that rules might fill, and “ambiguity” in respect to the boundaries of that gap. Mead Corp., 533 U. S., at 229; see Chevron U. S. A. Inc., 467 U. S., at 843.”).
It’s pernicious for the Office to persist in this fiction.
I am making these same compelling arguments about my privacy to the DMV! Nobody at the DMV needs to know my address. My car drives the same no matter where I live, just like Steve McQueen! Freedom!
Please send your money to my GoFundMe page. I can’t do this without your support.
Well, we all know that asking for identification for voting is Racy-ist, so…
I have no doubt that you are a big George Will fan. You both love non sequiturs.
Oh, it’s not the non-sequitur that you want to pretend it to be.
YOU of all people should immediately grasp that.
“Oh, it’s not the non-sequitur that you want to pretend it to be.”
Agreed. It’s even more ridiculous that I want to pretend it to be.
“It” being the Sprint Left protestations.
Yup.
I thought they were complaining because their private address had to be filed in papers that would be made public (unlike DMV filings). If they’re just complaining internal personnel will know where they live yeah that’s not gonna work.
“promoting popular sovereignty”
Lol wut? who ever saw the US as doing that?
“gathering diverse perspectives”
I heard tell that such was ra cist bruh.
“Requiring that every application include a signed statement from the inventor explaining their contribution in detail, or face immediate abandonment.
Mandating that the background section of specifications provide explicit citations to the closest statement of the problem as found in the prior art
Imposing a $1000 processing fee for any application that the USPTO deems improperly formatted”
1. seems at least tangentially substantive
2. again maybe tangentially substantive (needs congress I’d say)
3. Long overdue and should have been done in the 80’s. People eating up the PTO’s resources because they don’t want to spend another 10 minutes looking over their apps, and if they’re terrible drafters then an additional hour, constitutes a large portion of expenditure of time and effort. Arguably my current job is, especially on first action, like 1/3-1/2 proofreader rather than examiner. That thousand should go to providing othertime to proofread submissions, perhaps by dedicated examiners. Get the applications right or pay up. Note that this is excluding the rest of the proofreading that isn’t a big deal, that’s the proofreading required JUST for the stuff with substantive impact (at least small, but all too often right at big ol substantive junctures).
For somebody who boasts about finding killer, knock out 102 prior art with 5 second google searches you sure do complain a lot.
Well, to 6’s credit, it’s been a good eight years since he last claimed that.
When he announces the IPO for his “I’m going to charge patent owners $25K NOT to disclose the killer, knock out, invalidating prior art I found against their patents with a five second google search” business I will be first in line to buy some stock.
Lulz
Meh I still find quite a bit, and often fair quickly (arrange results by date published or filing date and look through them most recent published to furthest back, starting at the filing date). Though especially for foreign patent apps that have received their version of an NOA but the claims appear to be the same as the US version.
Shadup and pay your grand to pick up your sht drafting.
Pretty funny coming from somebody who’s never drafted a claim in his life.
I can only battle this very disruptive opinion by having financial help in filing a petition for rehearing and rehearing en banc. Carl has a link for a pledge form in the blog post mentioned above.
Thanks very much for everyone who might choose to help.
“We can also recognize that, for the most part, USPTO leadership is generally open to hearing direct feedback and suggestions from constituents.”
If you subscribed to one of Carl’s mail-lists you would know that is absolutely not true.
That is one of the reasons the Patent Office should be shut down and we should go to a patent registration system run by the Copyright Office.
Please Pardon Potential re(P)eat…
Your comment is awaiting moderation.
February 22, 2024 at 7:52 am
Per anyone that has been actually following along (Wt obviously not included because his political views aligns with Malcolms – how ewww), I have discussed pros and cons of moving to a registration system many times over the years.
Just think of the Billions (yes, that’s a “B“) that could be saved in inventor fees each and every year (as the Patent Office budget – as bloated as it is, is entirely funded by inventors).
“hearing” feedback does not mean acting on it, or even considering it.
PTO management has been “hearing” to examiner feedback for weeks about the failing IT systems for months.
Ben, we are in agreement.
This additional paperwork for all TM applicants should at least be subject to 44 USC §3501 et seq. (1980) – The Paperwork Reduction Act (PRA), but that requires OMB approval, not the notice and comment requirements of the Administrative Procedure Act (APA).
Is Trump’s reduce a requirement for every new requirement still in effect, or did Puppet Biden repeal that one?
Under a Trump dictatorship he will monetize the USPTO. All you will have to do is give him enough money and you will get your patent (or trademark) and/or your IPR will be successful.
He already did that with SCOTUS.
Really, NOIP?
That’s awfully C0nsp1racy The0ry of you, given that he did not even seem to recognize the USPTO for four years.
Not mentioned in DC’s post is that Carl Oppedahl is trying to raise funds for Chestek to file a motion for rehearing/rehearing en banc. Check out Carl’s “Ant Like Persistence” blog for more details.
+1
Carl is a gift.
Not worth it bro, obviously procedural. Waste of money. Worthwhile to keep petitioning the director and haranguing them for an option to keep that your residential info or whatever private in the agency tho (make an option to submit it electronically rather than in the forms if need be).
Another (not so small) nit:
“Mandating that the background section of specifications provide explicit citations to the closest statement of the problem as found in the prior art”
As prior art searches are not even legally required, any such “mandate” clearly exceeds the authority of the USPTO
Lest people forget, Tafas still binds the agency – and the current decision does not (cannot) over ride that.
>Tafas still binds the agency
Interestingly, the Fed. Cir. didn’t even cite that case here.
Perhaps because it does not fit the narrative.
Perhaps the CAFC did not want to tangle with any permutations as may be called for since the AIA did provide a rather limited – and very constrained – change.
The statement, “Of course, the USPTO generally does not have substantive rulemaking authority regarding the patent standards, and so everything is procedure.” is obviously false.
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