TPAC Discussions Focus on Office Funding, Government Shutdown & Trademark Legislation

Office Funding, Government Shutdown and Legislative Forecast for 2019 Dominate TPAC Meeting

Commissioner for Trademarks Mary Boney Denison told TPAC that proposed rules to require foreign trademark applicants and registrants to be represented by a U.S. licensed attorney have been slowed by the government shutdown.

The Trademark Public Advisory Committee (TPAC) held its first quarterly meeting of 2019 on  January 25—the morning after the USPTO announced that, in light of the partial government shutdown, which was on day 35 at the time of the meeting, the agency only had enough funds to perform normal patent operations through the second week in February and normal trademark operations through mid-April. President Donald Trump announced later in the day on January 25 that he would sign a bill to reopen the government temporarily—for three weeks—but it remains unclear whether there will be a permanent resolution by then. A request for comment by the USPTO on what the temporary funding announcement means has not yet been received as of publication.

Hiring and Forecasts

Despite the projection that without a long term solution to the government shutdown funding would run out by mid-April for Trademark Operations, USPTO Commissioner for Trademarks Mary Boney Denison said that the Office was still planning to proceed with hiring new trademark examiners. The USPTO currently has 939 employees in the Trademarks organization and has hired 61 new examining attorneys already this year. Deputy Director Laura Peter said that the Office hopes to hire 100 new examiners in 2019, and Boney Denison said that she is moving forward with hiring additional examiners by March. Precisely how many can be hired by then will be determined in the next few weeks.

The shutdown may also have affected the Office’s ability to accurately forecast projected filings. The first quarter of 2019 and last quarter of 2018 indicated a decline in filings for the first time since FY2010, which could mean that the USPTO’s projection that trademark filings will increase by 6.1% this year is incorrect. There have been only four years since 1984 where there was a decline in trademark filings. However, the statistics were not necessarily being updated during the shutdown, said Boney Denison. Boney Denison also noted that trademark pendency is currently at 3.4 months, with a 2019 goal of 2.5 – 3.5 months. Boney Denison herself and other senior staff are working hard to maintain those rates. “We’ve been meeting our goals for a very long time and I don’t want to be the one who misses it, she said.

Some rulemaking measures that are with the U.S. Office of Management and Budget (OMB) for approval have also been held up by the shutdown. In the fall of 2018, the Office issued a Notice of Proposed Rulemaking to require foreign trademark applicants and registrants to be represented by a U.S. licensed attorney to file trademark documents with the USPTO. The rule will require foreign domiciled trademark applicants to be represented by a U.S. attorney to file documents with the USPTO. “This will aid efforts to improve the accuracy of the trademark register,” said Peter. Boney Denison noted that “the proposed rule is ready to go,” but approval was being delayed by the government shutdown.

The second measure proposes “Changes to the Trademark Rules of Practice To Mandate Electronic Filing.” Peter said that only 88% of applications presently remain electronic through the life of prosecution. “We want to make it fully electronic,” she said. The Office has completed a Notice of Final Rulemaking on the matter and publication and implementation is scheduled for later in 2019.

Boney Denison also highlighted the results of the Office’s proof of use audit program, which was announced in November 2017 as a means of decluttering the trademark register. Boney Denison said the results were “quite disappointing” so far: 48% of those audited deleted at least some goods or services, and 79% of those were represented by attorneys. “We’re open to suggestions from TPAC and anyone who has ideas they’d like us to consider” to mitigate the problem, said Boney Denison.


On the Hill

Dana Colarulli, USPTO Director, Office of Governmental Affairs, outlined the Office’s legislative priorities, which include measures to ensure continuity of operations via continued access to fee collections and flexibility on suspending legal deadlines. Right now, if the agency’s electronic filing systems become unavailable due to a government shutdown or for other reasons, the Director has no authority to extend submission deadlines.

Colarulli also gave an overview of the 116th Congress and said that there is “potential to address some trademark issues that have been bubbling up to help improve the system.” There has been discussion of recreating an IP Subcommittee of the Judiciary Committee on the Senate side, which Colarulli said would provide more bandwidth to address IP issues. Members of the Senate Judiciary Committee who have traditionally been active on the patent side would likely ascend to leadership of such a subcommittee.

Two pending bills Colarulli said the Office is watching include one that would create the Office of Critical Technology and Security, focused on the risks of IP theft, and the Fair Trade with China Enforcement Act, which would prohibit federal agencies from “using or procuring telecommunications equipment or services from Huawei Technologies Company, ZTE Corporation, or any other entity reasonably believed to be owned or controlled by China.”

In response to a question from TPAC Chair William Barber of Pirkey Barber about what more the trademark bar can be doing to help the USPTO retain access to its fee collections, Colarulli did not have many answers. He acknowledged the support of the stakeholder community in recent years for the Office to access all of its fees and said that continuing to bring attention to the challenges presented by the current system would be helpful. “Even short of a full lapse in funding, the lead up to these types of situations is damaging to the agency,” Colarulli said. “Consistent access to our fees in a very timely way affects the operations of our office. I can’t believe this was the intent of Congress.”

Strategic Plan and Fee Collection

Tony Scardino, the USPTO’s Chief Financial Officer, addressed the 2018-2022 Strategic Plan released by the agency last year. The plan set four goals for the trademark operations of the USPTO: (i) optimizing trademark application pendency; (ii) supporting the issuance of high-quality trademarks; (iii) fostering business effectiveness; and (iv) enhancing the operations of the Trademark Trial and Appeal Board (TTAB). Scardino also discussed the effects of the SUCCESS Act, which renewed the USPTO’s fee setting authority until September 2026. Currently, the agency is in the midst of its biennial fee review of all existing fees, as required by the CFO Act, to determine whether to eliminate or introduce new fees. In determining whether fees were appropriately aligned, Scardino noted that sometimes fees need to be adjusted for full cost recovery whereas other fees could be adjusted more to incentivize certain behaviors for agency customers—although the agency was seeking to recover costs in the aggregate.

TPAC member Brian Winterfeldt of Winterfeldt IP Group suggested that, while the operational reserve fund for the trademark side of the USPTO included about five months’ worth of funding, it may be beneficial to plan for six months of funding given the potential effects of situations like the latest government shutdown. This suggestion was also supported by TPAC Chair William Barber. Scardino said that the agency’s fee review may require a TPAC hearing but that such a hearing would only be called if the agency chose to raise or introduce fees.

TTAB Update

Gerard Rogers, the Chief Administrative Trademark Judge (ATJ) of the Trademark Trial and Appeal Board (TTAB), gave an update on the operations of the TTAB. Rogers noted that there was some fluctuation in the staffing levels of the TTAB due to two judge retirements from last quarter. Although there were recommendations for hiring three new ATJs submitted to Secretary of Commerce Wilbur Ross, whose office is responsible for signing off on new TTAB hires, that office wasn’t fully operational during the shutdown, so those hiring recommendations had yet to be adopted. Rogers did note a major jump in the number of interlocutory attorneys at the TTAB due to the addition of five such attorneys hired at the end of the 2018 fiscal year. Rogers called this the largest crop of new interlocutory attorney hires during his tenure and he indicated his hopefulness that the new hires would help the TTAB reduce the pendency of contested motions.

In discussing levels of TTAB filings, Rogers noted that the last few years had seen significant increases in the number of oppositions and petitions for cancelling trademarks coming in through the front door of the TTAB’s filing system. While appeals were increasing, they were being outpaced by oppositions and petitions to cancel, although appeals did increase rapidly during the first quarter of the 2019 fiscal year. The 124 appeal decisions being decided by TTAB judicial panels was a 15% reduction over the appeal decision totals from 2018’s first quarter; Rogers attributed this to the two judicial vacancies and a focus during the first quarter on handling a burgeoning number of trial cases. Rogers lauded the work of Karen Kuhlke who, working as Deputy Chief ATJ, had shepherded nine precedential decisions through the TTAB, a total which was above average for the first quarter. Decisions on contested motions were also down during the first quarter due in part to two interlocutory attorneys being on medical leave, as well as the training of new attorneys.

For case decisions based on the merits, Rogers said that the agency has met its pendency goal of 10 to 12 weeks on average for both appeals and trial cases. The case inventory was 27 cases above the agency’s goal, but Rogers said he expected the extra caseload to be addressed by additional production during the second and fourth quarters. Rogers addressed an increase in the pendency for accelerated case resolution (ACR) trial cases by noting that few ACR cases are filed, so longer trial times for two or three cases have a major effect on the average. Rogers expressed his pleasure at what he called a “good level of interest” in ACR processes by parties interested in more efficient proceedings. He emphasized, however, that plaintiffs needed to remember that, while ACR cases have relaxed rules on evidence and restrictions in discovery to increase trial efficiency, the burden of proof in ACR cases doesn’t change. He cited one recent precedential decision where the plaintiff lost because of a failure to meet the burden of proof.

On the subject of IT updates to the TTAB’s system, Rogers noted that changes rolled out last August resulted in a technical issue for parties seeking extension or suspension periods via consent form. When those periods ended on a weekend or a holiday and a party submitted a filing on the next business day, those parties were getting blocked out of the system. An IT update planned for April should solve the issue, but Rogers indicated that parties should either file on the deadline or submit general filing forms to avoid the problem until that time. Rogers noted that the April IT update would also allow parties opposing multiple trademark applications at the same time to reuse information from a single notice of opposition form instead of having to fill out multiple forms.

Other TTAB matters discussed by Rogers included the public comment period for the Board’s standard protective order policy. The deadline for submitting comments through the TTAB’s IdeaScale site is March 31st but Rogers indicated that date could be extended if needed. He also discussed the early results from the TTAB’s expedited cancellation pilot program, which had been very labor intensive because there was no easy way to identify cases that involve only non-use or abandonment claims. 51% of such cases result in a default judgment because of a party’s failure to answer.


Image Source: Mary Boney Denison Official Image (public domain).


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