CAFC Okays USPTO Process for Promulgating Domicile Address Requirement

The U.S. Court of Appeals for the Federal Circuit (CAFC) today said in a precedential decision that the U.S. Patent and Trademark Office (USPTO) did not need to engage in notice-and-comment rulemaking to require trademark applicants and registrants to provide a physical street address with their trademark applications. The court took the case as an opportunity to directly address “when a rule is procedural and excepted from notice-and-comment rulemaking as a ‘rule[] of agency organization, procedure, or practice.’”

The domicile address requirement came to light following a 2019 Notice of Proposed Rulemaking that said applicants, registrants, or parties to a Trademark Trial and Appeal Board proceeding who are not domiciled in the United States must be represented by a U.S. attorney in good standing in an attempt to cut down on fraudulent trademark filings. Once the rule became final, an examination guide was published in August 2019 that noted the domicile address requirement, to which there was considerable opposition. Some critics argued that the rule “opens all trademark owners to a variety of negative consequences in our digital age, and would be acutely felt by those who are most vulnerable.”

The CAFC appeal was brought by Chestek Legal, PLLC, whose member, Pamela Chestek, authored a Petition for Rulemaking on behalf of Software Freedom Conservancy in 2019. Chestek Legal’s application to register the mark CHESTEK LEGAL in May 2020 was rejected by the examiner for failure to comply with the domicile address requirement, since Chestek Legal provided only a P.O. box as its domicile address. Chestek argued to the CAFC that the domicile address requirement was improperly promulgated because 1) the USPTO failed to comply with the requirements of notice-and-comment rulemaking and 2) the requirement is arbitrary and capricious, particularly with respect to its failure to consider issues like privacy.

In addressing Chestek’s arguments, the court explained that the relevant statute, 5 U.S. Code § 553, does not require the USPTO to engage in notice-and-comment rulemaking for “interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice.” A “substantive” rule, which does require notice-and-comment rulemaking, is one that “effects a change in existing law or policy which affects individual rights and obligations.”

The CAFC disagreed with Chestek’s contention that the domicile address requirement is a substantive rule “because it imposes a new requirement on applicants to obtain a trademark—providing a domicile address rather than a mailing address—and therefore substantively alters the rights or interests of applicants.” Since the requirement “does not alter the substantive standards by which the USPTO evaluates trademark applications, e.g., a mark’s use in commerce or distinctiveness,” it qualifies as a procedural rule that is excepted from notice-and-comment rulemaking, said the court. The court also rejected Chestek’s attempt to argue that “the cross-reference to § 553 in 35 U.S.C. § 2(b) displaces the procedural exceptions to notice-and-comment rulemaking contained within § 553(b),” noting that “displacing that exception for procedural rules would be inconsistent with our holdings regarding interpretive rules under the same provision of § 553(b).”

As to Chestek’s argument that the domicile address requirement is arbitrary and capricious because the Office did not provide sufficient justification for it, the court said Chestek was “incorrect.” The Office provided an explanation for the requirement, namely that it was part of a larger effort to ensure foreign trademark applicants, registrants, or parties to a trademark proceeding were being represented by U.S. counsel in an attempt to curb “the influx of unauthorized practice of law by foreign parties improperly representing trademark applicants and purportedly pro se foreign applicants failing to comply with the requirements of the USPTO.” Thus, even though the change represented a shift in USPTO policy, there was good reason for it, said the court.

As to the privacy concerns, which Chestek proffered as further evidence the requirement was arbitrary and capricious, the CAFC said the Office could not have been expected to consider these because it was not at issue in the rulemaking process. “[T]he policy concerns Chestek raises now were not raised before the agency,” said the court. The USPTO’s refusal to register CHESTEK LEGAL was therefore affirmed.