A Perspective on USPTO Rulemaking Following In re Chestek

“Whether required by law or not, the rulemaking process is improved by notice and comment procedures. At a minimum, it gets the agency hundreds if not thousands of free proofreaders.”

rulemakingThere are many views on the significance of In re Chestek, No. 2022-1843 (February 14, 2024) to the U.S. Patent and Trademark Office (USPTO) rulemaking process. One question I have asked myself is what I would do differently after Chestek if I were still involved in rulemaking at the USPTO. The simple answer is almost nothing: I would add a cite to Chestek in the Administrative Procedure Act (APA) section of a proposed or final rule (see, e.g., 88 Fed. Reg. 39172, 39176 [June 15, 2023)] for an example of that section in a final rule).

In the U.S. Court of Appeals for the Federal Circuit’s recent decision, the court said the relevant statutes, 5 U.S.C. § 553 and 35 U.S.C. § 2(b)(2), do 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.” The Federal Circuit stated that the key distinction between procedural and substantive rules is whether the rule’s requirement affects the substantive standards by which the USPTO examines a party’s application, and in Chestek requiring different or additional information from applicants regarding their addresses merely alters the manner in which applicants present themselves, but does not alter the substantive standards by which the USPTO evaluates the application.

Initially, it should be remembered that the USPTO did not skip notice and comment procedures in adopting the trademark rules at issue in Chestek. The USPTO published a proposed rule in 2019 concerning trademark applicants, registrants, or parties to a proceeding whose domicile or principal place of business is not located within the United States (84 Fed. Reg. 4393 (Feb. 15, 2019)). Chestek’s argument was that the proposed rule did not provide notice of the “domicile address” requirement adopted in the final rule (logical outgrowth issue), and not that the USPTO skipped notice and comment procedures altogether. The USPTO raised the point that the rules were in any event exempt from notice and comment procedures to moot the argument that the final rule was not a logical outgrowth of the proposed rule.

Legally Speaking, Notice and Comment is Safer

While exemptions from notice and comment rulemaking procedures do exist, one reason I would resist skipping them is that while the “govern the conduct of proceedings in the Office” provision of section 2(b)(2) may be the most comprehensive source of USPTO rulemaking authority, it is not the only source of rulemaking authority: e.g., section 27 provides for procedures for revival of abandoned applications; sections 119 and 120 provide for procedures for accepting delayed priority/benefit claims; section 123(e) provides for imposing additional limits on micro entity claims; section 154(b)(2)(C)(iii) and (b)(3)(A) provide for regulations concerning aspects of patent term adjustment; sections 316 and 326 provide for regulations concerning inter partes review and post grant review proceedings. In addition, section 10 of the America Invents Act (AIA) gives the USPTO fee setting authority but has a process for setting fees that goes beyond the usual notice and comment procedures. Finally, while a number of Federal Circuit decisions (the favorite being Merck Co., Inc. v Kessler, 80 F.3d 1543 (Fed. Cir. 1996)) state that the USPTO’s general “conduct of proceeding” rulemaking authority is a grant of procedural rulemaking authority only, the Supreme Court decision in Cuozzo does state that section 2(b)(2) “does not clearly contain the [Federal] Circuit’s claimed limitation.” Cuozzo Speed Technologies v. Lee, 579 U.S. 261, 277 (2016). It is prudent to use notice and comment procedures for rulemaking whenever possible, as one never knows when having gone through the notice and comment procedures will prove beneficial.

Practical Reasons for Notice and Comment

Setting aside legal concerns, there are practical reasons to engage in notice and comment rulemaking. Most USPTO rulemakings, as well as examination guidelines, go through the notice and comment process, even though they state that notice and comment is not required (e.g., example from the 2000s – 66 Fed. Reg. 46409,46412 (Sept. 5, 2001); example from the 2010s – 77 Fed. Reg. 982, 996 (Jan. 6, 2012); example from the 2020s – 87 Fed. Reg. 41267,41269) (July 12, 2022)). The notice and comment process permits an agency to obtain a sense of the public’s or stakeholders’ reaction to a change, see how the language of the regulation is being interpreted and understood, and see if there is a blind spot (e.g., new language creates an inconsistency with another provision) before a change is adopted.

In one example of significant changes brought about in part by public comment, the USPTO proposed changes to the patent term adjustment (PTA) rules to address a problematic situation by redefining what was a “decision in the review reversing an adverse determination of patentability” for PTA purposes (76 Fed. Reg. 18990 (Apr. 6, 2011) (proposed rule)). In response to public comment and further reevaluation, the USPTO changed course and approached the situation by defining the period of appellate review as beginning on the date jurisdiction passed to the Board (76 Fed. Reg. 81433 (Dec. 28, 2011) (proposed rule)), and ultimately adopted that position in the final rule (77 Fed. Reg. 49354 (Aug. 16, 2012) (final rule)). The USPTO’s reevaluation of its April 2011 proposal in light of the public comment ultimately proved advantageous (Chudik v. Hirshfeld, 987 F.3d 1033 (Fed. Cir. 2021)). In another such example, the USPTO proposed a relatively modest approach to implementing the AIA section 4 Assignee Filing provisions in the proposed rule (77 Fed. Reg. 982 (Jan. 6, 2011)), but changed course in response to public comment and further reevaluation in the final rule to an implementation more in line with stakeholder expectations (77 Fed. Reg. 48776 (Aug. 14, 2012)). While most rulemakings do not have changes of this significance between the proposed and final rule as these examples, it is rare that the public comments do not lead to any change between the rules as proposed and the rules as adopted. That being said, that comments are considered does not mean that all suggestions are adopted or every concern alleviated. The rulemaking process is not a majority wins or popularity exercise, and unpopular approaches will be adopted when necessary.

Special Circumstances

There are also occasions when notice and comment procedures were applied subsequently via an interim rule or omitted altogether. These situations are generally when:

(1) there is insufficient time for advance notice and comment due to a statutory or other deadline (e.g., 70 Fed. Reg. 1818 (Jan. 11, 2005) (implementing the CREATE Act), 65 Fed. Reg. 14865 (Mar. 20, 2000) (implementing the AIPA RCE practice));

(2) there is a desire to make a change that is beneficial to applicants effective as soon as possible (e.g., 79 Fed. Reg. 12386 (Mar. 5, 2014) (allowing delayed submission of certain requirements in a prioritized examination application), 70 Fed. Reg. 5053 (Feb. 1, 2005) (reduction of national stage fees in PCT applications)); or

(3) a rote change to regulations is necessary for consistency with a statutory change (e.g., 76 Fed. Reg. 70651 (Nov. 15, 2011) (amending rules to add new fee required by the AIA for applications not filed by EFS), 76 Fed. Reg. 59055 (Sept. 23, 2011) (change in standard required by the AIA for granting a request for inter partes reexamination)).

Whether required by law or not, the rulemaking process is improved by notice and comment procedures. At a minimum, it gets the agency hundreds if not thousands of free proofreaders. I would not expect significant changes in how the USPTO conducts its rulemaking as a result of Chestek.

Author’s note: While I was not involved in the trademark rulemaking at issue in Chestek, I was formerly the Deputy Commissioner for Patent Examination Policy at the USPTO, and was involved in patent rulemakings under the Commissioner for Patents from 1996 until 2023. The views expressed here are solely my own based upon my decades of experience in rulemaking at the USPTO and should not be attributed to the USPTO.

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Author: mstanley
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Join the Discussion

9 comments so far. Add my comment.

  • [Avatar for Paul F. Morgan]
    Paul F. Morgan
    February 28, 2024 01:45 pm

    This article “A Perspective on USPTO Rulemaking Following In re Chestek” is full of useful information and good commentary on PTO rulemaking by Robert Bahr, a top expert on this subject.

  • [Avatar for Pamela Chestek]
    Pamela Chestek
    February 28, 2024 09:34 am

    In the proposed rulemaking in In re Chestek, the USPTO specifically disclaimed that the rule would affect US applicants, saying it would only affect foreign applicants. As a double whammy, the Federal Circuit cited the lack of comment about the burden on US applicants as a reason why the rule wasn’t arbitrary and capricious. Had the PTO disclosed that they were going to require residential street addresses for all applicants, including US applicants, I’m quite sure that a lot of people would have had something to say about it. I agree completely that the notice and comment period, even if not required, can and should serve a valuable purpose. But what good is notice and comment, required or not, if they don’t truthfully disclose what the new rules are going to be?

  • [Avatar for Pro Say]
    Pro Say
    February 27, 2024 08:15 pm

    The IP realm needs more truth-telling, curtain-ripping, pain-inflicting, floodlight-into-the-dark, fight-the-good-fight, change-agent bull dogs like Julie.

    A slew more.

  • [Avatar for Anon]
    February 27, 2024 03:05 pm

    Wow Julie, please tell us how you really feel.

  • [Avatar for Julie Burke]
    Julie Burke
    February 27, 2024 02:04 pm

    Hi Breeze, that was an apt and fitting nod back to John Doll. It brought back memories, beginning with his widespread renown for “being extremely good at what he does.”

    Doll may be long gone but his shadow and cadre of carefully selected and groomed first and now second generation lieutenants litter the USPTO’s management chart today.

    John Doll possessed that special blend of utter disregard for regulatory oversight coupled with disdain for attorneys and the practice of law, both the USPTO’s and the patent bar. It was a marvel to see him in action.

    Back in the day, I recall sitting at the table in Commissioner Doll’s office, watching the legal shop try to explain how OMB was pushing back on the claims and continuation package for violating the paper work reduction act. Doll responded by asking who OMB was and what did those people have to do with anything going on at the patent office, anyway. When the agency’s top lawyer tried to answer, Doll dismissed him as a “court jester.”

    John Doll’s achilles heel? He had big dreams. We all saw how the claims and continuation package flamed out.

    A bunch of smart people work at the USPTO. The institution learns and evolves. Today, his lieutenants and their compadres apply Doll’s mindset to a tsunami of smaller projects that add layers of unnecessary complication to everyday patent prosecution practice and collectively exhaust the patent bar.

    America’s patent system is being nibbled to death by these ducks.

    Removing the amendment marking made to point out MPEP changes. check.

    Making serial retroactive policy changes via the MPEP. check.

    Quietly changing first action final policy in the MPEP to promote more first action final Office actions. Check.

    Retroactively watering down the restriction criteria in the MPEP to promote more divisions, while at the same time asking he paten bar to weigh in on proposals to curtail paten thickets. Check.

    Giving contract employees fake SPE titles so they can perform SPE duties like making document and transaction changes in official patent files and assign applications. Check.

    That whole SAWS thing. Check.

    Every single Notice and Comment proceeding. Check.

    Any number of IT debacles, including creating DOCX initiative, imposing DOCX surcharge, Patent Center rollout, Assignment portal fiasco, etc. Check.

    When under review by Congress and OIG to address telework fraud, the USPTO filtered out the worst abuses in their 16 page synopsis of the actual original 32 page report. Check.

    When under review by Congress to address poor patent examination quality, instead UAPTO worked with POPA to significantly water down the quality element of the examiners’ performance and appraisal plan. They then told Congress this new PAP is intended as a roadmap to improved patent quality. Check.

    Requiring trademark applicants to provide their home address. Check.

    What’s next?

    As Prof Crouch points out, “the USPTO generally does not have substantive rulemaking authority regarding the patent standards, and so everything is procedure.”

    Left unchallenged, we can expect the in re Chestek decision will further embolden John Doll’s Lieutenants and compadres to continue to do what they been doing.

    Make no mistake, this institution has become very good at what it does.

  • [Avatar for Pro Say]
    Pro Say
    February 27, 2024 11:52 am

    Bottom line: “Whether required by law or not, the rulemaking process is improved by notice and comment procedures.”

    Big +1.

    Thanks Robert. You know of what you speak.

  • [Avatar for Breeze]
    February 27, 2024 11:28 am

    “I would not expect significant changes in how the USPTO conducts its rulemaking as a result of Chestek.”

    I wouldn’t expect much from the lifers at the PTO who all learned complete and total disrespect for the rule of law from John Doll.

  • [Avatar for Julie Burke]
    Julie Burke
    February 27, 2024 11:23 am

    Former DCPEP Bahr, thank you for taking the time to weigh in on this important issue. I wish you all the best in your post-USPTO career.

    As another former USPTO employee, I suggest its going to be hard for the IP Community to swallow well reasoned and well intended reassurances that the expanded rule making powers bestowed by in re Chestek should be of no real concern since the USPTO will be likely continue to do what the USPTO has been doing.

    From America’s inventors, investors and IP community POV, the root cause of America’s failing innovation system is that USPTO will continue to do what the USPTO has been doing.


  • [Avatar for Anon]
    February 27, 2024 09:14 am

    I do not think that the issue is whether or not the USPTO went through the motions of Notice and Comment as much as it is whether that was merely a fig leaf with no intent to pay attention to comments (further, perhaps some accountability as TO responding meaningfully to comments should be developed).

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