A Perspective on USPTO Rulemaking Following In re Chestek

There 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.

Image Source:Deposit Photos
Author: mstanley
Image ID: 122798564