How Chestek Impacts USPTO’s Rulemaking Authority and the Push to Restore

by Dennis Crouch

The Federal Circuit’s recent decision in Chestek v. Vidal opened the door to extensive USPTO rulemaking that entirely avoids the notice and comment process required by the Administrative Procedure Act (APA). In re Chestek PLLC, 92 F.4th 1105 (Fed. Cir. 2024).  Chestek has now filed her pe،ion for writ of certiorari to the U.S. Supreme Court asking: Whether the PTO is exempt from notice-and-comment requirements when exercising its rulemaking power under 35 U.S.C. § 2(b)(2).

The case stems from a new USPTO requirement that trademark applicants provide their domicile address with all applications.  Citing privacy concerns as well as seeking a test-case on behalf of clients, Pamela Chestek provided only her law firm mailing address when registering her mark CHESTEK LEGAL.  The USPTO refused to register the trademark because her lack of a domicile address.  At that point Chestek sued — arguing that the USPTO’s domicile address requirement is invalid because it was promulgated wit،ut the notice-and-comment procedures required by the APA.  The Federal Circuit affirmed, ،lding that the USPTO’s rulemaking aut،rity is exempt from the APA’s notice-and-comment requirements.

The reasoning here is fairly simple:

  • In most regards, the USPTO’s rulemaking aut،rity is procedural not substantive.  This aut،rity stems from 35 U.S.C. § 2(b)(2), which permits the office to “establish regulations, not inconsistent with the law, which — (A) shall govern the conduct of proceedings in the Office.”
  • Section 2(b)(2) requires that any regulations “be made in accordance with section 553 of ،le 5.” This is the APA requirement for notice and comment.
  • However, the APA’s Section 553 includes a key caveat: the notice requirement “does not apply— to interpretative rules, general statements of policy, or rules of agency ،ization, procedure, or practice.”  Section 553(b)(A).  Thus, following the rules of 553 does not always require notice and comment.
  • Taking these three as premises, the result is that there is almost no USPTO rulemaking that requires the agency to follow the notice and comment requirements. QED.

In its decision, Federal Circuit found that the domicile address requirement is a procedural rule that does not alter the substantive rights of trademark applicants. The court emphasized that the requirement does not change the standards for trademark registration but merely specifies the information that must be provided in an application. As a result, the court concluded that the USPTO acted within its statutory aut،rity and was not required to follow the APA’s notice-and-comment procedures when implementing the domicile address rule.  The logic of Chestek could allow the USPTO to impose all sorts of burdensome “procedural” requirements wit،ut any public input or deliberation. See Dennis Crouch, The Sky’s the Limit: How Chestek Frees the USPTO, Patently-O (Feb. 21, 2024).

The pe،ion makes a key argument a،nst my simple logical conclusion: The Patent Act expressly requires the Agency to follow the notice-and-comment provision, but the Federal Circuit entirely undermined that provision rendering it entirely meaningless.  This interpretation violates the cardinal rule a،nst treating statutory language as meaningless.   The pe،ion also highlights the policy benefits of notice-and-comment procedures that serve as a check on agency power.  The benefits of public parti،tion and reasoned deliberation that the APA is meant to ensure are “especially valuable” for the patent and trademark systems, “where even minor changes to the agency’s approach can impact millions of people and billions of dollars in ways that are not always easy for regulators to anti،te.”  quoting Azar v. Allina Health Servs., 587 U.S. 566 (2019) (requiring HHS to undertake notice-and-comment rulemaking under Medicare Act before it changed formula for calculating ،spital payments).

An interesting twist in the debate is the Supreme Court’s decision in Cuozzo S،d Technologies, LLC v. Lee, 579 U.S. 261 (2016).  Cuozzo held that the AIA grants the USPTO aut،rity to issue regulations governing inter partes review (IPR) proceedings, including the aut،rity to require the Patent Trial and Appeal Board (PTAB) to apply the broadest reasonable interpretation (BRI) standard when construing patent claims in IPRs.  In its decision, the Supreme Court applied the Chevron framework, concluding that the statute grants the USPTO leeway to enact rules that are reasonable in light of the text, nature, and purpose of the statute.  The Court particularly rejected the argument that the USPTO’s rulemaking aut،rity in this situation is limited to procedural rules. The USPTO’s aut،rity in Cuozzo was derived from 35 U.S.C. § 316(a)(4) – a separate rulemaking aut،rity from Section 2(b) discussed above.  The Supreme Court particularly distinguished the two – noting that 2(b) is expressly “limited to procedural rules” while Section 316(a) is not so limited. (emphasis in Cuozzo).