Democracy on Trial: Chestek and the Future of USPTO Accountability

by Dennis Crouch

The pending petition for certiorari in Chestek v. Vidal focuses on the extend that the APA requires the USPTO to follow notice-and-comment requirements when promulgating regulations under 35 U.S.C. § 2(b)(2). In its decision below, the Federal Circuit held that the USPTO is exempt from these requirements because the types of rules it is authorized to issue under Section 2(b)(2) are procedural in nature, and the APA excuses “rules of agency … procedure” from the requirements.  There are two ways that the Federal Circuit potentially erred:

1. The TM applicant home-address requirement being challenged here is not the type of procedural rule exempted under the APA; and
2. Even if it is procedural, the particular requirements of the Patent Act’s section 2(b)(2) requires following the notice and comment requirements.

The Federal Circuit agreed that 35 U.S.C. § 2(b)(2) requires USPTO regulations to be “made in accordance with” the APA — but disagreed that this requires notice-and-comment for all new regulations. The court concluded that the APA inherently includes an exception for procedural requirements and so the USPTO was not required to follow notice-and-comment rulemaking when promulgating the trademark applicant home-address rule, because the court deemed it to be a procedural rather than substantive rule exempt from those APA requirements.

Five amicus briefs were recently filed in support of the petitioner, arguing that Supreme Court review is warranted to correct the Federal Circuit’s erroneous decision, arguing that the Federal Circuit’s interpretation of Section 2(b)(2) is flawed and undermines important principles of administrative law.

• Chestek Petition
• Chestek DC Bar Assn
• Chestek Cato
• Chestek NCLA Greg Dolin
• Chestek IEEE
• Chestek Game Developers

Bar Association of D.C. (BADC) Brief Highlights Legislative History and Policy Concerns with USPTO’s Claimed Exemption from Notice-and-Comment Rulemaking

BADC filed an amicus brief providing context on the legislative history of the key statutory provisions at issue. As the BADC argues, in the American Inventors Protection Act (AIPA) of 1999, Congress expressly mandated that USPTO regulations promulgated under 35 U.S.C. § 2(b)(2) must comply with the Administrative Procedure Act’s (APA) notice-and-comment requirements in 5 U.S.C. § 553. See Pub. L. No. 106-113, 113 Stat. 1501 (1999).

BADC notes the absurd results here that.  Except perhaps for AIA issues, the Federal Circuit has long held that the USPTO authority only extends to procedural rules.  The Federal Circuit’s narrow interpretation of Section 2(b)(2) means that, despite the statutory compliance requirement, the USPTO need not go through any notice-and-comment process.  Congress did not intend for the USPTO to have that latitude.  BADC cites the late Justice Scalia’s admonition that courts must avoid interpretations “[incompatible] with the reason [and] purpose of the statute.” Antonin Scalia, Judicial Deference to Administrative Interpretations of Law, 1989 Duke L.J. 511.

BADC points to two recent USPTO actions as demonstrating the need for this Court’s intervention to vindicate the public’s right to have a voice in agency policymaking under the APA and AIPA:

• The domicile disclosure rule at issue in this case, which the USPTO finalized without undertaking a second round of notice-and-comment after making substantive changes to its original proposal. See 84 Fed. Reg. 31,498, 31,507 (July 2, 2019).
• So-called “panel stacking” at the PTAB, where the brief asserts USPTO leadership secretly manipulated administrative patent judge assignments to sway case outcomes, then rushed out an “Interim Process” to address the controversy without notice-and-comment.

In sum, the BADC argues the Court should grant certiorari to realign the Federal Circuit’s case law with Congress’s clear intent to promote transparency and accountability at the USPTO through mandatory notice-and-comment rulemaking.

IP litigator Bill Atkins (Pillsbury Winthrop filed the brief for BADC)

Cato Institute and EPPC Emphasize Democratic Values Served by Notice-and-Comment

The Cato Institute and the Ethics and Public Policy Center (EPPC) submitted a joint amicus brief focused on the important democratic values served by the APA’s notice-and-comment process. As frequent participants in agency rulemakings themselves, the amici have a strong interest in ensuring this vital avenue for public input is preserved.

Cato and EPPC argue that notice-and-comment serves critical purposes of improving the quality of agency decision-making, reducing the risk of arbitrary rules, and legitimizing the administrative process. By soliciting diverse perspectives and forcing agencies to grapple with critiques, the process “counteracts biases” and results in more rational, thoroughly considered rules. Jonathan Weinberg, The Right to Be Taken Seriously, 67 U. Miami L. Rev. 149 (2012). The hard-look judicial review enabled by a robust record also promotes reasoned decision-making. Motor Vehicle Mfrs. Ass’n v. State Farm Mutual Auto. Ins. Corp., 463 U.S. 29 (1983).  Just as importantly, the amici contend, notice-and-comment respects citizens’ right to have a voice in the development of rules that affect them. Cato and EPPC warn that agencies have strong incentives to avoid the constraints of notice-and-comment, making rigorous judicial enforcement essential.  The Federal Circuit’s decision, they argue, deprives the public of these vital participatory rights with respect to USPTO rules that can have profound economic impacts. The result is a Patent Office without democratic accountability.

NCLA Argues the Federal Circuit Ignored Statutory Text and Canons of Construction

The New Civil Liberties Alliance (NCLA) is a nonprofit law firm founded by Columbia Law School professor Philip Hamburger to challenge what it perceives as unlawful administrative overreach.  Professor Baltimore Greg Dolin filed a brief on behalf of NCLA arguing that the FedCir’s decision misinterprets both the Patent Act and the APA by ignoring the plain text and established canons of statutory construction.

NCLA argues that Congress’s creation of § 2(b)(2)(B) in 1999 was expressly designed to require USPTO regulations to comply with the APA’s notice-and-comment provisions of 5 U.S.C. § 553, it clearly intended this as a meaningful change.  The Federal Circuit’s contrary reading renders this amendment superfluous, violating the principle that “statutory amendments are meant to have real and substantial effect.”  (quoting Stone v. INS, 514 U.S. 386 (1995)). Ut res magis valeat quam pereat.

Furthermore, NCLA contends, the Federal Circuit’s interpretation ignores the APA’s own text, which provides that the exemption for procedural rules does not apply where another statute requires “notice or hearing.” 5 U.S.C. § 553(b). Section 2(b)(2)(B)’s specific mandate overrides the APA’s general exception under the canon that “the specific governs the general.”  Generalia specialibus non derogant.

IEEE-USA Amicus Brief

Through its Intellectual Property Committee, IEEE-USA has frequently submitted public comments on proposed USPTO rules, addressing issues like inventorship guidance for AI inventions, PTAB trial practice, subject matter eligibility under Section 101, and paperwork reduction. The brief argues that exempting the USPTO from notice-and-comment would prevent IEEE-USA from providing this valuable input.

IGDA and CodeMiko Project Amicus Brief

This brief, submitted by video game industry and digital entertainer groups, focuses on the privacy implications of requiring trademark applicants to provide domicile addresses. It argues this substantively impacts applicants’ privacy rights, rendering the rule more than just procedural.  Game developers and digital entertainers known as “VTubers” are said to be especially vulnerable, as they often work from home and face risks of “doxxing” – malicious publication of private information.