This recent decision from the Supreme Court case grapples with the issue of when a public official’s social media activity constitutes state action for purposes of a First Amendment claim under 42 U.S.C. §1983. I’ve been following the case as part of my work on internet and media law issues.
The case arose after James Freed, the city manager of Port Huron, Michigan, deleted comments and blocked a Port Huron citizen (Kevin Lindke) from commenting on Freed’s personal Facebook page after Lindke used the forum to criticize the city’s handling of the COVID-19 pandemic. Lindke sued Freed, arguing that Freed had violated his free speech rights by censoring him in a public forum.
In a unanimous opinion authored by Justice Barrett, the Supreme Court created a two step test, holding that that a public official’s social media conduct only qualifies as state action under §1983 if the official:
possessed actual authority to speak on the State’s behalf on the particular matter at issue, and
purported to exercise that authority when speaking in the relevant social media posts.
Along with my work in intellectual property, I also spent a lot of time focusing on internet law issues and their interrelation with AI, privacy, speech and security. We have seen growing calls for action surrounding Section 230 modifications and social media censorship, and several pending Supreme Court cases could reshape the legal landscape governing online platforms.
Banning TikTok: The U.S. House of Representatives passed a bill this week, with a vote of 352-65, that could potentially ban TikTok in the United States. The bill, called the Protecting Americans from Foreign Adversary Controlled Applications Act, would require TikTok to divest from its China-based parent company ByteDance or face consequences such as being cut off from app stores and hosting services in the U.S. (more…)
In a short nonprecedential decision, the Federal Circuit affirmed a PTAB IPR decision finding claims 15-25 of U.S. Patent No. 8,671,132 (‘132 patent) unpatentable under 35 U.S.C. § 103 over combinations of prior art references. Daedalus Blue LLC v. Vidal, No. 2023-1313, slip op. at 2 (Fed. Cir. Mar. 13, 2024). The key issue on appeal was whether the Gelb reference qualified as analogous art for the purposes of the obviousness analysis. Daedalus unsuccessfully argued that the PTAB erred in two respects: (1) by finding Gelb to be in the same field of endeavor as the ‘132 patent, and (2) by determining that Gelb is reasonably pertinent to the problems addressed by the ‘132 patent. This post discusses the analogous arts test and provides key guidance to patent attorneys in today’s post-AIA world.
The recent case of Purdue Pharma v. Collegium Pharmaceutical, Case no. 23A766, highlights the importance of adhering to the Supreme Court’s rules and presenting compelling reasons when requesting an extension of time to file a petition for certiorari. The Supreme Court’s denial of Purdue’s request for a 30-day extension serves as a reminder that even in cases involving significant legal questions, the Court expects parties to follow its procedural rules and provide strong justifications for any deviations.
In a nonprecedential decision, the Federal Circuit has vacated and remanded a PTAB decision siding against the patentee. The key issue on appeal was the proper construction of the claim term “matingly engaged,” which appears in the limitation “a compliant member matingly engaged with the second side of the housing member.” CoolIT Sys., Inc. v. Vidal, No. 2022-1221 (Fed. Cir. Mar. 7, 2024). Coolit v Vidal.
One of the take-aways from the case is that parties should be cautious about using terms that may themselves require construction, as this can lead to a “construing the construction” problem. Courts aim to adopt constructions that clarify the meaning of the disputed term without introducing new ambiguities. See Jason Rantanen, Construing Claim Constructions, Patently-O (Sept. 28, 2011, 4:13 PM).
The Federal Circuit handed down a mixed decision in Chewy, Inc. v. International Business Machines Corp., 2022-1756 (Fed. Cir. Mar. 5, 2024) ChewyvIBM. The district court had ruled against the patentee (IBM) — finding one patent ineligible and the other not infringed. On appeal, the Federal Circuit largely affirmed, but found one claim that passes through the pre-trial gauntlet. The patents at issue were IBM’s U.S. Patent Nos. 7,072,849 and 7,076,443, relating to improvements in web-based advertising. On remand, a jury may need to decide whether claim 12 of the ‘849 patent is valid and infringed.
The first half of the post focuses on eligibility and is fairly standard. The second half of the post is what all patent prosecutors need to read because it delves into “magic language” – binding statements – in describing the invention. (more…)
In January 2024 a then-secret order from US Customs and Border Protection (CPB) had a major impact in the Masimo v. Apple case. That opinion from CBP’s Exclusion Order Enforcement (EOE) Branch has now been released in redacted form and provides some insight into how Apple was able to quickly modify its Apple Watch designs to avoid the ITC’s limited exclusion order that would have blocked import of the infringing devices. The CBP EOE ruling determined that Apple’s redesigned watches, which disabled the infringing pulse oximetry functionality, were sufficiently modified to fall outside the scope of the ITC’s exclusion order, allowing them to be imported and sold in the US.
If you recall, Celanese v. ITC involves the sweetener known as AceK (acesulfame potassium), a compound discovered back in the 1960s. Celanese began selling the product on the competitive market in 2011, and eventually decided to file for patent protection on its manufacturing process in 2015. In my prior post on Celanese v. ITC, I focused on the key statutory interpretation question of whether, under the AIA’s revised 35 U.S.C. § 102, a patentee’s pre-filing sale of a product made by a secret process starts the one-year clock for patenting that process.
Although Celanese did not patent the product itself, one interesting fact that I failed to mention in the prior post is that Celanese is seeking an exclusion order at the ITC preventing importation of Ace-K. This adds an interesting wrinkle to the policy debate. (more…)
The Federal Circuit recently issued a decision in Maxell, Ltd. v. Amperex Technology Limited, No. 2023-1194 (Fed. Cir. Mar. 6, 2024), reversing Judge Alan Albright’s finding that certain claims of Maxell’s patent covering rechargeable lithium-ion battery indefinite under 35 U.S.C. § 112, ¶ 2 (112(b)). U.S. Patent No. 9,077,035.
The case provides important cover for patent prosecutors who inelegantly add narrowed limitations from the dependent claims into the independent claims without rewriting or deleting the corresponding broader element descriptions already there.
The Federal Circuit has affirmed the PTAB’s finding that Pfizer’s pneumococcal vaccine patent is obvious, but has vacated and remanded the Board’s denial of Pfizer’s motion to amend certain claims. Pfizer Inc. v. Sanofi Pasteur Inc., No. 19-1871 (Fed. Cir. Mar. 5, 2024); U.S. Patent No. 9,492,559. Pfizer v. Sanofi Opinion.
I am super excited to be part of a big interdisciplinary conference this week here at the University of Missouri where we’ll be focusing on AI and Society: Government, Policy, and the Law. Co-hosted by the Truman School of Government and Public Affairs and the University of Missouri School of Law, this two-day event on March 7-8, 2024, will bring together a diverse group of experts to explore four main themes: AI in Government, Impact of AI on Democracy, Government Regulation and AI, and Creating an AI Ready Public Sector; and a collection of the papers will be published in the Missouri Law Review. (more…)
The Federal Circuit held oral arguments on March 4, 2024 in the important patent case of Celanese Int’l. v ITC, 22-1827 (Fed. Cir. 2024).
The question: Under the AIA, does sale of a product by the patent applicant prohibit the patentee from later patenting the process used to make the product?
Elon Musk was instrumental in the initial creation of OpenAI as a nonprofit with the vision of responsibly developing artificial intelligence (AI) to benefit humanity and to prevent monopolistic control over the technology. After ChatGPT went viral in late 2022, the company began focusing more on revenue and profits. It added a major for-profit subsidiary and completed a $13+ billion deal with Microsoft — entitling the industry giant to a large share of OpenAI’s future profits and a seat on the Board.
In a new lawsuit, Elon Musk alleges that OpenAI and its CEO Sam Altman have breached the organization’s founding vision. [Musk vs OpenAI].
The six PTAB decisions reviewed below provide insight into the application of 35 USC 101 in cases involving more than just computer hardware and software. While the claims in each decision recite physical devices or molecules, the PTAB still found most to be ineligible as directed to an abstract idea and lacking an integrated inventive concept beyond well-understood, routine conventional activities. A core parallel across the decisions is the PTAB’s focus on whether the additional elements in the claims, including the physical components, integrate the judicial exception into a practical application or provide significantly more.
Ex parte Ezerzer: CKRD peptides that can modulate immune system activity for treating autoimmune diseases – fragment of naturally occurring protein.
Ex parte Magatti: Beverage preparation system (Nespresso) which monitors container consumption to enable convenient reordering.
Ex parte Demou: System for predicting occurrence of adverse cardiovascular or cerebrovascular health conditions, including use of sensors attached to an artificial pump in a human body.
Ex parte Mitchell: Automated beer brewing system that modifies beer recipes to adjust sensory characteristics based on user inputs.
Ex parte Facchinetti: Continuous glucose monitor and insulin pump system that detects failures in glucose monitoring or insulin treatment in real-time.
Ex parte Masherah: Claims a system for distributing physical trading cards by scanning them and offering electronic versions for purchase online.
The claimed invention claims specific CKRD peptides that can modulate immune system activity for treating autoimmune diseases. Citing Myriad, the examiner rejected the claims under Section 101 after concluding that the claims covered a fragment of polypeptides that naturally occur within the human body. On appeal, PTAB agreed that there is “no dispute that the peptides themselves are fragments of larger naturally occurring proteins.” However, the panel found “market differences” between the claimed peptide and the naturally occurring form. The patentee particularly provided evidence that its claimed sequence had a much higher ability to bind to inflammatory targets — suggesting an important practical and likely structural difference from the naturally occurring larger molecule. For example, it is likely that this protein fragment folds in a different way than the larger molecule from which it is derived.
The PTAB also recognized that there is some likelihood that the claimed invention has shown-up in nature. Relying on Myriad, the PTAB found that “the mere possibility that the peptides of claim 1 might have existed as a natural phenomenon is insufficient to establish that the composition is a product of nature and therefore a judicial exception” The Examiner had not shown that the specific peptides of SEQ ID NOs: 2 and 16 necessarily existed in nature.
The claimed invention in Ex parte Magatti relates to a beverage or foodstuff preparation system (including a Nespresso machine) which monitors container consumption to enable flexible and convenient reordering for the end user. The system includes subsystems for preparing containers, controlling preparation, monitoring consumption, and networking with external devices.
Regarding the 101 rejection entered by the PTAB, the claimed system was determined to be directed to an abstract idea of “keeping an inventory record of food or beverage containers for use with food or beverage preparation equipment.” Limitations reciting tracking stock state information and comparing order identifiers were found to be mental processes of observation, evaluation, and judgment. For example, a coffee shop barista tracking coffee pod usage and purchase orders with pen and paper.
The additional elements like the beverage preparation machine, computer subsystem, and networking subsystem did not integrate the abstract idea into a practical application or provide “significantly more.” Instead, these elements merely used generic components such as a (“generic beverage or foodstuff preparation machine”) as tools to implement the inventory management abstract idea without shifting the invention’s true focus from managing inventory.
The claimed invention relates to a system for predicting an “occurrence of an adverse cardiovascular or cerebrovascular health condition.” The claims particularly require an implantable pump having a variety of sensors attached to a rotor. But, the novel features of the invention is the capability to process the sensor data using a particular algorithms to predict a likely future cardiac event.
In its decision, the PTAB affirmed the examiner’s eligibility rejection under 35 USC § 101 — finding that the claim was directed to an abstract idea of “mental processes” because many of the claimed steps could be performed in the human mind but for the recitation of a generic computing device. The PTAB relied on CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366 (Fed. Cir. 2011) (holding the claims that could be “performed in the human mind . . . or by a human using a pen and paper” were directed to patent-ineligible mental processes). Although the patentee’s actual process involves quite complex data manipulations, the claim itself was “broad enough to encompass straightforward situations that involve little more than mental observations, calculations, and comparisons of features from a plot.”
The PTAB further determined that the additional elements in the claims, including the implantable pump, sensors, communication circuitry, memory, input/output interface, and processor, did not integrate the judicial exception into a practical application. The additional elements were described generically in the specification to perform well-understood functions such as gathering, transmitting, and processing data — finding that “the Specification does not indicate in any manner that the recited ‘one or more sensors,’ first and second ‘communication circuitry,’ and ‘processor’ of claim 32 are anything other than generic, off-the-shelf components.”
The invention here is an automated beer brewing system that modifies beer recipes to adjust sensory characteristics of beer based on user inputs. The claimed invention allows users to select a baseline beer recipe and adjust its characteristics, such as bitterness, flavor, and aroma, to suit their preferences. The system then modifies the recipe accordingly, using a performance model to predict the outcome of these adjustments. The specification notes that beer making is an old practice, and the question here is whether the claimed invention constitutes an abstract idea rather than a patent eligible invention.
The PTAB affirmed the Examiner’s rejection of the claims — finding them directed to a mental process that could be performed by a human using pen and paper, involving thinking about and modifying a beer recipe. The Board found that the claims did not integrate the abstract idea into a practical application and did not add an inventive concept beyond the abstract idea itself. The use of a computer to automate this process was deemed insufficient to transform the claims into patent-eligible subject matter. In particular, the claims did not recite new technology. The Board concluded that mere automation of manual processes using generic computers does not satisfy the requirements for patent eligibility. “Nothing in claim 1 provides an inventive concept as the creation of beer recipes and determination of characteristics from a recipe are well-understood, routine, and conventional in the beer making arts and are more than capable of being performed in the human mind.”
DexCom is a leader in continuous glucose monitoring. The claimed invention here relates to a method a safety method – looking for real-time failures of monitoring or insulin treatment. Claim 1 is directed to a “device” that includes a continuous glucose monitoring system and an insulin infusion pump, but the key advance is in the data processing that creates individualized model based upon patent data using a discrete reiterative filter to predict glucose levels with confidence intervals and then create an alert if the actual levels deviate.
Regarding the 35 USC § 101 rejection, the PTAB determined that claim 1 was directed to an abstract idea of “mathematical concepts and concepts that can be practically performed in the human mind or with the assistance of pen and paper (including an observation, evaluation, judgment, opinion).” The PTAB further determined that the additional elements in the claim, including the continuous glucose monitoring system, insulin infusion pump, alert device, and processor, did not integrate the judicial exception into a practical application. The additional elements were described in the specification as generic computer components being used in a conventional manner to manipulate data. The PTAB stated that “[m]erely adding generic data generating hardware and computer components, namely a generic processor, to perform an abstract idea does not integrate the abstract idea into a practical application.” Thus, the claims cannot be patented.
The claimed invention relates to an electronic distribution system for physical trading cards that can be scanned into electronic trading cards and placed on a website for purchase. The claimed method involves first manufacturing “physical trading cards” and then “scanning” their images. At that point then we have an online inventory system that then facilitates orders and shipping of the physical cards.
Regarding the 35 USC § 101 rejection, the PTAB determined that claim 22, which was representative of the claims on appeal, was directed to an abstract idea of “offering trading cards for purchase and sale” by reciting certain methods of organizing human activity in the form of commercial interactions.
Although the claims require printing/scanning/shipping steps, the specification specifically identified that the invention “generally relates to an electronic distribution system for physical trading cards that can be scanned into electronic trading cards and placed on a website for purchase.” After finding the claims directed to an abstract idea, the PTAB the determined that the additional elements in the claim, including the recited scanner, website, and device, did not integrate the judicial exception into a practical application.
I wanted to consider some recent PTAB jurisprudence on patent eligibility under 35 U.S.C. § 101. The following post reviews four recent eligibility cases. In all four cases the PTAB found the claims lacked eligibility. Two of the cases affirmed examiner rejections while the other two added eligibility as a new grounds for rejection after finding that the examiner erred in their 102/103 rejections. All four cases here involve communications technology where the patent applicant was seeking to claim the functional operational steps without describing any new “technology.” I have a second post coming with recent device 101 cases from the PTAB.
The recent Federal Circuit decision in AlexSam, Inc. v. MasterCard Intl. Inc. provides a lesson into the importance of carefully drafting—and understanding—the scope of licensing terms, especially covenants not to sue. Of importance to this case is understanding both their scope and their duration. The second half of the post delves into the jurisdictional hook that allowed the Federal Circuit to hear this case, even though it originated as a state law breach of contract claim, as well as analyzing whether MasterCard’s invalidity declaratory judgment counterclaim was truly compulsory, as required for Federal Circuit appellate jurisdiction. The post also notes a curious empaneling of judges. 22-2046.OPINION.2-28-2024_2277625.
Earlier this week, the USPTO published updated examination guidelines regarding obviousness determinations under 35 U.S.C. §103. While these new guidelines are not legally binding, they offer important insight into how the Office plans to apply an even more flexible approach to obviousness — something Director Vidal sees as mandated by the Supreme Court’s 2007 decision in KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007). (2500 words).
Overall the guidance here suggests that the office is looking to make non-obviousness a larger hurdle via increased flexibility. Still, the guidelines spend some time on the requirements of a prima facie case; the necessity of both evidence and reasoning to support any obviousness rejection; and consideration of all evidence before the examiner. Obviousness is already the most common rejection – with the vast majority of applications being initially rejected as obvious. It will be interesting to see whether the rates go up even further following this new guidance.
This post breaks down the guidelines and walks through some potential strategies for patent applicants.
A jury in Judge Albright’s W.D.Tex. court sided with Amazon – finding no infringement. On appeal, the Federal Circuit has affirmed — particularly affirming Judge Albright rejection of Freshub’s post-verdict motions. Freshub, Inc. v. Amazon.com, Inc., 22-1391 (Fed. Cir. Feb 26, 2024). In a cross-appeal, Amazon argues that the district court should have found the patent unenforceable due to inequitable conduct. That appeal was also rejected. Freshub v Amazon.
No Reversible Error in Denying Inequitable Conduct
I want to use this blog post to focus on the finding of no inequitable conduct. (more…)
On February 21, 2024, the Supreme Court heard oral arguments in the case of Warner Chappell Music v. Nealy, which deals with a circuit split over the availability of back-damages in copyright infringement cases. Specifically, the Court is examining whether copyright plaintiffs are barred from recovering damages for acts of infringement that occurred more than three years before filing suit, even if the claims are timely under the “discovery rule.” During the arguments, the parties and justices used metaphors of “bad wine vintages” in questioning the pedigree and value of the discovery rule and damages limitation put before them. [Oral Argument Transcript]
The copyright law has a three year statute of limitations for filing suit that begins when the copyright “claim accrued.” Although “accrual” in copyright cases ordinarily occurs with infringement, the judge-made discovery rule allows copyright claims to accrue when the plaintiff discovers, or reasonably should have discovered, the infringement rather than when the infringing act occurred. All circuit courts accept some form of the discovery rule, but they disagree over a second point — whether damages can reach back beyond the three-year statute of limitations period measured from the date of filing. Although the statute does not make any distinction between a right to file an action and a right to back damages, the distinction stems from ambiguous dicta in the Court’s 2014 Petrella v. MGM decision. Although that case focused on laches, the court suggested general allowance for the discovery rule for copyright claims more than three years from filing, but also wrote that Section 507(b) permits “retrospective relief running only three years back from the date the complaint was filed.” This statement led some courts (including the district court here) to conclude that a copyright holder can sue for wrongful actions that were more than three-years distant, but can only collect damages associated with infringing actions within the three year bubble. In this case, the Eleventh Circuit sided with the plaintiff (reversing the district court) in holding that claims for back damages also follow the discovery rule — permitting potential distant claims.
In the certiorari process, the music publishers asked two broader questions that seemed to potentially challenge the discovery rule itself, but the court granted a re-written narrower question that assumed the discovery rule is in place, but questioned whether it also allows damages beyond the three year mark.
Kannon Shanmugam, representing the music publishers who lost before the Eleventh Circuit, began the argument with a statement that the case “presents a straightforward matter of statutory interpretation” under Section 507(b)’s three-year limitations period. He stated that “a plaintiff can obtain damages for acts of infringement only within three years of filing” and that Petrella supports this position. However, the Justices quickly noted that the question presented “assumes the existence of the discovery rule” and does not revisit whether one should exist at all. This prompted pushback from Shanmugam:
I don’t think that this Court when it rephrased the question presented was accepting any particular version of the discovery rule. . . At most, the rephrased question presented assumes the existence of some version of the discovery rule. It does not take sides on the scope of that rule.
The Justices remained skeptical, with Justice Sotomayor asking “isn’t it artificial for you to raise the most important part of your argument in a footnote” rather than directly asking the Court to revisit the discovery rule. She emphasized that Shanmugam was now trying to make arguments that went beyond the scope of the question presented. Justice Gorsuch echoed this, stating “we’re being asked to decide the scope of something that may or may not exist.”
Respondent’s counsel, Joe Earnhardt, also refused to defend the discovery rule’s validity. He argued the question that was granted certiorari “assumes that there is a discovery rule” and claimed all circuits agree one exists (but disagree as to its scope). Justice Gorsuch then wondered: “Why wouldn’t we just take up that question first” regarding the existence of any discovery rule? But Earnhardt maintained doing so was inappropriate since the issue “wasn’t raised below” and has no circuit split.
Overall, the Justices appear to not be willing to rule expressly on the discovery rule question – whether it exists, even while questioning how to decide a “scope” issue if the rule itself is uncertain. Justices floated the possibility of DIGing the case, meaning dismissing it as improvidently granted (DIG). That had also been suggested by respondent. Justice Alito noted, it makes little sense to “talk about the second [question of scope] without resolving the first [its existence].”
Turning to the core question regarding retrospective damages, Shanmugam argued the time-bar stems directly from the statute of limitations provision that a claim must be brought within three years of accrual. “Our submission is simple. As this Court has said, the standard rule is that ‘accrues’ means at the point when you have a complete and present cause of action.” Plaintiff’s attorney Earnhardt contested this reading. He claimed other parts of the Copyright Act authorize full recovery of damages without any “lookback” restriction, such that imposing one would contradict Congress’s intent. It appears that nothing in the Copyright statute provides any hook for separately treating the damages timing from the general accrual limitation. Justice Sotomayor explained her perspective that “The damages section speaks about damages. The statute of limitations speaks about a time period to file a complaint. You’re automatically tying the two. Tell me how you’re doing it.” Shanmugam argued both that the text demands a three year rule and that the particular damages limitation is derived from the Court’s own prior statements in Petrella. On the other side Earnhardt agreed with the Justices that there is no such connection between the two statutes. This core issue may also help explain the court’s difficulty in sifting through whether they must first answer a question about the discovery rule before analyzing how it applies to damages. Under Shanmugam’s theory, the two are inextricably linked, whereas for Earnheart the statute of limitations is entirely separate and distinct from the copyright damages statute.
Earnhardt insisted Petrella was distinguishable dicta because the plaintiff there “only brought claims for the three-year period” preceding her lawsuit, whereas broader relief would be appropriate if earlier acts were successfully tied to timely claims under the discovery rule. However, Justice Gorsuch noted that Petrella’s language about damages going back “only three years” was seemingly not so limited. Shanmugam argued this was a necessary implication of the prior laches decision — the crux of the decision that laches does not apply to back-damages was the existence of a statute that cuts-off back damages at the three year mark. Shanmugam cautioned that failing limit damages could entrench an overbroad discovery rule that lets plaintiffs reach back indefinitely. During oral arguments, the Court gave little indication of how it might interpret Petrella‘s meaning or perhaps walk-back its language, although Justice Gorsuch sees the case as clearly stating that “you look back three years and no more.”
In the end, the Justices asked few questions about the government’s position that Petrella should not bar damages for timely claims and that the Second Circuit “erred” in Sohm v. Scholastic by holding otherwise based on the Petrella dicta. How the Court maneuvers around Petrella to answer the question remains to be seen when a decision is issued.
The key recurring metaphor during oral arguments was that of “bad wine” in reference to the discovery rule for copyright claims. Justice Gorsuch stated, “we also have a lot of cases in this Court casting doubt on the existence of a discovery rule. We’ve called it wine from a bad vintage or something like that.” See, for example, TRW Inc. v. Andrews, 534 U.S. 19, 37 (2001) (Scalia, J. in dissent writing “The injury-discovery rule applied by the Court of Appeals is bad wine of recent vintage.”); and Rotkiske v. Klemm, 140 S. Ct. 355, 360 (2019) (an “expansive approach to the discovery rule is a bad wine of recent vintage”). Later, Respondent’s counsel argued that the copyright discovery rule is not “bad vintage” because it is inherent to the “accrual” language of the Copyright Act. Of course, the discovery rule is not explicit in the language of the Act, and Gorsuch responded that it “may or may not” be there “some people say that the wine is there.” Sticking to the metaphor, Gorsuch later seemingly referenced the Petrella precedent and subsequent appellate decisions as “not even the old bad wine. It’s something else. It’s a new bad wine.” The “bad wine” metaphor has generally captured skepticism amongst the Justices about a broad discovery rule. After all this back and forth over the vintage, both sides likely needed a smooth evening recovery Merlot. We expect the nine sommeliers to release their opinion by the middle of June 2024.
Earlier this month, the Federal Circuit issued a decision in the case of In re Chestek that, on its face, simply upheld the USPTO’s requirement that trademark applicants provide their domicile address. But contained within the court’s ruling is language that could have some major implications — essentially giving the USPTO carte blanche ability to sidestep administrative rulemaking procedures for any new requirements it imposes, as long as they are deemed “procedural” in nature. And on this point the Federal Circuit appears to establish a wide permissive definition that the rulemaking is procedural so long as does not affect the substantive patent or trademark standards. Of course, the USPTO generally does not have substantive rulemaking authority regarding the patent standards, and so everything is procedure.
Chestek centered around amendments made to trademark regulations in 2019 requiring that applicants provide their domicile address, defined as their permanent legal residence or principal place of business — mailing address is insufficient. The USPTO argued that this new address requirement was needed to help enforce its parallel new rule mandating that foreign applicants retain U.S. licensed counsel. Chestek PLLC, a law firm run by Pamela Chestek and specializing in trademark law, challenged the domicile address rule itself, saying its imposition failed to comply with the notice and comment requirements of the Administrative Procedure Act (APA).
In what appears to be largely a test case, Chestek applied to register the mark CHESTEK LEGAL, but refused to include her personal home address. She argued that for privacy reasons her personal home address is not generally known and that its submission risks major breaches in privacy. But, the USPTO refused to register her mark based upon her failure to comply with the domicile rule. After losing at the USPTO, Chestek appealed to the Federal Circuit.
On the core issue, the Federal Circuit sided resoundingly with the USPTO. The court held that the domicile address rule was clearly procedural in nature rather than substantive, and thus was exempted from APA notice and comment strictures. The key passage from the court reads:
[T]he new rule requires additional information about applicants, i.e., their domicile address. Requiring different or additional information from applicants regarding their addresses merely ‘alter[s] the manner in which the [applicants] present themselves…to the agency.’ It does not alter the substantive standards by which the USPTO evaluates trademark applications.
Chestek at 8 (Quoting JEM Broadcasting Co. v. F.C.C., 22 F.3d 320 (D.C. Cir. 1994). In other words, because the domicile address rule does not itself change the substantive legal criteria for granting or denying trademarks, the court sees it as merely a procedural step in the application process. And crucially, procedural rules are exempt from notice and comment requirements under APA section 553(b)(A).
Under the statute, an agency must publish notice of proposed rules prior to them becoming law. BUT the requirement does not apply “(A) to interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice; or (B) [when] impracticable, unnecessary, or contrary to the public interest.” 5 U.S.C. § 553(b). I.e., the notice-and-comment requirements don’t apply to changes of agency procedure or practice. Although the rule was deemed procedural, it still has substantial impact — i.e., Chestek loses her rights. Of course any lawyer will agree failing to follow procedures can result in major consequences.
In finding the address rule procedural, the court asked the simple question: Does the rule “affect the substantive trademark standards by which the Office examines a party’s application.” Here, the answer is clearly “no” and therefore, according to the Federal Circuit, the rule is procedural and thus exempt from notice-and-comment rulemaking.
Having found the challenged rules within the procedural exception to notice-and-comment rulemaking, we need not address Chestek’s argument that the proposed rule failed to provide sufficient notice of the domicile address requirement.
I am not worried about trademark applicants providing a residential address (although Chestek’s privacy argument seems to have some merit). But, the Federal Circuit’s decision here appears quite sweeping and may provide the USPTO with enough authority avoid almost any future notice-and-comment in its rulemaking.
The notice and comment requirements serve a vital purpose, even when an agency does not incorporate public feedback into the final rule. The process provides transparency by allowing the public to understand what changes an agency is considering and why. It also fosters deliberation – the agency must provide a reasoned explanation if it rejects commenters’ concerns and proceeds to adopt the rule as originally proposed. Additionally, notice and comment creates a record for judicial review. If a party challenges the rule, the court can examine whether the agency fully considered and responded to material critiques raised during the process. An agency does not have free rein just because it technically “considered” comments before rejecting them. The record must substantiate that it took serious public input under advisement and had adequate grounds for sticking with the original course. Simply going through the motions of notice and comment without meaningfully wrestling with opposing views raised by stakeholders risks reversal upon legal challenge – and is bad policy for a nation that sees itself as promoting popular sovereignty. Even if not determinative, airing criticism, gathering diverse perspectives, and requiring a reasoned response uphold good governance norms and the model of administrative law. Allowing agencies to bypass this process denies public participation that bolsters legitimacy.
The logic of this case sweeps broadly and sets up the USPTO to potentially make more “procedural changes” without meaningful external input or following the traditional notice-and-comment approach.
Carl Oppedahl has been writing about the impact of the new .DOCX standard associated with a $400 fee for non-compliance as a typical procedural rule with substantive impact created without notice-and-comment because it merely involves procedural aspects of the patent application process — despite the large penalty for noncompliance. Other potential examples:
Requiring that every application include a signed statement from the inventor explaining their contribution in detail, or face immediate abandonment.
Mandating that the background section of specifications provide explicit citations to the closest statement of the problem as found in the prior art
Imposing a $1000 processing fee for any application that the USPTO deems improperly formatted
None of these hypothetical new rules have any direct bearing on the substantive bases on which the USPTO evaluates patentability. But forcing applicants to jump through more procedural hoops and face steeper penalties would clearly make pursuing and maintaining protection more onerous. Without formal notice and comment, however, aggrieved parties would have little recourse to contest such impositions or to help guide the potential policy decisions.
One potential catch, alluded to in passing in Chestek, is the stipulation that procedural rules cannot “affect individual rights and obligations.” And indeed, one could argue that layered procedural requirements that make the patenting process drastically more expensive or convoluted would impinge on inventors’ substantive rights. Moving forward we will have to see which of these threads of thought the court and the PTO will follow.
To be clear, I believe the Federal Circuit followed administrative law precedent here, and I raise the issue just to recognize the power of the USPTO. We can also recognize that, for the most part, USPTO leadership is generally open to hearing direct feedback and suggestions from constituents. The notice-and-comment approach is not so necessary because the Patent Bar remains much like a small town. where many of us know each other at a personal level. In Chestek, for instance, the USPTO has heard the privacy complaints regarding requiring home address, but ultimately weighed that against the ongoing problems facing the agency from faulty foreign applications. That is effectively the same approach as notice-and-comment. The key difference though, is that USPTO official availability is a choice that might not be made by every administration, whereas notice-and-comment are required by law.
I am super excited to be part of a big interdisciplinary conference this week here at the University of Missouri where we’ll be focusing on 
