Government Opposition to Chestek’s Cert Petition

Patent, , , , ,

by Dennis Crouch

The U.S. Solicitor General has filed the Government’s opposition to Chestek PLLC’s petition for a writ of certiorari in a case challenging the USPTO’s authority to implement certain procedural rules without notice-and-comment rulemaking. The case has has significant implications for the agency’s regulatory powers. In particular, the Federal Circuit’s decision frees the agency so that it most situations it can conduct rulemaking without any notice-and-comment.  Chestek offers some similarities to another APA case pending at the Federal Circuit, Apple v. Vidal, that similarly questions whether the FINTIV discretionary denial rules should have gone through notice-and-comment. 

If you recall, this case center’s on the USPTO’s attempt to address trademark fraud.  One approach that the agency has taken is to require trademark applicants to provide their domicile address (defined as their permanent legal residence or principal place of business) rather than just a mailing address.  84 Fed. Reg. 31,498 (July 2, 2019).   The agency found that many of the fraudulent filing were from foreign applicants using a U.S. mailing address. This requirement is designed to help weed those out.  Chestek refused to provide her home address to the USPTO because of privacy concerns, leading the USPTO to reject her trademark application.

Chestek’s core argument against the rulemaking centers on the interpretation of 35 U.S.C. § 2(b)(2), which directs the USPTO to promulgate regulations “in accordance with section 553 of title 5” (the Administrative Procedure Act). Chestek contends that this statutory language requires the USPTO to follow notice-and-comment procedures for all rules issued under § 2(b)(2), including procedural rules that would otherwise be exempt under 5 U.S.C. § 553(b)(A). Chestek argues that because the Federal Circuit has interpreted § 2(b)(2) as authorizing only procedural rules, applying the APA’s procedural rule exception would render the reference to § 553 in § 2(b)(2) meaningless, violating the canon against surplusage. Furthermore, Chestek asserts that Congress’s intent in including the § 553 reference was to ensure public participation in USPTO rulemaking, given the significant impact that even procedural rules can have on trademark applicants and registrants. Chestek argues that this interpretation is necessary to provide a check on the USPTO’s rulemaking authority and to ensure transparency in the agency’s decision-making process.

The Opposition: When looking at certiorari opposition briefs, my first glance is usually directed to the question presented. It is common these days for the opposition brief to restate the question presented in a more favorable manor — recognizing that the question presented is potentially the advocacy keystone. Although the U.S. Gov’t typically does less restating than private parties, this case still shows some:

  1. Petitioner’s Question: Whether the PTO is exempt from notice-and-comment requirements when exercising its rulemaking power under 35 U.S.C. § 2(b)(2).
  2. USPTO’s Question: Whether the United States Patent and Trademark Office, in promulgating a rule that requires trademark applications to include the applicant’s domicile address, was subject to the notice-and-comment rulemaking requirements of 5 U.S.C. 553(b).

This difference here is significant. Chestek’s framing is broader, potentially encompassing all rulemaking under § 2(b)(2). The USPTO’s version, however, is narrower and more specific to the domicile address rule at issue. This framing difference highlights the government’s strategy to focus the Court’s attention on the particular rule and facts at issue in this case rather than engaging in a broader debate about the USPTO’s rulemaking authority.

The APA is clear that purely procedural rules are exempt from notice-and-comment requirements.  5 U.S.C. § 553(b)(A).  And the government brief argues that the Patent Act incorporates this exception into 2(b)(2). In other words, the statutory statement that PTO rulemaking be done “in accordance with section 553” only requires notice-and-comment if required under section 553. 

The government challenges Chestek’s claim that applying the APA’s procedural rule exception would render § 2(b)(2)’s reference to Section 553 meaningless. First, even if § 2(b)(2) is confined to procedural rules, the cross-reference to Section 553 still has meaningful practical import, such as the right to petition for rule changes under § 553(e).  In addition, the government argues that Section 2(b) actually permits substantive rulemaking. Although Federal Circuit precedent was not overruled on this point, the Supreme Court in Cuozzo certainly gave some side-eye — noting that Section 2(b)(2) “does not clearly contain the [Federal] Circuit’s claimed limitation” to purely procedural rules. Cuozzo Speed Techs., LLC v. Lee, 579 U.S. 261 (2016).  Although this issue of the potential substantive nature of a Section 2 rulemaking has not directly returned to the Federal Circuit since Cuozzo, at least one panel recently highlighted the Cuozzo shade: 

The [Supreme] Court questioned whether section 2(b)(2)(A) itself [is] limited to procedural rules, noting that the statute “does not clearly contain the Circuit’s claimed limitation.” Cuozzo, 579 U.S. at 277, 136 S.Ct. 2131.

SoftView LLC v. Apple Inc., 108 F.4th 1366 (Fed. Cir. 2024).  I’ll note here that if the Supreme Court takes the case, there is a good chance that it would revisit the procedural vs. substantive debate — including the question of whether domicile address rule is purely procedural rule.  But, truthfully it is not a good vehicle for this particular question because the home address does seem procedural. 

The government brief also does a nice job of explaining that if Congress had intended all USPTO rules to undergo notice and comment, it could have included an express requirement in § 2(b)(2), as it has done in other federal laws.