Opinions / Panel Activity

This week the Federal Circuit issued its opinion in In re Chestek PLLC, a trademark case we have been following because it attracted an amicus brief. In this case, the Federal Circuit reviewed the Trademark Trial and Appeal Board’s rejection of Chestek’s trademark application based on non-compliance with the domicile address disclosure requirement. In an opinion by Judge Lourie joined by Judges Chen and Stoll, the Federal Circuit upheld the rejection of Chestek’s trademark application. In particular, the court found the “USPTO’s decision to require the address provided by all applicants to be a domicile address was . . . not arbitrary or capricious for failure to provide a reasoned justification.” This is our summary of the opinion.

Judge Lourie began by highlighting the factual and procedural background of the case:

In 2019, the United States Patent and Trademark Office (“the USPTO”) engaged in notice-and-comment rulemaking to require trademark applicants, registrants, or parties to a trademark proceeding with domiciles outside the United States or its territories to be represented by United States licensed counsel . . . The USPTO explained that the rule was enacted to combat ‘the growing problem of foreign individuals, entities, and applicants failing to comply with U.S. law.’ . . . The USPTO further stated that the proposed changes were ‘rules of agency practice and procedure, and/or interpretive rules’ exempt from the requirements of notice-and-comment rulemaking but that it had nevertheless ‘chosen to seek public comment before implementing the rule to benefit from the public’s input.’ . . . As part of the final rule adopting the U.S. counsel requirement, the USPTO revised 37 C.F.R. § 2.32 to require all applications to include ‘[t]he name and domicile address of each applicant’ and added 37 C.F.R. § 2.189 to require ‘[a]n applicant or registrant [to] provide and keep current the address of its domicile” (“the domicile address requirement”). Final Rule at 31511. . . . In May 2020, Chestek, a law firm that represents clients in trademark matters, applied for the mark CHESTEK LEGAL and provided only a P.O. box as its domicile address. . . . The examiner refused Chestek’s application for failure to comply with 37 C.F.R. §§ 2.32(a)(2) . . . The examiner made the refusal final, and Chestek appealed to the Board, where Chestek conceded its failure to comply with the domicile address requirement but maintained its argument that the rules enforced against it were improperly promulgated.

Judge Lourie began his analysis for the court by explaining how the panel reviews “agency procedures for compliance with the Administrative Procedure Act de novo and must ‘hold unlawful and set aside agency action, findings, and conclusions found to be . . . arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law . . . [or] without observance of procedure required by law.’”

On the merits, Judge Lourie first addressed the statute directed towards agency rulemaking, 5 U.S.C. § 553, highlighting that it “does not require the formalities of notice-and-comment for ‘interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice.’” Judge Lourie then distinguished a substantive rule that requires a notice and comment period from an interpretive rule. A substantive rule, he explained, is “one that ‘effects a change in existing law or policy which affects individual rights and obligations.’”

Judge Lourie went on to note that the new rule requiring domicile information “does not alter the substantive standards by which the USPTO evaluates trademark applications, e.g., a mark’s use in commerce or distinctiveness.” Therefore, he concluded, the “USPTO’s requirement for applicants to provide a domicile address under 37 C.F.R. §§ 2.32(a)(2) and 2.189 is . . . a procedural rule that is excepted from notice-and-comment rulemaking.” As a result, Judge Lourie explained, the court did not need to address arguments directed towards failure to provide notice of the “domicile address requirement.”

Judge Lourie next addressed Chestek’s contention that “the final rule is arbitrary and capricious because it offers an insufficient justification for the domicile address requirement.” Judge Lourie noted the court disagreed, explaining the “USPTO adopted the domicile address requirement as part of a larger regulatory scheme to require foreign trademark applicants, registrants, or parties to a trademark proceeding to be represented by U.S. counsel.” The reasoning behind the rule, he continued, was “because of the influx of unauthorized practice of law by foreign parties improperly representing trademark applicants and purportedly pro se foreign applicants failing to comply with the requirements of the USPTO.”

Judge Lourie finally addressed Chestek’s argument that the “domicile address requirement was arbitrary and capricious because the final rule failed to consider privacy and other concerns introduced by the requirement.” Judge Lourie emphasized that in promulgating rules an “agency is not required ‘to consider all policy alternatives in reaching decision.’” He also emphasized that “the only concerns before the USPTO regarding the domicile address requirement were raised in comments relating to foreign applicants potentially filing fraudulent addresses, which the USPTO considered and addressed.” He noted the USPTO did not get comments “from parties expressing the privacy and other concerns raised by Chestek in this case.” Judge Lourie concluded that “the USPTO did not act arbitrarily or capriciously by failing to consider an important aspect of the problem based on the record before it.”

As a result of its analysis, the Federal Circuit affirmed the Board’s refusal to register Chestek’s trademark.