In re Chestek PLLC

92 F.4th 1105

IN RE: CHESTEK PLLC, Appellant

2022-1843

United States Court of Appeals, Federal Circuit

Decided: February 13, 2024

Appeal from the United States Patent and Trademark Office, Trademark Trial and Appeal Board in No. 88938938.

Andrew M. Grossman, Baker & Hostetler LLP, Washington, DC, argued for appellant. Also represented by Renee Knudsen, Kristin Ann Shapiro.

Mary Beth Walker, Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA, argued for appellee Katherine K. Vidal. Also represented by Christina J. Hieber, Farheena Yasmeen Rasheed.

David E. Boundy, Potomac Law Group PLLC, Newton, MA, as amicus curiae, pro se.

Before Lourie, Chen, and Stoll, Circuit Judges.

Lourie, Circuit Judge.

Chestek PLLC ("Chestek") appeals from a Trademark Trial and Appeal Board ("the Board") decision affirming the examiner's refusal to register the mark CHESTEK LEGAL for failure to comply with the domicile address requirement of 37 C.F.R. §§ 2.32(a)(2) and 2.189. In re Chestek PLLC, No. 88938938, 2022 WL 1000226 (T.T.A.B. Mar. 30, 2022) ("Decision"). Chestek challenges the procedural process by which the rules containing the domicile address requirement were promulgated. For the following reasons, we affirm.

BACKGROUND

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 U.S. counsel requirement"). See Requirement of U.S. Licensed Attorney for Foreign Trademark Applicants and Registrants, 84 Fed. Reg. 4393 (Feb. 15, 2019) (to be codified at 37 C.F.R. pts. 2, 11) ("Proposed Rule"); Requirement of U.S. Licensed Attorney for Foreign Trademark Applicants and Registrants, 84 Fed. Reg. 31498 (July 2, 2019) (to be codified at 37 C.F.R. pts. 2, 7, 11) ("Final Rule"). 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." Proposed Rule at 4396; Final Rule at 31500. 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." Proposed Rule at 4399.

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 the proposed rule, "domicile" was defined to mean "the permanent legal place of residence of a natural person," Proposed Rule at 4402, and in the final rule, that definition was expanded to include "the principal place of business of a juristic entity." Final Rule at 31510; 37 C.F.R. § 2.2(o). While the proposed rule did not expressly include the domicile address requirement, it provided that the USPTO may require an applicant to provide any information "reasonably necessary to the proper determination of whether the applicant . . . is subject to the [U.S. counsel] requirement[.]" Proposed Rule at 4402; Final Rule at 31510; 37 C.F.R. § 2.11(b). Previously, applicants were required to provide a mailing address, which could include a P.O. box, but the USPTO explained that, in adopting the U.S. counsel requirement, it was following the practice of other countries with similar domestic attorney requirements and conditioning it on domicile. Proposed Rule at 4396; Final Rule at 31500.

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. Decision at *1. The examiner refused Chestek's application for failure to comply with 37 C.F.R. §§ 2.32(a)(2) and 2.189. Id. Chestek declined to change its address and argued that the rules enforced against it were improperly promulgated under the Administrative Procedure Act ("the APA"). Id. 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. Id. at *2. To address Chestek's procedural challenge, the Board incorporated by reference the USPTO's denial of an earlier petition for rulemaking submitted by Chestek on behalf of a third-party client that made similar arguments regarding the improper promulgation of the domicile address requirement. Id. at *3. The Board then affirmed the examiner's refusal based on Chestek's failure to comply with the domicile address requirement in 37 C.F.R. §§ 2.32(a)(2) and 2.189. Id. at *4. Chestek timely appealed. We have jurisdiction to consider Chestek's APA challenge to a USPTO rule adversely enforced against it. See Abbott Lab'ys v. Gardner, 387 U.S. 136, 140, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967), abrogated on other grounds by Califano v. Sanders, 430 U.S. 99, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977); see, e.g., Aqua Prod., Inc. v. Matal, 872 F.3d 1290, 1300-01 (Fed. Cir. 2017). We have jurisdiction over appeals from the Board under 28 U.S.C. § 1295(a)(4)(B) and 15 U.S.C. § 1071(a).

DISCUSSION

We review agency procedures for compliance with the APA 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." 5 U.S.C. §§ 706(2)(A), (D); EmeraChem Holdings, LLC v. Volkswagen Grp. of Am., Inc., 859 F.3d 1341, 1345 (Fed. Cir. 2017).

Chestek argues that the domicile address requirement was improperly promulgated for two independent reasons and that the Board's decision enforcing the domicile address requirement should therefore be vacated. Chestek first argues that the USPTO was required to comply with the requirements of notice-and-comment rulemaking under 5 U.S.C. § 553 but failed to do so because the proposed rule did not provide notice of the domicile address requirement adopted in the final rule. Second, Chestek argues that the domicile address requirement is arbitrary and capricious because the final rule failed to offer a satisfactory explanation for the domicile address requirement and failed to consider important aspects of the problem it purports to address, such as privacy.

I

We first address whether or not the USPTO was required to promulgate the domicile address requirement through notice-and-comment rulemaking. Under 35 U.S.C. § 2(b)(2), the USPTO has authority to establish regulations to "govern the conduct of proceedings in the Office," which "shall be made in accordance with section 553 of title 5." Section 553, which generally prescribes notice-and-comment rulemaking, provides:

(a) This section applies, according to the provisions thereof, except to the extent that there is involved—

(1) a military or foreign affairs function of the United States; or

(2) a matter relating to agency management or personnel or to public property, loans, grants, benefits, or contracts.

(b) General notice of proposed rule making shall be published in the Federal Register, unless persons subject thereto are named and either personally served or otherwise have actual notice thereof in accordance with law. The notice shall include—

(1) a statement of the time, place, and nature of public rule making proceedings;

(2) reference to the legal authority under which the rule is proposed; [and]

(3) either the terms or substance of the proposed rule or a description of the subjects and issues involved; . . .

Except when notice or hearing is required by statute, this subsection does not apply—

(A) to interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice; or

(B) when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.

5 U.S.C. § 553 (emphasis added).

As provided above, § 553(b)(A) does not require the formalities of notice-and-comment for "interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice." Id. In the context of distinguishing between a "substantive" rule that requires notice-and-comment rulemaking and an "interpretive" rule that does not, this court has described a "substantive" rule as one that "effects a change in existing law or policy which affects individual rights and obligations." Animal Legal Def. Fund v. Quigg, 932 F.2d 920, 927 (Fed. Cir. 1991) (cleaned up); see also Cooper Techs. Co. v. Dudas, 536 F.3d 1330, 1336-37 (Fed. Cir. 2008) (holding that the USPTO's interpretation of "original application" was not subject to the formal notice-and-comment requirements of § 553 because it "merely clarifie[d]" existing law). This court has not, however, directly addressed when a rule is procedural and excepted from notice-and-comment rulemaking as a "rule[ ] of agency organization, procedure, or practice."

Chestek argues that the domicile address requirement is a substantive rule and that the USPTO was therefore required to undertake notice-and-comment rulemaking to adopt it. In the alternative, Chestek argues that the USPTO is required to undertake notice-and-comment rulemaking for procedural rules. Both arguments are unpersuasive.

Chestek first argues that the domicile address requirement is a substantive rule because it imposes a new requirement on applicants to obtain a...