“While the address requirement may not concern [all stakeholders], practitioners might take pause at the other ways in which the USPTO allegedly failed to comply with administrative law when rulemaking.”
The author represents Software Freedom Conservancy and filed the Petition for Rulemaking on the organization’s behalf.
In February 2019, the U.S. Patent and Trademark Office (USPTO) instituted a rulemaking with the goal of reducing the number of fraudulent or inaccurate trademark applications. USPTO data shows that there has been a significant increase in applications from China, and many of those applications appear to be fraudulent or inaccurate. The USPTO therefore proposed new rules designed to address the problem. The Notice of Proposed Rulemaking (NPRM) stated that the new rules would add a requirement that applicants, registrants, or parties to a Trademark Trial and Appeal Board proceeding who are not domiciled in the United States be represented by a U.S. attorney in good standing. The USPTO received comments on the new rules and published the final rules on July 2, 2019. Nothing about the rulemaking seemed out of the ordinary.
The Shoe Drops
However, the shoe dropped with the publication of a new Examination Guide 4-19 on August 2. Not only did foreign applicants need to have lawyers, according to the guide, but every applicant and registrant had to provide a physical street address for the application, regardless of whether they were represented. Individuals had to provide their residential addresses. The Exam Guide further stated that applicants residing in the United States had to be legal residents, with the address requirement apparently designed to ferret out applicants who were not legal residents. Finally, the USPTO also now required that every attorney listed on an application had to update the application with their bar number, state of licensure, and a statement that the attorney is in good standing.
The reaction was swift. On August 27, 2019 National Public Radio affiliate WGBH in Boston published the story and the USPTO’s response was equally swift. On September 6, it published a revised version of the Exam Guide that omitted any reference to immigration status. However, the USPTO retained the requirement that all applicants and registrants must provide a physical address. The revised Exam Guide stated expressly that post office boxes, “care of” addresses “or other similar variations” would not be accepted. The Exam Guide also gives the USPTO the authority to ask for documentation proving residency, such as rental agreements, insurance policies, and utility bills. The revised Exam Guide also added a provision that the address requirement could be waived under “extraordinary” circumstances, but it did not describe what the USPTO might consider “extraordinary.”
The Opposition Speaks Out
However, on September 19, the USPTO received a further challenge to the new rules. The Software Freedom Conservancy, described as a not-for-profit organization that “helps promote, improve, develop, and defend Free and Open Source Software (FOSS) in pursuit of ethical technology,” filed a Petition for Rulemaking asking the USPTO to temporarily suspend implementation of the new rules to the extent they require providing physical address information. The Software Freedom Conservancy describes part of its charitable mission as “providing a supportive community and financial support for the development of technical skills by those who face systematic bias or discrimination, such as many women, transgendered individuals, and African and native Americans.” In a press release, the Software Freedom Conservancy stated that the new requirement “opens all trademark owners to a variety of negative consequences in our digital age, and would be acutely felt by those who are most vulnerable.”
The petition claims that the USPTO’s rulemaking process was defective in several ways. The Software Freedom Conservancy first alleges that the address requirement is capricious and arbitrary. The petition argues that the NPRM failed to disclose that U.S.-domiciled applicants and registrants would be affected and failed to provide any evidence that the new address requirement would help eliminate fraudulent or incorrect applications. The petition describes a number of ways in which, in the Software Freedom Conservancy’s view, the address requirement puts applicants at risk of harm, particularly individuals who have been stalked, have stated unpopular opinions, or who are victims of domestic abuse. The Software Freedom Conservancy also takes the position that the waiver available for “extraordinary” situations is inadequate because the USPTO has not defined what it will consider “extraordinary.” The Software Freedom Conservancy therefore asks that the USPTO undertake a new rulemaking process specifically for the address requirement.
Paperwork Reduction Act Violation
While the Software Freedom Conservancy’s principal concern is the physical address requirement, patent practitioners might find more interesting the Conservancy’s description of other ways that the USPTO’s rulemaking was deficient. The Software Freedom Conservancy also alleges that the USPTO failed to meet the requirements of the Paperwork Reduction Act. The USPTO’s NPRM acknowledged that there would be an additional paperwork burden as a result of the implementation of the new rules, but it did not submit the new proposed rules to the Office of Management and Budget as, the Conservancy alleges, it was required to do. The USPTO’s NPRM nevertheless stated that “the collection of information involved in this rule has been reviewed and previously approved by the Office of Management and Budget (OMB),” however the petition claims that the USPTO did not file anything with the OMB, citing OMB records.
Insufficient Data Provided
The NPRM provided statistical data for foreign pro se applicants only, that is, only those who would be affected by the requirement that they obtain a U.S. attorney. The USPTO stated that there would only be 6,000 hours of burden for the affected applications. The petition points out that the USPTO failed to provide any data on the cost for attorneys to add the newly required bar information to pending applications, the cost of responding to office actions refusing registration because the application did not have a physical address for the applicant, and the cost to provide documentary evidence of a physical address. Contrary to 6,000 hours, the Conservancy calculated the cost of these additional paperwork burdens at almost $50 million.
Similarly, the Software Freedom Conservancy alleged that the USPTO failed to meet similar disclosure requirements about the economic impact of the new rules on small business under the Regulatory Flexibility Act, as it was required to do.
Failure to Remove Regulations
Finally, the petition points out that the USPTO failed to comply with Executive Order 13771, which obliges agencies to remove two regulations for every one added. The USPTO added new Rule 2.189, but the Office did not identify any rules that had been removed. The USPTO also stated that it was not obliged to comply with the requirement that it provide an approximation of the total cost associated with the new rule “because it is expected to result in no more than de minimis costs to citizens and residents of the United States.” Executive Order 13771 does not exempt regulations that affect only foreigners, but perhaps the USPTO thought that it could avoid scrutiny because foreign applicants are unlikely to complain about deficient rulemaking process.
While the address requirement may not concern you, practitioners might take pause at the other ways in which the USPTO allegedly failed to comply with administrative law when rulemaking. Providing data on only one affected group rather than data for all those potentially affected, failing to clearly explain what changes the new rules would have, and failing to submit paperwork to OMB while misrepresenting that it had, suggests that those affected by USPTO rulemaking should perhaps be reading any Notice of Proposed Rulemaking with a careful and skeptical eye.
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