What administrative law can teach the trademark system.

AuthorWasserman, Melissa F.
PositionII. The Trademark Office and Administrative Law Doctrine C. Factual Determinations 2. Applying Deference Jurisprudence to the Trademark Office's Factual Determinations through Conclusion, with footnotes, p. 1551-1575
  1. Applying Deference Jurisprudence to the Trademark Office's Factual Determinations

Until 1999, however, the Federal Circuit denied the applicability of the APA to the Trademark Office's fact-findings altogether. Instead, the appellate court insisted that the "clearly erroneous" standard (the standard that typically governs the review of a district court's fact-findings) governed review of the Agency's factual findings--a standard that is less deferential than either of the standards enunciated in the APA. (181) In 1999, the Supreme Court, in Zurko v. Dickinson, rejected the Federal Circuit's contention and held that the APA does govern the Patent and Trademark Office's decision-making. (182) At issue in Zurko was the appropriate standard under which to review the factual determinations of the Board of Patent Appeals and Interferences, which was later renamed the Patent Trial and Appeal Board, not of the TTAB. (183) While the BPAI, the patent counterpart to the TTAB, arguably conducted formal adjudication with respect to patent interferences, the vast majority of BPAI adjudications, including the adjudication of patent denials, were infonnal in nature. (184) Moreover, at issue in Zurko, and the cases discussed in-depth in this Subpart, was BPAI informal adjudication of patent denials. (185) The Supreme Court in Zurko, however, did not specify which of the two standards outlined in the APA should be applied when reviewing the Patent Office's factual determinations. (186)

Because, as discussed below, the Federal Circuit held, without any analysis, the deference owed to the Trademark Office's factual determinations is the same as the deference owed to the Patent Office's factual determinations, understanding the reasoning behind the latter is critical in analyzing the former. As a result, I now turn to applying the standard administrative law principles to review of the Patent and Trademark Office's fact-findings as well as critiquing In re Gartside, the case in which the Federal Circuit confronted the question of whether substantial evidence or the less deferential arbitrary or capricious standard governed the review of the Patent Office's factual determinations. (187)

The APA is structured so that [section] 706(2)(a) provides "arbitrary [or] capricious" review as a catch-all whereas [section] 706(2)(E) sets out the specific scenarios when the "substantial evidence" standard governs. Determining what standard should apply to the Patent Office's decisions should have been relatively straightforward. Section 706(2)(E) states that substantial evidence applies in cases "subject to sections 556 and 557 of [the APA] or otherwise reviewed on the record of an agency hearing provided by statute." (188) Thus, [section] 706(2)(E) governs only formal proceedings--in other words, proceedings that resemble a civil judicial trial. (189) The first half of [section] 706(2)(E) would apply when the agency's organic statute utilized the magic words in [section] 554 of "hearing" and "on a record," which trigger the formal provisions outlined in [section] 556 and [section] 557 of the APA. The second half of [section] 706(2)(E) applies to formal hearings in which the organic statute did not utilize the triggering language of [section] 554 but instead listed within the statute itself the formal protections of [section] 556 and [section] 557 or similar trial-like protections. (190) That is, it applies where the organic statute of an agency states that its adjudicatory obligation must be effectuated by, among other things, a neutral hearing officer who is prohibited from participating in ex parte communications and presides over the case and grants parties to the proceeding the right to conduct cross-examination of witnesses. Because the adjudications at issue both in Zurko v. Dickinson and In re Gartside were informal patent denials, the Federal Circuit should have found the substantial evidence standard was inapplicable and the more deferential "arbitrary [or] capricious" standard governed. (191)

The Federal Circuit, however, had other ideas and managed to find the path of less deference. (192) Although the court acknowledged in In re Gartside that the BPAI did not conduct formal proceedings under [section] 556 and [section] 557 with respect to patent denials, it nevertheless found that the second half of 706(2)(E) governed. The Federal Circuit held that because one statutory provision of the Patent Act states that the Federal Circuit "shall review the decision from which an appeal is taken on the record before the Patent and Trademark Office" (193) and another provision refers to appeals at the BPAI as being "heard," and because only the BPAI has the authority to grant a "rehearing," substantial evidence review was appropriate. (194)

The Federal Circuit's reasoning is troubling on several fronts. (195) At a conceptual level, the appellate court's analysis--its searching for "on the record" and "hearing" in the Patent Act--would have been more appropriate if the appellate court had determined the first half rather than the second half of [section] 706(2)(E) applied to the Patent Office's fact-finding. That is, the court's strained interpretation of the APA contravenes the standard understanding that "otherwise reviewed on the record of an agency hearing provided by statute" governs when an implementing statute requires the agency to conduct what amounts to an evidentiary hearing. Because the Patent Act did not contain any language requiring the BPAI to partake in an evidentiary hearing wherein parties cross-examine witnesses, object to evidence presented, or take advantage of any of the other protections that are typically associated with formal adjudication, the second half of [section] 706(2)(E) is inapplicable.

Moreover, even considering the court's analysis through the lens of the first half of [section] 706(2)(E), the Federal Circuit's reasoning still misses the mark. Although the statutory provision of the Patent Act enumerating BPAI duties includes the authority to grant a "rehearing" and states that each appeal shall be "heard," importantly, it does not utilize the word "hearing." (196) While this may seem like semantics, the absence of the word "hearing" has been of utmost salience in the line of jurisprudence delineating the triggering language of formal proceedings--that is, [section] 556 and [section] 557 of the APA. (197) Courts have repeatedly held that if the statute does not utilize the word "hearing" to describe an agency's adjudicatory obligations, then the agency is not required to effectuate those obligations through formal proceedings. (198) Moreover, the "on the record" language the Federal Circuit cites is found in the statutory provision that governs the court's review of the BPAI's decisions, not in the provisions that enumerate the BPAI's duties. That is, the "on the record" language does not support the contention that the BPAI itself may not consider any evidence that is not part of the record in making its determination. Thus, the first half of [section] 706(2)(E) also did not govern. (199) Because the Patent Act did not compel the Patent Office to partake in formal adjudication or in an evidentiary type hearing, the governing standard should have been arbitrary or capricious review.

Shortly thereafter, the Federal Circuit perpetuated the flawed reasoning in In re Gartside by holding, without any analysis, that the substantial evidence standard also applied to the Trademark Office's factual determinations. (200) In On-Line Careline v. America Online, the Federal Circuit provided an ex-post justification for its earlier decision to extend substantial evidence review to the TTAB's factual determinations. (201) The Federal Circuit's analysis, however, was even less convincing than it was in the patent context. The appellate court continued to misconstrue the second half of [section] 706(2)(E) by suggesting that because the Lanham Act also required the court to "review the decision from which the appeal is taken on the record before the Patent and Trademark Office," (202) substantial evidence governed. (203) However, in On-Line Careline, the appellate court did not discuss, or even acknowledge, that the word "hearing" or any word whose root was "hear" did not appear in the provisions of the Lanham Act that enumerated the TTAB's duties. (204) Thus, half of the key reason why the Federal Circuit held that substantial evidence governed the review of the Patent Office's fact-findings was not present with respect to the Trademark Office. (205)

Similar to the patent scenario, the determination of which APA standard governed the Trademark Office's factual findings should have turned on the formality associated with the proceeding. This determination should have been relatively straightforward, at least with respect to Trademark Office fact-findings announced in the adjudication of trademark denials. The absence of the word "hearing" in the Trademark Office's adjudicatory obligations associated with trademark denials suggests that Congress did not compel the Trademark Office to utilize formal adjudication, and hence the first half of [section] 706(2)(E) did not govern the fact-findings of the TTAB. (206) Nothing in the Lanham Act suggests that the TTAB must conduct what amounts to an evidentiary hearing wherein parties can present evidence and cross examine witness, among other things, when conducting a trademark registration denial proceeding. (207) Thus, the second half of [section] 706(2)(E) also did not apply. As a result, the Federal Circuit should have determined that the arbitrary and capricious standard governed review of the Trademark Office's factual determinations announced during the adjudication of trademark denials.

With respect to inter partes proceedings, or the adjudication of trademark registration grants, the analysis is arguably more nuanced. The Trademark Office utilizes formal...

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