82 FR 6259 - Changes in Requirements for Affidavits or Declarations of Use, Continued Use, or Excusable Nonuse in Trademark Cases

DEPARTMENT OF COMMERCE
United States Patent and Trademark Office

Federal Register Volume 82, Issue 12 (January 19, 2017)

In order to assess and promote the accuracy and integrity of the trademark register, the United States Patent and Trademark Office (USPTO or Office) amends its rules concerning the examination of affidavits or declarations of continued use or excusable nonuse filed pursuant to section 8 of the Trademark Act, or affidavits or declarations of use in commerce or excusable nonuse filed pursuant to section 71 of the Act. Specifically, under the regulations enacted herein, the USPTO may require the submission of information, exhibits, affidavits or declarations, and such additional specimens of use as may be reasonably necessary for the USPTO to ensure that the register accurately reflects marks that are in use in commerce in the United States for all the goods/services identified in the registrations, unless excusable nonuse is claimed in whole or in part. A register that does not accurately reflect marks in use in commerce in the United States for the goods/services identified in registrations imposes costs and burdens on the public. The amended rules will allow the USPTO to require additional proof of use to verify the accuracy of claims that a trademark is in use in commerce in connection with particular goods/ services identified in the registration.

[Federal Register Volume 82, Number 12 (Thursday, January 19, 2017)]
[Rules and Regulations]
[Pages 6259-6265]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-00317]


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DEPARTMENT OF COMMERCE

United States Patent and Trademark Office

37 CFR Parts 2 and 7

[Docket No. PTO-T-2016-0002]
RIN 0651-AD07


Changes in Requirements for Affidavits or Declarations of Use, 
Continued Use, or Excusable Nonuse in Trademark Cases

AGENCY: United States Patent and Trademark Office, Commerce.

ACTION: Final rule.

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SUMMARY: In order to assess and promote the accuracy and integrity of 
the trademark register, the United States Patent and Trademark Office 
(USPTO or Office) amends its rules concerning the examination of 
affidavits or declarations of continued use or excusable nonuse filed 
pursuant to section 8 of the Trademark Act, or affidavits or 
declarations of use in commerce or excusable nonuse filed pursuant to 
section 71 of the Act. Specifically, under the regulations enacted 
herein, the USPTO may require the submission of information, exhibits, 
affidavits or declarations, and such additional specimens of use as may 
be reasonably necessary for the USPTO to ensure that the register 
accurately reflects marks that are in use in commerce in the United 
States for all the goods/services identified in the registrations, 
unless excusable nonuse is claimed in whole or in part. A register that 
does not accurately reflect marks in use in commerce in the United 
States for the goods/services identified in registrations imposes costs 
and burdens on the public. The amended rules will allow the USPTO to 
require additional proof of use to verify the accuracy of claims that a 
trademark is in use in commerce in connection with particular goods/
services identified in the registration.

DATES: This rule is effective on February 17, 2017.

FOR FURTHER INFORMATION CONTACT: Catherine Cain, Office of the Deputy 
Commissioner for Trademark Examination Policy, by email at 
[email protected], or by telephone at (571) 272-8946.

SUPPLEMENTARY INFORMATION:
    Purpose: The USPTO revises the rules in parts 2 and 7 of title 37 
of the Code of Federal Regulations to allow the USPTO, during the 
examination of affidavits or declarations of continued use or excusable 
nonuse filed pursuant to section 8 of the Trademark Act, 15 U.S.C. 
1058, or affidavits or declarations of use in commerce or excusable 
nonuse filed pursuant to section 71 of the Trademark Act, 15 U.S.C. 
1141k (section 8 or section 71 affidavits), to require the submission 
of such information, exhibits, affidavits or declarations, and such 
additional specimens of use as may be reasonably necessary for the 
USPTO to verify the accuracy of claims that a trademark is in use in 
commerce in connection with the goods/services listed in the 
registration.
    This will benefit the public because it will facilitate the USPTO's 
ability to assess and promote the integrity of the trademark register 
by encouraging accuracy in the identification of goods/services for 
which use in commerce or continued use is claimed. The accuracy

[[Page 6260]]

of the trademark register as a reflection of marks that are actually in 
use in commerce in the United States for the goods/services identified 
in the registrations listed therein serves an important purpose for the 
public. The public relies on the register to determine whether a chosen 
mark is available for use or registration. Where a party's search of 
the register discloses a potentially confusingly similar mark, that 
party may incur a variety of resulting costs and burdens, such as those 
associated with investigating the actual use of the disclosed mark to 
assess any conflict, proceedings to cancel the registration or oppose 
the application of the disclosed mark, civil litigation to resolve a 
dispute over the mark, or changing plans to avoid use of the party's 
chosen mark. If a registered mark is not actually in use in commerce in 
the United States, or is not in use in commerce in connection with all 
the goods/services identified in the registration, these costs and 
burdens may be incurred unnecessarily. An accurate and reliable 
trademark register helps avoid such needless costs and burdens.
    The amended rules also facilitate the cancellation of registrations 
for marks that were never in use in commerce or are no longer in use, 
and for which acceptable claims of excusable nonuse were not submitted, 
in connection with the identified goods/services. The statutory 
requirements in sections 8 and 71 exist to enable the USPTO to clear 
the register of deadwood by cancelling, in whole or in part, 
registrations for marks that are not in use in commerce for all or some 
of the goods/services identified in the registration. The rules enacted 
herein further this statutory purpose.

Background

    Post Registration Proof-of-Use Pilot Program: A final rule was 
published in the Federal Register on May 22, 2012 (77 FR 30197), in 
which the USPTO announced a two-year pilot program to assess and 
promote the accuracy and integrity of the trademark register. The USPTO 
randomly selected 500 registrations for which section 8 and section 71 
affidavits were filed to participate in the pilot program to determine 
the actual use in commerce of the marks in connection with the goods/
services identified in the registrations. As part of the pilot program, 
the selected trademark owners were required to submit proof of use of 
their marks for additional goods/services per class, in addition to the 
one specimen per class submitted with their affidavits, and to verify 
use of the additional goods/services during the statutory filing 
period.
    In 51% of the registrations selected for the pilot, the trademark 
owners failed to supply additional verified proof of use on specific 
goods/services for which use in commerce was initially claimed. Of this 
51%, in 35% of the registrations, the owner requested that some goods/
services that were initially claimed to be in use in commerce be 
deleted, and the remaining 16% of the registrations were cancelled 
because the trademark owners failed to respond to the requirements for 
additional proof or to other issues raised during examination of the 
section 8 or section 71 affidavit. Ultimately, the section 8 and 
section 71 affidavits were accepted for 84.4%, or 422 registrations, 
which included acceptances issued after goods/services queried under 
the pilot were deleted.
    The status reports issued throughout the course of the pilot all 
supported the need for ongoing efforts aimed at ensuring the accuracy 
and integrity of the trademark register as to the actual use in 
commerce of marks in connection with the goods/services identified in 
the registrations. To that end, the USPTO held a roundtable discussion 
on December 12, 2014, for various stakeholder groups, requested written 
comments from interested parties to further explore the topic, and 
discussed the topic at several other outreach sessions. During the 
roundtable discussion and outreach sessions, one suggestion that 
received widespread support was to establish a permanent program 
similar to the proof-of-use pilot. The USPTO considered this 
recommendation in proposing the permanent program set forth in the 
notice of proposed rulemaking published in the Federal Register on June 
22, 2016, at 81 FR 40589. As discussed below, the Office considered all 
public comments received during the comment period in the development 
of this final rule.

Proposed Rule: Comments and Responses

    The USPTO published a proposed rule on June 22, 2016, soliciting 
comments on the proposed amendments. In response, the USPTO received 
comments from six organizations and eight individual commenters 
representing law firms, corporations, and individuals. The Office 
received comments both generally supporting and objecting to the 
proposed requirements. The commenters who supported the goal of 
promoting the integrity of the register by encouraging accuracy in the 
listing of goods/services for which use in commerce is claimed agreed 
that the rules will facilitate the cancellation of registrations of 
marks that were never in use in commerce or are no longer in use. In 
addition, several of those commenters expressed suggestions or concerns 
regarding the audit program. Similar comments have been grouped 
together and summarized below, followed by the USPTO's responses. All 
comments are posted on the USPTO's Web site at https://www.uspto.gov/trademark/trademark-updates-and-announcements/comments-changes-requirements-affidavits-or.
    Comment 1: One commenter suggested that costs imposed on trademark 
owners will likely be minimal because owners will only be randomly 
selected and not routinely or repeatedly subject to audits and another 
commenter noted that the information sought is within the knowledge of 
the trademark owner and should be simple to produce if there is indeed 
use. Another commenter stated that the proposed procedure would add an 
additional cost in terms of time and legal expense, but that the cost 
is generally offset by the public-policy benefit.
    Response: The USPTO appreciates the commenters' support of the rule 
changes and concurs that the rule changes create minimal burdens on 
trademark owners. The USPTO also notes that as trademark owners are 
already required to ascertain whether a mark is currently in use in 
commerce with all the goods/services in connection with the filing of a 
section 8 or section 71 affidavit, any additional requirement to 
provide proof of such use with select goods/services should not be 
unduly burdensome or costly. Although approximately one-third of 
section 8 and section 71 affidavits are filed pro se, the USPTO assumes 
that an attorney is representing the registrant, and estimates it will 
take approximately one hour to comply.
    Comment 2: One commenter noted that the proposed rule did not 
address the issue of the ``abuse'' encouraged by the Madrid Protocol 
system where there is no pre-registration use requirement for Madrid 
Protocol applications. Another commenter suggested that the proposed 
changes could be a model for changes to the process for affidavits or 
declarations of incontestability under section 15 of the Trademark Act, 
15 U.S.C. 1065, by expanding the audit procedure to a percentage of 
section 15 affidavits. The commenter expressed concern that the cost of 
a faulty section 15 affidavit is high, given the ability of a 
registrant to use incontestability as leverage in disputes.

[[Page 6261]]

    Response: The USPTO appreciates the commenters' concerns, but notes 
that the Madrid Protocol is an international treaty that became 
effective in the United States on November 2, 2003. Addressing any 
concerns related to the Madrid Protocol or its regulations is beyond 
the scope of this rulemaking, as is any expansion in the audit 
procedure to a percentage of section 15 affidavits.
    Comment 3: One commenter requested that the USPTO consider some 
form of concession for registrants who are audited and successfully 
comply with audit requirements, such as an immediate fee reduction in 
the cost of a section 8 or section 71 affidavit or a future fee offset. 
Another commenter suggested that the USPTO offer registrants the option 
to elect out of the random audit by checking a box on the electronic 
form and voluntarily providing evidence of use for each good/service in 
a class. A third commenter recommended that the USPTO address abusive 
practices by: requiring specimens for all goods/services; requiring 
automatic audits of lengthy identifications of goods and services; 
allowing applicants whose mark is the subject of a likelihood-of-
confusion refusal to petition the Office to audit a registration; 
providing an item-by-item checklist of all goods/services claimed and 
requiring registrants to specifically declare use for each good/
service; shortening the initial period for filing a section 8 or 
section 71 affidavit; implementing a penalty system to incentivize 
renewal only for goods/services that are actually being used; and 
making more data available to the public concerning the marks on the 
register, the number of applications and renewals filed, and the number 
of refusals and amendments filed.
    Response: The USPTO notes that although registrants are required to 
submit only one specimen of use in commerce per class with a section 8 
or section 71 affidavit, they are not prevented from voluntarily 
providing evidence of use in commerce for each good/service listed in 
the registration. If a registrant does so, it would diminish the 
likelihood that additional proof of use would be required if the 
registration is selected for audit. However, any proposal to reduce the 
fees for section 8 or section 71 affidavits, to create a tiered fee 
structure, to implement a monetary penalty, to require specimens for 
all goods/services, or to allow a third party to petition the Office to 
audit a registration would require separate rulemakings. Moreover, 
shortening the initial filing period for a section 8 or section 71 
affidavit would require Congressional action to amend the Trademark 
Act. Even if the statute was amended, such proposals would also require 
substantial changes to the Trademark electronic filing system, as would 
modifying the forms to require, or allow the owner to elect to provide, 
proof of use for each good/service listed on the registration. 
Regarding the request to make data available to the public, the USPTO 
notes that information about application filings, active registrations, 
and new registrations by fiscal year is available on the USPTO Web site 
at https://www.uspto.gov/dashboards/trademarks/main.dashxml. The USPTO 
will consider making the other requested data available at a future 
date.
    Comment 4: One commenter stated that cancelling the entire 
registration for failure to respond to an Office action is overly harsh 
if the specimen(s) originally submitted with the section 8 or section 
71 affidavit are acceptable. In such cases, the commenter recommends 
that the USPTO cancel only those goods/services that are not supported 
by the specimen(s) submitted with the relevant affidavit.
    Response: As in the pilot program, owners of the registrations 
selected will be afforded the usual post-registration response period 
to the Office action requiring additional information and are subject 
to the same consequences for failure to respond. In general, Office 
actions issued in relation to section 8 and section 71 affidavits are 
governed by the Trademark Act and rules. 15 U.S.C. 1058(c), (e), 
1141k(c), (e); 37 CFR 2.163, 7.39. A response to a post-registration 
Office action must be filed within six months of the date of issuance 
of the Office action, or before the end of the filing period set forth 
in section 8(a) or section 71(a) of the Act, whichever is later. 37 CFR 
2.163(b), 7.39(a). Failure to respond within the prescribed time 
periods results in cancellation of the registration, unless time 
remains in the grace period for filing a new affidavit. 37 CFR 
2.163(c), 7.39(b). If no time remains in the grace period, trademark 
owners may file a petition to the Director under 37 CFR 2.146(a)(5) and 
2.148 to waive 37 CFR 2.163(b) so that a late response to the Office 
action may be accepted. However, the Director will waive a rule only in 
an extraordinary situation, where justice requires, and no other party 
is injured. 37 CFR 2.146(a)(5), 2.148.
    Comment 5: One commenter expressed concern that the proposed 
amendments were vague, unnecessarily open ended, and insufficiently 
described to properly assess the likely impact and effectiveness of the 
audit program. Another commenter requested that the USPTO have further 
discussions with stakeholder groups prior to implementation of the 
program.
    Response: The USPTO appreciates the commenters' concerns and notes 
that the expected impact and effectiveness of the audit program can be 
initially assessed in relation to the results of the pilot program, 
which supported the need for ongoing efforts aimed at ensuring the 
accuracy and integrity of the trademark register as to the actual use 
in commerce of marks in connection with the goods/services identified 
in the registrations. In addition, the widespread support among 
stakeholders to establish a permanent program is attributable to the 
results of the pilot program. An overview of the audit program enacted 
herein, which is similar to the pilot, is described in the section 
entitled Overview of the Audit Program of this final rule. As noted in 
that section, section 8 and section 71 affidavits in which the mark is 
registered for more than one good or service per class are subject to 
audit. The additional information or specimens required will be 
reviewed according to the generally accepted standards for use in 
commerce. The USPTO notes that there is a uniform standard for 
determining what constitutes an acceptable specimen both prior to and 
post registration and finds no basis to establish a different standard 
for use of the mark in commerce in the context of the audit program. 
The USPTO believes such a distinction would be a disservice to the 
public. Not only would a new standard for determining what constitutes 
acceptable use in commerce increase public confusion, but it would also 
call into question whether a mark is actually used with particular 
goods or services. The USPTO also intends to discuss with stakeholder 
groups the procedures that it will employ to carry out the program to 
obtain feedback regarding the procedures. These procedures will 
ultimately be available to the public and internal and external 
customers in the Trademark Manual of Examining Procedure.
    Comment 6: Two commenters objected to any changes, as they believed 
the current rule is clear and the present practice is appropriate. One 
suggested that the existing rule is less susceptible to discriminatory 
application and that the proposed rule is not capable of being applied 
equally to all ``applicants.'' The other commenter stated that it is 
not the role of the Office to police registrations and if a registrant 
is not using a mark in connection with all goods/services in

[[Page 6262]]

the registration, the registration may be challenged in a cancellation 
proceeding before the Trademark Trial and Appeal Board (TTAB).
    Response: The USPTO appreciates the commenters' concerns regarding 
equal application of the rules, and notes that registrants, rather than 
applicants, would be subject to any requirements under the rules. The 
USPTO does not anticipate that the final rule will have a 
disproportionate impact upon any particular class of registrant and has 
determined that its objective of ensuring the accuracy and integrity of 
the register can be fairly reached by randomly selecting the 
registrations subject to audit based on the procedures discussed below. 
Any entity that has a registered trademark in which the mark is 
registered for more than one good or service per class could 
potentially be impacted by the rules.
    The USPTO agrees that cancellation proceedings before the TTAB 
provide an avenue for third parties to seek removal of registrations 
for marks that are not in use in commerce for some or all of the goods/
services identified in the registration. However, as discussed above, 
the accuracy of the trademark register as a reflection of marks that 
are actually in use in commerce in the United States for the goods/
services identified in the registrations listed therein serves an 
important purpose for the public, which relies on the register to 
determine whether a chosen mark is available for use or registration. 
For example, when a party's search of the register discloses a 
potentially confusingly similar mark, that party may incur a variety of 
resulting costs and burdens, such as those associated with proceedings 
to cancel the registration. If a registered mark is not actually in use 
in commerce in the United States, or is not in use in commerce in 
connection with all the goods/services identified in the registration, 
the cost of undertaking a cancellation proceeding may be incurred 
unnecessarily. In addition, the results of the pilot audit program 
supported the need for ongoing efforts aimed at ensuring the accuracy 
and integrity of the trademark register as to the actual use in 
commerce of marks in connection with the goods/services identified in 
live registrations. Further, outreach to stakeholder groups and 
interested parties in the aftermath of the pilot yielded widespread 
support for establishing a permanent proof-of-use program similar to 
the pilot. Therefore, the USPTO believes that establishing a permanent 
program for auditing registrations that include multiple goods/services 
furthers the public policy of ensuring the accuracy of the trademark 
register.

Overview of the Audit Program

    The USPTO herein enacts a permanent audit program whereby it will 
conduct random audits of the combined total of section 8 and section 71 
affidavits filed each year in which the mark is registered for more 
than one good or service per class. The USPTO anticipates that upon 
initial implementation it would conduct random audits of up to 
approximately 10% of such affidavits and may increase the percentage 
going forward, depending on results and as resources allow. As part of 
the review of the selected affidavits, in addition to the one specimen 
of use per class currently required, owners will be required to provide 
additional proof of use in the nature of information, exhibits, 
affidavits or declarations, and specimens showing use in commerce.
    In a selected case, the USPTO will issue an Office action 
specifying the goods/services for which additional proof of use is 
required. Upon implementation, the USPTO anticipates requesting proof 
of use for two additional goods/services per class in the initial 
Office action. Thereafter, the owner may be required to submit proof of 
use in commerce for additional goods/services. If there is only one 
good/service in a class, additional proof of use will be required if 
the specimen submitted with the section 8 or section 71 affidavit would 
not also be acceptable to show actual use in commerce. The Office 
action will also advise trademark owners to delete those goods/services 
for which they are unable to provide the requested proof of use. It 
will further advise owners to delete all goods/services not in use in 
commerce because the Office may issue subsequent actions requiring 
proof of use on some, or all, remaining goods/services.
    As in the pilot program, trademark owners will be afforded the 
usual response period to the Office action, that is, a response would 
be due within six months of the issuance date of the Office action, or 
before the end of the statutory filing period for the section 8 or 
section 71 affidavit, whichever is later. 37 CFR 2.163(b), 7.39(a). If 
the trademark owner responds, but is ultimately unable to provide the 
requested information, exhibits, affidavits or declarations, and 
specimens, the USPTO would deem the section 8 or section 71 affidavit 
unacceptable as to the goods/services to which the requirement 
pertained and will cancel such goods/services from the registration. If 
no response to the Office action is filed within six months of the 
issuance date of the Office action, or before the end of the statutory 
filing period for the section 8 or section 71 affidavit, whichever is 
later, the USPTO will cancel the entire registration, unless time 
remains in the grace period under section 8(a)(3) or section 71(a)(3) 
of the Act. 15 U.S.C. 1058(a)(3), 1141k(a)(3); 37 CFR 2.163, 7.39. If 
time remains in the grace period, the owner may file a complete new 
section 8 or section 71 affidavit, with a new fee and grace-period 
surcharge. 37 CFR 2.161(d)(2), 7.36(b)(3). The USPTO further clarifies 
that trademark owners may also file a petition to the Director under 37 
CFR 2.146(a)(5) and 2.148 to waive 37 CFR 2.163(b) so that a late 
response to an Office action may be accepted. However, the Director 
will waive a rule only in an extraordinary situation, where justice 
requires, and no other party is injured. 37 CFR 2.146(a)(5), 2.148.
    Costs and Benefits: This rulemaking is not considered to be 
economically significant under Executive Order 12866 (Sept. 30, 1993).

Discussion of Proposed Regulatory Changes

    The USPTO amends 37 CFR 2.161 and 7.37 to provide that the USPTO 
may require such information, exhibits, affidavits or declarations, and 
such additional specimens of use as may be reasonably necessary for the 
USPTO to assess and promote the accuracy and integrity of the register. 
The current rules mandate the submission of only one specimen per class 
in connection with a section 8 or section 71 affidavit unless 
additional information, exhibits, affidavits or declarations, or 
specimens are necessary for proper examination of the affidavit itself. 
37 CFR 2.161(g), (h), 7.37(g), (h). This final rule will allow the 
USPTO to require additional proof of use of a mark not only to 
facilitate proper examination of a section 8 or section 71 affidavit, 
but also to verify the accuracy of claims that a trademark is in use on 
or in connection with the goods/services identified in the registration
    The USPTO revises Sec.  2.161(h) to add the phrase ``or for the 
Office to assess and promote the accuracy and integrity of the 
register'' at the end of the paragraph.
    The USPTO revises Sec.  7.37(h) to add the phrase ``or for the 
Office to assess and promote the accuracy and integrity of the 
register'' at the end of the paragraph.

[[Page 6263]]

Rulemaking Requirements

    Administrative Procedure Act: The changes in this rulemaking 
involve rules of agency practice and procedure, and/or interpretive 
rules. See Perez v. Mortg. Bankers Ass'n, 135 S. Ct. 1199, 1204 (2015) 
(interpretive rules ``advise the public of the agency's construction of 
the statutes and rules which it administers'') (citation and internal 
quotation marks omitted); Nat'l Org. of Veterans' Advocates v. Sec'y of 
Veterans Affairs, 260 F.3d 1365, 1375 (Fed. Cir. 2001) (rule that 
clarifies interpretation of a statute is interpretive); Bachow Commc'ns 
Inc. v. FCC, 237 F.3d 683, 690 (D.C. Cir. 2001) (rules governing an 
application process are procedural under the Administrative Procedure 
Act); Inova Alexandria Hosp. v. Shalala, 244 F.3d 342, 350 (4th Cir. 
2001) (rules for handling appeals were procedural where they did not 
change the substantive standard for reviewing claims).
    Accordingly, prior notice and opportunity for public comment for 
the changes in this rulemaking are not required pursuant to 5 U.S.C. 
553(b) or (c), or any other law. See Perez, 135 S. Ct. at 1206 (notice-
and-comment procedures are required neither when an agency ``issue[s] 
an initial interpretive rule'' nor ``when it amends or repeals that 
interpretive rule''); Cooper Techs. Co. v. Dudas, 536 F.3d 1330, 1336-
37 (Fed. Cir. 2008) (stating that 5 U.S.C. 553, and thus 35 U.S.C. 
2(b)(2)(B), does not require notice and comment rulemaking for 
``interpretative rules, general statements of policy, or rules of 
agency organization, procedure, or practice,'' quoting 5 U.S.C. 
553(b)(A)). However, the USPTO has chosen to seek public comment before 
implementing the rule.

Final Regulatory Flexibility Analysis

    The USPTO publishes this Final Regulatory Flexibility Analysis 
(FRFA) as required by the Regulatory Flexibility Act (RFA) (5 U.S.C. 
601 et seq.) to examine the impact of the Office's post-registration 
audit program on small entities. Under the RFA, whenever an agency is 
required by 5 U.S.C. 553 (or any other law) to publish a notice of 
proposed rulemaking (NPRM), the agency must prepare and make available 
for public comment a FRFA, unless the agency certifies under 5 U.S.C. 
605(b) that the proposed rule, if implemented, will not have a 
significant economic impact on a substantial number of small entities. 
5 U.S.C. 603, 605. The USPTO published an Initial Flexibility Analysis 
(IRFA), along with the NPRM, on June 22, 2016 (81 FR 40589). The USPTO 
received no comments from the public directly applicable to the IFRA, 
as stated below in Item 2.
    Items 1-6 below discuss the six items specified in 5 U.S.C. 
604(a)(1)-(6) to be addressed in a FRFA. Item 6 below discusses 
alternatives considered by the Office.

1. Succinct Statement of the Need for, and Objectives of, the Rule

    The USPTO amends its rules to require any information, exhibits, 
affidavits or declarations, and such additional specimens deemed 
reasonably necessary to assess and promote the accuracy and integrity 
of the trademark register in connection with the examination of a 
section 8 or section 71 affidavit. Post registration affidavits under 
section 8 or section 71, and their accompanying specimens of use, 
demonstrate a registration owner's continued use of its mark in 
commerce for the goods/services identified in the registration. The 
revisions enacted herein will facilitate the USPTO's ability to ensure 
that the register accurately reflects marks that are in use in commerce 
that may be regulated by the U.S. Congress for the goods/services 
identified therein.
    The objective of the rulemaking is to allow the USPTO to assess and 
promote the integrity of the trademark register. The Trademark Act 
gives the Director discretion regarding the number of specimens to 
require. 15 U.S.C. 1051(a)(1), (d)(1), 1058(b)(1)(C), 1141k(b)(1)(C). 
The current rules mandate the submission of only one specimen per class 
in connection with a section 8 or section 71 affidavit unless 
additional information, exhibits, affidavits or declarations, or 
specimens are necessary for proper examination of the affidavit itself. 
37 CFR 2.161(g), (h), 7.37(g), (h). However, these rules do not 
currently allow the Office to require additional specimens or other 
information or exhibits in order to verify that the mark is in use on 
additional goods/services listed in the registration. The final rule 
will allow the USPTO to properly examine the nature and veracity of 
allegations of use made in connection with the submission of a section 
8 or section 71 affidavit, and thereby assess and promote the integrity 
of the register by verifying that the register accurately reflects the 
goods/services for which use is claimed for a given registered mark.

2. A Statement of the Significant Issues Raised by the Public Comments 
in Response to the Initial Regulatory Flexibility Analysis, a Statement 
of the Assessment of the Agency of Such Issues, and a Statement of any 
Changes Made in the Proposed Rule as a Result of Such Comments

    The USPTO did not receive any public comments in response to the 
IRFA. However, the Office received comments about the audit program in 
general, which are further discussed in the preamble.

3. The Response of the Agency to any Comments Filed by the Chief 
Counsel for Advocacy of the Small Business Administration in Response 
to the Proposed Rule, and a Detailed Statement of any Change Made to 
the Proposed Rule in the Final Rule as a Result of the Comments

    The USPTO did not receive any comments filed by the Chief Counsel 
for Advocacy of the Small Business Administration in response to the 
proposed rule.

4. Description of and an Estimate of the Number of Small Entities to 
Which the Rule Will Apply or an Explanation of Why No Such Estimate Is 
Available

    The USPTO does not collect or maintain statistics in trademark 
cases on small- versus large-entity registrants, and this information 
would be required in order to estimate the number of small entities 
that would be affected by the final rule. However, the USPTO believes 
that the overall impact of the regulations enacted herein on 
registrants will be relatively minimal.
    After registration, trademark owners must make periodic filings 
with the USPTO to maintain their registrations. A section 8 or section 
71 affidavit is a sworn statement in which the registrant specifies the 
goods/services/collective membership organization for which the mark is 
in use in commerce and/or the goods/services/collective membership 
organization for which excusable nonuse is claimed. 15 U.S.C. 1058, 
1141k. The purpose of the section 8 and section 71 affidavits is to 
facilitate the cancellation, by the Director, of registrations of marks 
no longer in use in connection with the goods/services/collective 
membership organization identified in the registrations. The final rule 
applies to any entity filing a section 8 or section 71 affidavit, but 
only a subset of trademark owners would be required to provide more 
than one specimen or additional information, exhibits, or specimens in 
connection with the audit. The USPTO is unable to

[[Page 6264]]

estimate the subset of trademark owners who are small entities that are 
impacted by the proposed rules. In Fiscal Year 2016, approximately 
150,000 section 8 affidavits and 9,100 section 71 affidavits were 
filed.

5. Description of the Reporting, Recordkeeping, and Other Compliance 
Requirements of the Final Rule, Including an Estimate of the Classes of 
Small Entities Which Will Be Subject to the Requirement and the Type of 
Professional Skills Necessary for Preparation of the Report or Record

    The final rule imposes no new recordkeeping requirements on 
trademark registrants.
    Regarding compliance with this final rule, as an initial matter, 
the USPTO does not anticipate the rules to have a disproportionate 
impact upon any particular class of small or large entities. Any entity 
that has a registered trademark in which the mark is registered for 
more than one good or service per class could potentially be impacted 
by the final rule.
    The USPTO enacts herein a permanent program where it would conduct 
random audits of section 8 and section 71 affidavits that are filed in 
which the mark is registered for more than one good or service per 
class. The USPTO anticipates that upon initial implementation it would 
conduct random audits of up to approximately 10% of such affidavits and 
may increase the percentage going forward, depending on results and as 
resources allow. In those post registration cases where an initial 
requirement for additional information, exhibits, affidavits or 
declarations, and specimens is issued in an Office action, although 
approximately one-third of section 8 and section 71 affidavits are 
filed pro se, the USPTO assumes that an attorney is representing the 
registrant, and estimates it will take approximately one hour to 
comply. To that end, the USPTO provides an online electronic form for 
responding to Office actions.
    Similar to the submission necessary for the statutorily required 
section 8 and section 71 affidavits, a response to an Office action 
issued in connection with these affidavits will generally necessitate 
gathering and submitting one or more specimens of use and an 
accompanying declaration. Therefore, under the final rule, the type of 
fact gathering and review of the nature and extent of the use of the 
mark that underlies a section 8 or section 71 affidavit will already 
have occurred. Compliance with the requirements enacted herein will 
only necessitate gathering and submitting the additional evidence to 
demonstrate and support what has previously been assessed.
    Assuming the mark is in use as claimed, the compliance time 
involves the length of time to secure additional information, exhibits, 
affidavits or declarations, or specimens and accompanying declaration, 
plus any time it takes an attorney to communicate with the client in 
order to obtain what is required and make the necessary filing with the 
USPTO. As noted above, approximately one-third of section 8 and section 
71 affidavits are filed pro se. Trademark owners selected for review 
are likely to have a shorter compliance time than what the USPTO has 
estimated, which assumes the involvement of an attorney. The final rule 
does not mandate the use of legal counsel.

6. Description of the Steps the Agency Has Taken To Minimize the 
Significant Economic Impact on Small Entities Consistent With the 
Stated Objectives of Applicable Statutes, Including a Statement of the 
Factual, Policy, and Legal Reasons for Selecting the Alternative 
Adopted in the Rinal Rule and Why Each One of the Other Significant 
Alternatives to the Rule Considered by the Agency Which Affect the 
Impact on Small Entities Was Rejected

    The USPTO has considered whether and how it is appropriate to 
reduce any burden on small businesses through increased flexibility. 
The following alternatives were considered, but rejected, by the USPTO.
    The USPTO considered an alternative where it would not require 
additional information, exhibits, affidavits or declarations, and 
specimens in connection with section 8 or section 71 affidavits, or 
where it would exempt small entities from such requirements. This 
alternative would have a lesser economic impact on small entities, but 
was rejected because it would not accomplish the stated objective of 
assessing and promoting the integrity of the trademark register by 
verifying that marks are in use for the goods/services identified in 
the registration. As noted above, the results of the post registration 
proof-of-use pilot supported the need for ongoing efforts aimed at 
assessing and promoting the accuracy and integrity of the register as 
to the actual use of marks in connection with the goods/services 
identified in the registrations. Subsequent outreach efforts revealed 
widespread support for continuing the pilot program on a permanent 
basis. Exempting small entities would prevent consideration of all 
section 8 and section 71 affidavits and not achieve the stated 
objective of assessing and promoting the accuracy and integrity of the 
register.
    The stated objective of the final rule also facilitates the 
cancellation of registrations for marks that are no longer in use or 
that were never used, and for which acceptable claims of excusable 
nonuse were not submitted, in connection with the identified goods/
services. The statutory requirements in sections 8 and 71 exist to 
enable the USPTO to clear the register of deadwood by cancelling, in 
whole or in part, registrations for marks that are not in use for all 
or some of the goods/services identified in the registration. The final 
rule furthers this statutory purpose. Exempting small entities from 
possible scrutiny regarding use allegations would fail to address marks 
not used by them, thereby not achieving the objective.
    The USPTO considered a second alternative that would extend the 
time period for compliance by small entities. However, this was 
rejected because there appears to be no reason that meeting the 
requirements of the final rule would be more time consuming for small 
entities. The USPTO's standard six-month time period for responding to 
Office actions allows sufficient time regardless of small-entity 
status.
    Finally, the USPTO considered an alternative that would streamline 
or simplify the compliance mechanism for small entities, but it was 
deemed unnecessary given the ease of responding electronically to 
Office actions using the Trademark Electronic Application System 
Response to Post Registration Office Action form. Thus, under the final 
rule, compliance will be as streamlined and simplified as possible for 
all affected entities. Moreover, where the objective is to verify the 
accuracy of a claim of use in a section 8 or section 71 affidavit, the 
requirements for additional information, exhibits, affidavits or 
declarations, and specimens demonstrating the manner of use of the mark 
in connection with the specified goods/services are the least 
burdensome and most efficient means of achieving the objective of 
assessing and promoting the accuracy and integrity of the register by 
verifying allegations of use.
    Use of performance rather than design standards is not applicable 
to the final rulemaking because the USPTO is not issuing any sort of 
standard. This final rule will require registrants to furnish evidence 
of use, rather than comply with a performance or design standard.
    Executive Order 12866 (Regulatory Planning and Review): This 
rulemaking has been determined to be not

[[Page 6265]]

significant for purposes of Executive Order 12866 (Sept. 30, 1993).
    Executive Order 13563 (Improving Regulation and Regulatory Review): 
The USPTO has complied with Executive Order 13563 (Jan. 18, 2011). 
Specifically, the USPTO has, to the extent feasible and applicable: (1) 
Made a reasoned determination that the benefits justify the costs of 
the rule changes; (2) tailored the rules to impose the least burden on 
society consistent with obtaining the regulatory objectives; (3) 
selected a regulatory approach that maximizes net benefits; (4) 
specified performance objectives; (5) identified and assessed available 
alternatives; (6) provided the public with a meaningful opportunity to 
participate in the regulatory process, including soliciting the views 
of those likely affected prior to issuing a notice of proposed 
rulemaking, and provided on-line access to the rulemaking docket; (7) 
attempted to promote coordination, simplification, and harmonization 
across government agencies and identified goals designed to promote 
innovation; (8) considered approaches that reduce burdens and maintain 
flexibility and freedom of choice for the public; and (9) ensured the 
objectivity of scientific and technological information and processes, 
to the extent applicable.
    Executive Order 13132 (Federalism): This rulemaking does not 
contain policies with federalism implications sufficient to warrant 
preparation of a Federalism Assessment under Executive Order 13132 
(Aug. 4, 1999).
    Congressional Review Act: Under the Congressional Review Act 
provisions of the Small Business Regulatory Enforcement Fairness Act of 
1996 (5 U.S.C. 801 et seq.), prior to issuing any final rule, the USPTO 
will submit a report containing the final rule and other required 
information to the United States Senate, the United States House of 
Representatives, and the Comptroller General of the Government 
Accountability Office. The changes in this notice are not expected to 
result in an annual effect on the economy of 100 million dollars or 
more, a major increase in costs or prices, or significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or the ability of United States-based enterprises to 
compete with foreign-based enterprises in domestic and export markets. 
Therefore, this notice is not expected to result in a ``major rule'' as 
defined in 5 U.S.C. 804(2).
    Unfunded Mandates Reform Act of 1995: The changes set forth in this 
rulemaking do not involve a Federal intergovernmental mandate that will 
result in the expenditure by State, local, and tribal governments, in 
the aggregate, of 100 million dollars (as adjusted) or more in any one 
year, or a Federal private sector mandate that will result in the 
expenditure by the private sector of 100 million dollars (as adjusted) 
or more in any one year, and will not significantly or uniquely affect 
small governments. Therefore, no actions are necessary under the 
provisions of the Unfunded Mandates Reform Act of 1995. See 2 U.S.C. 
1501 et seq.
    Paperwork Reduction Act: This rulemaking involves information 
collection requirements that are subject to review by the Office of 
Management and Budget (OMB) under the Paperwork Reduction Act of 1995 
(44 U.S.C. 3501 et seq.). The collection of information involved in 
this rulemaking has been reviewed and previously approved by OMB under 
control numbers 0651-0051 and 0651-0055.
    Notwithstanding any other provision of law, no person is required 
to respond to nor shall a person be subject to a penalty for failure to 
comply with a collection of information subject to the requirements of 
the Paperwork Reduction Act unless that collection of information 
displays a currently valid OMB control number.

List of Subjects

37 CFR Part 2

    Administrative practice and procedure, Trademarks.

37 CFR Part 7

    Administrative practice and procedure, Trademarks, International 
registration.

    For the reasons stated in the preamble and under the authority 
contained in 15 U.S.C. 1123 and 35 U.S.C. 2, as amended, the USPTO 
amends parts 2 and 7 of title 37 as follows:

PART 2--RULES OF PRACTICE IN TRADEMARK CASES

0
1. The authority citation for 37 CFR part 2 continues to read as 
follows:

    Authority: 15 U.S.C. 1113, 15 U.S.C. 1123, 35 U.S.C. 2, Section 
10 of Pub. L. 112-29, unless otherwise noted.


0
2. Amend Sec.  2.161 by revising paragraph (h) to read as follows:


Sec.  2.161  Requirements for a complete affidavit or declaration of 
continued use or excusable nonuse.

* * * * *
    (h) The Office may require the owner to furnish such information, 
exhibits, affidavits or declarations, and such additional specimens as 
may be reasonably necessary to the proper examination of the affidavit 
or declaration under section 8 of the Act or for the Office to assess 
and promote the accuracy and integrity of the register.
* * * * *

PART 7--RULES OF PRACTICE IN FILINGS PURSUANT TO THE PROTOCOL 
RELATING TO THE MADRID AGREEMENT CONCERNING THE INTERNATIONAL 
REGISTRATION OF MARKS

0
3. The authority citation for 37 CFR part 7 continues to read as 
follows:

    Authority: 15 U.S.C. 1123, 35 U.S.C. 2, unless otherwise noted.


0
4. Amend Sec.  7.37 by revising paragraph (h) to read as follows:


Sec.  7.37  Requirements for a complete affidavit or declaration of use 
in commerce or excusable nonuse.

* * * * *
    (h) The Office may require the holder to furnish such information, 
exhibits, affidavits or declarations, and such additional specimens as 
may be reasonably necessary to the proper examination of the affidavit 
or declaration under section 71 of the Act or for the Office to assess 
and promote the accuracy and integrity of the register.
* * * * *

    Dated: January 5, 2017.
Russell Slifer,
Deputy Under Secretary of Commerce for Intellectual Property and Deputy 
Director of the United States Patent and Trademark Office.
[FR Doc. 2017-00317 Filed 1-18-17; 8:45 am]
 BILLING CODE 3510-16-P