82_FR_6271 82 FR 6259 - Changes in Requirements for Affidavits or Declarations of Use, Continued Use, or Excusable Nonuse in Trademark Cases

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)

Page Range6259-6265
FR Document2017-00317

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 Issue 12 (Thursday, January 19, 2017)
[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



                                                                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Rules and Regulations                                           6259

                                                  has been required through compulsory                    phases under § 668.87(a)(1)(iv)(B), the                the trademark register, the United States
                                                  process under section 490A of the HEA                   hearing official’s initial decision                    Patent and Trademark Office (USPTO or
                                                  or other applicable law to submit to the                determines whether the institution is                  Office) amends its rules concerning the
                                                  United States or to the Department                      liable for the act or omission described               examination of affidavits or declarations
                                                  material regarding an express or an                     in the notice of intent to recover, and                of continued use or excusable nonuse
                                                  implied representation, the institution                 the hearing official issues an initial                 filed pursuant to section 8 of the
                                                  cannot thereafter, in any proceeding                    decision on liability only.                            Trademark Act, or affidavits or
                                                  under this subpart in which it is alleged               *      *     *     *     *                             declarations of use in commerce or
                                                  that the representation was false,                         (c) * * *                                           excusable nonuse filed pursuant to
                                                  erroneous, or misleading, and for any                      (2) * * *                                           section 71 of the Act. Specifically,
                                                  purpose relating to the defense of such                    (x) In a borrower defense and recovery              under the regulations enacted herein,
                                                  allegation, introduce into the record,                  proceeding conducted in two phases                     the USPTO may require the submission
                                                  either directly or indirectly through                   under § 668.87(a)(1)(iv)(B), if a party                of information, exhibits, affidavits or
                                                  references contained in documents or                    appeals an initial decision of the                     declarations, and such additional
                                                  oral testimony, any material of any type                hearing official in the first phase, the               specimens of use as may be reasonably
                                                  that was required to be but was not                     Secretary may affirm, modify, or reverse               necessary for the USPTO to ensure that
                                                  timely submitted in response to that                    the initial decision, or may remand the                the register accurately reflects marks
                                                  compulsory process.                                     case to the hearing official for further               that are in use in commerce in the
                                                     (ii) The hearing official shall, upon                proceedings consistent with the                        United States for all the goods/services
                                                  motion at any stage, exclude all material               Secretary’s decision.                                  identified in the registrations, unless
                                                  that was required to be but was not                     *      *     *     *     *                             excusable nonuse is claimed in whole or
                                                  timely submitted in response to a                                                                              in part. A register that does not
                                                  compulsory process described in                         § 668.96    [Amended]                                  accurately reflect marks in use in
                                                  paragraph (b)(8)(i) of this section, or any             ■  12. Newly redesignated § 668.96 is                  commerce in the United States for the
                                                  reference to such material, unless the                  amended by:                                            goods/services identified in registrations
                                                  institution demonstrates, and the                       ■ A. In paragraph (a) removing the word                imposes costs and burdens on the
                                                  hearing official finds, that by the                     ‘‘The’’ and adding, in its place, the                  public. The amended rules will allow
                                                  exercise of due diligence the material                  words ‘‘In an action to fine an                        the USPTO to require additional proof
                                                  could not have been timely submitted in                 institution or servicer, or to limit,                  of use to verify the accuracy of claims
                                                  response to the compulsory process, and                 suspend, or terminate the participation                that a trademark is in use in commerce
                                                  the institution notified the Department                 of an institution or the eligibility of a              in connection with particular goods/
                                                  or such other party that issued the order               servicer, the’’.                                       services identified in the registration.
                                                  to produce, of the existence of the                     ■ B. In paragraph (b), after the words                 DATES: This rule is effective on February
                                                  material immediately upon its                           ‘‘The corrective action’’, adding the                  17, 2017.
                                                  discovery. The hearing official shall                   words ‘‘under paragraph (a) of this                    FOR FURTHER INFORMATION CONTACT:
                                                  specify with particularity the evidence                 section’’.                                             Catherine Cain, Office of the Deputy
                                                  relied upon.                                            ■ C. In paragraph (c), after the word                  Commissioner for Trademark
                                                     (9) When issues not raised in the                    ‘‘decision’’, adding the words ‘‘in any                Examination Policy, by email at
                                                  notice of proposed action are tried                     action under this subpart’’.                           TMFRNotices@uspto.gov, or by
                                                  without objection at the hearing, they                                                                         telephone at (571) 272–8946.
                                                  will be treated in all respects as if they              § 668.99    [Amended]
                                                                                                                                                                 SUPPLEMENTARY INFORMATION:
                                                  had been raised in the notice of                        ■ 13. In newly redesignated paragraph                     Purpose: The USPTO revises the rules
                                                  proposed action, and no formal                          (c) of § 668.99, remove ‘‘§ 668.91(a)(4)’’             in parts 2 and 7 of title 37 of the Code
                                                  amendments are required.                                and add, in its place, ‘‘§ 668.92(a)(4)’’.             of Federal Regulations to allow the
                                                     (c) The hearing official makes a                     [FR Doc. 2017–00972 Filed 1–18–17; 8:45 am]            USPTO, during the examination of
                                                  transcribed record of the proceeding and                BILLING CODE 4000–01–P                                 affidavits or declarations of continued
                                                  makes a copy of the record available to                                                                        use or excusable nonuse filed pursuant
                                                  the designated Department official and                                                                         to section 8 of the Trademark Act, 15
                                                  to the institution or servicer.                         DEPARTMENT OF COMMERCE                                 U.S.C. 1058, or affidavits or declarations
                                                  (Authority: 20 U.S.C. 1094)                                                                                    of use in commerce or excusable nonuse
                                                  ■ 11. Newly redesignated § 668.91 is                    United States Patent and Trademark                     filed pursuant to section 71 of the
                                                  amended by:                                             Office                                                 Trademark Act, 15 U.S.C. 1141k (section
                                                  ■ A. Redesignating paragraph (a)(2) as                                                                         8 or section 71 affidavits), to require the
                                                  paragraph (a)(2)(i).                                    37 CFR Parts 2 and 7                                   submission of such information,
                                                  ■ B. In newly redesignated paragraph                    [Docket No. PTO–T–2016–0002]                           exhibits, affidavits or declarations, and
                                                  (a)(2)(i) adding ‘‘or recovery’’ after ‘‘fine,                                                                 such additional specimens of use as
                                                                                                          RIN 0651–AD07                                          may be reasonably necessary for the
                                                  limitation, suspension, or termination’’.
                                                  ■ C. Adding paragraph (a)(2)(ii).                                                                              USPTO to verify the accuracy of claims
                                                                                                          Changes in Requirements for
                                                  ■ D. Removing the second sentence in                                                                           that a trademark is in use in commerce
                                                                                                          Affidavits or Declarations of Use,
                                                  paragraph (a)(4).                                                                                              in connection with the goods/services
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                                                                                                          Continued Use, or Excusable Nonuse
                                                  ■ E. Adding paragraph (c)(2)(x).                                                                               listed in the registration.
                                                                                                          in Trademark Cases                                        This will benefit the public because it
                                                     The additions read as follows:
                                                                                                          AGENCY:  United States Patent and                      will facilitate the USPTO’s ability to
                                                  § 668.91   Initial and final decisions.                 Trademark Office, Commerce.                            assess and promote the integrity of the
                                                    (a) * * *                                             ACTION: Final rule.                                    trademark register by encouraging
                                                    (2)(i) * * *                                                                                                 accuracy in the identification of goods/
                                                    (ii) In a borrower defense and                        SUMMARY: In order to assess and                        services for which use in commerce or
                                                  recovery proceeding conducted in two                    promote the accuracy and integrity of                  continued use is claimed. The accuracy


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                                                  6260             Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Rules and Regulations

                                                  of the trademark register as a reflection               goods/services during the statutory                    goods/services for which use in
                                                  of marks that are actually in use in                    filing period.                                         commerce is claimed agreed that the
                                                  commerce in the United States for the                      In 51% of the registrations selected                rules will facilitate the cancellation of
                                                  goods/services identified in the                        for the pilot, the trademark owners                    registrations of marks that were never in
                                                  registrations listed therein serves an                  failed to supply additional verified                   use in commerce or are no longer in use.
                                                  important purpose for the public. The                   proof of use on specific goods/services                In addition, several of those commenters
                                                  public relies on the register to determine              for which use in commerce was initially                expressed suggestions or concerns
                                                  whether a chosen mark is available for                  claimed. Of this 51%, in 35% of the                    regarding the audit program. Similar
                                                  use or registration. Where a party’s                    registrations, the owner requested that                comments have been grouped together
                                                  search of the register discloses a                      some goods/services that were initially                and summarized below, followed by the
                                                  potentially confusingly similar mark,                   claimed to be in use in commerce be                    USPTO’s responses. All comments are
                                                  that party may incur a variety of                       deleted, and the remaining 16% of the                  posted on the USPTO’s Web site at
                                                  resulting costs and burdens, such as                    registrations were cancelled because the               https://www.uspto.gov/trademark/
                                                  those associated with investigating the                 trademark owners failed to respond to                  trademark-updates-and-
                                                  actual use of the disclosed mark to                     the requirements for additional proof or               announcements/comments-changes-
                                                  assess any conflict, proceedings to                     to other issues raised during                          requirements-affidavits-or.
                                                  cancel the registration or oppose the                   examination of the section 8 or section                   Comment 1: One commenter
                                                  application of the disclosed mark, civil                71 affidavit. Ultimately, the section 8                suggested that costs imposed on
                                                  litigation to resolve a dispute over the                and section 71 affidavits were accepted                trademark owners will likely be
                                                  mark, or changing plans to avoid use of                 for 84.4%, or 422 registrations, which                 minimal because owners will only be
                                                  the party’s chosen mark. If a registered                included acceptances issued after                      randomly selected and not routinely or
                                                  mark is not actually in use in commerce                 goods/services queried under the pilot                 repeatedly subject to audits and another
                                                  in the United States, or is not in use in               were deleted.                                          commenter noted that the information
                                                  commerce in connection with all the                        The status reports issued throughout                sought is within the knowledge of the
                                                  goods/services identified in the                        the course of the pilot all supported the              trademark owner and should be simple
                                                  registration, these costs and burdens                   need for ongoing efforts aimed at                      to produce if there is indeed use.
                                                  may be incurred unnecessarily. An                       ensuring the accuracy and integrity of                 Another commenter stated that the
                                                  accurate and reliable trademark register                the trademark register as to the actual                proposed procedure would add an
                                                  helps avoid such needless costs and                     use in commerce of marks in connection                 additional cost in terms of time and
                                                  burdens.                                                with the goods/services identified in the              legal expense, but that the cost is
                                                     The amended rules also facilitate the                registrations. To that end, the USPTO                  generally offset by the public-policy
                                                  cancellation of registrations for marks                 held a roundtable discussion on                        benefit.
                                                  that were never in use in commerce or                   December 12, 2014, for various                            Response: The USPTO appreciates the
                                                  are no longer in use, and for which                     stakeholder groups, requested written                  commenters’ support of the rule changes
                                                  acceptable claims of excusable nonuse                   comments from interested parties to                    and concurs that the rule changes create
                                                  were not submitted, in connection with                  further explore the topic, and discussed               minimal burdens on trademark owners.
                                                  the identified goods/services. The                      the topic at several other outreach                    The USPTO also notes that as trademark
                                                  statutory requirements in sections 8 and                sessions. During the roundtable                        owners are already required to ascertain
                                                  71 exist to enable the USPTO to clear                   discussion and outreach sessions, one                  whether a mark is currently in use in
                                                  the register of deadwood by cancelling,                 suggestion that received widespread                    commerce with all the goods/services in
                                                  in whole or in part, registrations for                  support was to establish a permanent                   connection with the filing of a section
                                                  marks that are not in use in commerce                   program similar to the proof-of-use                    8 or section 71 affidavit, any additional
                                                  for all or some of the goods/services                   pilot. The USPTO considered this                       requirement to provide proof of such
                                                  identified in the registration. The rules               recommendation in proposing the                        use with select goods/services should
                                                  enacted herein further this statutory                   permanent program set forth in the                     not be unduly burdensome or costly.
                                                  purpose.                                                notice of proposed rulemaking                          Although approximately one-third of
                                                                                                          published in the Federal Register on                   section 8 and section 71 affidavits are
                                                  Background                                              June 22, 2016, at 81 FR 40589. As                      filed pro se, the USPTO assumes that an
                                                    Post Registration Proof-of-Use Pilot                  discussed below, the Office considered                 attorney is representing the registrant,
                                                  Program: A final rule was published in                  all public comments received during the                and estimates it will take approximately
                                                  the Federal Register on May 22, 2012                    comment period in the development of                   one hour to comply.
                                                  (77 FR 30197), in which the USPTO                       this final rule.                                          Comment 2: One commenter noted
                                                  announced a two-year pilot program to                                                                          that the proposed rule did not address
                                                  assess and promote the accuracy and                     Proposed Rule: Comments and                            the issue of the ‘‘abuse’’ encouraged by
                                                  integrity of the trademark register. The                Responses                                              the Madrid Protocol system where there
                                                  USPTO randomly selected 500                               The USPTO published a proposed                       is no pre-registration use requirement
                                                  registrations for which section 8 and                   rule on June 22, 2016, soliciting                      for Madrid Protocol applications.
                                                  section 71 affidavits were filed to                     comments on the proposed                               Another commenter suggested that the
                                                  participate in the pilot program to                     amendments. In response, the USPTO                     proposed changes could be a model for
                                                  determine the actual use in commerce of                 received comments from six                             changes to the process for affidavits or
                                                  the marks in connection with the goods/                 organizations and eight individual                     declarations of incontestability under
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                                                  services identified in the registrations.               commenters representing law firms,                     section 15 of the Trademark Act, 15
                                                  As part of the pilot program, the                       corporations, and individuals. The                     U.S.C. 1065, by expanding the audit
                                                  selected trademark owners were                          Office received comments both                          procedure to a percentage of section 15
                                                  required to submit proof of use of their                generally supporting and objecting to                  affidavits. The commenter expressed
                                                  marks for additional goods/services per                 the proposed requirements. The                         concern that the cost of a faulty section
                                                  class, in addition to the one specimen                  commenters who supported the goal of                   15 affidavit is high, given the ability of
                                                  per class submitted with their affidavits,              promoting the integrity of the register by             a registrant to use incontestability as
                                                  and to verify use of the additional                     encouraging accuracy in the listing of                 leverage in disputes.


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                                                                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Rules and Regulations                                           6261

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


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                                                  6262             Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Rules and Regulations

                                                  the registration, the registration may be               policy of ensuring the accuracy of the                 registration. If no response to the Office
                                                  challenged in a cancellation proceeding                 trademark register.                                    action is filed within six months of the
                                                  before the Trademark Trial and Appeal                                                                          issuance date of the Office action, or
                                                                                                          Overview of the Audit Program
                                                  Board (TTAB).                                                                                                  before the end of the statutory filing
                                                     Response: The USPTO appreciates the                     The USPTO herein enacts a                           period for the section 8 or section 71
                                                  commenters’ concerns regarding equal                    permanent audit program whereby it                     affidavit, whichever is later, the USPTO
                                                  application of the rules, and notes that                will conduct random audits of the                      will cancel the entire registration,
                                                  registrants, rather than applicants,                    combined total of section 8 and section                unless time remains in the grace period
                                                  would be subject to any requirements                    71 affidavits filed each year in which                 under section 8(a)(3) or section 71(a)(3)
                                                  under the rules. The USPTO does not                     the mark is registered for more than one               of the Act. 15 U.S.C. 1058(a)(3),
                                                  anticipate that the final rule will have                good or service per class. The USPTO                   1141k(a)(3); 37 CFR 2.163, 7.39. If time
                                                  a disproportionate impact upon any                      anticipates that upon initial                          remains in the grace period, the owner
                                                  particular class of registrant and has                  implementation it would conduct                        may file a complete new section 8 or
                                                  determined that its objective of ensuring               random audits of up to approximately                   section 71 affidavit, with a new fee and
                                                  the accuracy and integrity of the register              10% of such affidavits and may increase                grace-period surcharge. 37 CFR
                                                  can be fairly reached by randomly                       the percentage going forward,                          2.161(d)(2), 7.36(b)(3). The USPTO
                                                  selecting the registrations subject to                  depending on results and as resources                  further clarifies that trademark owners
                                                  audit based on the procedures discussed                 allow. As part of the review of the                    may also file a petition to the Director
                                                  below. Any entity that has a registered                 selected affidavits, in addition to the                under 37 CFR 2.146(a)(5) and 2.148 to
                                                  trademark in which the mark is                          one specimen of use per class currently                waive 37 CFR 2.163(b) so that a late
                                                  registered for more than one good or                    required, owners will be required to                   response to an Office action may be
                                                  service per class could potentially be                  provide additional proof of use in the                 accepted. However, the Director will
                                                  impacted by the rules.                                  nature of information, exhibits,                       waive a rule only in an extraordinary
                                                     The USPTO agrees that cancellation                   affidavits or declarations, and                        situation, where justice requires, and no
                                                  proceedings before the TTAB provide an                  specimens showing use in commerce.                     other party is injured. 37 CFR
                                                  avenue for third parties to seek removal                   In a selected case, the USPTO will
                                                                                                                                                                 2.146(a)(5), 2.148.
                                                  of registrations for marks that are not in              issue an Office action specifying the
                                                  use in commerce for some or all of the                  goods/services for which additional                       Costs and Benefits: This rulemaking is
                                                  goods/services identified in the                        proof of use is required. Upon                         not considered to be economically
                                                  registration. However, as discussed                     implementation, the USPTO anticipates                  significant under Executive Order 12866
                                                  above, the accuracy of the trademark                    requesting proof of use for two                        (Sept. 30, 1993).
                                                  register as a reflection of marks that are              additional goods/services per class in                 Discussion of Proposed Regulatory
                                                  actually in use in commerce in the                      the initial Office action. Thereafter, the             Changes
                                                  United States for the goods/services                    owner may be required to submit proof
                                                  identified in the registrations listed                  of use in commerce for additional                         The USPTO amends 37 CFR 2.161
                                                  therein serves an important purpose for                 goods/services. If there is only one                   and 7.37 to provide that the USPTO may
                                                  the public, which relies on the register                good/service in a class, additional proof              require such information, exhibits,
                                                  to determine whether a chosen mark is                   of use will be required if the specimen                affidavits or declarations, and such
                                                  available for use or registration. For                  submitted with the section 8 or section                additional specimens of use as may be
                                                  example, when a party’s search of the                   71 affidavit would not also be                         reasonably necessary for the USPTO to
                                                  register discloses a potentially                        acceptable to show actual use in                       assess and promote the accuracy and
                                                  confusingly similar mark, that party                    commerce. The Office action will also                  integrity of the register. The current
                                                  may incur a variety of resulting costs                  advise trademark owners to delete those                rules mandate the submission of only
                                                  and burdens, such as those associated                   goods/services for which they are                      one specimen per class in connection
                                                  with proceedings to cancel the                          unable to provide the requested proof of               with a section 8 or section 71 affidavit
                                                  registration. If a registered mark is not               use. It will further advise owners to                  unless additional information, exhibits,
                                                  actually in use in commerce in the                      delete all goods/services not in use in                affidavits or declarations, or specimens
                                                  United States, or is not in use in                      commerce because the Office may issue                  are necessary for proper examination of
                                                  commerce in connection with all the                     subsequent actions requiring proof of                  the affidavit itself. 37 CFR 2.161(g), (h),
                                                  goods/services identified in the                        use on some, or all, remaining goods/                  7.37(g), (h). This final rule will allow
                                                  registration, the cost of undertaking a                 services.                                              the USPTO to require additional proof
                                                  cancellation proceeding may be                             As in the pilot program, trademark                  of use of a mark not only to facilitate
                                                  incurred unnecessarily. In addition, the                owners will be afforded the usual                      proper examination of a section 8 or
                                                  results of the pilot audit program                      response period to the Office action,                  section 71 affidavit, but also to verify
                                                  supported the need for ongoing efforts                  that is, a response would be due within                the accuracy of claims that a trademark
                                                  aimed at ensuring the accuracy and                      six months of the issuance date of the                 is in use on or in connection with the
                                                  integrity of the trademark register as to               Office action, or before the end of the                goods/services identified in the
                                                  the actual use in commerce of marks in                  statutory filing period for the section 8              registration
                                                  connection with the goods/services                      or section 71 affidavit, whichever is
                                                  identified in live registrations. Further,              later. 37 CFR 2.163(b), 7.39(a). If the                   The USPTO revises § 2.161(h) to add
                                                  outreach to stakeholder groups and                      trademark owner responds, but is                       the phrase ‘‘or for the Office to assess
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                                                  interested parties in the aftermath of the              ultimately unable to provide the                       and promote the accuracy and integrity
                                                  pilot yielded widespread support for                    requested information, exhibits,                       of the register’’ at the end of the
                                                  establishing a permanent proof-of-use                   affidavits or declarations, and                        paragraph.
                                                  program similar to the pilot. Therefore,                specimens, the USPTO would deem the                       The USPTO revises § 7.37(h) to add
                                                  the USPTO believes that establishing a                  section 8 or section 71 affidavit                      the phrase ‘‘or for the Office to assess
                                                  permanent program for auditing                          unacceptable as to the goods/services to               and promote the accuracy and integrity
                                                  registrations that include multiple                     which the requirement pertained and                    of the register’’ at the end of the
                                                  goods/services furthers the public                      will cancel such goods/services from the               paragraph.


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                                                                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Rules and Regulations                                           6263

                                                  Rulemaking Requirements                                 received no comments from the public                   2. A Statement of the Significant Issues
                                                    Administrative Procedure Act: The                     directly applicable to the IFRA, as stated             Raised by the Public Comments in
                                                  changes in this rulemaking involve rules                below in Item 2.                                       Response to the Initial Regulatory
                                                  of agency practice and procedure, and/                    Items 1–6 below discuss the six items                Flexibility Analysis, a Statement of the
                                                  or interpretive rules. See Perez v. Mortg.              specified in 5 U.S.C. 604(a)(1)–(6) to be              Assessment of the Agency of Such
                                                  Bankers Ass’n, 135 S. Ct. 1199, 1204                                                                           Issues, and a Statement of any Changes
                                                                                                          addressed in a FRFA. Item 6 below
                                                  (2015) (interpretive rules ‘‘advise the                                                                        Made in the Proposed Rule as a Result
                                                                                                          discusses alternatives considered by the
                                                  public of the agency’s construction of                                                                         of Such Comments
                                                                                                          Office.
                                                  the statutes and rules which it                                                                                  The USPTO did not receive any
                                                  administers’’) (citation and internal                   1. Succinct Statement of the Need for,                 public comments in response to the
                                                  quotation marks omitted); Nat’l Org. of                 and Objectives of, the Rule                            IRFA. However, the Office received
                                                  Veterans’ Advocates v. Sec’y of Veterans                                                                       comments about the audit program in
                                                                                                             The USPTO amends its rules to
                                                  Affairs, 260 F.3d 1365, 1375 (Fed. Cir.                                                                        general, which are further discussed in
                                                  2001) (rule that clarifies interpretation               require any information, exhibits,
                                                                                                                                                                 the preamble.
                                                  of a statute is interpretive); Bachow                   affidavits or declarations, and such
                                                                                                          additional specimens deemed                            3. The Response of the Agency to any
                                                  Commc’ns Inc. v. FCC, 237 F.3d 683,
                                                                                                          reasonably necessary to assess and                     Comments Filed by the Chief Counsel
                                                  690 (D.C. Cir. 2001) (rules governing an
                                                                                                          promote the accuracy and integrity of                  for Advocacy of the Small Business
                                                  application process are procedural
                                                                                                          the trademark register in connection                   Administration in Response to the
                                                  under the Administrative Procedure
                                                                                                          with the examination of a section 8 or                 Proposed Rule, and a Detailed
                                                  Act); Inova Alexandria Hosp. v. Shalala,
                                                                                                          section 71 affidavit. Post registration                Statement of any Change Made to the
                                                  244 F.3d 342, 350 (4th Cir. 2001) (rules
                                                                                                          affidavits under section 8 or section 71,              Proposed Rule in the Final Rule as a
                                                  for handling appeals were procedural
                                                                                                          and their accompanying specimens of                    Result of the Comments
                                                  where they did not change the
                                                  substantive standard for reviewing                      use, demonstrate a registration owner’s                  The USPTO did not receive any
                                                  claims).                                                continued use of its mark in commerce                  comments filed by the Chief Counsel for
                                                     Accordingly, prior notice and                        for the goods/services identified in the               Advocacy of the Small Business
                                                  opportunity for public comment for the                  registration. The revisions enacted                    Administration in response to the
                                                  changes in this rulemaking are not                      herein will facilitate the USPTO’s                     proposed rule.
                                                  required pursuant to 5 U.S.C. 553(b) or                 ability to ensure that the register                    4. Description of and an Estimate of the
                                                  (c), or any other law. See Perez, 135 S.                accurately reflects marks that are in use              Number of Small Entities to Which the
                                                  Ct. at 1206 (notice-and-comment                         in commerce that may be regulated by                   Rule Will Apply or an Explanation of
                                                  procedures are required neither when                    the U.S. Congress for the goods/services               Why No Such Estimate Is Available
                                                  an agency ‘‘issue[s] an initial                         identified therein.
                                                  interpretive rule’’ nor ‘‘when it amends                                                                          The USPTO does not collect or
                                                  or repeals that interpretive rule’’);                      The objective of the rulemaking is to               maintain statistics in trademark cases on
                                                  Cooper Techs. Co. v. Dudas, 536 F.3d                    allow the USPTO to assess and promote                  small- versus large-entity registrants,
                                                  1330, 1336–37 (Fed. Cir. 2008) (stating                 the integrity of the trademark register.               and this information would be required
                                                  that 5 U.S.C. 553, and thus 35 U.S.C.                   The Trademark Act gives the Director                   in order to estimate the number of small
                                                  2(b)(2)(B), does not require notice and                 discretion regarding the number of                     entities that would be affected by the
                                                  comment rulemaking for ‘‘interpretative                 specimens to require. 15 U.S.C.                        final rule. However, the USPTO believes
                                                  rules, general statements of policy, or                 1051(a)(1), (d)(1), 1058(b)(1)(C),                     that the overall impact of the regulations
                                                  rules of agency organization, procedure,                1141k(b)(1)(C). The current rules                      enacted herein on registrants will be
                                                  or practice,’’ quoting 5 U.S.C.                         mandate the submission of only one                     relatively minimal.
                                                  553(b)(A)). However, the USPTO has                      specimen per class in connection with                     After registration, trademark owners
                                                  chosen to seek public comment before                    a section 8 or section 71 affidavit unless             must make periodic filings with the
                                                  implementing the rule.                                  additional information, exhibits,                      USPTO to maintain their registrations.
                                                                                                          affidavits or declarations, or specimens               A section 8 or section 71 affidavit is a
                                                  Final Regulatory Flexibility Analysis                                                                          sworn statement in which the registrant
                                                                                                          are necessary for proper examination of
                                                     The USPTO publishes this Final                       the affidavit itself. 37 CFR 2.161(g), (h),            specifies the goods/services/collective
                                                  Regulatory Flexibility Analysis (FRFA)                  7.37(g), (h). However, these rules do not              membership organization for which the
                                                  as required by the Regulatory Flexibility                                                                      mark is in use in commerce and/or the
                                                                                                          currently allow the Office to require
                                                  Act (RFA) (5 U.S.C. 601 et seq.) to                                                                            goods/services/collective membership
                                                                                                          additional specimens or other
                                                  examine the impact of the Office’s post-                                                                       organization for which excusable
                                                                                                          information or exhibits in order to verify
                                                  registration audit program on small                                                                            nonuse is claimed. 15 U.S.C. 1058,
                                                  entities. Under the RFA, whenever an                    that the mark is in use on additional                  1141k. The purpose of the section 8 and
                                                  agency is required by 5 U.S.C. 553 (or                  goods/services listed in the registration.             section 71 affidavits is to facilitate the
                                                  any other law) to publish a notice of                   The final rule will allow the USPTO to                 cancellation, by the Director, of
                                                  proposed rulemaking (NPRM), the                         properly examine the nature and                        registrations of marks no longer in use
                                                  agency must prepare and make available                  veracity of allegations of use made in                 in connection with the goods/services/
                                                  for public comment a FRFA, unless the                   connection with the submission of a                    collective membership organization
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                                                  agency certifies under 5 U.S.C. 605(b)                  section 8 or section 71 affidavit, and                 identified in the registrations. The final
                                                  that the proposed rule, if implemented,                 thereby assess and promote the integrity               rule applies to any entity filing a section
                                                  will not have a significant economic                    of the register by verifying that the                  8 or section 71 affidavit, but only a
                                                  impact on a substantial number of small                 register accurately reflects the goods/                subset of trademark owners would be
                                                  entities. 5 U.S.C. 603, 605. The USPTO                  services for which use is claimed for a                required to provide more than one
                                                  published an Initial Flexibility Analysis               given registered mark.                                 specimen or additional information,
                                                  (IRFA), along with the NPRM, on June                                                                           exhibits, or specimens in connection
                                                  22, 2016 (81 FR 40589). The USPTO                                                                              with the audit. The USPTO is unable to


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                                                  6264             Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Rules and Regulations

                                                  estimate the subset of trademark owners                 evidence to demonstrate and support                    and not achieve the stated objective of
                                                  who are small entities that are impacted                what has previously been assessed.                     assessing and promoting the accuracy
                                                  by the proposed rules. In Fiscal Year                      Assuming the mark is in use as                      and integrity of the register.
                                                  2016, approximately 150,000 section 8                   claimed, the compliance time involves                     The stated objective of the final rule
                                                  affidavits and 9,100 section 71 affidavits              the length of time to secure additional                also facilitates the cancellation of
                                                  were filed.                                             information, exhibits, affidavits or                   registrations for marks that are no longer
                                                                                                          declarations, or specimens and                         in use or that were never used, and for
                                                  5. Description of the Reporting,                        accompanying declaration, plus any                     which acceptable claims of excusable
                                                  Recordkeeping, and Other Compliance                     time it takes an attorney to                           nonuse were not submitted, in
                                                  Requirements of the Final Rule,                         communicate with the client in order to                connection with the identified goods/
                                                  Including an Estimate of the Classes of                 obtain what is required and make the                   services. The statutory requirements in
                                                  Small Entities Which Will Be Subject to                 necessary filing with the USPTO. As                    sections 8 and 71 exist to enable the
                                                  the Requirement and the Type of                         noted above, approximately one-third of                USPTO to clear the register of
                                                  Professional Skills Necessary for                       section 8 and section 71 affidavits are                deadwood by cancelling, in whole or in
                                                  Preparation of the Report or Record                     filed pro se. Trademark owners selected                part, registrations for marks that are not
                                                     The final rule imposes no new                        for review are likely to have a shorter                in use for all or some of the goods/
                                                  recordkeeping requirements on                           compliance time than what the USPTO                    services identified in the registration.
                                                  trademark registrants.                                  has estimated, which assumes the                       The final rule furthers this statutory
                                                     Regarding compliance with this final                 involvement of an attorney. The final                  purpose. Exempting small entities from
                                                  rule, as an initial matter, the USPTO                   rule does not mandate the use of legal                 possible scrutiny regarding use
                                                  does not anticipate the rules to have a                 counsel.                                               allegations would fail to address marks
                                                  disproportionate impact upon any                                                                               not used by them, thereby not achieving
                                                  particular class of small or large entities.            6. Description of the Steps the Agency
                                                                                                                                                                 the objective.
                                                  Any entity that has a registered                        Has Taken To Minimize the Significant                     The USPTO considered a second
                                                  trademark in which the mark is                          Economic Impact on Small Entities                      alternative that would extend the time
                                                  registered for more than one good or                    Consistent With the Stated Objectives of               period for compliance by small entities.
                                                  service per class could potentially be                  Applicable Statutes, Including a                       However, this was rejected because
                                                  impacted by the final rule.                             Statement of the Factual, Policy, and                  there appears to be no reason that
                                                     The USPTO enacts herein a                            Legal Reasons for Selecting the                        meeting the requirements of the final
                                                  permanent program where it would                        Alternative Adopted in the Rinal Rule                  rule would be more time consuming for
                                                  conduct random audits of section 8 and                  and Why Each One of the Other                          small entities. The USPTO’s standard
                                                  section 71 affidavits that are filed in                 Significant Alternatives to the Rule                   six-month time period for responding to
                                                  which the mark is registered for more                   Considered by the Agency Which Affect                  Office actions allows sufficient time
                                                  than one good or service per class. The                 the Impact on Small Entities Was                       regardless of small-entity status.
                                                  USPTO anticipates that upon initial                     Rejected                                                  Finally, the USPTO considered an
                                                  implementation it would conduct                            The USPTO has considered whether                    alternative that would streamline or
                                                  random audits of up to approximately                    and how it is appropriate to reduce any                simplify the compliance mechanism for
                                                  10% of such affidavits and may increase                 burden on small businesses through                     small entities, but it was deemed
                                                  the percentage going forward,                           increased flexibility. The following                   unnecessary given the ease of
                                                  depending on results and as resources                   alternatives were considered, but                      responding electronically to Office
                                                  allow. In those post registration cases                 rejected, by the USPTO.                                actions using the Trademark Electronic
                                                  where an initial requirement for                           The USPTO considered an alternative                 Application System Response to Post
                                                  additional information, exhibits,                       where it would not require additional                  Registration Office Action form. Thus,
                                                  affidavits or declarations, and                         information, exhibits, affidavits or                   under the final rule, compliance will be
                                                  specimens is issued in an Office action,                declarations, and specimens in                         as streamlined and simplified as
                                                  although approximately one-third of                     connection with section 8 or section 71                possible for all affected entities.
                                                  section 8 and section 71 affidavits are                 affidavits, or where it would exempt                   Moreover, where the objective is to
                                                  filed pro se, the USPTO assumes that an                 small entities from such requirements.                 verify the accuracy of a claim of use in
                                                  attorney is representing the registrant,                This alternative would have a lesser                   a section 8 or section 71 affidavit, the
                                                  and estimates it will take approximately                economic impact on small entities, but                 requirements for additional information,
                                                  one hour to comply. To that end, the                    was rejected because it would not                      exhibits, affidavits or declarations, and
                                                  USPTO provides an online electronic                     accomplish the stated objective of                     specimens demonstrating the manner of
                                                  form for responding to Office actions.                  assessing and promoting the integrity of               use of the mark in connection with the
                                                     Similar to the submission necessary                  the trademark register by verifying that               specified goods/services are the least
                                                  for the statutorily required section 8 and              marks are in use for the goods/services                burdensome and most efficient means of
                                                  section 71 affidavits, a response to an                 identified in the registration. As noted               achieving the objective of assessing and
                                                  Office action issued in connection with                 above, the results of the post registration            promoting the accuracy and integrity of
                                                  these affidavits will generally                         proof-of-use pilot supported the need                  the register by verifying allegations of
                                                  necessitate gathering and submitting                    for ongoing efforts aimed at assessing                 use.
                                                  one or more specimens of use and an                     and promoting the accuracy and                            Use of performance rather than design
                                                  accompanying declaration. Therefore,                    integrity of the register as to the actual             standards is not applicable to the final
asabaliauskas on DSK3SPTVN1PROD with RULES




                                                  under the final rule, the type of fact                  use of marks in connection with the                    rulemaking because the USPTO is not
                                                  gathering and review of the nature and                  goods/services identified in the                       issuing any sort of standard. This final
                                                  extent of the use of the mark that                      registrations. Subsequent outreach                     rule will require registrants to furnish
                                                  underlies a section 8 or section 71                     efforts revealed widespread support for                evidence of use, rather than comply
                                                  affidavit will already have occurred.                   continuing the pilot program on a                      with a performance or design standard.
                                                  Compliance with the requirements                        permanent basis. Exempting small                          Executive Order 12866 (Regulatory
                                                  enacted herein will only necessitate                    entities would prevent consideration of                Planning and Review): This rulemaking
                                                  gathering and submitting the additional                 all section 8 and section 71 affidavits                has been determined to be not


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                                                                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Rules and Regulations                                                6265

                                                  significant for purposes of Executive                   and tribal governments, in the aggregate,              examination of the affidavit or
                                                  Order 12866 (Sept. 30, 1993).                           of 100 million dollars (as adjusted) or                declaration under section 8 of the Act or
                                                     Executive Order 13563 (Improving                     more in any one year, or a Federal                     for the Office to assess and promote the
                                                  Regulation and Regulatory Review): The                  private sector mandate that will result                accuracy and integrity of the register.
                                                  USPTO has complied with Executive                       in the expenditure by the private sector               *     *     *     *     *
                                                  Order 13563 (Jan. 18, 2011).                            of 100 million dollars (as adjusted) or
                                                  Specifically, the USPTO has, to the                     more in any one year, and will not                     PART 7—RULES OF PRACTICE IN
                                                  extent feasible and applicable: (1) Made                significantly or uniquely affect small                 FILINGS PURSUANT TO THE
                                                  a reasoned determination that the                       governments. Therefore, no actions are                 PROTOCOL RELATING TO THE
                                                  benefits justify the costs of the rule                  necessary under the provisions of the                  MADRID AGREEMENT CONCERNING
                                                  changes; (2) tailored the rules to impose               Unfunded Mandates Reform Act of                        THE INTERNATIONAL REGISTRATION
                                                  the least burden on society consistent                  1995. See 2 U.S.C. 1501 et seq.                        OF MARKS
                                                  with obtaining the regulatory objectives;                  Paperwork Reduction Act: This
                                                  (3) selected a regulatory approach that                 rulemaking involves information                        ■ 3. The authority citation for 37 CFR
                                                  maximizes net benefits; (4) specified                   collection requirements that are subject               part 7 continues to read as follows:
                                                  performance objectives; (5) identified                  to review by the Office of Management                    Authority: 15 U.S.C. 1123, 35 U.S.C. 2,
                                                  and assessed available alternatives; (6)                and Budget (OMB) under the Paperwork                   unless otherwise noted.
                                                  provided the public with a meaningful                   Reduction Act of 1995 (44 U.S.C. 3501
                                                  opportunity to participate in the                                                                              ■ 4. Amend § 7.37 by revising paragraph
                                                                                                          et seq.). The collection of information                (h) to read as follows:
                                                  regulatory process, including soliciting                involved in this rulemaking has been
                                                  the views of those likely affected prior                reviewed and previously approved by                    § 7.37 Requirements for a complete
                                                  to issuing a notice of proposed                         OMB under control numbers 0651–0051                    affidavit or declaration of use in commerce
                                                  rulemaking, and provided on-line access                 and 0651–0055.                                         or excusable nonuse.
                                                  to the rulemaking docket; (7) attempted                    Notwithstanding any other provision                 *      *    *     *     *
                                                  to promote coordination, simplification,                of law, no person is required to respond                  (h) The Office may require the holder
                                                  and harmonization across government                     to nor shall a person be subject to a                  to furnish such information, exhibits,
                                                  agencies and identified goals designed                  penalty for failure to comply with a                   affidavits or declarations, and such
                                                  to promote innovation; (8) considered                   collection of information subject to the               additional specimens as may be
                                                  approaches that reduce burdens and                      requirements of the Paperwork                          reasonably necessary to the proper
                                                  maintain flexibility and freedom of                     Reduction Act unless that collection of                examination of the affidavit or
                                                  choice for the public; and (9) ensured                  information displays a currently valid                 declaration under section 71 of the Act
                                                  the objectivity of scientific and                       OMB control number.                                    or for the Office to assess and promote
                                                  technological information and                                                                                  the accuracy and integrity of the
                                                  processes, to the extent applicable.                    List of Subjects
                                                                                                                                                                 register.
                                                     Executive Order 13132 (Federalism):
                                                                                                          37 CFR Part 2                                          *      *    *     *     *
                                                  This rulemaking does not contain
                                                  policies with federalism implications                     Administrative practice and                            Dated: January 5, 2017.
                                                  sufficient to warrant preparation of a                  procedure, Trademarks.                                 Russell Slifer,
                                                  Federalism Assessment under Executive                   37 CFR Part 7                                          Deputy Under Secretary of Commerce for
                                                  Order 13132 (Aug. 4, 1999).                                                                                    Intellectual Property and Deputy Director of
                                                     Congressional Review Act: Under the                    Administrative practice and                          the United States Patent and Trademark
                                                  Congressional Review Act provisions of                  procedure, Trademarks, International                   Office.
                                                  the Small Business Regulatory                           registration.                                          [FR Doc. 2017–00317 Filed 1–18–17; 8:45 am]
                                                  Enforcement Fairness Act of 1996 (5                       For the reasons stated in the preamble               BILLING CODE 3510–16–P
                                                  U.S.C. 801 et seq.), prior to issuing any               and under the authority contained in 15
                                                  final rule, the USPTO will submit a                     U.S.C. 1123 and 35 U.S.C. 2, as
                                                  report containing the final rule and                    amended, the USPTO amends parts 2                      DEPARTMENT OF VETERANS
                                                  other required information to the United                and 7 of title 37 as follows:                          AFFAIRS
                                                  States Senate, the United States House
                                                  of Representatives, and the Comptroller                 PART 2—RULES OF PRACTICE IN                            38 CFR Part 14
                                                  General of the Government                               TRADEMARK CASES
                                                  Accountability Office. The changes in                                                                          RIN 2900–AP51
                                                  this notice are not expected to result in               ■ 1. The authority citation for 37 CFR
                                                                                                          part 2 continues to read as follows:                   Recognition of Tribal Organizations for
                                                  an annual effect on the economy of 100                                                                         Representation of VA Claimants
                                                  million dollars or more, a major increase                 Authority: 15 U.S.C. 1113, 15 U.S.C. 1123,
                                                  in costs or prices, or significant adverse              35 U.S.C. 2, Section 10 of Pub. L. 112–29,             AGENCY:    Department of Veterans Affairs.
                                                  effects on competition, employment,                     unless otherwise noted.                                ACTION:   Final rule.
                                                  investment, productivity, innovation, or                ■ 2. Amend § 2.161 by revising
                                                  the ability of United States-based                      paragraph (h) to read as follows:                      SUMMARY:   The Department of Veterans
                                                  enterprises to compete with foreign-                                                                           Affairs (VA) is amending its regulations
                                                  based enterprises in domestic and                       § 2.161 Requirements for a complete                    concerning recognition of certain
asabaliauskas on DSK3SPTVN1PROD with RULES




                                                  export markets. Therefore, this notice is               affidavit or declaration of continued use or           national, State, and regional or local
                                                  not expected to result in a ‘‘major rule’’              excusable nonuse.                                      organizations for purposes of VA claims
                                                  as defined in 5 U.S.C. 804(2).                          *      *    *     *     *                              representation. Specifically, this
                                                     Unfunded Mandates Reform Act of                         (h) The Office may require the owner                rulemaking allows the Secretary to
                                                  1995: The changes set forth in this                     to furnish such information, exhibits,                 recognize tribal organizations in a
                                                  rulemaking do not involve a Federal                     affidavits or declarations, and such                   similar manner as the Secretary
                                                  intergovernmental mandate that will                     additional specimens as may be                         recognizes State organizations. The final
                                                  result in the expenditure by State, local,              reasonably necessary to the proper                     rule allows a tribal organization that is


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Document Created: 2018-02-01 15:15:30
Document Modified: 2018-02-01 15:15:30
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionFinal rule.
DatesThis rule is effective on February 17, 2017.
ContactCatherine Cain, Office of the Deputy Commissioner for Trademark Examination Policy, by email at [email protected], or by telephone at (571) 272-8946.
FR Citation82 FR 6259 
RIN Number0651-AD07
CFR Citation37 CFR 2
37 CFR 7
CFR AssociatedAdministrative Practice and Procedure; Trademarks and International Registration

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