Trademark Fee Adjustment, 73197-73218 [2020-25222]

Download as PDF Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations Dated: November 12, 2020. Aaron T. Siegel, Alternate OSD Federal Register Liaison Officer, Department of Defense. [FR Doc. 2020–25361 Filed 11–16–20; 8:45 am] BILLING CODE 5001–06–P DEPARTMENT OF COMMERCE Patent and Trademark Office 37 CFR Parts 2 and 7 [Docket No. PTO–T–2019–0027] RIN 0651–AD42 Trademark Fee Adjustment United States Patent and Trademark Office, Department of Commerce. ACTION: Final rule. AGENCY: The United States Patent and Trademark Office (Office or USPTO) is setting or adjusting certain trademark fees, as authorized by the Leahy-Smith America Invents Act (AIA), as amended by the Study of Underrepresented Classes Chasing Engineering and Science Success Act of 2018 (SUCCESS Act). The changes will allow the USPTO to continue to recover the prospective aggregate costs of strategic and operational trademark and Trademark Trial and Appeal Board (TTAB or Board) goals (based on workload projections included in the USPTO fiscal year (FY) 2021 Congressional Justification), including associated administrative costs. They will also further USPTO strategic objectives by better aligning fees with costs, protecting the integrity of the trademark register, improving the efficiency of agency processes, and ensuring financial sustainability to facilitate effective trademark operations. USPTO has weighed carefully current economic conditions and the potential hardship that the fee increase could create for businesses and individuals. The Office paused development of the fee rule because of uncertainty about the economy earlier this year. The latest economic data point to continued recovery in many sectors of the economy. Because of this and the relatively small annual cost to businesses and individuals from USPTO’s trademark applications and maintenance fees, the Office has decided to finalize the fee rule for implementation in January 2021. DATES: This rule is effective on January 2, 2021. FOR FURTHER INFORMATION CONTACT: Catherine Cain, Office of the Deputy SUMMARY: VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 Commissioner for Trademark Examination Policy, at 571–272–8946, or by email at TMPolicy@uspto.gov. SUPPLEMENTARY INFORMATION: The USPTO conducted a fee review in FY 2019 that formed the basis for this regulatory process to adjust and set new trademark user fees. While trademarkrelated costs of operations have risen, trademark fees have not changed since January 2017. The revenue and workload assumptions in this rule are based on the assumptions found in the FY 2021 Congressional Justification (i.e., the USPTO’s FY 2021 budget submission to Congress). However, projections of aggregate revenues and costs are based on point-in-time estimates, and the circumstances surrounding these assumptions can change quickly. Notably, since the FY 2021 Congressional Justification was published, some fee collections have been lower than anticipated, due to lower than expected post-registration and Madrid filings. Although economic circumstances have changed substantially since the FY 2021 budget was developed, the USPTO determined it remains the most appropriate starting point for developing this Final Rule. First, the USPTO’s projections of aggregate revenues and costs are necessarily estimates that can change substantially from one point in time to the next due to numerous factors outside the USPTO’s control, including cyclical economic changes or exogenous shocks, such as COVID–19, changes in the laws governing USPTO revenues or expenditures, and other events. Nevertheless, the USPTO has historically used its most recent budget assumptions when setting fees because they are the most recent complete evaluation of the USPTO’s budget expectations and requirements, and they provide assumptions for stakeholders to use when formulating their comments. Those projections were developed in late calendar year 2019, prior to the COVID–19 outbreak, and they assumed continuing stable economic growth, not the sharp economic downturn and rebound of 2020. As part of the multi-year fee-setting process, the Trademark Public Advisory Committee (TPAC) held a public hearing at the USPTO on September 23, 2019. The Office considered and analyzed all comments, advice, and recommendations received from the TPAC in proposing the fees set forth in the notice of proposed rulemaking (NPRM) published in the Federal Register on June 19, 2020, at 85 FR 37040. In formulating this rule, the PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 73197 USPTO considered the state of the U.S. economy, the operational needs of the agency, and public comments submitted pursuant to the NPRM and made adjustments to the substance of this rule based on these considerations. The USPTO has considered the state of the U.S. economy, the operational needs of the agency, and the comments and advice received from the public during the 45-day comment period. The current economic conditions illustrate the need for the increases set forth in this rule. The majority of USPTO’s trademark revenue comes from new applications, but the initial costs to examine applications exceed the revenues from those applications. These examination costs have been increasing over the years while the USPTO has kept filing fees low enough to encourage broad public participation in the trademark system by offsetting examination costs with revenues generated with intent-to-use (ITU) and maintenance filings. Despite this balancing of front- and back-end costs, the USPTO has been observing multiyear consistent trends that have begun to adversely affect this model. The USPTO is receiving record levels of new trademark application filings, carrying with them larger front-end examination costs, while the percentage of ITU and maintenance filings are decreasing, resulting in less back-end revenue. With larger net costs that are not being offset by back-end revenue, the USPTO would be unable to maintain an operating reserve, which puts the Office on an unsustainable funding model. The USPTO has observed these trends taking place whether the economy is doing well or facing turmoil, but the present situation is particularly challenging in light of the impact of the pandemic and its effect on the economy and filings. In particular, over the last six months, the USPTO has experienced a surge in new applications while maintenance filings continue to be impacted by lower rates of payment from one-time filers and individual applicants. The surge is also undermining the other traditional revenue sources that have historically offset front-end costs, such as ITU, since the USPTO is receiving more use-based applications, especially from foreign filers. While the USPTO is observing a surge in filings at present, given past experience, we expect a future decline to bring filings in line with the underlying economic dynamism. Although the timing and the magnitude of a future correction may be difficult to anticipate with complete accuracy, given past experience, the USPTO anticipates that a correction in filing E:\FR\FM\17NOR1.SGM 17NOR1 73198 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations levels could generate funding shortfalls that quickly drain our reserves and affect our operations and financial stability. The USPTO received some comments urging the Office not to raise any fees. As noted below, in the discussion of the Regulatory Flexibility Act, one regulatory alternative that was considered was to leave all trademark fees as currently set. This alternative was rejected because, due to changes in demand for certain services and rising costs described herein, the Office has determined that a fee increase is needed to meet future budgetary requirements as described in the FY 2021 Congressional Justification. As discussed further below, the alternative of making no changes to trademark fees would not have achieved the goals of this rulemaking. Those goals are to assist in promoting access to the trademark system, protect the integrity of the register, and promote the efficiency of the trademark registration process by incentivizing: (1) Maintenance of registrations for goods and services for which marks are actually in use, (2) more timely filing of applications and other documents, and (3) faster resolution of appeals and inter partes proceedings at the TTAB. USPTO has weighed carefully current economic conditions and the potential hardship that the fee increase could create for businesses and individuals. The USPTO has undertaken many efforts to provide various types of relief, including deadline extensions and fee postponements. Additionally, in the FY 2021 Congressional Justification, implementation of the fee rule was slated for August of 2020. Considering the impact of the pandemic, uncertainty about the economy, and stakeholder feedback, the USPTO paused development of the fee rule over the summer of 2020. The latest economic data point to continued recovery in many sectors of the economy. Because of this and the relatively small annual cost to businesses and individuals from USPTO’s trademark applications and maintenance fees, the Office has decided to finalize the fee rule for implementation in January 2021. I. Purpose: The USPTO protects consumers and provides benefits to businesses by effectively and efficiently carrying out the trademark laws of the United States. As a fee-funded agency, appropriate fees are critically important for the USPTO to maintain the quality and timeliness of examination and other services, and to stabilize and modernize aging information technology (IT) infrastructure on which the Office and its customers rely. The fee schedule VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 enacted in this rulemaking is estimated to provide aggregate revenue to recover the USPTO’s aggregate estimated future costs and ensure the USPTO can achieve strategic and operational goals. These goals include effectively using resources to maintain low trademark pendency and high quality, fostering business effectiveness, stabilizing and modernizing trademark IT systems, continuing programs for stakeholder and public outreach, enhancing operations of the TTAB, and ensuring financial sustainability to facilitate effective trademark operations. Section 10 of the AIA authorizes the Director of the USPTO (Director) to set or adjust by rule any fee established, authorized, or charged under the Trademark Act of 1946, 15 U.S.C. 1051 et seq., as amended (the Trademark Act or the Act) for any services performed by, or materials furnished by, the Office. See section 10 of the AIA, Public Law 112–29, 125 Stat. 284, 316–17, as amended by the SUCCESS Act, Public Law 115–273, 132 Stat. 4158. Section 10 of the AIA prescribes that trademark fees may be set or adjusted only to recover the aggregate estimated costs to the USPTO for processing, activities, services, and materials related to trademarks, including administrative costs to the USPTO with respect to such trademark and TTAB operations. This authority includes the flexibility to set individual fees to advance key policy objectives. Thus, the Director may set individual fees at, below, or above their respective associated costs, while taking into account the aggregate estimated costs to the USPTO. The USPTO estimates, based on the assumptions found in the FY 2021 Congressional Justification, that the additional aggregate revenue derived from the fee schedule set forth here will recover the future costs of implementing strategic and operational goals, including the cost of necessary IT stabilization and modernization activities. Also, the additional revenue will allow the USPTO to achieve sustainable funding by gradually building the operating reserve, which mitigates the risk of immediate unplanned financial disruptions that can adversely affect pendency and quality. Based on the assumptions found in the FY 2021 Congressional Justification, the Office estimates reaching the optimal six-month trademark operating reserve level in FY 2025. However, projections of aggregate revenues and costs are based on pointin-time estimates, and the circumstances surrounding these assumptions can change quickly. Notably, since the FY 2021 PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 Congressional Justification was published, some fee collections have been lower than anticipated, due to lower than expected post-registration and Madrid filings. II. Summary of Major Provisions: The USPTO is setting or adjusting trademark fees codified in 37 CFR parts 2 and 7. Fees are increased for all application filing types (i.e., paper applications, applications filed via the Trademark Electronic Application System (TEAS), and requests for extension of protection under section 66(a) of the Trademark Act, 15 U.S.C. 1141f). The per-class fee increases range from $25 for a TEAS Plus application to $150 for a paper application. In addition, fees for filing affidavits or declarations of use or excusable non-use under section 8 or section 71 of the Act (section 8 or section 71 affidavits), 15 U.S.C. 1058, 1141k, are increasing by $100 per class. As described in further detail below, these increases address policy considerations related to ensuring a more accurate register as well as reflecting increased processing costs to the Office in handling these filings. This rule creates two levels of fees for petitions. There is one fee for petitions to the Director under §§ 2.146 and 2.147, and a lower fee for a petition to revive an abandoned application under § 2.66. Currently, the fees for these petitions are $200 if filed on paper and $100 if filed through TEAS. This rule sets the fee for petitions under §§ 2.146 and 2.147 at $350 if filed on paper and $250 if filed through TEAS. The fees for a petition to revive under § 2.66 are set at $250 if filed on paper and $150 if filed through TEAS. These fees take into account the different processing costs of these filings. The USPTO is also setting a new $50 fee for filing a letter of protest, along with new regulations that codify letterof-protest procedures. The new fee and procedures are designed to help offset processing costs and deter the filing of unsupported or irrelevant letters of protest, while not discouraging the filing of relevant, well-supported letters of protest. The new regulatory section is based on existing, longstanding procedures for letters of protest, which are currently set forth in the Trademark Manual of Examining Procedure (TMEP), as well as the procedures set out in the patents rules in 37 CFR 1.290 and 1.291 and the Manual of Patent Examining Procedure (MPEP) governing third-party submissions concerning pending applications, which serve a function similar to letters of protest. As discussed further below, some of the fee adjustments made in this rule are meant to adjust applicant behaviors that E:\FR\FM\17NOR1.SGM 17NOR1 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations put an undue burden on the trademark system and that can adversely affect the quality and integrity of the trademark register. Some of these behavior adjustments are accomplished with new fees (e.g., post audit deletion of goods and services) or with targeted increases (e.g. TEAS Plus vs. TEAS Standard to promote more efficient, higher quality, and most cost effective filings, especially for small businesses, or increases for paper filing fees to encourage electronic filing). As a further example, the rule also sets a new fee structure to encourage registrants to perform due diligence before filing a section 8 or section 71 affidavit to maintain a registration, so as to determine the goods or services for which the registered mark is no longer in use and to delete those goods, services, and/or classes from the registration. The rule sets two fee levels for amendments to registrations to delete goods, services, and/or classes that depend on when the amendment is submitted. The first is a $0 fee if the only amendment made in a request under section 7 of the Act (section 7 request), 15 U.S.C. 1057(e), that is filed prior to submission of a section 8 or section 71 affidavit, is the deletion of goods, services, and/or classes. The current practice that results in no amendment fee for section 8 or section 71 affidavits that specify fewer than all of the goods or services listed in the registration when the affidavit is filed, which results in the deletion of goods, services, and/or classes not included in the affidavit from the registration, is unchanged. However a fee will be assessed if goods, services, and/or classes are deleted in either a section 7 request, a response to an Office action, or a voluntary amendment filed after submission, but prior to acceptance, of a section 8 or section 71 affidavit. This is a per-class fee of $250 for submissions filed through TEAS and $350 for submissions permitted to be filed on paper. To implement the new fee requirement, corresponding new regulations are enacted at §§ 2.161(c) and 7.37(c). In addition, the rule revises the section titles and restructures §§ 2.161 and 7.37 to set out the requirements for section 8 and section 71 affidavits more clearly. Except for the new provision regarding the fee required for deletions made after submission and prior to acceptance of the affidavit, the substantive text of §§ 2.161 and 7.37 is not otherwise revised. Finally, as discussed below, 16 fees related to TTAB filings (8 for electronic filings and 8 for paper filings) are VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 established or adjusted in this rule. Ten existing fees (5 electronic/5 paper) are increased, specifically, those for initiating an ex parte appeal from an examining attorney’s refusal to register a mark, for initiating an opposition proceeding, for initiating a cancellation proceeding, and for filing each of two different types of extensions of time to oppose. Six new filing fees (3 electronic/3 paper) are established, which are explained below. The new and adjusted fees are generally designed to recover more of the costs of TTAB procedures, reduce the extent to which they are subsidized by other trademark fee collections, and advance policy objectives. The USPTO also revises § 2.114(a) to provide that a partial refund of the filing fee for a petition to cancel may be made in cases involving only a nonuse or abandonment claim, when default judgment is entered in the case, where there was no appearance by a defendant, and where no filings were made other than the petition to cancel. III. Rulemaking Goals and Strategies: Consistent with federal fee setting standards, the Office conducted a biennial review of fees, costs, and revenues that began in FY 2019 and found that fee adjustments were necessary to provide the resources needed to improve trademark operations and to implement the USPTO 2018– 2022 Strategic Plan (Strategic Plan). As a result, the fee adjustments in this rule directly align with the Office’s strategic goals and key objectives as outlined in this section. Consistent with the USPTO’s strategic goals and obligations under the AIA, the overall objective of this rule is to ensure the fee schedule generates sufficient revenue to recover the prospective aggregate costs of trademark and TTAB strategic improvements and operations, including the associated administrative costs. Fees must be set at levels projected to cover the cost of future budgetary requirements and maintain an operating reserve at a sufficient level. Trademark applications in FY 2019 represented filings in a record number of over 673,000 classes of goods/ services. During ordinary economic times, application filings generally have increased by an average historical rate of between 7% and 8% per year. To ensure its ability to keep pace with demand, the USPTO is in the midst of a multiyear IT systems and infrastructure upgrade, which is critical to the future of the U.S. trademark registration system and represents a significant cost to the Office. Trademark filings—and, therefore, total revenue—are sensitive to general economic conditions. In the last two PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 73199 recessions, new application filings declined (2001, by ¥21.0%; 2002, by ¥12.7%; and 2009, by ¥12.3%). So far, in the current uncertain economic environment, trademark application filings are showing some resilience; however, with a protracted pandemic, the risk of a major filing decline remains high. The USPTO anticipates a return to historical growth rates as trademark applicants return to expected activities. However, current fees have not kept up with increases in salary, IT and other costs, and a return to traditional growth rates means a return to additional costs for new staff and supporting resources including information technology. In general, the proposed increases are commensurate with the size of the cost recovery shortfalls in trademark examination and TTAB proceedings. As discussed above, with the larger net costs from applications, revenue surpluses derived from other services, such as ITU and maintenance payments, are being reduced. The increases in this rule are designed to address those shortfalls, which as noted above are projected to increase in the future without the fee adjustments being made in this rule. The USPTO, as a fully fee-funded agency, retains an operating reserve to ensure sufficient financial resources are available to support and promote public confidence in the U.S. intellectual property (IP) system. The operating reserve enables the USPTO to maintain operations by absorbing and responding to immediate and temporary changes in its economic and operating environments or circumstances, such as unexpected economic downturns, reducing the risk for short-term financial actions and providing the security for long-term strategic investments, such as IT development projects that are crucial to operations and customer support. An adequate operating reserve also allows the USPTO to continue serving its users in the event of a short-term lapse in congressional appropriations or other disruptions to the agency’s cash flow. The fee schedule in effect prior to this rulemaking was insufficient to satisfy future budgetary requirements to: (1) Meet the expenses that will result from projected filings; (2) recover the costs necessary to support trademark and TTAB operations and administrative services; (3) make necessary investments in IT systems, IP policy, and USPTO programs related to trademark and TTAB operations; and (4) achieve optimal operating reserve levels to ensure financial sustainability. Budgetary requirements increased to address unplanned pay raises, E:\FR\FM\17NOR1.SGM 17NOR1 73200 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations additional review of filings for potential fraud, post-registration audits, agency administrative operations, and continued investments in IT that required additional funding beginning in FY 2020. IT investments include modernization of IT systems to create a fully electronic workflow and state-ofthe-art technological resources for external and internal users. New systems will also be deployed that enhance access for external trademark customers and stakeholders. Operational gains from these IT investments will allow for a broader public base to more efficiently and effectively apply for, register, and maintain trademark registrations and to continue to invest in and reap the benefits of strong brands, which will ultimately benefit American consumers and sustain economic activities. Without the fee adjustments enacted in this rule, based on the assumptions found in the FY 2021 Congressional Justification, budgetary requirements would exceed revenues and available operating reserve balances beginning in FY 2022 through FY 2025 (see Table 1). TABLE 1—TRADEMARK FINANCIAL OUTLOOK WITHOUT FINAL RULE FEES—FY 2021–FY 2025 Dollars in millions FY 2021 Projected Fee Collections .................................................... Other Income ....................................................................... Total Projected Fee Collections and Other Income ............ Budgetary Requirements ..................................................... Funding to (+) and from (¥) Operating Reserve ................ Operating Reserve Balance ................................................. Over/(Under) Minimum Level ............................................... Over/(Under) Optimal Level ................................................. Table 2 below shows the available revenue and operating reserve balances by fiscal year, after including the new fee rates in the projected fee collections. The numbers in the table below were developed in late calendar year 2019, prior to the COVID–19 pandemic, in support of the FY 2021 Congressional FY 2022 $367 6 373 419 (46) 26 (49) (184) FY 2023 $390 6 396 460 (64) (38) (113) (268) $412 6 418 462 (44) (81) (156) (312) Justification, and have been updated to remove the previously proposed fee for requests for reconsideration filed more than three months from the date of issuance of a final Office action. Under current circumstances, it is difficult to predict what the actual numbers will be. However, since the USPTO was FY 2024 $430 6 436 478 (42) (123) (198) (362) FY 2025 $447 6 453 497 (44) (167) (242) (415) projecting insufficient funding even during an economic expansion (see Table 1), and the trademark financial outlook has worsened since the onset of the pandemic, the fee increase is a necessary step to put the Office on a sustainable financial path. TABLE 2—TRADEMARK FINANCIAL OUTLOOK INCLUDING FINAL RULE FEES—FY 2021–FY 2025 Dollars in millions FY 2021 Projected Fee Collections .................................................... Other Income ....................................................................... Total Projected Fee Collections and Other Income ............ Budgetary Requirements ..................................................... Funding to (+) and from (¥) Operating Reserve ................ Operating Reserve Balance ................................................. Over/(Under) Minimum Level ............................................... Over/(Under) Optimal Level ................................................. Additional information on estimated costs can be found in the USPTO FY 2021 Congressional Justification at https://www.uspto.gov/about-us/ performance-and-planning/budget-andfinancial-information, which includes two revenue estimates, one based on the current fee schedule and another based on the fee schedule proposed in the NPRM (see Appendix IV: USPTO Fees— Change from FY 2020 PB to FY 2021 PB). Another fee setting goal of this rulemaking is to set individual fees to further key IP protection policy objectives while taking into account the cost of a particular service. The USPTO seeks to enhance trademark protection for IP rights holders by offering VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 FY 2022 $443 6 449 419 30 101 26 (108) $471 6 477 460 17 118 43 (112) application processing options and promoting IP protection strategies. A. Aligning Fees With Costs: The first fee setting policy consideration is to set and adjust trademark fees to more closely align them with the costs of providing the relevant services. The overall goal is to achieve total cost recovery from fee collections for trademark and TTAB operations, including associated administrative services. In determining which fees to set or adjust, this rule targets changes to the category of fees in which the gap between the cost of the service and the current fee rate is the greatest, and where narrowing that gap serves policy objectives. As noted above, application filing fees, petition fees, and TTAB fees PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 FY 2023 $497 6 503 462 41 159 84 (72) FY 2024 $518 6 524 478 46 206 131 (33) FY 2025 $538 6 544 497 47 253 178 4 do not fully cover the costs of processing and examination for those services. Instead, these costs are recovered or subsidized from fees paid for intent-to-use and post-registration maintenance filings that return more than the costs of processing such filings. As noted above, the USPTO anticipates, based on current trends, that this shortfall in cost recovery for these frontend services will continue absent the fee adjustments made in this rule. For example, using FY 2019 earned revenue compared to costs or expenses, application filing fees recovered 65% of expenses, petition (trademark processing) fees recovered 50% of expenses, and TTAB fees recovered just 31% of expenses (see Table 3). E:\FR\FM\17NOR1.SGM 17NOR1 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations 73201 TABLE 3—EARNED REVENUE VS. EXPENSE BY TRADEMARK PRODUCT [Dollars in millions] FY 2019 earned revenue Trademark products FY 2019 expense FY 2019 variance Earned revenue vs. expense or cost recovery (percent) Application Filings .................................................................................... Intent to Use/Use Fees ............................................................................ Trademark Processing Fees ................................................................... Maintaining Exclusive Rights ................................................................... Madrid Protocol ........................................................................................ Other Trademark Fees ............................................................................ Trademark Trial and Appeal Board ......................................................... $190 50 3 80 4 11 8 $292 17 5 14 1 9 28 $(102) 33 (2) 66 3 2 (20) 65 291 50 571 427 119 31 Total .................................................................................................. 346 366 (20) 95 The fee schedule enacted in this rule will increase the percentage of fee revenues collected over a five year period for application filings by 21%, for petition filings by 73%, and for TTAB filings by 58% overall, thereby increasing the cost recovery for these services (see Table 4). TABLE 4—INCREASE IN CUMULATIVE REVENUE OVER FIVE YEARS, BY PRODUCT [Dollars in millions] Projected cumulative revenue, FY 2021–FY 2025 Trademark products Current fee rates (baseline) % Increase Final fee rates Application Filings ........................................................................................................................ Maintaining Exclusive Rights ....................................................................................................... Intent to Use/Use ......................................................................................................................... Madrid .......................................................................................................................................... TTAB ............................................................................................................................................ Petition ......................................................................................................................................... Other Processing Fees ................................................................................................................ $1,079 518 293 29 53 18 58 $1,301 659 293 42 83 30 58 21 27 0 45 58 73 0 Total ...................................................................................................................................... 2,047 2,467 20 Estimated revenues account for adjustments made to fee rates after considering public comments received in regard to this rulemaking. B. Protecting the Integrity of the Trademark Register: The second fee setting policy consideration is to set or adjust fees to provide resources necessary to improve the accuracy of the trademark register. The trademark register is a reflection of marks that are actually in use in commerce in the United States for the goods and/or services identified in the registrations and its accuracy serves a critical purpose for the public and for all registrants. An accurate register allows the public to rely on the register to determine potential trademark rights. By registering trademarks, the USPTO has a significant role in protecting consumers, as well as providing important benefits to American businesses, by allowing them to strengthen and safeguard their brands and related investments. The public relies on the register to determine whether a chosen mark is available for VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 use or registration. When a person’s search of the register discloses a potentially confusingly similar mark, that person 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, initiating proceedings to cancel the registration or oppose the application of the disclosed mark, engaging in civil litigation to resolve a dispute over the mark, or changing business plans to avoid the use of that person’s chosen mark. In addition, such persons may incur costs and burdens unnecessarily 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 and/or services identified in the registration. An accurate and reliable trademark register helps avoid such needless public costs and burdens. This rule sets and adjusts fees to encourage actions by trademark filers that help facilitate more efficient processing and the prompt conclusion PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 of application prosecution by assessing fees for second and subsequent extension requests to file appeal briefs. In addition, filings that may result in a less accurate register, including postregistration filings to maintain registrations that may include goods or services for which the mark is no longer in use, are among those filings targeted under this objective. The new fee structure for requests to delete goods, services, and/or classes from a registration will protect and improve the integrity of the register and the efficiency of the process by incentivizing both more timely filings and proactive action by registrants to ensure the accuracy of their registrations. The increased efficiencies realized through this rule will benefit all applicants and registrants by allowing registrations to be granted sooner and more efficiently by removing unused marks and unsupported goods and services from the register. In addition, revenue generated by this rule allows for continuing development of methods E:\FR\FM\17NOR1.SGM 17NOR1 73202 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations for detecting and addressing filing practices that threaten the integrity of the register. C. Improving the Efficiency of USPTO Processes: The third fee setting policy consideration pertains to improving the efficiency of the trademark and TTAB processes. To that end, this rule targets changes to fees that will administratively improve application and appeal processing by incentivizing more complete and timely filings and prosecution. For example, TEAS Plus, the lowest-cost TEAS application filing option, has more stringent initial application requirements and thus tends to result in a more complete application, which expedites processing, shortens pendency, minimizes manual processing and the potential for dataentry errors, and is thus more efficient for both the filer and the USPTO. While the per-class fee for TEAS Plus is increasing by $25 (to $250) under this rule, the per-class fee for TEAS Standard, which has less stringent initial application requirements, is increasing by $75 (to $350), resulting in a difference of $100 in the per-class fees of the respective filing options (double the current difference of $50), providing a greater financial incentive to choose the more efficient TEAS Plus filing option. D. Ensuring Financial Sustainability to Facilitate Effective Trademark Operations: The fourth fee setting policy consideration pertains to ensuring sufficient revenue to recover the aggregate costs of Trademark and TTAB operations in future years. Additional resources are necessary to fund the multi-year project to upgrade IT systems and infrastructure and other business improvements, while also maintaining a sufficient operating reserve balance to ensure sustainable funding that will mitigate the risk of unplanned financial disruptions that could threaten operations and planned investments. Operating reserves are intended to mitigate operational risk caused by a lack of financial resources. The USPTO defines an optimal balance and a minimum acceptable balance for the trademark operating reserve. The optimal balance sets the goal for building and maintaining the operating reserve—it defines the desired level of operating reserves the USPTO wishes to maintain. The USPTO analyzes risks related to spending and fee collections, considering the likelihood and consequence of each and its impact to financial stability, in determining the optimal reserve level. The USPTO has determined six months of operating or budgetary requirements to be the optimal trademark reserve. This rule will provide a stable financial foundation to fulfill the USPTO mission and maintain performance. The budgetary requirements of the USPTO are comprised of substantial fixed costs, which require increased fee rates to ensure revenue sufficient to recover aggregate costs. Based on the assumptions found in the FY 2021 Congressional Justification, this rule will produce sufficient revenue to recover the aggregate costs of Trademark and TTAB operations, including executing USPTO strategic goals, policy objectives, and initiatives; creating a better and fairer cost-recovery system that balances subsidizing costs to encourage broader usage of IP rightsprotection mechanisms and participation by more trademark owners; promoting a strong incentive for more efficient filing behaviors; and protecting the federal trademark register as a reliable indicator of marks in use in commerce. Based on the assumptions found in the FY 2021 Congressional Justification, the USPTO projects that trademark fee collections in total would increase by an average of 20% per year, or $76 million to $91 million per year, over the fiveyear planning period as compared to the baseline (see Table 5). TABLE 5—ANNUAL INCREASES IN AGGREGATE REVENUE [Dollars in millions] FY 2021 Aggregate Revenue—Baseline ................ Aggregate Revenue—Final Rule ............. $ Increase ................................................ % Increase ............................................... $367 $443 $76 21% The projections of both aggregate revenues and costs are based on pointin-time estimates and assumptions that are subject to change. There is considerable uncertainty in estimating both fee collections and budgetary requirements in ordinary times, and even more so now. In addition to the COVID–19 pandemic, a number of other risks could materialize (e.g., lower application volumes, decreased renewals, recompetition of major contracts, lease renewals, changing assumptions about presidentially authorized or congressionally mandated employee pay raises, etc.) that could change the USPTO’s budgetary outlook. These estimates are refreshed annually in the formulation of the USPTO’s Budget, and the USPTO continues to gain new data as the pandemic unfolds. VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 FY 2022 FY 2023 $390 $471 $81 21% $412 $497 $85 20% IV. Comments and Responses: In response to the NPRM published on June 19, 2020, the USPTO received comments from four intellectual property organizations and fifteen individual commenters, representing law firms, small business owners, and individuals. These comments are posted on the Regulations.gov website at https://beta.regulations.gov/document/ PTO-T-2019-0027-0001. The Office received comments both generally supporting the need to increase fees and objecting to particular proposed fee increases. Four major user groups representing thousands of trademark professionals and trademark owners, who run the gamut from large corporations, to small businesses and individuals submitted comments on behalf of their members. The user groups generally acknowledged and PO 00000 Frm 00012 Fmt 4700 Sfmt 4700 FY 2024 $430 $518 $88 20% FY 2025 $447 $538 $91 20% Average $409 $493 $83 20% supported the need to increase fees to further USPTO’s strategic objectives and facilitate effective operations, including encouraging e-filing and enabling needed improvements in technology and technology infrastructure. However, the user groups objected to or had comments regarding some specific fee increases, as discussed below. In addition, at least one user group noted that some business owners struggle to pay the current fees and suggested that the USPTO consider the state of the U.S. economy before issuing the final rule. Several of the other commenters objected to any increase in fees, as they believed such increases placed hardships on small business owners. Multiple commenters requested additional information on the rationales for the increases and that the Office take E:\FR\FM\17NOR1.SGM 17NOR1 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations the current economy into consideration before issuing a final rule. The USPTO appreciates the commenters’ support of the need to increase revenue as well as their concerns regarding the impact of the rule on small businesses owners. As noted above, in formulating this rule, the USPTO considered the state of the U.S. economy, the operational needs of the agency, and comments submitted in response to the NPRM. The USPTO is also mindful of the current difficulties many USPTO users are experiencing as a result of the COVID–19 pandemic. The USPTO has undertaken many efforts to provide various types of relief, including deadline extensions and fee postponements. Additionally, in the FY 2021 Congressional Justification, implementation of the fee rule was slated for August of 2020. Considering the impact of the pandemic, and in response to the stakeholder feedback, the USPTO paused development of the fee rule over the summer of 2020 and deferred the timing of implementation of the fee rule from August 2020 to January 2021. This is the first change of trademark fee rules in almost four years. Fees were adjusted in January 2017, and many of those changes were to encourage electronic filing by increasing fees for certain paper submissions. See 81 FR 78042 and FR 81 72694. Since that time, the USPTO has made electronic filing mandatory except in limited circumstances. Further, after considering all comments, the Office has withdrawn the proposed fee for requests for reconsideration filed more than three months from the date of issuance of a final Office action, which commenters noted are a frequently used option for applicants prosecuting applications. It should also be noted that USPTO’s fees for trademark services remain relatively small compared to the legal fees many applicants incur in seeking those services. Many applicants engage attorneys to handle their filing with the Office, and based on data concerning the cost of trademark representation, including from the American Intellectual Property Law Association’s 2019 Report of the Economic Survey, USPTO understands that trademark fees represent a small fraction of the legal fees a filer would generally pay to have an attorney represent them during the application process. In a TTAB proceeding, where even more time and work is required by an attorney representing a party before the Board, the fees for TTAB services would generally be an even smaller fraction of attorney fees associated with the representation. Understanding that legal VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 fees are a significant expense, the USPTO will continue to help to minimize the cost of the application process for small businesses through the USPTO’s law school clinic program, which enables qualified individuals and small businesses in need of trademark legal services to receive pro bono assistance in filing applications and responding to Office actions in trademark applications. The Office also notes that some of the fees being increased in this rule are paid by only a relatively small number of applicants—such as TTAB fees and letter of protest fees, which are not incurred by the majority of applicants with trademark business before the Office—and therefore these fee increases are unlikely to impact a large number of applicants, including small business owners. Some commenters also expressed concerns with specific individual fees. In the interest of providing context, when the USPTO received comments about a specific fee, they are summarized, and the USPTO’s responses are provided, in the discussion below of the individual fee rationale. V. Individual Fee Rationale: Based on the assumptions found in the FY 2021 Congressional Justification, the USPTO projects the aggregate revenue generated from this rule will recover the prospective aggregate costs of its trademark and TTAB operations and associated administrative services. However, each individual fee is not necessarily set at an amount equal to the estimated cost of performing the activities related to the fee. Instead, as described above, some of the fees are set to address increases in budgetary requirements as well as balance several key policy considerations, and executing these policy considerations through the trademark fee schedule is consistent with the goals and objectives outlined in the Strategic Plan. Once the cost recovery and key policy considerations are factored in, fees are set at, above, or below individual costrecovery levels for the service provided. Additional details on the cost methodologies used to derive the historical fee unit expenses can be found in ‘‘USPTO Fee Setting—Activity Based Information and Trademark Fee Unit Expense Methodology’’ at http:// www.uspto.gov/about-us/performanceand-planning/fee-setting-and-adjusting. A. Trademark application filing fees: This rule increases all application filing fees by varying amounts. The filing fee for a paper trademark application is increasing by $150, from $600 per class to $750 per class. The TEAS Plus PO 00000 Frm 00013 Fmt 4700 Sfmt 4700 73203 application filing fee is increasing by $25, from $225 per class to $250 per class. The TEAS Standard application filing fee is increasing by $75, from $275 per class to $350 per class. The fee for filing an application under section 66(a) of the Act is increasing by $100, from the equivalent of $400 per class, as paid in Swiss francs, to the equivalent of $500 per class, as paid in Swiss francs. Comments: One commenter expressed support for the increase in the paper application filing fee. Four commenters expressed concerns about the increase in electronic initial application fees. Of those four comments, one generally commented that increases will impact small businesses, while the others expressed concern about the amount of the increase in the TEAS Standard application and resulting gap in cost between TEAS Plus and TEAS Standard applications. Response: The USPTO appreciates the commenter’s support of the need to increase the paper application fee. The USPTO also appreciates commenters’ concerns regarding the increase in the TEAS Standard fees and impact on small business owners. Initial application fees are generally kept lower than the full processing cost in order to enable broader participation in the trademark registration system. The increase in the fees will help close the gap between the processing cost and incoming revenue while still keeping the fees below the full processing cost. The USPTO also notes that filers continue to have the option to select TEAS Plus, which is only increasing by $25, from $225 per class to $250 per class, which is less than current TEAS Standard fee rates, and encourages filers, including individuals and small business owners, to use this less expensive filing option. This rule also decreases the processing fee for failure to meet the filing requirements under § 2.22(a) for a TEAS Plus application from $125 to $100 per class. Thus, if the processing fee is required in a TEAS Plus application, the resulting per-class fee will equal the per-class fee for a TEAS Standard application. If a decrease in the processing fee were not enacted, the per-class fee for an application initially filed as TEAS Plus would exceed the fee for a TEAS Standard application, creating a disincentive to choose TEAS Plus, which, as noted above, tends to be more efficient for both filers and the USPTO. B. Fees for Paper Trademark Filings: This rule maintains the cost differential for all paper filings to better align fees with costs by setting all trademark processing fees for paper filings $100 to E:\FR\FM\17NOR1.SGM 17NOR1 73204 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations $200 higher than the corresponding electronic filing fees (per class, when applicable). Overall, it is more costly for the USPTO to process paper filings than electronic filings, and that cost is not recovered by the current fees for paper filings. Raising the fees for paper filings will help offset the higher processing costs and move the USPTO closer to total cost recovery. A final rule published on July 31, 2019 (84 FR 37081), which became effective on February 15, 2020 (84 FR 69330), requires applicants and registrants to file electronically through TEAS all trademark applications based on section 1 and/or section 44 of the Act, 15 U.S.C. 1051, 1126, and all submissions filed with the USPTO concerning applications or registrations, with limited exceptions. This followed a final rule published on October 7, 2016 (81 FR 69950), which became effective on January 14, 2017, requiring all parties in TTAB proceedings to file electronically through the Electronic System for Trademark Trials and Appeals (ESTTA). At present, the vast majority of filings are submitted electronically. For example, in FY 2019, less than 0.02% of initial applications were filed on paper. Thus, an increase in paper filing fees will have no impact on the vast majority of applicants, registrants, and parties to Board proceedings, who already meet the requirement to file documents electronically. C. Other Trademark Processing Fees: This rule also increases certain other trademark processing fees to further key policy goals. The rule sets out increases to the fees for petitions to the Director as well as section 8 and section 71 affidavits. In addition, the rule sets new fees and procedural regulations for filing a letter of protest, and for deleting goods, services, and/or classes from a registration after submission and prior to acceptance of a section 8 or section 71 affidavit. Finally, the USPTO decided not to implement the proposed new fee for a request for reconsideration filed more than three months, but within six months, after the issue date of a final action or with a petition to revive an abandoned application. (1) Petitions to the Director in Trademark Matters: This rule separates petitions to the Director into two types. Each type has a new and distinct fee amount with different levels of increases from the current single fee. The rule increases the fee for filing a petition to the Director for petitions filed under §§ 2.146 or 2.147 by one amount and establishes a separate fee code for petitions to revive filed under § 2.66 that increases the fee by less than VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 the fee for petitions filed under §§ 2.146 or 2.147. The fees enacted herein are intended to facilitate effective trademark operations. The fee for electronically filing a petition to the Director under §§ 2.146 or 2.147 is increasing from the current fee of $100 to $250, and the fee for filing on paper is increasing from $200 to $350. The fee for electronically filing a petition to revive an abandoned application under § 2.66 is increasing from the current fee of $100 to $150, and the fee for filing on paper is increasing from $200 to $250. Generally, petitions under §§ 2.146 or 2.147 extend the trademark registration and post-registration processes by introducing additional processing and examination into the timeline, which may lead to applications and registration maintenance documents remaining in a pending status for longer periods of time, potentially blocking others. They can also be used to delay processing of TTAB matters. By increasing fees for these filings, the USPTO discourages misuse of the process through unnecessary filings that delay prosecution of an application or registration maintenance document. Comments: One commenter indicated that they did not oppose the increase to the fee for petitions to the Director under § 2.66 to revive an abandoned application and also generally supported or are neutral regarding the increase in the fee for petitions to the Director under §§ 2.146 and 2.147. Another commenter noted that the amount of the increase for petitions under §§ 2.146 and 2.147, from $100 to $250, seems significantly beyond the rate that is appropriate for periodic increases. Response: The USPTO appreciates the feedback regarding the increase in fees for a petition to the Director. The fee for filing a petition to the Director has not increased since the fee was established, more than 30 years ago. Under this rule, petitions to the Director have been separated by type. Petitions under § 2.66 to revive an application abandoned for failure to respond to an Office action or notice of allowance are increased by a smaller amount because they cost less to process. These petitions generally require less processing when the filer complies with certain criteria in the submission itself. Petitions to the Director under §§ 2.146 and 2.147 usually include unique facts that require a lengthier review process. The increase in the fees for each type of petition will help to recoup more of the costs to process these filings. Additionally, the increase will further policy considerations consistent with the goals and objectives outlined in the Strategic PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 Plan because this fee should discourage misuse of the petition process through unnecessary filings that delay prosecution of an application or registration maintenance document, or an appeal or trial proceeding before the TTAB. (2) Section 8 or Section 71 Affidavits: Fees from post-registration filings have historically been set to recover more than the costs of processing the filings. The fees are used to help offset the cost of application processing and examination as well as TTAB trial proceedings and appeals—services for which the fees charged generally do not recover the full cost. In general, fewer post-registration maintenance filings are made by pro se and foreign registrants, who comprise a growing share of new applicants. Based on recent prepandemic trends, the overall percentage of registrations being maintained is decreasing. Therefore, the USPTO anticipates that it will face a continuing decrease in revenue from maintenance filings going forward if adjustments are not made. Increasing fees for section 8 and section 71 affidavits is necessary to continue to enable the USPTO to achieve aggregate cost recovery while allowing other fees to remain below their individual unit costs. This rule also increases the fees for these filings in part because of the postregistration audit program, which was implemented as a result of the 2012 Post Registration Proof of Use Pilot Program (pilot program). During the pilot program, section 8 or section 71 affidavits for 500 registrations were reviewed as to actual use of the marks in connection with the goods and/or services identified in the registrations in order to assess the accuracy and integrity of the trademark register. The findings of the pilot program demonstrated a need for ongoing measures for additional review of these filings on a permanent basis. Since codifying the authority to require additional information and evidence concerning the use of registered marks in connection with section 8 and 71 maintenance filings in 2017 (82 FR 6259), the USPTO has conducted additional reviews of the actual use of the marks in 8,276 section 8 or section 71 affidavits through January 1, 2020. In more than 50% of the registrations undergoing the additional review, the registrations have either been removed from the register or had goods or services deleted, resulting in a more accurate trademark register. The fee increases implemented in this rule will also support the cost of this additional review. E:\FR\FM\17NOR1.SGM 17NOR1 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations Comments: Three commenters expressed concerns about the increase in fees for filing a section 8 or section 71 affidavit. One commenter stated that the increase of $100 is excessive in light of the $25 increase four years ago. A second commenter indicated the increases will decrease renewal filings, particularly among small business owners. The third commenter stated that the increase in fees is significant. This commenter also mentioned increases to the section 15 fee. The USPTO notes that although an increase to the section 15 fee was initially considered, it was not proposed in the NPRM. Response: The USPTO appreciates the commenters’ concerns regarding the increase in the fees. These postregistration filing fees have historically been set to recover more than the costs of processing the filings in order to offset costs in other parts of the process. In addition, these fees are increasing to offset the cost of the legal examination required to conduct the post registration audit program, a valuable tool for improving the accuracy and integrity of the trademark register. Costs for this additional examination were discussed in the last fee adjustment in 2017. At that time, the Office was in the process of reviewing the findings from the pilot program and codifying regulations for the permanent audit program. The results of this ongoing audit program indicate that not only should this program continue, but also that the need for legal examination of an increasing number of filings is warranted. Based on these findings, the increase in fees is necessary to help offset costs for this program and allow other fees to remain below their individual unit costs. (3) Letters of Protest in Trademark Applications: This rule sets a new $50 fee for filing a letter of protest. A letter of protest allows a third party to bring to the attention of the USPTO evidence bearing on the registrability of a mark in a pending application. In this way, the letter-of-protest procedure can potentially improve the quality of the examination of a given application. The procedure is not, however, a substitute for the statutory inter partes opposition and cancellation procedures available to third parties who believe they would be damaged by the registration of the involved mark. A letter of protest, properly supported, should aid in examination without causing undue delay or compromising the integrity and objectivity of the ex parte examination process, which is designed to involve communications regarding an application only between the applicant VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 and the Office. For this reason, the protestor is not permitted to submit legal arguments, contact the examining attorney assigned to the subject application, or participate in any Office proceedings relating to the protest or the application to which it is directed. The limited involvement of the third party ends with the filing of the protest. The questions of whether evidence is relevant to a ground for refusal appropriate in ex parte examination, whether a refusal should be made, or whether a registration will issue are matters for the Office to determine during the ex parte examination process that occurs between the applicant and the Office acting on behalf of the public. The Office incurs costs associated with the work of reviewing and processing each letter. The filing volume for letters of protest has steadily increased in recent years, with the USPTO receiving 2,726 in FY 2017; 3,480 in FY 2018; and 4,106 in FY 2019. Thus, letters of protest continue to generate increasing additional expenses, which will likely further increase in the future. Comments: The Office received comments both generally supporting and objecting to the new fee to file a letter of protest. Commenters supporting the fee stated that the amount is reasonable and appropriate to recoup costs. Two of the commenters indicated that the fee should be kept as low as possible, with one suggesting that the fee should be set at $25 instead of $50, and one suggesting that the fee should be refunded if the letter of protest is granted. Several other commenters expressed concerns about the impact to small businesses by requiring a fee to file a letter of protest. These commenters also noted that letters of protest aid the Office by bringing to light information and/or refusals that an examining attorney may miss. These commenters stated that the Office should not charge a fee for a process that allows the public to aid in the registration process. Response: The USPTO understands the desire to keep the fee low so as to not discourage the use of the letter-ofprotest process. However, given the costs to process these filings, the USPTO has determined that a fee is necessary to help offset some of the processing costs. Similar to petitions under §§ 2.146 and 2.147, review of letters of protest cannot be automated because they include unique facts requiring review by staff attorneys to ensure guidelines are met before the information is sent to the examining attorney for review. In FY 2019, the evidence in approximately 25% of pre- PO 00000 Frm 00015 Fmt 4700 Sfmt 4700 73205 publication letters of protest and 94% of post-publication letters of protest was not forwarded to the examining attorney. This suggests that a significant portion of filings do not contain relevant information or evidence, do not meet the requirements for a letter of protest, or are otherwise unnecessary. These filings generate additional costs without a proportionate corresponding benefit. The fee set by this rule is below the amount required to recoup the full processing cost. The fee is intended to be at a level high enough to partially offset processing costs and deter the filing of unsupported or irrelevant filings, but low enough so as not to discourage the filing of relevant, wellsupported letters of protest. This fee is also consistent with the recommendations contained in the TPAC report that it fall within the $20 to $100 fee range. The USPTO does not anticipate that the letter of protest fee will impact a large number of parties with business before the Office. The letter of protest is a purely voluntary process that most applicants and registrants do not use. In addition, the letter of protest process was developed many years ago when examining attorneys had limited resources for gathering evidence to support refusals of registration. The tools available to examining attorneys today are far more advanced, reducing the need for letters of protest. In connection with this fee, the USPTO also codifies a new regulatory section at 37 CFR 2.149, which sets out the procedures for letters of protest. The new regulatory section is based on the existing longstanding procedures for letters of protest, which are currently set forth in the TMEP, with appropriate modifications that more closely align the procedures with those for similar third-party submissions and protests in patent applications under 37 CFR 1.290 and 1.291 and as set out in MPEP §§ 1134 and 1901. This action is being undertaken at this time due to the rising volume of letters of protest in recent years, which has resulted in the need to codify procedures for submission of such protests in the regulations and to adjust those procedures to deal efficiently with this higher volume of filings. Under the procedures set forth in the regulatory text at § 2.149, a letter of protest must be timely filed through TEAS and must include: (1) The fee; (2) the serial number of the pending application that is the subject of the protest; (3) an itemized evidence index that includes identification of the documents, or portions of documents, being submitted as evidence and a E:\FR\FM\17NOR1.SGM 17NOR1 73206 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations concise factual statement of the relevant grounds for refusal of registration appropriate in ex parte examination that each identified item supports; and (4) a clear and legible copy of the supporting evidence identified in the evidence index. If the letter of protest is filed before publication of the subject application, the evidence must be relevant to the identified ground(s) for refusal. If filed on the date of or within 30 days after publication of the subject application, the evidence must establish a prima facie case for refusal on the identified grounds, such that failure to issue a refusal or make a requirement would likely result in issuance of a registration in violation of the Act or regulations. The letter-of-protest process is intended to provide an opportunity for the protestor to efficiently and effectively provide relevant evidence in support of the proposed legal grounds for refusing registration of the application identified in the submission. It is inappropriate for the protestor to ‘‘dump’’ evidence and leave it to the Office to determine its possible relevance. Therefore, an index is required for all submissions listing the documents submitted as evidence and the ground(s) for refusal each item of evidence supports. In addition, the procedures also require that the submission not total more than 10 items of evidence in support of a specified ground of refusal and not more than 75 total pages of evidence without a detailed and sufficient explanation that establishes the special circumstances that necessitate providing more than 10 items of evidence per refusal ground or more than 75 total pages of evidence. This requirement encourages the submission of evidence that is succinct, not duplicative, and limited to the most relevant evidence. It should be a rare situation in which more than 10 items of evidence or 75 total pages of evidence is necessary to support the proposed legal grounds for refusal. However, some examples of situations that might constitute such special circumstances are when: (1) A subject application includes multiple classes and the protestor needs to provide evidence of relatedness of the goods and/or services for all classes in the application; (2) evidence submitted to support a refusal for descriptiveness consists of fewer than 10 discrete items, but each item comprises multiple pages, totaling more than 75 pages; or (3) a protestor raises more than one ground for refusal and the evidence necessary to support all grounds raised totals more than 10 items or 75 pages. VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 A letter of protest submitted by a third party is not made part of the application record to preserve the ex parte nature of examination. If the USPTO determines that the submission complies with the proposed regulations, only the specified grounds for refusal and the provided evidence relevant to the grounds for refusal would be included in the application record for consideration by the examining attorney. A third party filing a letter of protest will not receive any communication from the USPTO relating to the submission other than acknowledgement that it has been received by the Office and notification of whether the submission is found to be compliant or non-compliant. Also, the Office will not accept amendments to a non-compliant submission that was previously filed or requests to reconsider a compliance determination. Rather, the third party may submit a new letter of protest that is compliant if the time period for submitting a letter of protest has not closed. A protestor does not, by the mere filing of a protest, obtain a ‘‘right’’ to argue the protest before the Office. As noted above, the questions of whether evidence is relevant to a refusal ground appropriate in ex parte examination, whether a refusal will be made, or whether a registration will issue are matters for the Office to determine as part of the ex parte examination process that occurs between the applicant and the Office acting on behalf of the public. Therefore, the procedures also provide that: (1) The Office’s determination whether to include submitted evidence in the record of an application would be final and non-petitionable, (2) the limited involvement of the third party ends with the filing of the letter of protest, and (3) the third party may not directly contact the examining attorney assigned to the application. (4) Requests for Reconsideration in Trademark Applications: The USPTO has decided not to implement the proposed new fee for a request for reconsideration filed more than three months, but within six months, after the issue date of a final action or with a petition to revive an abandoned application. The proposed fee was $400 for a TEAS submission and $500 for a paper submission. No fee was proposed to be incurred for requests filed within three months of the issue date of a final action. Comments: Seven commenters objected to and expressed a variety of concerns regarding implementation of a fee for requests for reconsideration of a trademark application. One commenter noted that the proposed fee would impose a significant financial burden PO 00000 Frm 00016 Fmt 4700 Sfmt 4700 late in the process. Another commenter noted that the proposed fee would be higher than the initial application fee. Response: After further review, the USPTO has determined that the proposed fee might not provide significant enhancement to the timeliness or quality of the examination process and would impose an additional financial burden to administer. Given these considerations and the public concerns about such a fee, including the impact of potential fee increases on small businesses and individuals, the USPTO withdraws this proposed fee. (5) Deletion of Goods, Services, and/ or Classes from Registrations: Currently, amendments to registrations may be made by filing a section 7 request for amendment or correction of a registration for $100, if submitted through TEAS, or $200, if filed on paper. This rule sets a $0 fee for a section 7 request that is filed through TEAS prior to the submission of a section 8 or section 71 affidavit and that consists only of a request to delete specified goods, services, and/or classes. As noted above, the current practice that results in no additional amendment fee for section 8 or section 71 affidavits that specify fewer than all of the goods or services listed in the registration when the affidavit is filed, which results in the deletion of goods, services, and/or classes not included in the affidavit from the registration, is unchanged. However, a fee will be assessed if goods, services, and/or classes are deleted in a section 7 request, a response to an Office action, or a voluntary amendment filed after submission, but prior to the acceptance, of a section 8 or section 71 affidavit. This rule sets a new fee of $250 per class, if filed through TEAS, or $350 per class, if a paper filing is permitted, for deleting goods, services, and/or classes from the registration under such circumstances. The $0 fee option is available to, and the $250 (or $350) per-class fee will be assessed against, all registrants. Thus, the fees are not related to the postregistration audit program or a TTAB finding. The fees are intended to improve the accuracy and integrity of the register by encouraging all registrants to perform due diligence before filing a section 8 or section 71 affidavit to maintain a registration, so as to determine the goods, services, and/or classes for which the registered mark is no longer in use and to delete them from the registration. Comments: One commenter indicated support for a $0 fee for a section 7 request to delete goods or services prior to filing a section 8 or 71 affidavit. Two commenters expressed concern for E:\FR\FM\17NOR1.SGM 17NOR1 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations offsetting the cost to the USPTO to mail an updated paper registration certificate to filers who take advantage of the $0 fee. Response: The comments have been considered; however, the USPTO anticipates that other fees will help offset these costs. The decision to implement this fee as proposed prioritizes the key policy objective of incentivizing improvement of the accuracy and integrity of the register. Comments: Five commenters expressed concerns regarding the new fee to delete goods, services, and/or classes from a registration after a section 8 or 71 affidavit has been submitted. One commenter indicated there should be no fee for changes made online. Three commenters indicated the amount of the fee is too high, with two commenters suggesting the fee should be $100 per class. Finally, one commenter expressed concerns regarding the post-registration audit program and use of the fee to incentivize an increase in audited files. Response: Applicants and registrants are required to submit all trademark filings electronically (i.e., online). 37 CFR 2.23. Since the fee is intended to incentivize all registrants to perform the due diligence necessary to ensure that the mark is in use on all goods and/or services recited in the registration prior to the submission of a section 8 or 71 affidavit, not implementing the fee for an electronic filing would undermine the USPTO’s express purpose in proposing the fee. Further, the fee is not charged if the registrant performs its due diligence and deletes any goods, services, and/or classes for which the mark is not in use within the section 8 or 71 affidavit at the time of filing. As noted above, the fee structure for requests to delete goods, services, and/ or classes from a registration will protect and improve the integrity of the register and the efficiency of the process by incentivizing both more timely filings and proactive action by registrants to ensure the accuracy of their registrations. Undermining the quality of the register will generate potentially exorbitant undue costs and hardship on registrants, applicants, and the agency. The new fee needs to be high enough to reflect the significance of incomplete due diligence. At the same time, the fee should not be so low as to have limited deterrence. The USPTO believes that $250 is the appropriate fee to incentivize the desired practices. Further, the increased efficiencies realized through this rule will benefit all applicants and registrants by allowing registrations to be granted sooner and more efficiently VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 by removing unused marks and unsupported goods and services from the register. In addition, revenue generated by this rule allows for continuing development of methods for detecting and addressing filing practices that threaten the integrity of the register. The USPTO assures the public that any decision to increase the number of registrations audited after submission of a post-registration maintenance document would be made to promote the accuracy and integrity of the register and not because of the possibility that it might increase revenue. As noted above, the no-fee option is available to, and the $250 (or $350) per-class fee will be assessed against, all registrants. The fee is applied to all registrations in which goods or services are deleted after submission, but prior to acceptance, of a section 8 or 71 affidavit, not only to deletions in registrations being audited. When filing a section 8 or 71 affidavit, all registrants are required to specify the goods and/or services for which the mark is in use in commerce. These fees will serve to improve the integrity and quality of the register by incentivizing all registrants to perform the due diligence necessary before submission of a section 8 or 71 affidavit to maintain a registration. Thus, registrants who ensure that their marks are in use in commerce in connection with the goods and/or services listed in the registration before the submission of a section 8 or 71 affidavit, and who delete those goods, services, and/or classes for which the mark is not in use when the affidavit is submitted, are not subject to this fee. However, registrants who later determine, either as part of an audit or not, that some of the goods, services, and/or classes included in the affidavit must be deleted are subject to the fee. D. TTAB Fees: This rule sets or adjusts 16 TTAB-related fees (8 for electronic filings and 8 for paper filings). Ten existing fees (5 electronic/ 5 paper) are increased, specifically, those for initiating an ex parte appeal from an examining attorney’s refusal to register a mark, for initiating an opposition proceeding, for initiating a cancellation proceeding, and for filing each of two different types of extensions of time to oppose. Six new filing fees (3 electronic/3 paper) are established, and are explained below. The rule also codifies that the TTAB has discretion to grant a refund of a portion of the filing fee for a petition to cancel. While the percentage increase for a number of TTAB fees is larger than the application filing fees discussed above, the USPTO notes that many of the TTAB fees remain below cost recovery, considering the significant costs the Board incurs in PO 00000 Frm 00017 Fmt 4700 Sfmt 4700 73207 conducting proceedings. In addition, TTABs fees are a small percentage of the total litigation costs incurred by a party before the Board, considering the attorney fees and other expenses of litigation. (1) Existing Fees for Trial Cases: To better align the costs of providing TTAB services with the fees charged for them, this rule increases the fee for petitions for cancellation and notices of opposition by $200 per class. The rule also amends § 2.114(a) to allow the USPTO discretion to refund a portion of the petition fee in cases of default judgment where there is no appearance by a defendant and no filings are made other than the petition to cancel, reflecting reduced work needed on the part of the TTAB. The resulting lower net fee for a petition to cancel that meets these characteristics also furthers the policy goal of not discouraging the filing of petitions to cancel by petitioners with knowledge that a registered mark is no longer in use, or was never put to use, and therefore should be removed from the register. The refund will be in the amount of $200 per class, as explained below. Comments: Four IP stakeholder organizations provided comments on the proposed $200 per class increases in the fees for trial cases (Notices of Opposition and Petitions for Cancellation). Three of the four noted the increases of four years ago, and stated that they consider the proposed increases ‘‘steep’’ or ‘‘excessive.’’ Response: The percentage of TTAB costs associated with processing of trial cases varies a great deal, as compared to the uniform per class filing fee. Clearly, in an opposition or cancellation case in which no appearance by a defendant is made, no filing other than the plaintiff’s initial complaint is made, and the case is decided by way of default judgment, a higher percentage of TTAB operational costs is covered than in a case involving significant motion practice and a full trial. The original set of fee proposals discussed in the TPAC fee setting hearing with the public and stakeholders included a discussion of shifting some of the costs of TTAB trials to heavier users of trial case services, for example, by requiring a fee for the filing of a motion for summary judgment. However, initial stakeholder input during the fee setting hearing clearly indicated a preference for more uniform filing fees and fewer user fees for particular filings. The costs associated with processing trial cases are more substantial than with appeal cases because of the larger number of trial cases and the procedural complexities. For example, the Board’s E:\FR\FM\17NOR1.SGM 17NOR1 73208 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations staff of 18 interlocutory attorneys exists primarily to handle contested motions in trial cases. Since parties in trial cases pay no fees associated with the myriad motions, voluminous evidentiary submissions, and many briefs that can be filed, trial case filing fees need to be set for all commenced trial cases at a level that furthers cost recovery for all such cases. In addition, as noted above, USPTO initial fees for filing trial cases at the TTAB, compared to other costs associated with financing litigation, such as attorney fees, remain a small part of overall litigation costs. As noted in the NPRM, TTAB fee revenue presently covers only 31% of TTAB operating costs. Applicants and registrants making filings in the trademark operation, the vast majority of whom do not use TTAB services, subsidize TTAB costs. The TTAB can recover a more substantial percentage of its operating costs, thereby reducing the subsidization of TTAB operations, while still keeping TTAB filing fees low as a portion of the overall cost of litigation by attaching fees to the TTAB filings that are significant enough in number to bring in appreciable revenue. The most effective means for raising revenue that will allow the Board to recover more of its operating costs lies in filing fees for trial cases, and in particular, oppositions (2) Partial Refunds of Qualifying Cancellation Fees: Comments: Three IP stakeholder organizations addressed the proposal to grant the TTAB discretion to provide partial refunds in cancellation cases asserting abandonment or nonuse of a registered mark, where there is no appearance by a defendant, no filings are made other than the petition to cancel, and where a default judgment is entered. Commenters sought clarification regarding how the Board would exercise such discretion, whether the refund would be processed as a matter of course by the Board, or whether a refund request must be filed and whether the refund of $200 is per class or per proceeding. One of these commenters also sought clarification as to whether the petitioner would need to have a deposit account for the refund to issue. Response: First, the Office is granted discretion under revised § 2.114(a) precisely because it must have the discretion to refund any portion of a fee otherwise required. The TTAB will process refunds as a matter of course during the process of termination of a cancellation case, so long as the stated requirements are met. Paralegals will have no need to exercise individual VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 discretion to determine whether to provide a refund or not. Second, refunds will be handled by TTAB paralegals, during the process of terminating cancellation proceedings. The petitioner will not have to request the refund. The refund will be processed in the same way that refunds now are processed for cases that should not have been instituted and are dismissed as a nullity. Therefore, a filer who did not use a deposit account to pay the filing fee would not need to establish an account just for the purpose of receiving a refund. Third, as explained in the NPRM, under this rule a petitioner filing only an abandonment or nonuse claim, where no other filings are made, and in which a default judgment is entered, would receive a $200 per class refund of the filing fee. That is, the net filing fee would be the same as it was prior to this rule. Notwithstanding the pressing need to cover more of the TTAB’s operating costs, the refund of a portion of the fee for a petition to cancel provided for by this rule, under defined circumstances, means that many filers of petitions for cancellation will see no increase in the filing fee for such cases. Comments: One commenter sought clarification as to what would happen if the Board granted a motion to reopen a case in which the Board had entered default judgment. Response: To ensure that cancellation petitioners who do not obtain default judgments are treated equally, if a motion to reopen was granted in a cancellation case that was originally decided by default, the petitioner would be assessed the amount of the refund processed at the time of default. Comments: One commenter suggested that the refund conditions be expanded to allow for filing of some documents prior to entry of a default judgment (e.g., ‘‘no substantive filings’’ were made or only ‘‘simple, procedural’’ filings were made). Response: The Office appreciates the comment that some cancellation cases asserting only abandonment or nonuse claims may have few filings and no ‘‘substantive’’ filings prior to entry of default judgment. However, the refund procedure is established with clear guidelines for determining when a refund will be provided to avoid caseby-case discretionary judgments on whether a filing was substantive or a ‘‘simple, procedural filing.’’ The Office will not expand the refund process to cancellation cases asserting abandonment that involve filing of more than just the initial complaint prior to entry of judgment. Extending the refund to cancellation cases asserting PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 abandonment and that involve filings other than the initial complaint would require time-consuming case-by-case judgments regarding whether the filings were substantive or not or were simple and procedural. Moreover, cases that did not involve substantive filings might still involve many procedural filings that could cause the case to remain pending for a long period of time, and the refund proposal is designed to benefit cases that are terminated rapidly. In addition, decisions by TTAB personnel regarding whether filings were substantive or simple could then be subject to review on petition and would result in additional delays prior to termination. Comments: Commenters also proposed that a refund should be available in opposition cases and for all cases of default judgment, regardless of the grounds asserted by the plaintiff. Of the two stakeholder organizations that addressed the issue of the frequency with which default judgment is entered in opposition proceedings, one stated that the reported experience of its members is that default judgments are just as frequent in opposition proceedings as they are in cancellation proceedings. In contrast, the other acknowledged that default judgments are rare in opposition proceedings. Response: The TTAB’s expedited cancellation proceeding pilot confirmed only the high rate of default judgment in cancellation cases asserting abandonment or nonuse alone. Thus, the Board did not have any basis to propose refunds in opposition cases or in cancellation cases asserting other grounds. The NPRM refund proposal was limited to cancellation cases asserting only abandonment or nonuse, in which the defendant does not enter an appearance, the only filing was the initial complaint, and that results in default judgment. This was rooted in the recognition of the high number of abandonment or nonuse claims, the high rate of default in cases in which those are the only claims, and the ability to handle refund processing in the normal course of terminating a cancellation proceeding. Based on statistics from the TTAB’s recent twoyear expedited cancellation proceeding pilot program, abandonment is the most common claim in cancellation proceedings, appearing in 34% of filings. The default rate in cancellation cases in which abandonment is the only claim is 60%. The decision to process refunds in such cases results in no net increase in the cancellation filing fee for many petitioners and also encourages filings that help ensure the integrity of the register. Cancellation cases E:\FR\FM\17NOR1.SGM 17NOR1 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations involving assertion of other grounds serve other purposes that may be unrelated to the integrity of the register. Opposition cases typically do not involve abandonment claims and, even if they result in default judgments do not result in removal of registered but unused marks from the register. (3) Fees for Extensions of Time to Oppose: This rule also increases fees for filing requests for an extension of time to file an opposition. Prior to enactment of this rule, applicants could request: (1) An initial 30-day extension for no fee, (2) a subsequent 60-day extension (or an initial 90-day extension) for a fee of $100 for electronic filings and $200 for paper filings, and (3) a final 60-day extension for a fee of $200 for electronic filings and $300 for paper filings. This rule maintains this tiered structure with an increase of $100 for the first 60-day (or initial 90-day) electronic extension and $200 for the final 60-day electronic extension. Paper-filed extension requests will increase by $200 for each filing. The fees are per application, not per class. These fees are designed to yield efficiencies by encouraging potential opposers to make decisions regarding filing an opposition sooner, thus reducing delays to applicants whose filings have been made the subject of extensions of time to oppose. Additionally, by encouraging earlier decisions to initiate proceedings, the uncertainty experienced by these applicants will be ameliorated by having their applications proceed to determination on the merits sooner. This will also help protect the integrity of the trademark register by encouraging timely decisions and filings to ensure that the rights of other applicants and the public are not adversely affected. Further, currently about two-thirds of the cost of TTAB operations is subsidized by revenue from other trademark processing fees. The increases in existing TTAB fees set by this rule, and the new fees set by this rule, will not recover the full costs of TTAB operations, but they are estimated to increase cost recovery by 7% and to bring the TTAB incrementally closer to full cost recovery. Finally, the extension of time to oppose fees will help offset TTAB processing costs. In FY 2019, the USPTO received 20,502 requests for extensions of time to file a notice of opposition. It is customary for requests that delay processing of records, such as extensions, to incur a fee, which offsets costs associated with processing the filing, as well as the overall cost of processing appeals and trials. These fees are necessary to help achieve primary VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 Office goals of recovering the aggregate costs of operations, along with key policy considerations, such as encouraging efficient processing. Comments: Two IP stakeholder organizations and one law firm provided comments on the extension of time to oppose fees. One stakeholder organization noted only the proposed fee for the final 60-day extension of time to oppose, and it is unclear whether the organization’s comment concerns only that extension or both types of extensions that carry fees. All commenters noted that fees for these filings were first levied four years ago and that the proposed increases are, percentage-wise, substantial. Comments also suggested that an applicant engaged in settlement talks with a potential opposer could attempt to force an increase in costs for the potential opposer to continue settlement talks by not responding to attempts to settle the parties’ differences. The law firm suggested that potential opposers might proceed to file a notice of opposition rather than pay the increased fees for the extensions of time to oppose. The law firm also suggested that processing of extensions of time to oppose is largely automated and, therefore, the fee increase cannot be justified on the grounds of cost recovery. Response: Many potential opposers are aware of applications that have been filed and that are perceived as potentially conflicting well before a mark is published for opposition, as demonstrated by the large number of Letters of Protest filed each year, many of which seek to ensure an examining attorney is aware of the protestor’s prior registration or other concerns. A potential opposer and an applicant can initiate settlement discussions as soon as the application is approved for publication in the Trademark Official Gazette and before it actually publishes. Then, upon publication, there is a 30day opposition period, and a 30-day extension of that period can be obtained at no cost. Extension of time to oppose fees do not apply until 60 days after the date of publication. The additional 60 days that can be obtained for the period covering 60–120 days from publication carry a fee that is charged per application, not per class of goods or services in the application. A final extension for another 60 days can be obtained for a higher fee, also per application, not per class. The fee structure encourages parties to discuss settlement of differences, but charges more the longer the discussions go on and applications are delayed. When fees for extensions were first proposed, commenters posited that PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 73209 potential opposers might file oppositions rather than pay the extension fees. The Board has not seen any evidence of a significant change in practice. On the contrary, the number of extensions of time to oppose filed has generally increased on an annual basis. Opposition fees are paid per class for the opposed application, while fees that are required for extensions of the opposition period accrue on a perapplication basis. As such, filing an opposition to avoid paying an extension fee when negotiations to avoid commencement of an opposition are progressing would in most instances cost a potential opposer more. When negotiations are not progressing, the potential opposer may wish to consider an earlier determination as to whether filing of an opposition is desirable. In trial cases, it is not unusual for the Board to be informed that an adversary is not willing to engage in settlement talks. The Board has limited ability to force such discussions. In addition, the Board has received objections to its approval of extensions of time to oppose from applicants who assert that the potential opposer has no real basis for an opposition and seeks only to delay the application. Thus, the extension fees are intended to facilitate earlier discussion of settlement and recognize that delay can be a concern for both parties. As noted above in the discussion of increases in filing fees for trial cases, cost recovery by the TTAB is not assessed solely on the basis of each particular type of filing or Board proceeding. As stakeholders have indicated a preference for spreading out cost recovery over many filings, rather than be faced with steeply higher costs for involved and protracted proceedings, cost recovery for all Board operations is facilitated by apportionment of fees on filings that are most frequently made. Extensions of time to oppose are filed on an annual basis at three times the rate of the filing of notices of opposition. Therefore, they are a logical type of filing for which to charge nominal fees for longer extensions. In addition, the fact that processing of extensions of time to oppose is largely automated does not mean that there are no costs associated with their processing. Development and enhancements of automated processing systems cost a great deal. (4) Fees for Filing an Appeal Brief: This rule increases the fee for filing a notice of appeal by $25 per class, based on inflation, and establishes new fees for filing an appeal brief of $300 per class if filed on paper and $200 per class if filed through ESTTA. These fees E:\FR\FM\17NOR1.SGM 17NOR1 73210 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations address the TPAC report recommendations to apply the majority of the aggregate increases in appeal fees to the costs incurred when an appeal brief is filed, which increases the likelihood that the appeal will have to be decided on the merits. (5) Fees for Filing Requests for Extension of Time to File an Appeal Brief: This rule sets fees for second and subsequent requests for extensions of time to file an appeal brief at $200 per application if filed on paper and $100 per application if filed through ESTTA. These fees yield efficiencies by encouraging applicants to move forward with their appeals, resulting in a quicker resolution of the appeal, the pendency of which can adversely impact the rights of other applicants and registrants. Implementing a tiered fee structure minimizes costs to all applicants, including smaller entities, as there is no fee for a first request for extension of time to file the appeal brief. (6) Fees for Oral Hearing: This rule sets the fee for a request for an oral hearing at $500 per proceeding. Oral hearings are not requested in the vast majority of cases before the TTAB. They are optional and are most useful when cases involve complex issues, a complex record, or highly technical goods and/or services. This fee will help offset the costs of scheduling and conducting the hearing, as well as the maintenance of equipment for remote participation. Comments: Two IP stakeholder organizations and one law firm addressed the proposed fee for an oral hearing in an ex parte appeal or trial case. One organization noted its concern but did not provide an explanation of the basis for its concern, though it did suggest limiting the fee to in-person arguments. The other organization concluded that the fee will discourage the use of oral hearings and could weaken a party’s chance of success in a matter before the TTAB. The law firm considers trademark cases to be inherently complex and long and the fee to be a disservice to the bar, to the parties, and to fair determinations of cases. Response: This fee appropriately places Board costs on actual users of this service. Approximately 100 hearings have been requested on an annual basis in recent years. While some practitioners routinely request an oral argument for cases in which they are involved, most do not. The Board has no evidence that outcomes for parties that request an oral argument are appreciably different than for those that do not. No Board case is decided without thorough review of the record and briefs, which, as frequently stated, VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 are of paramount importance. However, hearings are available for those who request them. Because there is no current fee for requesting an oral hearing, it is not unusual for a party to request one only to cancel shortly before the hearing. Charging a fee for requesting a hearing may help deter requests for hearings that could later be cancelled. Hearings incur costs that are not associated with cases submitted for decision on the briefs. The scheduling and running of hearings requires a dedicated staff position, and the TTAB must maintain a hearing room for use when in-person hearings are held and the technical infrastructure necessary to offer parties the option to appear by video rather than incur the costs associated with having to travel to the USPTO. This infrastructure has a finite lifespan and needs regular upgrading or replacement. Discussion of Rule Changes The USPTO revises § 2.6(a)(1)(i) to increase the per-class fee for filing an initial application on paper from $600 to $750. The USPTO revises § 2.6(a)(1)(ii) to increase the per-class fee for filing an application under section 66(a) of the Act from $400 to $500. The USPTO revises § 2.6(a)(1)(iii) to increase the per-class fee for filing a TEAS Standard application from $275 to $350. The USPTO revises § 2.6(a)(1)(iv) to increase the per-class fee for filing a TEAS Plus application from $225 to $250. The USPTO revises § 2.6(a)(1)(v) to decrease the processing fee under § 2.22(c) from $125 to $100 per class. The USPTO adds § 2.6(a)(11)(iii) to establish a fee of $0 for filing a section 7 request to amend a registration through TEAS prior to submission of a section 8 or section 71 affidavit and that consists only of the deletion of goods, services, and/or classes. The USPTO revises § 2.6(a)(12)(i) and (ii) to increase the per-class fee for filing a section 8 affidavit from $225 to $325 for a paper submission and from $125 to $225 for a TEAS submission. The USPTO adds § 2.6(a)(12)(iii) and (iv) to establish fees for the deletion of goods, services, and/or classes after submission and prior to acceptance of a section 8 affidavit. The addition of § 2.6(a)(12)(iii) and (iv) sets the per-class fee at $350 for a paper submission and $250 for a TEAS submission. The USPTO revises § 2.6(a)(15) to establish separate fees for petitions to the Director under §§ 2.146 or 2.147 and petitions to revive an abandoned application under § 2.66. The revisions PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 to § 2.6(a)(15)(i) and (ii) set the fee for filing a petition to the Director under §§ 2.146 or 2.147 at $350 for a paper submission and $250 for a TEAS submission. The addition of § 2.6(a)(15)(iii) and (iv) sets the fee for filing a petition to revive an abandoned application under § 2.66 at $250 for a paper submission and $150 for a TEAS submission. The USPTO revises § 2.6(a)(16)(i) and (ii) to increase the per-class fee for filing a petition to cancel from $500 to $700 for a paper submission and from $400 to $600 for an ESTTA submission. The USPTO revises § 2.6(a)(17)(i) and (ii) to increase the per-class fee for filing a notice of opposition from $500 to $700 for a paper submission and from $400 to $600 for an ESTTA submission. The USPTO revises § 2.6(a)(18) to increase the fee for filing an ex parte appeal and to establish new fees for requests for an extension of time to file an appeal brief and for filing a brief in an ex parte appeal. The revisions to § 2.6(a)(18)(i) and (ii) increase the perclass fee for filing an ex parte appeal from $300 to $325 for a paper submission and from $200 to $225 for an ESTTA submission. The addition of § 2.6(a)(18)(iii) sets the per-application fee for filing a first request for an extension of time to file an appeal brief at $0. The addition of § 2.6(a)(18)(iv) and (v) sets the per-application fee for filing a second or subsequent request for an extension of time to file an appeal brief at $200 for a paper submission and $100 for an ESTTA submission. The addition of § 2.6(a)(18)(vi) and (vii) sets the per-class fee for filing a brief in an ex parte appeal at $300 for a paper submission and $200 for an ESTTA submission. The USPTO revises § 2.6(a)(22)(i) and (ii) to increase the fee for filing a request for an extension of time to file a notice of opposition pursuant to § 2.102(c)(1)(ii) or (c)(2) from $200 to $400 for a paper submission and from $100 to $200 for an ESTTA submission. The USPTO revises § 2.6(a)(23)(i) and (ii) to increase the fee for filing a request for an extension of time to file a notice of opposition pursuant to § 2.102(c)(3) from $300 to $500 for a paper submission and from $200 to $400 for an ESTTA submission. The USPTO adds § 2.6(a)(24) to establish a fee for filing a request for an oral hearing before the TTAB of $500 per proceeding. The USPTO adds § 2.6(a)(25) to establish a fee of $50 for the filing of a letter of protest per subject application. The USPTO revises § 2.114(a) to provide that a partial refund of the fee for a petition to cancel, equal to the E:\FR\FM\17NOR1.SGM 17NOR1 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations increase in that fee otherwise enacted in this rulemaking, may be made in cases of default judgment where there was no appearance by a defendant and no filings are made other than the petition to cancel. The USPTO adds § 2.149, which codifies the procedures and requirements for letters of protest. The USPTO revises the section title and restructures § 2.161 to set out the requirements for section 8 affidavits or declarations more clearly. The USPTO also adds, at revised § 2.161(c), a provision stating that if goods, services, and/or classes are deleted from a registration after submission and prior to the acceptance of a section 8 affidavit or declaration, the deletion must be accompanied by the relevant fee under § 2.6(a)(12)(iii) or (iv) for each class from which goods, services, and/or classes are deleted. The USPTO revises § 7.6(a)(6)(i) and (ii) to increase the per-class fee for filing a section 71 affidavit from $225 to $325 for a paper submission and from $125 to $225 for a TEAS submission. The USPTO adds § 7.6(a)(6)(iii) and (iv) to establish fees for the deletion of goods, services, and/or classes after submission and prior to acceptance of a section 71 affidavit. The added § 7.6(a)(iii) and (iv) set the per-class fee at $350 for a paper submission and $250 for a TEAS submission. The USPTO revises the section title and restructures § 7.37 to set out the requirements for section 71 affidavits or declarations more clearly. The USPTO also adds, at revised § 7.37(c), a provision stating that if goods, services, and/or classes are deleted from a registration after submission and prior to acceptance of a section 71 affidavit or declaration, the deletion must be accompanied by the relevant fee under § 7.6(a)(6)(iii) or (iv) for each class from which goods, services, and/or classes are deleted. Rulemaking Requirements A. America Invents Act: This rulemaking sets and adjusts fees under section 10(a) of the AIA as amended by the SUCCESS Act. Section 10(a) of the AIA authorizes the Director to set or adjust by rule any trademark fee established, authorized, or charged under the Trademark Act for any services performed by, or materials furnished by, the USPTO (see section 10 of the AIA, Pub. L. 112–29, 125 Stat. 284, 316–17, as amended by Pub. L. 115–273, 132 Stat. 4158). Section 10(e) of the AIA sets forth the general requirements for rulemakings that set or adjust fees under this authority. In particular, section 10(e)(1) requires the VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 Director to publish in the Federal Register any proposed fee change under section 10 and include in such publication the specific rationale and purpose for the proposal, including the possible expectations or benefits resulting from the proposed change. For such rulemakings, the AIA requires that the USPTO provide a public comment period of not less than 45 days. The TPAC advises the Under Secretary of Commerce for Intellectual Property and Director of the USPTO on the management, policies, goals, performance, budget, and user fees of trademark operations. When adopting fees under section 10 of the AIA, the AIA requires the Director to provide the TPAC with the proposed trademarkrelated fees at least 45 days prior to publishing them in the Federal Register. The TPAC then has at least 30 days within which to deliberate, consider, and comment on the proposal, as well as hold a public hearing(s) on the proposed fees. The TPAC must make a written report available to the public of the comments, advice, and recommendations of the committee regarding the proposed fees before the USPTO issues any final fees. The USPTO will consider and analyze any comments, advice, or recommendations received from the TPAC before finally setting or adjusting fees. Consistent with the requirements of the AIA, on August 28, 2019, the Director notified the TPAC of the USPTO’s intent to set or adjust trademark fees and submitted a preliminary trademark fee proposal with supporting materials. The preliminary trademark fee proposal and associated materials are available at http:// www.uspto.gov/about-us/performanceand-planning/fee-setting-and-adjusting. The TPAC held a public hearing in Alexandria, Virginia, on September 23, 2019. Transcripts of this hearing and comments submitted to the TPAC in writing are available for review at http:// www.uspto.gov/about-us/performanceand-planning/fee-setting-and-adjusting. The TPAC subsequently issued a report, dated October 31, 2019, regarding the preliminary proposed fees. The report can be found online at http:// www.uspto.gov/about-us/performanceand-planning/fee-setting-and-adjusting. B. 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 USPTO’s proposed changes to trademark fees on small entities. Under the RFA, whenever an agency is required by 5 U.S.C. 553 (or any other PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 73211 law) to publish an 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 (see 5 U.S.C. 603, 605). The USPTO published an Initial Regulatory Flexibility Analysis (IRFA), along with the NPRM, on June 19, 2020 (85 FR 37040). 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 discusses alternatives considered by the Office. 1. Succinct statement of the need for, and objectives of, the rule: The USPTO is setting and adjusting certain trademark fees as authorized by section 10 of the AIA, as amended by Public Law 115–273, 132 Stat. 4158 (the SUCCESS Act). The fee schedule established under section 10 in this rulemaking will, based on the assumptions found in the FY 2021 Congressional Justification, recover the aggregate estimated costs to the USPTO while achieving strategic and operational goals, such as implementing measures to maintain trademark pendency and high trademark quality, modernizing the trademark IT systems, continuing important programs for stakeholder and public outreach, enhancing operations of the TTAB, and maintaining a sufficient operating reserve. Aggregate costs are estimated through the USPTO budget formulation process with the annual preparation of a five-year performance-based budget request. Revenues are estimated based on the projected demand (workload) for trademark products and services and fee rates. The policy objectives of the rule are to: (1) Better align fees with costs, (2) protect the integrity of the trademark register, (3) improve the efficiency of USPTO processes related to trademark and TTAB operations, and (4) ensure financial sustainability to facilitate effective trademark operations. The legal basis for the rule is section 10 of the AIA, as amended, which provides the authority for the Director to set or adjust by rule any fee established, authorized, or charged under the Trademark Act of 1946, 15 U.S.C. 1051 et seq., as amended. See also section 31 of the Trademark Act, 15 U.S.C. 1113. 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, E:\FR\FM\17NOR1.SGM 17NOR1 73212 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations 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 fees in general, as well as particular fees, and their impact on small entities, 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 applicants, and this information would be required in order to determine the number of small entities that would be affected by the proposed rule. This rule applies to any entity filing trademark documents with the USPTO. The USPTO estimates, based on the assumptions found in the FY 2021 Congressional Justification, that during the first full fiscal year under the fees as proposed, the USPTO would expect to collect approximately $76 million more in trademark processing and TTAB fees in FY 2021. The USPTO would receive an additional $40 million in fees from applications for the registration of a mark, including requests for extension of protection and subsequent designations; $2 million more from petitions and letters of protest; and $27 million more for section 8 and section 71 affidavits. TTAB fees would increase by $6 million. Trademark fees are collected for trademark-related services and products at different points in time in the trademark application examination process and over the lifecycle of the registration. Approximately 55% of all trademark fee collections are from application filing fees. Fees for TTAB proceedings and appeals comprise 2.5% of revenues. Fees from other trademark activities, petitions, assignments and certifications, and Madrid processing are approximately 5% of revenues. Fees for filing post-registration and intent-touse filings, which subsidize the costs of VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 filing, search, examination, and TTAB activities, comprise 37.5%. The USPTO’s five-year estimated aggregate trademark fee revenue is based on the number of trademark applications and other fee-related filings it expects to receive for a given fiscal year and work it expects to process in a given fiscal year (an indicator of future fee workload and budgetary requirements). Within the iterative process for estimating aggregate revenue, the USPTO adjusts individual fee rates up or down based on policy and cost considerations and then multiplies the resulting fee rates by appropriate workload volumes to calculate a revenue estimate for each fee, which is then used to calculate the aggregate revenue. Additional details about the USPTO’s aggregate revenue, including projected workloads by fee, are available at https://www.uspto.gov/ about-us/performance-and-planning/ fee-setting-and-adjusting. 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 reporting or recordkeeping requirements. The main purpose of the final rule is to set and adjust trademark fees. The final rule also codifies new procedural regulations at 37 CFR 2.149 for the submission of letters of protest. The USPTO does not collect or maintain statistics in trademark cases on smallversus large-entity applicants and is unable to provide an estimate of the classes of small entities that will be subject to the new procedural requirements. However, the USPTO does not anticipate that the final rule would have a disproportionate impact upon any particular class of small or large entities. 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 final 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 considered four alternatives, based on the assumptions found in the FY 2021 Congressional Justification, before enacting this rule: (1) The adjustments included in this final rule, (2) an across-the-board PO 00000 Frm 00022 Fmt 4700 Sfmt 4700 adjustment of 22%, (3) the unit cost of providing services based on FY 2019 costs, and (4) no change to the baseline of current fees. The alternatives are each explained here with additional information regarding how each alternative was developed and the aggregate revenue estimated. A description of the Aggregate Revenue Methodologies is available at http:// www.uspto.gov/about-us/performanceand-planning/fee-setting-and-adjusting. The USPTO is setting or adjusting trademark fees codified in 37 CFR parts 2 and 7. Fees are adjusted for all application filing types (i.e., paper applications, applications filed via TEAS, and requests for extension of protection under section 66(a) of the Trademark Act (15 U.S.C. 1141f)). The USPTO also sets or adjusts certain other trademark processing fees to further effective administration of the trademark system. For example, the rule increases the fees for certain petitions to the Director as well as section 8 and section 71 affidavits, sets a new fee and proposes procedural regulations for filing a letter of protest, and sets new fees for deleting goods, services, and/or classes from a registration after submission and prior to acceptance of a section 8 or section 71 affidavit. The USPTO chose the alternative established in this rule because it will enable the Office to achieve its goals effectively and efficiently without unduly burdening small entities, erecting barriers to entry, or stifling incentives to innovate. The alternative established here secures the USPTO’s objectives for meeting the strategic goals of encouraging broader usage of IP rights-protection mechanisms and participation by more trademark owners and more efficient resolution of appeals and inter partes proceedings at the TTAB by increasing revenue to meet the Office’s aggregate future costs. In particular, the new fee structure for requests to delete goods, services, and/ or classes from a registration will protect the integrity of the register and the efficiency of the process by incentivizing both more timely filings and proactive action by applicants and registrants. The increased efficiencies realized through this rule will benefit all applicants and registrants by allowing registrations to be granted in a timely manner and more efficiently by removing unused marks and unsupported goods and services from the register. All trademark applicants and registrants should benefit from the efficiency that will be realized under the final rule. With regard to the new regulations governing the filing of letters of protest, E:\FR\FM\17NOR1.SGM 17NOR1 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations the USPTO anticipates that the impact to affected entities will be small. The proposed fee of $50 is set at a level high enough to recognize there are processing costs and deter the filing of unsupported or irrelevant filings, but low enough so as not to discourage the filing of relevant, well-supported letters of protest. In addition, the new procedural regulations for filing letters of protest are not anticipated to significantly impact affected entities because the new regulations are based on existing informal procedures set out in the TMEP. Finally, the new provision at § 2.114(a) provides that a partial refund of the fee for a petition to cancel may be made in cases of default judgement where there was no appearance by a defendant and no filings were made other than the petition to cancel. This change will balance the cost recovery obtained from the increase in the fee for a petition to cancel, a case type that has increased markedly in recent years, against the benefit of having petitions to cancel filed to remove registrations from the register when petitioners have determined through their investigations that the registered marks are no longer in use. In such situations, default judgments often result, efficiently clearing the register of marks that would otherwise stand as potential bars to applications seeking to register similar marks. This reduces costs for applicants filing such applications. The fee schedule for this alternative (labeled ‘‘Alternative 1—Final Rule’’) is available in the document entitled ‘‘Final Regulatory Flexibility Act Tables’’ at http://www.uspto.gov/aboutus/performance-and-planning/feesetting-and-adjusting. Another alternative to setting and adjusting fees that was considered was to increase all fees by the same 22% across the board. This alternative would maintain the status quo structure of cost recovery, where processing and examination costs are subsidized by fees paid for intent-to-use and postregistration maintenance filings (both of which exceed the cost of performing these services), given that all fees would be adjusted by the same escalation factor. This structure would promote innovation strategies and allow applicants to gain access to the trademark system through fees set below cost, while registrants would pay maintenance fees above cost to subsidize the below-cost front-end fees. This alternative was ultimately rejected. Although this alternative generates sufficient aggregate revenue to recover aggregate operating costs, unlike the final rule fee structure, there would be VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 no improvements in fee schedule design. As such, this alternative would not accomplish the stated objective of enhancing the integrity of the register by incentivizing users to maintain accurate goods and/or services. Further, it would not enhance the efficiency of the process, as it would offer no new incentives for users to timely file applications and other filings or to resolve appeals and inter partes proceedings at the TTAB more expeditiously. The fee schedule for this alternative (labeled ‘‘Alternative 2— Across-the-Board Adjustment’’) is available in the document entitled ‘‘Final Regulatory Flexibility Act Tables’’ at http://www.uspto.gov/aboutus/performance-and-planning/feesetting-and-adjusting. A third alternative that was considered was to set all trademark fees to allow for the USPTO to recover 100% of the unit costs associated with each product or service provided, based on the historical unit costs of the products and services provided by the USPTO. The USPTO uses activity based information to determine the unit costs of activities that contribute to the services and processes provided by individual fees. It is common practice in the Federal Government to set a particular fee at a level that recovers the cost of a given good or service. In Office of Management and Budget (OMB) Circular A–25, User Charges, the OMB states that user charges (fees) should be sufficient to recover the full cost to the Federal Government of providing the particular service, resource, or good, when the Government is acting in its capacity as sovereign. Under the unit cost recovery alternative, fees are generally set in line with the FY 2019 cost of providing the product or service. The USPTO recognizes that this approach does not account for changes in the fee structure or inflationary factors that could likely increase the costs of certain trademark services and necessitate higher fees in the out-years. However, the USPTO contends that the FY 2019 data is the best unit cost data available to inform this analysis. This alternative would produce a structure in which application and processing fees would increase significantly for all applicants, and intent-to-use and postregistration maintenance filing fees would decrease dramatically when compared with current fees. In addition, these fees would change from year to year based on the number of applications submitted. This alternative was rejected because it was determined that the unit costs for any given product or service can vary from year to year, PO 00000 Frm 00023 Fmt 4700 Sfmt 4700 73213 such that a yearly review of all, and an adjustment to many, trademark fees would be continually required and could also lead to consumer confusion regarding the amount at which any given trademark fee was currently set and what the relevant fee would be in the future. Additionally, this alternative does not address improvements in fee design to accomplish the stated objectives of encouraging broader usage of IP rights-protection mechanisms and participation by more trademark owners as well as practices that improve the efficiency of the process. The fee schedule for this alternative (labeled ‘‘Alternative 3—Unit Cost Recovery’’) is available in the document entitled ‘‘Final Regulatory Flexibility Act Tables’’ at http://www.uspto.gov/aboutus/performance-and-planning/feesetting-and-adjusting. A final alternative to setting and adjusting fees would be to take no action at this time regarding trademark fees and to leave all trademark fees as currently set. This alternative was rejected because, due to changes in demand for certain services and rising costs, the Office has determined that a fee increase is needed to meet future budgetary requirements as described in the FY 2021 Congressional Justification. Further, as previously explained, the fee schedule established in this final rule will assist in promoting access to the trademark system, protecting the integrity of the register, and promoting the efficiency of the trademark registration process by incentivizing: (1) Maintenance of registrations for goods and services for which marks are actually in use, (2) more timely filing of applications and other documents, and (3) faster resolution of appeals and inter partes proceedings at the TTAB. The fee schedule for this alternative (labeled ‘‘Alternative 4—Baseline—Current Fee Schedule’’) is available in the document entitled ‘‘Final Regulatory Flexibility Act Tables’’ at http://www.uspto.gov/ about-us/performance-and-planning/ fee-setting-and-adjusting. C. Executive Order 12866 (Regulatory Planning and Review): This rule has been determined to be Significant for purposes of Executive Order 12866 (Sept. 30, 1993). D. 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; (2) tailored the rule to impose the least burden on society consistent with obtaining the regulatory objectives; (3) E:\FR\FM\17NOR1.SGM 17NOR1 73214 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations 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 online 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. E. Executive Order 13771 (Reducing Regulation and Controlling Regulatory Costs): This final rule is not subject to the requirements of Executive Order 13771 (Jan. 30, 2017) because this final rule involves a transfer payment. F. Executive Order 13132 (Federalism): This rule does not contain policies with federalism implications sufficient to warrant preparation of a Federalism Assessment under Executive Order 13132 (Aug. 4, 1999). G. Executive Order 13175 (Tribal Consultation): This rulemaking will not: (1) Have substantial direct effects on one or more Indian tribes; (2) impose substantial direct compliance costs on Indian tribal governments; or (3) preempt tribal law. Therefore, a tribal summary impact statement is not required under Executive Order 13175 (Nov. 6, 2000). H. Executive Order 13211 (Energy Effects): This rulemaking is not a significant energy action under Executive Order 13211 because this rulemaking is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Therefore, a Statement of Energy Effects is not required under Executive Order 13211 (May 18, 2001). I. Executive Order 12988 (Civil Justice Reform): This rulemaking meets applicable standards to minimize litigation, eliminate ambiguity, and reduce burden as set forth in sections 3(a) and 3(b)(2) of Executive Order 12988 (Feb. 5, 1996). J. Executive Order 13045 (Protection of Children): This rulemaking does not concern an environmental risk to health or safety that may disproportionately affect children under Executive Order 13045 (Apr. 21, 1997). K. Executive Order 12630 (Taking of Private Property): This rulemaking will not affect a taking of private property or otherwise have taking implications under Executive Order 12630 (Mar. 15, 1988). L. 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 rulemaking are not expected to result in an annual effect on the economy of $100 million 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 rulemaking is not expected to result in a ‘‘major rule’’ as defined in 5 U.S.C. 804(2). M. Unfunded Mandates Reform Act of 1995: The changes set forth in this rulemaking do not involve a Federal OMB control No. 0651–0009 0651–0027 0651–0028 0651–0040 0651–0050 0651–0051 0651–0054 0651–0055 0651–0056 0651–0061 ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... VerDate Sep<11>2014 intergovernmental mandate that will result in the expenditure by State, local, and tribal governments, in the aggregate, of $100 million (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 (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. N. National Environmental Policy Act of 1969: This rulemaking will not have any effect on the quality of the environment and is thus categorically excluded from review under the National Environmental Policy Act of 1969. See 42 U.S.C. 4321 et seq. O. National Technology Transfer and Advancement Act of 1995: The requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) are not applicable because this rulemaking does not contain provisions that involve the use of technical standards. P. Paperwork Reduction Act of 1995: This final rule involves information collection requirements that are subject to review and approval by OMB under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). The collections of information involved with this final rule have been reviewed and previously approved by OMB under OMB control numbers 0651–0009, 0651–0027, 0651– 0028, 0651–0040, 0651–0050, 0651– 0051, 0651–0054, 0651–0055, 0651– 0056, and 0651–0061. This final rule establishes and adjusts certain trademark fees, which updates the total annual non-hour cost burdens by $33,440,550 as set out in the following table: Estimated update in total annual non-hour cost burdens (fees) due to final rule Information collection title Applications for Trademark Registration ................................................................................................. Recording Assignments .......................................................................................................................... Fastener Quality Act Insignia Recordal Process .................................................................................... Trademark Trial and Appeal Board (TTAB) Actions ............................................................................... Response to Office Action and Voluntary Amendment Forms ............................................................... Madrid Protocol ....................................................................................................................................... Substantive Submissions Made During Prosecution of the Trademark Application .............................. Post Registration (Trademark Processing) ............................................................................................. Submissions Regarding Correspondence and Regarding Attorney Representation ............................. Trademark Petitions ................................................................................................................................ 19:46 Nov 16, 2020 Jkt 253001 PO 00000 Frm 00024 Fmt 4700 Sfmt 4700 E:\FR\FM\17NOR1.SGM 17NOR1 $22,853,750 0 0 4,904,000 ¥4,300 3,205,450 148,400 2,159,000 0 174,250 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations This estimated cost burden increase is based on the current OMB approved response volumes associated with these information collections, which may be slightly different than the workflow forecasts cited in other parts of this rule. In addition, updates to the aforementioned information collections as a result of this final rule will be submitted to OMB for approval prior to the rule’s effective date. 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 has a currently valid OMB control number. List of Subjects 37 CFR Part 2 Administrative practice and procedure, Courts, Lawyers, Trademarks. 37 CFR Part 7 Administrative practice and procedure, Trademarks. For the reasons stated in the preamble and under the authority contained in section 10(a) of the AIA; 15 U.S.C. 1113, 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 1. The authority citation for part 2 is revised to read as follows: ■ Authority: 15 U.S.C. 1113, 1123; 35 U.S.C. 2; sec. 10, Pub. L. 112–29, 125 Stat. 284, unless otherwise noted. Sec. 2.99 also issued under secs. 16, 17, 60 Stat. 434; 15 U.S.C. 1066, 1067. 2. Amend § 2.6 by: a. Revising paragraphs (a)(1)(i) through (v); ■ b. Adding paragraph (a)(11)(iii); ■ c. Revising paragraphs (a)(12), (15) through (18), (22), and (23); and ■ d. Adding paragraphs (a)(24) and (25). The revisions and additions read as follows: ■ ■ § 2.6 Trademark fees. (a) * * * (1) * * * (i) For filing an application on paper, per class—$750.00 (ii) For filing an application under section 66(a) of the Act, per class— $500.00 (iii) For filing a TEAS Standard application, per class—$350.00 (iv) For filing a TEAS Plus application under § 2.22, per class—$250.00 VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 (v) Additional processing fee under § 2.22(c), per class—$100.00 * * * * * (11) * * * (iii) For filing an amendment to a registration prior to submission of an affidavit under section 8 or section 71 of the Act and consisting only of the deletion of goods, services, and/or classes—$0.00 (12) Affidavit under section 8. (i) For filing an affidavit under section 8 of the Act on paper, per class—$325.00 (ii) For filing an affidavit under section 8 of the Act through TEAS, per class—$225.00 (iii) For deleting goods, services, and/ or classes after submission and prior to acceptance of an affidavit under section 8 of the Act on paper, per class— $350.00 (iv) For deleting goods, services, and/ or classes after submission and prior to acceptance of an affidavit under section 8 of the Act through TEAS, per class— $250.00 * * * * * (15) Petitions to the Director. (i) For filing a petition under § 2.146 or § 2.147 on paper—$350.00 (ii) For filing a petition under § 2.146 or § 2.147 through TEAS—$250.00 (iii) For filing a petition under § 2.66 on paper—$250.00 (iv) For filing a petition under § 2.66 through TEAS—$150.00 (16) Petition to cancel. (i) For filing a petition to cancel on paper, per class— $700.00 (ii) For filing a petition to cancel through ESTTA, per class—$600.00 (17) Notice of opposition. (i) For filing a notice of opposition on paper, per class—$700.00 (ii) For filing a notice of opposition through ESTTA, per class—$600.00 (18) Ex parte appeal. (i) For filing an ex parte appeal to the Trademark Trial and Appeal Board on paper, per class— $325.00 (ii) For filing an ex parte appeal to the Trademark Trial and Appeal Board through ESTTA, per class—$225.00 (iii) For filing a first request for an extension of time to file an appeal brief, per application—$0.00 (iv) For filing a second or subsequent request for an extension of time to file an appeal brief on paper, per application—$200.00 (v) For filing a second or subsequent request for an extension of time to file an appeal brief through ESTTA, per application—$100.00 (vi) For filing an appeal brief on paper, per class—$300.00 (vii) For filing an appeal brief through ESTTA, per class—$200.00 * * * * * PO 00000 Frm 00025 Fmt 4700 Sfmt 4700 73215 (22) Extension of time for filing a notice of opposition under § 2.102(c)(1)(ii) or (c)(2). (i) For filing a request for an extension of time to file a notice of opposition under § 2.102(c)(1)(ii) or (c)(2) on paper— $400.00 (ii) For filing a request for an extension of time to file a notice of opposition under § 2.102(c)(1)(ii) or (c)(2) through ESTTA—$200.00 (23) Extension of time for filing a notice of opposition under § 2.102(c)(3). (i) For filing a request for an extension of time to file a notice of opposition under § 2.102(c)(3) on paper—$500.00 (ii) For filing a request for an extension of time to file a notice of opposition under § 2.102(c)(3) through ESTTA—$400.00 (24) Oral hearing. For filing a request for an oral hearing before the Trademark Trial and Appeal Board, per proceeding—$500.00 (25) Letter of protest. For filing a letter of protest, per subject application— $50.00 * * * * * ■ 3. Amend § 2.114 by revising paragraph (a) to read as follows: § 2.114 Answer. (a)(1) If no answer is filed within the time initially set, or as later may be reset by the Board, the petition may be decided as in the case of default. The failure to file a timely answer tolls all deadlines, including the discovery conference, until the issue of default is resolved. (2) If the cancellation proceeding is based solely on abandonment or nonuse and default judgment is entered with no appearance by the defendant, and no filings are made other than the petition to cancel, $200 per class of the petition to cancel fee may be refunded. * * * * * ■ 4. Add § 2.149 before the center heading ‘‘Certificate’’ to read as follows: § 2.149 Letters of protest against pending applications. (a) A third party may submit, for consideration and entry in the record of a trademark application, objective evidence relevant to the examination of the application for a ground for refusal of registration if the submission is made in accordance with this section. (b) A party protesting multiple applications must file a separate submission under this section for each application. (c) Any submission under this section must be filed no later than 30 days after the date the application is published for opposition under section 12(a) of the E:\FR\FM\17NOR1.SGM 17NOR1 73216 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations Act and § 2.80 of this part. If the subject application cannot be withdrawn from issuance of a registration while consideration of the protest is pending, the protest may be considered untimely. (d)(1) If the letter of protest is filed before publication of the subject application, the evidence must be relevant to the identified ground(s) for refusal, such that it is appropriate for the examining attorney to consider whether to issue a refusal or make a requirement under the Act or this part. (2) If the letter of protest is filed on or within 30 days after the date of publication of the subject application, the evidence must establish a prima facie case for refusal on the identified ground(s), such that failure to issue a refusal or to make a requirement would likely result in issuance of a registration in violation of the Act or parts 2 or 7 of this section. (e) Filing a submission under this section does not stay or extend the time for filing a notice of opposition. (f) Any submission under this section must be made in writing, filed through TEAS, and include: (1) The fee required by § 2.6(a)(25); (2) The serial number of the pending application that is the subject of the protest; (3) An itemized evidence index that does not identify the protestor or its representatives, does not contain legal argument, and includes: (i) An identification of the documents, or portions of documents, being submitted as evidence. The submission may not total more than 10 items of evidence in support of a specified ground of refusal and more than 75 total pages of evidence without a detailed and sufficient explanation that establishes the special circumstances that necessitate providing more than 10 items of evidence per refusal ground or more than 75 total pages of evidence; and (ii) A concise factual statement of the relevant ground(s) for refusal of registration appropriate in ex parte examination that each item identified supports; and (4) A clear and legible copy of each item identified in the evidence index where: (i) Copies of third-party registrations come from the electronic records of the Office and show the current status and title of the registration; (ii) Evidence from the internet includes the date the evidence was published or accessed and the complete URL address of the website; and (iii) Copies of printed publications identify the publication name and date of publication. VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 (g) Any submission under this section may not be entered or considered by the Office if: (1) Any part of the submission is not in compliance with this section; (2) The application record shows that the examining attorney already considered the refusal ground(s) specified in the submission; or (3) A provision of the Act or parts 2 or 7 of this chapter precludes acceptance of the submission. (h) If a submission is determined to be in compliance with this section, only the specified ground(s) for refusal and the provided evidence relevant to the ground(s) for refusal will be included in the application record for consideration by the examining attorney. An applicant should not reply to the entry into the application record of evidence entered under this section. (i) Any determination whether to include in an application record the ground(s) or evidence for a refusal of registration in a submission under this section is not petitionable. (j) A third party filing a submission under this section will not receive any communication from the Office relating to the submission other than acknowledgement that it has been received by the Office and notification of whether the submission is found to be compliant or non-compliant with this section. Communications with the third party will not be made of record in the application. The Office will not accept amendments to a non-compliant submission that was previously filed. Instead, a third party who previously filed a non-compliant submission may file another submission that meets the requirements of paragraph (f) of this section, provided the time period for filing a submission in paragraph (c) of this section has not closed. (k) The limited involvement of the third party ends with the filing of the submission under this section. The third party may not directly contact the examining attorney assigned to the application. ■ 5. Revise § 2.161 to read as follows: § 2.161 Requirements for a complete affidavit or declaration of use in commerce or excusable nonuse; requirement for the submission of additional information, exhibits, affidavits or declarations, and specimens; and fee for deletions of goods, services, and/or classes from a registration. (a) Requirements for a complete affidavit or declaration. A complete affidavit or declaration under section 8 of the Act must: (1) Be filed by the owner within the period set forth in § 2.160(a); (2) Include a verified statement attesting to the use in commerce or PO 00000 Frm 00026 Fmt 4700 Sfmt 4700 excusable nonuse of the mark within the period set forth in section 8 of the Act. This verified statement must be executed on or after the beginning of the filing period specified in § 2.160(a); (3) Include the U.S. registration number; (4)(i) Include the fee required by § 2.6 for each class that the affidavit or declaration covers; (ii) If the affidavit or declaration is filed during the grace period under section 8(a)(3) of the Act, include the grace period surcharge per class required by § 2.6; and (iii) If at least one fee is submitted for a multiple-class registration, but the fee is insufficient to cover all the classes, and the class(es) to which the fee(s) should be applied is not specified, the Office will issue a notice requiring either submission of the additional fee(s) or specification of the class(es) to which the initial fee(s) should be applied. Additional fees may be submitted if the requirements of § 2.164 are met. If the additional fee(s) is not submitted within the time period set out in the Office action, and the class(es) to which the original fee(s) should be applied is not specified, the Office will presume that the fee(s) covers the classes in ascending order, beginning with the lowest numbered class; (5)(i) Specify the goods, services, or nature of the collective membership organization for which the mark is in use in commerce, and/or the goods, services, or nature of the collective membership organization for which excusable nonuse is claimed under paragraph (a)(6)(ii) of this section; and (ii) Specify the goods, services, or classes being deleted from the registration, if the affidavit or declaration covers fewer than all the goods, services, or classes in the registration; (6)(i) State that the registered mark is in use in commerce; or (ii) If the registered mark is not in use in commerce on or in connection with all the goods, services, or classes specified in the registration, set forth the date when such use of the mark in commerce stopped and the approximate date when such use is expected to resume, and recite facts to show that nonuse as to those goods, services, or classes is due to special circumstances that excuse the nonuse and is not due to an intention to abandon the mark; and (7) Include one specimen showing how the mark is in use in commerce for each class in the registration, unless excusable nonuse is claimed under paragraph (a)(6)(ii) of this section. When requested by the Office, additional E:\FR\FM\17NOR1.SGM 17NOR1 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations specimens must be provided. The specimen must meet the requirements of § 2.56. (8) Additional requirements for a collective mark: In addition to the above requirements, a complete affidavit or declaration pertaining to a collective mark must: (i) State that the owner is exercising legitimate control over the use of the mark in commerce; and (ii) If the registration issued from an application based solely on section 44 of the Act, state the nature of the owner’s control over the use of the mark by the members in the first affidavit or declaration filed under paragraph (a)(1) of this section. (9) Additional requirements for a certification mark: In addition to the above requirements, a complete affidavit or declaration pertaining to a certification mark must: (i) Include a copy of the certification standards specified in § 2.45(a)(4)(i)(B); (A) Submitting certification standards for the first time. If the registration issued from an application based solely on section 44 of the Act, include a copy of the certification standards in the first affidavit or declaration filed under paragraph (a)(1) of this section; or (B) Certification standards submitted in prior filing. If the certification standards in use at the time of filing the affidavit or declaration have not changed since the date they were previously submitted to the Office, include a statement to that effect. If the certification standards in use at the time of filing the affidavit or declaration have changed since the date they were previously submitted to the Office, include a copy of the revised certification standards; (ii) State that the owner is exercising legitimate control over the use of the mark in commerce; and (iii) Satisfy the requirements of § 2.45(a)(4)(i)(A) and (C). (10) For requirements of a complete affidavit or declaration of use in commerce or excusable nonuse for a registration that issued from a section 66(a) basis application, see § 7.37. (b) Requirement for the submission of additional information, exhibits, affidavits or declarations, and specimens. 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. (c) Fee for deletions of goods, services, and/or classes from a registration. VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 Deletions by the owner of goods, services, and/or classes from a registration after submission and prior to acceptance of the affidavit or declaration must be accompanied by the relevant fee in § 2.6(a)(12)(iii) or (iv). PART 7—RULES OF PRACTICE IN FILINGS PURSUANT TO THE PROTOCOL RELATING TO THE MADRID AGREEMENT CONCERNING THE INTERNATIONAL REGISTRATION OF MARKS 6. The authority citation for part 7 continues to read as follows: ■ Authority: 15 U.S.C. 1123, 35 U.S.C. 2, unless otherwise noted. 7. Amend § 7.6 by revising paragraph (a)(6) to read as follows: ■ § 7.6 Schedule of U.S. process fees. (a) * * * (6) Affidavit under section 71. (i) For filing an affidavit under section 71 of the Act on paper, per class—$325.00 (ii) For filing an affidavit under section 71 of the Act through TEAS, per class—$225.00 (iii) For deleting goods, services, and/ or classes after submission and prior to acceptance of an affidavit under section 71 of the Act on paper, per class— $350.00 (iv) For deleting goods, services, and/ or classes after submission and prior to acceptance of an affidavit under section 71 of the Act through TEAS, per class —$250.00 * * * * * ■ 8. Revise § 7.37 to read as follows: § 7.37 Requirements for a complete affidavit or declaration of use in commerce or excusable nonuse; requirement for the submission of additional information, exhibits, affidavits or declarations, and specimens; and fee for deletions of goods, services, and/or classes from a registration. (a) Requirements for a complete affidavit or declaration. A complete affidavit or declaration under section 71 of the Act must: (1) Be filed by the holder of the international registration within the period set forth in § 7.36(b); (2) Include a verified statement attesting to the use in commerce or excusable nonuse of the mark within the period set forth in section 71 of the Act. The verified statement must be executed on or after the beginning of the filing period specified in § 7.36(b). A person who is properly authorized to sign on behalf of the holder is: (i) A person with legal authority to bind the holder; (ii) A person with firsthand knowledge of the facts and actual or PO 00000 Frm 00027 Fmt 4700 Sfmt 4700 73217 implied authority to act on behalf of the holder; or (iii) An attorney, as defined in § 11.1 of this chapter, who has an actual written or verbal power of attorney or an implied power of attorney from the holder; (3) Include the U.S. registration number; (4)(i) Include the fee required by § 7.6 for each class that the affidavit or declaration covers; (ii) If the affidavit or declaration is filed during the grace period under section 71(a)(3) of the Act, include the grace period surcharge per class required by § 7.6; (iii) If at least one fee is submitted for a multiple-class registration, but the fee is insufficient to cover all the classes, and the class(es) to which the fee(s) should be applied is not specified, the Office will issue a notice requiring either submission of the additional fee(s) or specification of the class(es) to which the initial fee(s) should be applied. Additional fees may be submitted if the requirements of § 7.39 are met. If the additional fee(s) is not submitted within the time period set out in the Office action, and the class(es) to which the original fee(s) should be applied is not specified, the Office will presume that the fee(s) covers the classes in ascending order, beginning with the lowest numbered class; (5)(i) Specify the goods, services, or nature of the collective membership organization for which the mark is in use in commerce, and/or the goods, services, or nature of the collective membership organization for which excusable nonuse is claimed under paragraph (a)(6)(ii) of this section; and (ii) Specify the goods, services, or classes being deleted from the registration, if the affidavit or declaration covers fewer than all the goods, services, or classes in the registration; (6)(i) State that the registered mark is in use in commerce; or (ii) If the registered mark is not in use in commerce on or in connection with all the goods, services, or classes specified in the registration, set forth the date when such use of the mark in commerce stopped and the approximate date when such use is expected to resume, and recite facts to show that nonuse as to those goods, services, or classes is due to special circumstances that excuse the nonuse and is not due to an intention to abandon the mark; and (7) Include one specimen showing how the mark is in use in commerce for each class in the registration, unless excusable nonuse is claimed under E:\FR\FM\17NOR1.SGM 17NOR1 73218 Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Rules and Regulations paragraph (a)(6)(ii) of this section. When requested by the Office, additional specimens must be provided. The specimen must meet the requirements of § 2.56 of this chapter. (8) Additional requirements for a collective mark: In addition to the above requirements, a complete affidavit or declaration pertaining to a collective mark must: (i) State that the holder is exercising legitimate control over the use of the mark in commerce; and (ii) State the nature of the holder’s control over the use of the mark by the members in the first affidavit or declaration filed under paragraph (a)(1) of this section. (9) Additional requirements for a certification mark: In addition to the above requirements, a complete affidavit or declaration pertaining to a certification mark must: (i) Include a copy of the certification standards specified in § 2.45(a)(4)(i)(B) of this chapter; (A) Submitting certification standards for the first time. In the first affidavit or declaration filed under paragraph (a)(1) of this section, include a copy of the certification standards; or (B) Certification standards submitted in prior filing. If the certification standards in use at the time of filing the affidavit or declaration have not changed since the date they were previously submitted to the Office, include a statement to that effect. If the certification standards in use at the time of filing the affidavit or declaration have changed since the date they were previously submitted to the Office, include a copy of the revised certification standards; (ii) State that the holder is exercising legitimate control over the use of the mark in commerce; and (iii) Satisfy the requirements of § 2.45(a)(4)(i)(A) and (C) of this chapter. (b) Requirement for the submission of additional information, exhibits, affidavits or declarations, and specimens. 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. (c) Fee for deletions of goods, services, and/or classes from a registration. Deletions by the holder of goods, services, and/or classes from a registration after submission and prior to acceptance of the affidavit or VerDate Sep<11>2014 19:46 Nov 16, 2020 Jkt 253001 declaration must be accompanied by the relevant fee in § 7.6(a)(6)(iii) or (iv). Andrei Iancu, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office. [FR Doc. 2020–25222 Filed 11–16–20; 8:45 am] BILLING CODE 3510–16–P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA–R07–OAR–2017–0416; FRL–10016– 10–Region 7] Air Plan Approval; Iowa; Air Quality Implementation Plan—Muscatine Sulfur Dioxide Nonattainment Area and Start-up, Shutdown, Malfunction SIP Call Withdrawal Environmental Protection Agency (EPA). ACTION: Final rule. AGENCY: The Environmental Protection Agency (EPA) is approving a State Implementation Plan (SIP) revision, submitted by the state of Iowa, through the Iowa Department of Natural Resources (IDNR), to the EPA on May 26, 2016, for the purpose of providing for attainment of the 2010 1-hour primary Sulfur Dioxide (SO2) National Ambient Air Quality Standard (NAAQS) in the Muscatine County, Iowa nonattainment area (NAA). The EPA concludes that Iowa has appropriately demonstrated that its SIP provides for attainment with the 2010 1-hour primary SO2 NAAQS in the NAA, and that the plan meets the other applicable requirements under the Clean Air Act (CAA or Act). As a part of approving the attainment demonstration, the EPA is taking final action to approve into the Iowa SIP the SO2 emissions limits and associated compliance parameters for the NAA. The EPA is also applying a policy regarding startup, shutdown, and malfunction (SSM) exemption provisions in the Iowa SIP that is consistent with the EPA’s national policy. In light of this policy and the EPA’s evaluation of Iowa’s SIP, the EPA is withdrawing the SIP call issued to Iowa as part of the EPA’s 2015 SSM SIP Action. DATES: This rule will become effective on December 17, 2020. ADDRESSES: The EPA has established a docket for this action under Docket ID No. EPA–R07–OAR–2017–0416. All documents in the docket are listed on the https://www.regulations.gov website. Although listed in the index, SUMMARY: PO 00000 Frm 00028 Fmt 4700 Sfmt 4700 some information may not be publicly available, i.e., Confidential Business Information or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically through www.regulations.gov or in hard copy at the Atmospheric Programs Section, Air Planning and Development Branch, Air and Radiation Division, U.S. Environmental Protection Agency, Region 7, 11201 Renner Boulevard, Lenexa, Kansas 66219. The EPA requests that if at all possible, you contact the person listed in the FOR FURTHER INFORMATION CONTACT section to schedule your inspection. The Regional Office’s official hours of business are Monday through Friday 8:30 a.m. to 4:30 p.m., excluding federal holidays. FOR FURTHER INFORMATION CONTACT: Ashley Keas, Environmental Protection Agency, Region 7 Office, Air Quality Planning Branch, 11201 Renner Boulevard, Lenexa, Kansas 66219; telephone number: (913) 551–7629; email address: keas.ashley@epa.gov. SUPPLEMENTARY INFORMATION: Throughout this document whenever ‘‘we,’’ ‘‘us,’’ and ‘‘our’’ is used, we mean the EPA. Table of Contents I. Background for This Action A. The Muscatine Attainment Plan B. The EPA’s 2015 SSM SIP Action C. The SSM SIP Call for Iowa D. The EPA’s 2020 SSM SIP Guidance Memorandum II. The EPA’s Evaluation of the Iowa SIP III. Final Action IV. Incorporation by Reference V. Statutory and Executive Order Reviews I. Background for This Action A. The Muscatine Attainment Plan On June 22, 2010, the EPA published a new 1-hour primary SO2 NAAQS of 75 parts per billion (ppb), which is met at an ambient air quality monitoring site when the 3-year average of the annual 99th percentile of daily maximum 1hour average concentrations does not exceed 75 ppb, as determined in accordance with appendix T of 40 CFR part 50.1 On August 5, 2013, the EPA designated the first set of areas of the country as nonattainment for the 2010 1-hour SO2 NAAQS, including the partial Muscatine County NAA in Iowa.2 The designations were effective 1 See 75 FR 35520, codified at 40 CFR 50.17(a)b). 78 FR 47191, codified at 40 CFR part 81, subpart C. 2 See E:\FR\FM\17NOR1.SGM 17NOR1

Agencies

[Federal Register Volume 85, Number 222 (Tuesday, November 17, 2020)]
[Rules and Regulations]
[Pages 73197-73218]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25222]


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DEPARTMENT OF COMMERCE

Patent and Trademark Office

37 CFR Parts 2 and 7

[Docket No. PTO-T-2019-0027]
RIN 0651-AD42


Trademark Fee Adjustment

AGENCY: United States Patent and Trademark Office, Department of 
Commerce.

ACTION: Final rule.

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SUMMARY: The United States Patent and Trademark Office (Office or 
USPTO) is setting or adjusting certain trademark fees, as authorized by 
the Leahy-Smith America Invents Act (AIA), as amended by the Study of 
Underrepresented Classes Chasing Engineering and Science Success Act of 
2018 (SUCCESS Act). The changes will allow the USPTO to continue to 
recover the prospective aggregate costs of strategic and operational 
trademark and Trademark Trial and Appeal Board (TTAB or Board) goals 
(based on workload projections included in the USPTO fiscal year (FY) 
2021 Congressional Justification), including associated administrative 
costs. They will also further USPTO strategic objectives by better 
aligning fees with costs, protecting the integrity of the trademark 
register, improving the efficiency of agency processes, and ensuring 
financial sustainability to facilitate effective trademark operations. 
USPTO has weighed carefully current economic conditions and the 
potential hardship that the fee increase could create for businesses 
and individuals. The Office paused development of the fee rule because 
of uncertainty about the economy earlier this year. The latest economic 
data point to continued recovery in many sectors of the economy. 
Because of this and the relatively small annual cost to businesses and 
individuals from USPTO's trademark applications and maintenance fees, 
the Office has decided to finalize the fee rule for implementation in 
January 2021.

DATES: This rule is effective on January 2, 2021.

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

SUPPLEMENTARY INFORMATION: The USPTO conducted a fee review in FY 2019 
that formed the basis for this regulatory process to adjust and set new 
trademark user fees. While trademark-related costs of operations have 
risen, trademark fees have not changed since January 2017. The revenue 
and workload assumptions in this rule are based on the assumptions 
found in the FY 2021 Congressional Justification (i.e., the USPTO's FY 
2021 budget submission to Congress). However, projections of aggregate 
revenues and costs are based on point-in-time estimates, and the 
circumstances surrounding these assumptions can change quickly. 
Notably, since the FY 2021 Congressional Justification was published, 
some fee collections have been lower than anticipated, due to lower 
than expected post-registration and Madrid filings.
    Although economic circumstances have changed substantially since 
the FY 2021 budget was developed, the USPTO determined it remains the 
most appropriate starting point for developing this Final Rule. First, 
the USPTO's projections of aggregate revenues and costs are necessarily 
estimates that can change substantially from one point in time to the 
next due to numerous factors outside the USPTO's control, including 
cyclical economic changes or exogenous shocks, such as COVID-19, 
changes in the laws governing USPTO revenues or expenditures, and other 
events. Nevertheless, the USPTO has historically used its most recent 
budget assumptions when setting fees because they are the most recent 
complete evaluation of the USPTO's budget expectations and 
requirements, and they provide assumptions for stakeholders to use when 
formulating their comments. Those projections were developed in late 
calendar year 2019, prior to the COVID-19 outbreak, and they assumed 
continuing stable economic growth, not the sharp economic downturn and 
rebound of 2020.
    As part of the multi-year fee-setting process, the Trademark Public 
Advisory Committee (TPAC) held a public hearing at the USPTO on 
September 23, 2019. The Office considered and analyzed all comments, 
advice, and recommendations received from the TPAC in proposing the 
fees set forth in the notice of proposed rulemaking (NPRM) published in 
the Federal Register on June 19, 2020, at 85 FR 37040. In formulating 
this rule, the USPTO considered the state of the U.S. economy, the 
operational needs of the agency, and public comments submitted pursuant 
to the NPRM and made adjustments to the substance of this rule based on 
these considerations.
    The USPTO has considered the state of the U.S. economy, the 
operational needs of the agency, and the comments and advice received 
from the public during the 45-day comment period. The current economic 
conditions illustrate the need for the increases set forth in this 
rule. The majority of USPTO's trademark revenue comes from new 
applications, but the initial costs to examine applications exceed the 
revenues from those applications. These examination costs have been 
increasing over the years while the USPTO has kept filing fees low 
enough to encourage broad public participation in the trademark system 
by offsetting examination costs with revenues generated with intent-to-
use (ITU) and maintenance filings. Despite this balancing of front- and 
back-end costs, the USPTO has been observing multi-year consistent 
trends that have begun to adversely affect this model. The USPTO is 
receiving record levels of new trademark application filings, carrying 
with them larger front-end examination costs, while the percentage of 
ITU and maintenance filings are decreasing, resulting in less back-end 
revenue. With larger net costs that are not being offset by back-end 
revenue, the USPTO would be unable to maintain an operating reserve, 
which puts the Office on an unsustainable funding model.
    The USPTO has observed these trends taking place whether the 
economy is doing well or facing turmoil, but the present situation is 
particularly challenging in light of the impact of the pandemic and its 
effect on the economy and filings. In particular, over the last six 
months, the USPTO has experienced a surge in new applications while 
maintenance filings continue to be impacted by lower rates of payment 
from one-time filers and individual applicants. The surge is also 
undermining the other traditional revenue sources that have 
historically offset front-end costs, such as ITU, since the USPTO is 
receiving more use-based applications, especially from foreign filers. 
While the USPTO is observing a surge in filings at present, given past 
experience, we expect a future decline to bring filings in line with 
the underlying economic dynamism. Although the timing and the magnitude 
of a future correction may be difficult to anticipate with complete 
accuracy, given past experience, the USPTO anticipates that a 
correction in filing

[[Page 73198]]

levels could generate funding shortfalls that quickly drain our 
reserves and affect our operations and financial stability.
    The USPTO received some comments urging the Office not to raise any 
fees. As noted below, in the discussion of the Regulatory Flexibility 
Act, one regulatory alternative that was considered was to leave all 
trademark fees as currently set. This alternative was rejected because, 
due to changes in demand for certain services and rising costs 
described herein, the Office has determined that a fee increase is 
needed to meet future budgetary requirements as described in the FY 
2021 Congressional Justification. As discussed further below, the 
alternative of making no changes to trademark fees would not have 
achieved the goals of this rulemaking. Those goals are to assist in 
promoting access to the trademark system, protect the integrity of the 
register, and promote the efficiency of the trademark registration 
process by incentivizing: (1) Maintenance of registrations for goods 
and services for which marks are actually in use, (2) more timely 
filing of applications and other documents, and (3) faster resolution 
of appeals and inter partes proceedings at the TTAB.
    USPTO has weighed carefully current economic conditions and the 
potential hardship that the fee increase could create for businesses 
and individuals. The USPTO has undertaken many efforts to provide 
various types of relief, including deadline extensions and fee 
postponements. Additionally, in the FY 2021 Congressional 
Justification, implementation of the fee rule was slated for August of 
2020. Considering the impact of the pandemic, uncertainty about the 
economy, and stakeholder feedback, the USPTO paused development of the 
fee rule over the summer of 2020. The latest economic data point to 
continued recovery in many sectors of the economy. Because of this and 
the relatively small annual cost to businesses and individuals from 
USPTO's trademark applications and maintenance fees, the Office has 
decided to finalize the fee rule for implementation in January 2021.
    I. Purpose: The USPTO protects consumers and provides benefits to 
businesses by effectively and efficiently carrying out the trademark 
laws of the United States. As a fee-funded agency, appropriate fees are 
critically important for the USPTO to maintain the quality and 
timeliness of examination and other services, and to stabilize and 
modernize aging information technology (IT) infrastructure on which the 
Office and its customers rely. The fee schedule enacted in this 
rulemaking is estimated to provide aggregate revenue to recover the 
USPTO's aggregate estimated future costs and ensure the USPTO can 
achieve strategic and operational goals. These goals include 
effectively using resources to maintain low trademark pendency and high 
quality, fostering business effectiveness, stabilizing and modernizing 
trademark IT systems, continuing programs for stakeholder and public 
outreach, enhancing operations of the TTAB, and ensuring financial 
sustainability to facilitate effective trademark operations.
    Section 10 of the AIA authorizes the Director of the USPTO 
(Director) to set or adjust by rule any fee established, authorized, or 
charged under the Trademark Act of 1946, 15 U.S.C. 1051 et seq., as 
amended (the Trademark Act or the Act) for any services performed by, 
or materials furnished by, the Office. See section 10 of the AIA, 
Public Law 112-29, 125 Stat. 284, 316-17, as amended by the SUCCESS 
Act, Public Law 115-273, 132 Stat. 4158. Section 10 of the AIA 
prescribes that trademark fees may be set or adjusted only to recover 
the aggregate estimated costs to the USPTO for processing, activities, 
services, and materials related to trademarks, including administrative 
costs to the USPTO with respect to such trademark and TTAB operations. 
This authority includes the flexibility to set individual fees to 
advance key policy objectives. Thus, the Director may set individual 
fees at, below, or above their respective associated costs, while 
taking into account the aggregate estimated costs to the USPTO.
    The USPTO estimates, based on the assumptions found in the FY 2021 
Congressional Justification, that the additional aggregate revenue 
derived from the fee schedule set forth here will recover the future 
costs of implementing strategic and operational goals, including the 
cost of necessary IT stabilization and modernization activities. Also, 
the additional revenue will allow the USPTO to achieve sustainable 
funding by gradually building the operating reserve, which mitigates 
the risk of immediate unplanned financial disruptions that can 
adversely affect pendency and quality. Based on the assumptions found 
in the FY 2021 Congressional Justification, the Office estimates 
reaching the optimal six-month trademark operating reserve level in FY 
2025. However, projections of aggregate revenues and costs are based on 
point-in-time estimates, and the circumstances surrounding these 
assumptions can change quickly. Notably, since the FY 2021 
Congressional Justification was published, some fee collections have 
been lower than anticipated, due to lower than expected post-
registration and Madrid filings.
    II. Summary of Major Provisions: The USPTO is setting or adjusting 
trademark fees codified in 37 CFR parts 2 and 7. Fees are increased for 
all application filing types (i.e., paper applications, applications 
filed via the Trademark Electronic Application System (TEAS), and 
requests for extension of protection under section 66(a) of the 
Trademark Act, 15 U.S.C. 1141f). The per-class fee increases range from 
$25 for a TEAS Plus application to $150 for a paper application. In 
addition, fees for filing affidavits or declarations of use or 
excusable non-use under section 8 or section 71 of the Act (section 8 
or section 71 affidavits), 15 U.S.C. 1058, 1141k, are increasing by 
$100 per class. As described in further detail below, these increases 
address policy considerations related to ensuring a more accurate 
register as well as reflecting increased processing costs to the Office 
in handling these filings.
    This rule creates two levels of fees for petitions. There is one 
fee for petitions to the Director under Sec. Sec.  2.146 and 2.147, and 
a lower fee for a petition to revive an abandoned application under 
Sec.  2.66. Currently, the fees for these petitions are $200 if filed 
on paper and $100 if filed through TEAS. This rule sets the fee for 
petitions under Sec. Sec.  2.146 and 2.147 at $350 if filed on paper 
and $250 if filed through TEAS. The fees for a petition to revive under 
Sec.  2.66 are set at $250 if filed on paper and $150 if filed through 
TEAS. These fees take into account the different processing costs of 
these filings.
    The USPTO is also setting a new $50 fee for filing a letter of 
protest, along with new regulations that codify letter-of-protest 
procedures. The new fee and procedures are designed to help offset 
processing costs and deter the filing of unsupported or irrelevant 
letters of protest, while not discouraging the filing of relevant, 
well-supported letters of protest. The new regulatory section is based 
on existing, longstanding procedures for letters of protest, which are 
currently set forth in the Trademark Manual of Examining Procedure 
(TMEP), as well as the procedures set out in the patents rules in 37 
CFR 1.290 and 1.291 and the Manual of Patent Examining Procedure (MPEP) 
governing third-party submissions concerning pending applications, 
which serve a function similar to letters of protest.
    As discussed further below, some of the fee adjustments made in 
this rule are meant to adjust applicant behaviors that

[[Page 73199]]

put an undue burden on the trademark system and that can adversely 
affect the quality and integrity of the trademark register. Some of 
these behavior adjustments are accomplished with new fees (e.g., post 
audit deletion of goods and services) or with targeted increases (e.g. 
TEAS Plus vs. TEAS Standard to promote more efficient, higher quality, 
and most cost effective filings, especially for small businesses, or 
increases for paper filing fees to encourage electronic filing). As a 
further example, the rule also sets a new fee structure to encourage 
registrants to perform due diligence before filing a section 8 or 
section 71 affidavit to maintain a registration, so as to determine the 
goods or services for which the registered mark is no longer in use and 
to delete those goods, services, and/or classes from the registration. 
The rule sets two fee levels for amendments to registrations to delete 
goods, services, and/or classes that depend on when the amendment is 
submitted. The first is a $0 fee if the only amendment made in a 
request under section 7 of the Act (section 7 request), 15 U.S.C. 
1057(e), that is filed prior to submission of a section 8 or section 71 
affidavit, is the deletion of goods, services, and/or classes. The 
current practice that results in no amendment fee for section 8 or 
section 71 affidavits that specify fewer than all of the goods or 
services listed in the registration when the affidavit is filed, which 
results in the deletion of goods, services, and/or classes not included 
in the affidavit from the registration, is unchanged. However a fee 
will be assessed if goods, services, and/or classes are deleted in 
either a section 7 request, a response to an Office action, or a 
voluntary amendment filed after submission, but prior to acceptance, of 
a section 8 or section 71 affidavit. This is a per-class fee of $250 
for submissions filed through TEAS and $350 for submissions permitted 
to be filed on paper. To implement the new fee requirement, 
corresponding new regulations are enacted at Sec. Sec.  2.161(c) and 
7.37(c). In addition, the rule revises the section titles and 
restructures Sec. Sec.  2.161 and 7.37 to set out the requirements for 
section 8 and section 71 affidavits more clearly. Except for the new 
provision regarding the fee required for deletions made after 
submission and prior to acceptance of the affidavit, the substantive 
text of Sec. Sec.  2.161 and 7.37 is not otherwise revised.
    Finally, as discussed below, 16 fees related to TTAB filings (8 for 
electronic filings and 8 for paper filings) are established or adjusted 
in this rule. Ten existing fees (5 electronic/5 paper) are increased, 
specifically, those for initiating an ex parte appeal from an examining 
attorney's refusal to register a mark, for initiating an opposition 
proceeding, for initiating a cancellation proceeding, and for filing 
each of two different types of extensions of time to oppose. Six new 
filing fees (3 electronic/3 paper) are established, which are explained 
below. The new and adjusted fees are generally designed to recover more 
of the costs of TTAB procedures, reduce the extent to which they are 
subsidized by other trademark fee collections, and advance policy 
objectives. The USPTO also revises Sec.  2.114(a) to provide that a 
partial refund of the filing fee for a petition to cancel may be made 
in cases involving only a nonuse or abandonment claim, when default 
judgment is entered in the case, where there was no appearance by a 
defendant, and where no filings were made other than the petition to 
cancel.
    III. Rulemaking Goals and Strategies: Consistent with federal fee 
setting standards, the Office conducted a biennial review of fees, 
costs, and revenues that began in FY 2019 and found that fee 
adjustments were necessary to provide the resources needed to improve 
trademark operations and to implement the USPTO 2018-2022 Strategic 
Plan (Strategic Plan). As a result, the fee adjustments in this rule 
directly align with the Office's strategic goals and key objectives as 
outlined in this section. Consistent with the USPTO's strategic goals 
and obligations under the AIA, the overall objective of this rule is to 
ensure the fee schedule generates sufficient revenue to recover the 
prospective aggregate costs of trademark and TTAB strategic 
improvements and operations, including the associated administrative 
costs. Fees must be set at levels projected to cover the cost of future 
budgetary requirements and maintain an operating reserve at a 
sufficient level.
    Trademark applications in FY 2019 represented filings in a record 
number of over 673,000 classes of goods/services. During ordinary 
economic times, application filings generally have increased by an 
average historical rate of between 7% and 8% per year. To ensure its 
ability to keep pace with demand, the USPTO is in the midst of a multi-
year IT systems and infrastructure upgrade, which is critical to the 
future of the U.S. trademark registration system and represents a 
significant cost to the Office.
    Trademark filings--and, therefore, total revenue--are sensitive to 
general economic conditions. In the last two recessions, new 
application filings declined (2001, by -21.0%; 2002, by -12.7%; and 
2009, by -12.3%). So far, in the current uncertain economic 
environment, trademark application filings are showing some resilience; 
however, with a protracted pandemic, the risk of a major filing decline 
remains high. The USPTO anticipates a return to historical growth rates 
as trademark applicants return to expected activities. However, current 
fees have not kept up with increases in salary, IT and other costs, and 
a return to traditional growth rates means a return to additional costs 
for new staff and supporting resources including information 
technology. In general, the proposed increases are commensurate with 
the size of the cost recovery shortfalls in trademark examination and 
TTAB proceedings. As discussed above, with the larger net costs from 
applications, revenue surpluses derived from other services, such as 
ITU and maintenance payments, are being reduced. The increases in this 
rule are designed to address those shortfalls, which as noted above are 
projected to increase in the future without the fee adjustments being 
made in this rule.
    The USPTO, as a fully fee-funded agency, retains an operating 
reserve to ensure sufficient financial resources are available to 
support and promote public confidence in the U.S. intellectual property 
(IP) system. The operating reserve enables the USPTO to maintain 
operations by absorbing and responding to immediate and temporary 
changes in its economic and operating environments or circumstances, 
such as unexpected economic downturns, reducing the risk for short-term 
financial actions and providing the security for long-term strategic 
investments, such as IT development projects that are crucial to 
operations and customer support. An adequate operating reserve also 
allows the USPTO to continue serving its users in the event of a short-
term lapse in congressional appropriations or other disruptions to the 
agency's cash flow.
    The fee schedule in effect prior to this rulemaking was 
insufficient to satisfy future budgetary requirements to: (1) Meet the 
expenses that will result from projected filings; (2) recover the costs 
necessary to support trademark and TTAB operations and administrative 
services; (3) make necessary investments in IT systems, IP policy, and 
USPTO programs related to trademark and TTAB operations; and (4) 
achieve optimal operating reserve levels to ensure financial 
sustainability. Budgetary requirements increased to address unplanned 
pay raises,

[[Page 73200]]

additional review of filings for potential fraud, post-registration 
audits, agency administrative operations, and continued investments in 
IT that required additional funding beginning in FY 2020. IT 
investments include modernization of IT systems to create a fully 
electronic workflow and state-of-the-art technological resources for 
external and internal users. New systems will also be deployed that 
enhance access for external trademark customers and stakeholders. 
Operational gains from these IT investments will allow for a broader 
public base to more efficiently and effectively apply for, register, 
and maintain trademark registrations and to continue to invest in and 
reap the benefits of strong brands, which will ultimately benefit 
American consumers and sustain economic activities.
    Without the fee adjustments enacted in this rule, based on the 
assumptions found in the FY 2021 Congressional Justification, budgetary 
requirements would exceed revenues and available operating reserve 
balances beginning in FY 2022 through FY 2025 (see Table 1).

                  Table 1--Trademark Financial Outlook Without Final Rule Fees--FY 2021-FY 2025
----------------------------------------------------------------------------------------------------------------
                                                                Dollars in millions
                                 -------------------------------------------------------------------------------
                                      FY 2021         FY 2022         FY 2023         FY 2024         FY 2025
----------------------------------------------------------------------------------------------------------------
Projected Fee Collections.......            $367            $390            $412            $430            $447
Other Income....................               6               6               6               6               6
Total Projected Fee Collections              373             396             418             436             453
 and Other Income...............
Budgetary Requirements..........             419             460             462             478             497
Funding to (+) and from (-)                 (46)            (64)            (44)            (42)            (44)
 Operating Reserve..............
Operating Reserve Balance.......              26            (38)            (81)           (123)           (167)
Over/(Under) Minimum Level......            (49)           (113)           (156)           (198)           (242)
Over/(Under) Optimal Level......           (184)           (268)           (312)           (362)           (415)
----------------------------------------------------------------------------------------------------------------

    Table 2 below shows the available revenue and operating reserve 
balances by fiscal year, after including the new fee rates in the 
projected fee collections. The numbers in the table below were 
developed in late calendar year 2019, prior to the COVID-19 pandemic, 
in support of the FY 2021 Congressional Justification, and have been 
updated to remove the previously proposed fee for requests for 
reconsideration filed more than three months from the date of issuance 
of a final Office action. Under current circumstances, it is difficult 
to predict what the actual numbers will be. However, since the USPTO 
was projecting insufficient funding even during an economic expansion 
(see Table 1), and the trademark financial outlook has worsened since 
the onset of the pandemic, the fee increase is a necessary step to put 
the Office on a sustainable financial path.

                 Table 2--Trademark Financial Outlook Including Final Rule Fees--FY 2021-FY 2025
----------------------------------------------------------------------------------------------------------------
                                                                Dollars in millions
                                 -------------------------------------------------------------------------------
                                      FY 2021         FY 2022         FY 2023         FY 2024         FY 2025
----------------------------------------------------------------------------------------------------------------
Projected Fee Collections.......            $443            $471            $497            $518            $538
Other Income....................               6               6               6               6               6
Total Projected Fee Collections              449             477             503             524             544
 and Other Income...............
Budgetary Requirements..........             419             460             462             478             497
Funding to (+) and from (-)                   30              17              41              46              47
 Operating Reserve..............
Operating Reserve Balance.......             101             118             159             206             253
Over/(Under) Minimum Level......              26              43              84             131             178
Over/(Under) Optimal Level......           (108)           (112)            (72)            (33)               4
----------------------------------------------------------------------------------------------------------------

    Additional information on estimated costs can be found in the USPTO 
FY 2021 Congressional Justification at https://www.uspto.gov/about-us/performance-and-planning/budget-and-financial-information, which 
includes two revenue estimates, one based on the current fee schedule 
and another based on the fee schedule proposed in the NPRM (see 
Appendix IV: USPTO Fees--Change from FY 2020 PB to FY 2021 PB).
    Another fee setting goal of this rulemaking is to set individual 
fees to further key IP protection policy objectives while taking into 
account the cost of a particular service. The USPTO seeks to enhance 
trademark protection for IP rights holders by offering application 
processing options and promoting IP protection strategies.
    A. Aligning Fees With Costs: The first fee setting policy 
consideration is to set and adjust trademark fees to more closely align 
them with the costs of providing the relevant services. The overall 
goal is to achieve total cost recovery from fee collections for 
trademark and TTAB operations, including associated administrative 
services. In determining which fees to set or adjust, this rule targets 
changes to the category of fees in which the gap between the cost of 
the service and the current fee rate is the greatest, and where 
narrowing that gap serves policy objectives. As noted above, 
application filing fees, petition fees, and TTAB fees do not fully 
cover the costs of processing and examination for those services. 
Instead, these costs are recovered or subsidized from fees paid for 
intent-to-use and post-registration maintenance filings that return 
more than the costs of processing such filings. As noted above, the 
USPTO anticipates, based on current trends, that this shortfall in cost 
recovery for these front-end services will continue absent the fee 
adjustments made in this rule. For example, using FY 2019 earned 
revenue compared to costs or expenses, application filing fees 
recovered 65% of expenses, petition (trademark processing) fees 
recovered 50% of expenses, and TTAB fees recovered just 31% of expenses 
(see Table 3).

[[Page 73201]]



                            Table 3--Earned Revenue vs. Expense by Trademark Product
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                                  Earned revenue
                                              FY 2019  earned      FY 2019          FY 2019       vs. expense or
             Trademark products                   revenue          expense          variance      cost recovery
                                                                                                    (percent)
----------------------------------------------------------------------------------------------------------------
Application Filings.........................             $190             $292           $(102)               65
Intent to Use/Use Fees......................               50               17               33              291
Trademark Processing Fees...................                3                5              (2)               50
Maintaining Exclusive Rights................               80               14               66              571
Madrid Protocol.............................                4                1                3              427
Other Trademark Fees........................               11                9                2              119
Trademark Trial and Appeal Board............                8               28             (20)               31
                                             -------------------------------------------------------------------
    Total...................................              346              366             (20)               95
----------------------------------------------------------------------------------------------------------------

    The fee schedule enacted in this rule will increase the percentage 
of fee revenues collected over a five year period for application 
filings by 21%, for petition filings by 73%, and for TTAB filings by 
58% overall, thereby increasing the cost recovery for these services 
(see Table 4).

                       Table 4--Increase in Cumulative Revenue Over Five Years, by Product
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                   Projected cumulative revenue,
                                                                          FY 2021-FY 2025
                                                                 --------------------------------
                       Trademark products                          Current  fee                     % Increase
                                                                       rates         Final fee
                                                                    (baseline)         rates
----------------------------------------------------------------------------------------------------------------
Application Filings.............................................          $1,079          $1,301              21
Maintaining Exclusive Rights....................................             518             659              27
Intent to Use/Use...............................................             293             293               0
Madrid..........................................................              29              42              45
TTAB............................................................              53              83              58
Petition........................................................              18              30              73
Other Processing Fees...........................................              58              58               0
                                                                 -----------------------------------------------
    Total.......................................................           2,047           2,467              20
----------------------------------------------------------------------------------------------------------------

    Estimated revenues account for adjustments made to fee rates after 
considering public comments received in regard to this rulemaking.
    B. Protecting the Integrity of the Trademark Register: The second 
fee setting policy consideration is to set or adjust fees to provide 
resources necessary to improve the accuracy of the trademark register. 
The trademark register is a reflection of marks that are actually in 
use in commerce in the United States for the goods and/or services 
identified in the registrations and its accuracy serves a critical 
purpose for the public and for all registrants. An accurate register 
allows the public to rely on the register to determine potential 
trademark rights. By registering trademarks, the USPTO has a 
significant role in protecting consumers, as well as providing 
important benefits to American businesses, by allowing them to 
strengthen and safeguard their brands and related investments. The 
public relies on the register to determine whether a chosen mark is 
available for use or registration. When a person's search of the 
register discloses a potentially confusingly similar mark, that person 
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, initiating proceedings to cancel the registration 
or oppose the application of the disclosed mark, engaging in civil 
litigation to resolve a dispute over the mark, or changing business 
plans to avoid the use of that person's chosen mark. In addition, such 
persons may incur costs and burdens unnecessarily 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 and/or services 
identified in the registration. An accurate and reliable trademark 
register helps avoid such needless public costs and burdens.
    This rule sets and adjusts fees to encourage actions by trademark 
filers that help facilitate more efficient processing and the prompt 
conclusion of application prosecution by assessing fees for second and 
subsequent extension requests to file appeal briefs. In addition, 
filings that may result in a less accurate register, including post-
registration filings to maintain registrations that may include goods 
or services for which the mark is no longer in use, are among those 
filings targeted under this objective. The new fee structure for 
requests to delete goods, services, and/or classes from a registration 
will protect and improve the integrity of the register and the 
efficiency of the process by incentivizing both more timely filings and 
proactive action by registrants to ensure the accuracy of their 
registrations. The increased efficiencies realized through this rule 
will benefit all applicants and registrants by allowing registrations 
to be granted sooner and more efficiently by removing unused marks and 
unsupported goods and services from the register. In addition, revenue 
generated by this rule allows for continuing development of methods

[[Page 73202]]

for detecting and addressing filing practices that threaten the 
integrity of the register.
    C. Improving the Efficiency of USPTO Processes: The third fee 
setting policy consideration pertains to improving the efficiency of 
the trademark and TTAB processes. To that end, this rule targets 
changes to fees that will administratively improve application and 
appeal processing by incentivizing more complete and timely filings and 
prosecution. For example, TEAS Plus, the lowest-cost TEAS application 
filing option, has more stringent initial application requirements and 
thus tends to result in a more complete application, which expedites 
processing, shortens pendency, minimizes manual processing and the 
potential for data-entry errors, and is thus more efficient for both 
the filer and the USPTO. While the per-class fee for TEAS Plus is 
increasing by $25 (to $250) under this rule, the per-class fee for TEAS 
Standard, which has less stringent initial application requirements, is 
increasing by $75 (to $350), resulting in a difference of $100 in the 
per-class fees of the respective filing options (double the current 
difference of $50), providing a greater financial incentive to choose 
the more efficient TEAS Plus filing option.
    D. Ensuring Financial Sustainability to Facilitate Effective 
Trademark Operations: The fourth fee setting policy consideration 
pertains to ensuring sufficient revenue to recover the aggregate costs 
of Trademark and TTAB operations in future years. Additional resources 
are necessary to fund the multi-year project to upgrade IT systems and 
infrastructure and other business improvements, while also maintaining 
a sufficient operating reserve balance to ensure sustainable funding 
that will mitigate the risk of unplanned financial disruptions that 
could threaten operations and planned investments.
    Operating reserves are intended to mitigate operational risk caused 
by a lack of financial resources. The USPTO defines an optimal balance 
and a minimum acceptable balance for the trademark operating reserve. 
The optimal balance sets the goal for building and maintaining the 
operating reserve--it defines the desired level of operating reserves 
the USPTO wishes to maintain. The USPTO analyzes risks related to 
spending and fee collections, considering the likelihood and 
consequence of each and its impact to financial stability, in 
determining the optimal reserve level. The USPTO has determined six 
months of operating or budgetary requirements to be the optimal 
trademark reserve.
    This rule will provide a stable financial foundation to fulfill the 
USPTO mission and maintain performance. The budgetary requirements of 
the USPTO are comprised of substantial fixed costs, which require 
increased fee rates to ensure revenue sufficient to recover aggregate 
costs. Based on the assumptions found in the FY 2021 Congressional 
Justification, this rule will produce sufficient revenue to recover the 
aggregate costs of Trademark and TTAB operations, including executing 
USPTO strategic goals, policy objectives, and initiatives; creating a 
better and fairer cost-recovery system that balances subsidizing costs 
to encourage broader usage of IP rights-protection mechanisms and 
participation by more trademark owners; promoting a strong incentive 
for more efficient filing behaviors; and protecting the federal 
trademark register as a reliable indicator of marks in use in commerce.
    Based on the assumptions found in the FY 2021 Congressional 
Justification, the USPTO projects that trademark fee collections in 
total would increase by an average of 20% per year, or $76 million to 
$91 million per year, over the five-year planning period as compared to 
the baseline (see Table 5).

                                                     Table 5--Annual Increases in Aggregate Revenue
                                                                  [Dollars in millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              FY 2021         FY 2022         FY 2023         FY 2024         FY 2025         Average
--------------------------------------------------------------------------------------------------------------------------------------------------------
Aggregate Revenue--Baseline.............................            $367            $390            $412            $430            $447            $409
Aggregate Revenue--Final Rule...........................            $443            $471            $497            $518            $538            $493
$ Increase..............................................             $76             $81             $85             $88             $91             $83
% Increase..............................................             21%             21%             20%             20%             20%             20%
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The projections of both aggregate revenues and costs are based on 
point-in-time estimates and assumptions that are subject to change. 
There is considerable uncertainty in estimating both fee collections 
and budgetary requirements in ordinary times, and even more so now. In 
addition to the COVID-19 pandemic, a number of other risks could 
materialize (e.g., lower application volumes, decreased renewals, 
recompetition of major contracts, lease renewals, changing assumptions 
about presidentially authorized or congressionally mandated employee 
pay raises, etc.) that could change the USPTO's budgetary outlook. 
These estimates are refreshed annually in the formulation of the 
USPTO's Budget, and the USPTO continues to gain new data as the 
pandemic unfolds.
    IV. Comments and Responses: In response to the NPRM published on 
June 19, 2020, the USPTO received comments from four intellectual 
property organizations and fifteen individual commenters, representing 
law firms, small business owners, and individuals. These comments are 
posted on the Regulations.gov website at https://beta.regulations.gov/document/PTO-T-2019-0027-0001.
    The Office received comments both generally supporting the need to 
increase fees and objecting to particular proposed fee increases. Four 
major user groups representing thousands of trademark professionals and 
trademark owners, who run the gamut from large corporations, to small 
businesses and individuals submitted comments on behalf of their 
members. The user groups generally acknowledged and supported the need 
to increase fees to further USPTO's strategic objectives and facilitate 
effective operations, including encouraging e-filing and enabling 
needed improvements in technology and technology infrastructure. 
However, the user groups objected to or had comments regarding some 
specific fee increases, as discussed below. In addition, at least one 
user group noted that some business owners struggle to pay the current 
fees and suggested that the USPTO consider the state of the U.S. 
economy before issuing the final rule. Several of the other commenters 
objected to any increase in fees, as they believed such increases 
placed hardships on small business owners. Multiple commenters 
requested additional information on the rationales for the increases 
and that the Office take

[[Page 73203]]

the current economy into consideration before issuing a final rule.
    The USPTO appreciates the commenters' support of the need to 
increase revenue as well as their concerns regarding the impact of the 
rule on small businesses owners. As noted above, in formulating this 
rule, the USPTO considered the state of the U.S. economy, the 
operational needs of the agency, and comments submitted in response to 
the NPRM. The USPTO is also mindful of the current difficulties many 
USPTO users are experiencing as a result of the COVID-19 pandemic. The 
USPTO has undertaken many efforts to provide various types of relief, 
including deadline extensions and fee postponements. Additionally, in 
the FY 2021 Congressional Justification, implementation of the fee rule 
was slated for August of 2020. Considering the impact of the pandemic, 
and in response to the stakeholder feedback, the USPTO paused 
development of the fee rule over the summer of 2020 and deferred the 
timing of implementation of the fee rule from August 2020 to January 
2021. This is the first change of trademark fee rules in almost four 
years. Fees were adjusted in January 2017, and many of those changes 
were to encourage electronic filing by increasing fees for certain 
paper submissions. See 81 FR 78042 and FR 81 72694. Since that time, 
the USPTO has made electronic filing mandatory except in limited 
circumstances.
    Further, after considering all comments, the Office has withdrawn 
the proposed fee for requests for reconsideration filed more than three 
months from the date of issuance of a final Office action, which 
commenters noted are a frequently used option for applicants 
prosecuting applications.
    It should also be noted that USPTO's fees for trademark services 
remain relatively small compared to the legal fees many applicants 
incur in seeking those services. Many applicants engage attorneys to 
handle their filing with the Office, and based on data concerning the 
cost of trademark representation, including from the American 
Intellectual Property Law Association's 2019 Report of the Economic 
Survey, USPTO understands that trademark fees represent a small 
fraction of the legal fees a filer would generally pay to have an 
attorney represent them during the application process. In a TTAB 
proceeding, where even more time and work is required by an attorney 
representing a party before the Board, the fees for TTAB services would 
generally be an even smaller fraction of attorney fees associated with 
the representation. Understanding that legal fees are a significant 
expense, the USPTO will continue to help to minimize the cost of the 
application process for small businesses through the USPTO's law school 
clinic program, which enables qualified individuals and small 
businesses in need of trademark legal services to receive pro bono 
assistance in filing applications and responding to Office actions in 
trademark applications.
    The Office also notes that some of the fees being increased in this 
rule are paid by only a relatively small number of applicants--such as 
TTAB fees and letter of protest fees, which are not incurred by the 
majority of applicants with trademark business before the Office--and 
therefore these fee increases are unlikely to impact a large number of 
applicants, including small business owners.
    Some commenters also expressed concerns with specific individual 
fees. In the interest of providing context, when the USPTO received 
comments about a specific fee, they are summarized, and the USPTO's 
responses are provided, in the discussion below of the individual fee 
rationale.
    V. Individual Fee Rationale: Based on the assumptions found in the 
FY 2021 Congressional Justification, the USPTO projects the aggregate 
revenue generated from this rule will recover the prospective aggregate 
costs of its trademark and TTAB operations and associated 
administrative services. However, each individual fee is not 
necessarily set at an amount equal to the estimated cost of performing 
the activities related to the fee. Instead, as described above, some of 
the fees are set to address increases in budgetary requirements as well 
as balance several key policy considerations, and executing these 
policy considerations through the trademark fee schedule is consistent 
with the goals and objectives outlined in the Strategic Plan. Once the 
cost recovery and key policy considerations are factored in, fees are 
set at, above, or below individual cost-recovery levels for the service 
provided. Additional details on the cost methodologies used to derive 
the historical fee unit expenses can be found in ``USPTO Fee Setting--
Activity Based Information and Trademark Fee Unit Expense Methodology'' 
at http://www.uspto.gov/about-us/performance-and-planning/fee-setting-and-adjusting.
    A. Trademark application filing fees: This rule increases all 
application filing fees by varying amounts. The filing fee for a paper 
trademark application is increasing by $150, from $600 per class to 
$750 per class. The TEAS Plus application filing fee is increasing by 
$25, from $225 per class to $250 per class. The TEAS Standard 
application filing fee is increasing by $75, from $275 per class to 
$350 per class. The fee for filing an application under section 66(a) 
of the Act is increasing by $100, from the equivalent of $400 per 
class, as paid in Swiss francs, to the equivalent of $500 per class, as 
paid in Swiss francs.
    Comments: One commenter expressed support for the increase in the 
paper application filing fee. Four commenters expressed concerns about 
the increase in electronic initial application fees. Of those four 
comments, one generally commented that increases will impact small 
businesses, while the others expressed concern about the amount of the 
increase in the TEAS Standard application and resulting gap in cost 
between TEAS Plus and TEAS Standard applications.
    Response: The USPTO appreciates the commenter's support of the need 
to increase the paper application fee. The USPTO also appreciates 
commenters' concerns regarding the increase in the TEAS Standard fees 
and impact on small business owners. Initial application fees are 
generally kept lower than the full processing cost in order to enable 
broader participation in the trademark registration system. The 
increase in the fees will help close the gap between the processing 
cost and incoming revenue while still keeping the fees below the full 
processing cost. The USPTO also notes that filers continue to have the 
option to select TEAS Plus, which is only increasing by $25, from $225 
per class to $250 per class, which is less than current TEAS Standard 
fee rates, and encourages filers, including individuals and small 
business owners, to use this less expensive filing option.
    This rule also decreases the processing fee for failure to meet the 
filing requirements under Sec.  2.22(a) for a TEAS Plus application 
from $125 to $100 per class. Thus, if the processing fee is required in 
a TEAS Plus application, the resulting per-class fee will equal the 
per-class fee for a TEAS Standard application. If a decrease in the 
processing fee were not enacted, the per-class fee for an application 
initially filed as TEAS Plus would exceed the fee for a TEAS Standard 
application, creating a disincentive to choose TEAS Plus, which, as 
noted above, tends to be more efficient for both filers and the USPTO.
    B. Fees for Paper Trademark Filings: This rule maintains the cost 
differential for all paper filings to better align fees with costs by 
setting all trademark processing fees for paper filings $100 to

[[Page 73204]]

$200 higher than the corresponding electronic filing fees (per class, 
when applicable). Overall, it is more costly for the USPTO to process 
paper filings than electronic filings, and that cost is not recovered 
by the current fees for paper filings. Raising the fees for paper 
filings will help offset the higher processing costs and move the USPTO 
closer to total cost recovery.
    A final rule published on July 31, 2019 (84 FR 37081), which became 
effective on February 15, 2020 (84 FR 69330), requires applicants and 
registrants to file electronically through TEAS all trademark 
applications based on section 1 and/or section 44 of the Act, 15 U.S.C. 
1051, 1126, and all submissions filed with the USPTO concerning 
applications or registrations, with limited exceptions. This followed a 
final rule published on October 7, 2016 (81 FR 69950), which became 
effective on January 14, 2017, requiring all parties in TTAB 
proceedings to file electronically through the Electronic System for 
Trademark Trials and Appeals (ESTTA). At present, the vast majority of 
filings are submitted electronically. For example, in FY 2019, less 
than 0.02% of initial applications were filed on paper. Thus, an 
increase in paper filing fees will have no impact on the vast majority 
of applicants, registrants, and parties to Board proceedings, who 
already meet the requirement to file documents electronically.
    C. Other Trademark Processing Fees: This rule also increases 
certain other trademark processing fees to further key policy goals. 
The rule sets out increases to the fees for petitions to the Director 
as well as section 8 and section 71 affidavits. In addition, the rule 
sets new fees and procedural regulations for filing a letter of 
protest, and for deleting goods, services, and/or classes from a 
registration after submission and prior to acceptance of a section 8 or 
section 71 affidavit. Finally, the USPTO decided not to implement the 
proposed new fee for a request for reconsideration filed more than 
three months, but within six months, after the issue date of a final 
action or with a petition to revive an abandoned application.
    (1) Petitions to the Director in Trademark Matters: This rule 
separates petitions to the Director into two types. Each type has a new 
and distinct fee amount with different levels of increases from the 
current single fee. The rule increases the fee for filing a petition to 
the Director for petitions filed under Sec. Sec.  2.146 or 2.147 by one 
amount and establishes a separate fee code for petitions to revive 
filed under Sec.  2.66 that increases the fee by less than the fee for 
petitions filed under Sec. Sec.  2.146 or 2.147. The fees enacted 
herein are intended to facilitate effective trademark operations. The 
fee for electronically filing a petition to the Director under 
Sec. Sec.  2.146 or 2.147 is increasing from the current fee of $100 to 
$250, and the fee for filing on paper is increasing from $200 to $350. 
The fee for electronically filing a petition to revive an abandoned 
application under Sec.  2.66 is increasing from the current fee of $100 
to $150, and the fee for filing on paper is increasing from $200 to 
$250.
    Generally, petitions under Sec. Sec.  2.146 or 2.147 extend the 
trademark registration and post-registration processes by introducing 
additional processing and examination into the timeline, which may lead 
to applications and registration maintenance documents remaining in a 
pending status for longer periods of time, potentially blocking others. 
They can also be used to delay processing of TTAB matters. By 
increasing fees for these filings, the USPTO discourages misuse of the 
process through unnecessary filings that delay prosecution of an 
application or registration maintenance document.
    Comments: One commenter indicated that they did not oppose the 
increase to the fee for petitions to the Director under Sec.  2.66 to 
revive an abandoned application and also generally supported or are 
neutral regarding the increase in the fee for petitions to the Director 
under Sec. Sec.  2.146 and 2.147. Another commenter noted that the 
amount of the increase for petitions under Sec. Sec.  2.146 and 2.147, 
from $100 to $250, seems significantly beyond the rate that is 
appropriate for periodic increases.
    Response: The USPTO appreciates the feedback regarding the increase 
in fees for a petition to the Director. The fee for filing a petition 
to the Director has not increased since the fee was established, more 
than 30 years ago. Under this rule, petitions to the Director have been 
separated by type. Petitions under Sec.  2.66 to revive an application 
abandoned for failure to respond to an Office action or notice of 
allowance are increased by a smaller amount because they cost less to 
process. These petitions generally require less processing when the 
filer complies with certain criteria in the submission itself. 
Petitions to the Director under Sec. Sec.  2.146 and 2.147 usually 
include unique facts that require a lengthier review process. The 
increase in the fees for each type of petition will help to recoup more 
of the costs to process these filings. Additionally, the increase will 
further policy considerations consistent with the goals and objectives 
outlined in the Strategic Plan because this fee should discourage 
misuse of the petition process through unnecessary filings that delay 
prosecution of an application or registration maintenance document, or 
an appeal or trial proceeding before the TTAB.
    (2) Section 8 or Section 71 Affidavits: Fees from post-registration 
filings have historically been set to recover more than the costs of 
processing the filings. The fees are used to help offset the cost of 
application processing and examination as well as TTAB trial 
proceedings and appeals--services for which the fees charged generally 
do not recover the full cost. In general, fewer post-registration 
maintenance filings are made by pro se and foreign registrants, who 
comprise a growing share of new applicants. Based on recent pre-
pandemic trends, the overall percentage of registrations being 
maintained is decreasing. Therefore, the USPTO anticipates that it will 
face a continuing decrease in revenue from maintenance filings going 
forward if adjustments are not made. Increasing fees for section 8 and 
section 71 affidavits is necessary to continue to enable the USPTO to 
achieve aggregate cost recovery while allowing other fees to remain 
below their individual unit costs.
    This rule also increases the fees for these filings in part because 
of the post-registration audit program, which was implemented as a 
result of the 2012 Post Registration Proof of Use Pilot Program (pilot 
program). During the pilot program, section 8 or section 71 affidavits 
for 500 registrations were reviewed as to actual use of the marks in 
connection with the goods and/or services identified in the 
registrations in order to assess the accuracy and integrity of the 
trademark register. The findings of the pilot program demonstrated a 
need for ongoing measures for additional review of these filings on a 
permanent basis. Since codifying the authority to require additional 
information and evidence concerning the use of registered marks in 
connection with section 8 and 71 maintenance filings in 2017 (82 FR 
6259), the USPTO has conducted additional reviews of the actual use of 
the marks in 8,276 section 8 or section 71 affidavits through January 
1, 2020. In more than 50% of the registrations undergoing the 
additional review, the registrations have either been removed from the 
register or had goods or services deleted, resulting in a more accurate 
trademark register. The fee increases implemented in this rule will 
also support the cost of this additional review.

[[Page 73205]]

    Comments: Three commenters expressed concerns about the increase in 
fees for filing a section 8 or section 71 affidavit. One commenter 
stated that the increase of $100 is excessive in light of the $25 
increase four years ago. A second commenter indicated the increases 
will decrease renewal filings, particularly among small business 
owners. The third commenter stated that the increase in fees is 
significant. This commenter also mentioned increases to the section 15 
fee. The USPTO notes that although an increase to the section 15 fee 
was initially considered, it was not proposed in the NPRM.
    Response: The USPTO appreciates the commenters' concerns regarding 
the increase in the fees. These post-registration filing fees have 
historically been set to recover more than the costs of processing the 
filings in order to offset costs in other parts of the process. In 
addition, these fees are increasing to offset the cost of the legal 
examination required to conduct the post registration audit program, a 
valuable tool for improving the accuracy and integrity of the trademark 
register.
    Costs for this additional examination were discussed in the last 
fee adjustment in 2017. At that time, the Office was in the process of 
reviewing the findings from the pilot program and codifying regulations 
for the permanent audit program. The results of this ongoing audit 
program indicate that not only should this program continue, but also 
that the need for legal examination of an increasing number of filings 
is warranted. Based on these findings, the increase in fees is 
necessary to help offset costs for this program and allow other fees to 
remain below their individual unit costs.
    (3) Letters of Protest in Trademark Applications: This rule sets a 
new $50 fee for filing a letter of protest. A letter of protest allows 
a third party to bring to the attention of the USPTO evidence bearing 
on the registrability of a mark in a pending application. In this way, 
the letter-of-protest procedure can potentially improve the quality of 
the examination of a given application. The procedure is not, however, 
a substitute for the statutory inter partes opposition and cancellation 
procedures available to third parties who believe they would be damaged 
by the registration of the involved mark. A letter of protest, properly 
supported, should aid in examination without causing undue delay or 
compromising the integrity and objectivity of the ex parte examination 
process, which is designed to involve communications regarding an 
application only between the applicant and the Office. For this reason, 
the protestor is not permitted to submit legal arguments, contact the 
examining attorney assigned to the subject application, or participate 
in any Office proceedings relating to the protest or the application to 
which it is directed. The limited involvement of the third party ends 
with the filing of the protest. The questions of whether evidence is 
relevant to a ground for refusal appropriate in ex parte examination, 
whether a refusal should be made, or whether a registration will issue 
are matters for the Office to determine during the ex parte examination 
process that occurs between the applicant and the Office acting on 
behalf of the public.
    The Office incurs costs associated with the work of reviewing and 
processing each letter. The filing volume for letters of protest has 
steadily increased in recent years, with the USPTO receiving 2,726 in 
FY 2017; 3,480 in FY 2018; and 4,106 in FY 2019. Thus, letters of 
protest continue to generate increasing additional expenses, which will 
likely further increase in the future.
    Comments: The Office received comments both generally supporting 
and objecting to the new fee to file a letter of protest. Commenters 
supporting the fee stated that the amount is reasonable and appropriate 
to recoup costs. Two of the commenters indicated that the fee should be 
kept as low as possible, with one suggesting that the fee should be set 
at $25 instead of $50, and one suggesting that the fee should be 
refunded if the letter of protest is granted. Several other commenters 
expressed concerns about the impact to small businesses by requiring a 
fee to file a letter of protest. These commenters also noted that 
letters of protest aid the Office by bringing to light information and/
or refusals that an examining attorney may miss. These commenters 
stated that the Office should not charge a fee for a process that 
allows the public to aid in the registration process.
    Response: The USPTO understands the desire to keep the fee low so 
as to not discourage the use of the letter-of-protest process. However, 
given the costs to process these filings, the USPTO has determined that 
a fee is necessary to help offset some of the processing costs. Similar 
to petitions under Sec. Sec.  2.146 and 2.147, review of letters of 
protest cannot be automated because they include unique facts requiring 
review by staff attorneys to ensure guidelines are met before the 
information is sent to the examining attorney for review. In FY 2019, 
the evidence in approximately 25% of pre-publication letters of protest 
and 94% of post-publication letters of protest was not forwarded to the 
examining attorney. This suggests that a significant portion of filings 
do not contain relevant information or evidence, do not meet the 
requirements for a letter of protest, or are otherwise unnecessary. 
These filings generate additional costs without a proportionate 
corresponding benefit. The fee set by this rule is below the amount 
required to recoup the full processing cost. The fee is intended to be 
at a level high enough to partially offset processing costs and deter 
the filing of unsupported or irrelevant filings, but low enough so as 
not to discourage the filing of relevant, well-supported letters of 
protest. This fee is also consistent with the recommendations contained 
in the TPAC report that it fall within the $20 to $100 fee range. The 
USPTO does not anticipate that the letter of protest fee will impact a 
large number of parties with business before the Office. The letter of 
protest is a purely voluntary process that most applicants and 
registrants do not use. In addition, the letter of protest process was 
developed many years ago when examining attorneys had limited resources 
for gathering evidence to support refusals of registration. The tools 
available to examining attorneys today are far more advanced, reducing 
the need for letters of protest.
    In connection with this fee, the USPTO also codifies a new 
regulatory section at 37 CFR 2.149, which sets out the procedures for 
letters of protest. The new regulatory section is based on the existing 
longstanding procedures for letters of protest, which are currently set 
forth in the TMEP, with appropriate modifications that more closely 
align the procedures with those for similar third-party submissions and 
protests in patent applications under 37 CFR 1.290 and 1.291 and as set 
out in MPEP Sec. Sec.  1134 and 1901. This action is being undertaken 
at this time due to the rising volume of letters of protest in recent 
years, which has resulted in the need to codify procedures for 
submission of such protests in the regulations and to adjust those 
procedures to deal efficiently with this higher volume of filings.
    Under the procedures set forth in the regulatory text at Sec.  
2.149, a letter of protest must be timely filed through TEAS and must 
include: (1) The fee; (2) the serial number of the pending application 
that is the subject of the protest; (3) an itemized evidence index that 
includes identification of the documents, or portions of documents, 
being submitted as evidence and a

[[Page 73206]]

concise factual statement of the relevant grounds for refusal of 
registration appropriate in ex parte examination that each identified 
item supports; and (4) a clear and legible copy of the supporting 
evidence identified in the evidence index. If the letter of protest is 
filed before publication of the subject application, the evidence must 
be relevant to the identified ground(s) for refusal. If filed on the 
date of or within 30 days after publication of the subject application, 
the evidence must establish a prima facie case for refusal on the 
identified grounds, such that failure to issue a refusal or make a 
requirement would likely result in issuance of a registration in 
violation of the Act or regulations.
    The letter-of-protest process is intended to provide an opportunity 
for the protestor to efficiently and effectively provide relevant 
evidence in support of the proposed legal grounds for refusing 
registration of the application identified in the submission. It is 
inappropriate for the protestor to ``dump'' evidence and leave it to 
the Office to determine its possible relevance. Therefore, an index is 
required for all submissions listing the documents submitted as 
evidence and the ground(s) for refusal each item of evidence supports. 
In addition, the procedures also require that the submission not total 
more than 10 items of evidence in support of a specified ground of 
refusal and not more than 75 total pages of evidence without a detailed 
and sufficient explanation that establishes the special circumstances 
that necessitate providing more than 10 items of evidence per refusal 
ground or more than 75 total pages of evidence. This requirement 
encourages the submission of evidence that is succinct, not 
duplicative, and limited to the most relevant evidence. It should be a 
rare situation in which more than 10 items of evidence or 75 total 
pages of evidence is necessary to support the proposed legal grounds 
for refusal. However, some examples of situations that might constitute 
such special circumstances are when: (1) A subject application includes 
multiple classes and the protestor needs to provide evidence of 
relatedness of the goods and/or services for all classes in the 
application; (2) evidence submitted to support a refusal for 
descriptiveness consists of fewer than 10 discrete items, but each item 
comprises multiple pages, totaling more than 75 pages; or (3) a 
protestor raises more than one ground for refusal and the evidence 
necessary to support all grounds raised totals more than 10 items or 75 
pages.
    A letter of protest submitted by a third party is not made part of 
the application record to preserve the ex parte nature of examination. 
If the USPTO determines that the submission complies with the proposed 
regulations, only the specified grounds for refusal and the provided 
evidence relevant to the grounds for refusal would be included in the 
application record for consideration by the examining attorney. A third 
party filing a letter of protest will not receive any communication 
from the USPTO relating to the submission other than acknowledgement 
that it has been received by the Office and notification of whether the 
submission is found to be compliant or non-compliant. Also, the Office 
will not accept amendments to a non-compliant submission that was 
previously filed or requests to reconsider a compliance determination. 
Rather, the third party may submit a new letter of protest that is 
compliant if the time period for submitting a letter of protest has not 
closed. A protestor does not, by the mere filing of a protest, obtain a 
``right'' to argue the protest before the Office. As noted above, the 
questions of whether evidence is relevant to a refusal ground 
appropriate in ex parte examination, whether a refusal will be made, or 
whether a registration will issue are matters for the Office to 
determine as part of the ex parte examination process that occurs 
between the applicant and the Office acting on behalf of the public. 
Therefore, the procedures also provide that: (1) The Office's 
determination whether to include submitted evidence in the record of an 
application would be final and non-petitionable, (2) the limited 
involvement of the third party ends with the filing of the letter of 
protest, and (3) the third party may not directly contact the examining 
attorney assigned to the application.
    (4) Requests for Reconsideration in Trademark Applications: The 
USPTO has decided not to implement the proposed new fee for a request 
for reconsideration filed more than three months, but within six 
months, after the issue date of a final action or with a petition to 
revive an abandoned application. The proposed fee was $400 for a TEAS 
submission and $500 for a paper submission. No fee was proposed to be 
incurred for requests filed within three months of the issue date of a 
final action.
    Comments: Seven commenters objected to and expressed a variety of 
concerns regarding implementation of a fee for requests for 
reconsideration of a trademark application. One commenter noted that 
the proposed fee would impose a significant financial burden late in 
the process. Another commenter noted that the proposed fee would be 
higher than the initial application fee.
    Response: After further review, the USPTO has determined that the 
proposed fee might not provide significant enhancement to the 
timeliness or quality of the examination process and would impose an 
additional financial burden to administer. Given these considerations 
and the public concerns about such a fee, including the impact of 
potential fee increases on small businesses and individuals, the USPTO 
withdraws this proposed fee.
    (5) Deletion of Goods, Services, and/or Classes from Registrations: 
Currently, amendments to registrations may be made by filing a section 
7 request for amendment or correction of a registration for $100, if 
submitted through TEAS, or $200, if filed on paper. This rule sets a $0 
fee for a section 7 request that is filed through TEAS prior to the 
submission of a section 8 or section 71 affidavit and that consists 
only of a request to delete specified goods, services, and/or classes. 
As noted above, the current practice that results in no additional 
amendment fee for section 8 or section 71 affidavits that specify fewer 
than all of the goods or services listed in the registration when the 
affidavit is filed, which results in the deletion of goods, services, 
and/or classes not included in the affidavit from the registration, is 
unchanged. However, a fee will be assessed if goods, services, and/or 
classes are deleted in a section 7 request, a response to an Office 
action, or a voluntary amendment filed after submission, but prior to 
the acceptance, of a section 8 or section 71 affidavit. This rule sets 
a new fee of $250 per class, if filed through TEAS, or $350 per class, 
if a paper filing is permitted, for deleting goods, services, and/or 
classes from the registration under such circumstances.
    The $0 fee option is available to, and the $250 (or $350) per-class 
fee will be assessed against, all registrants. Thus, the fees are not 
related to the post-registration audit program or a TTAB finding. The 
fees are intended to improve the accuracy and integrity of the register 
by encouraging all registrants to perform due diligence before filing a 
section 8 or section 71 affidavit to maintain a registration, so as to 
determine the goods, services, and/or classes for which the registered 
mark is no longer in use and to delete them from the registration.
    Comments: One commenter indicated support for a $0 fee for a 
section 7 request to delete goods or services prior to filing a section 
8 or 71 affidavit. Two commenters expressed concern for

[[Page 73207]]

offsetting the cost to the USPTO to mail an updated paper registration 
certificate to filers who take advantage of the $0 fee.
    Response: The comments have been considered; however, the USPTO 
anticipates that other fees will help offset these costs. The decision 
to implement this fee as proposed prioritizes the key policy objective 
of incentivizing improvement of the accuracy and integrity of the 
register.
    Comments: Five commenters expressed concerns regarding the new fee 
to delete goods, services, and/or classes from a registration after a 
section 8 or 71 affidavit has been submitted. One commenter indicated 
there should be no fee for changes made online. Three commenters 
indicated the amount of the fee is too high, with two commenters 
suggesting the fee should be $100 per class. Finally, one commenter 
expressed concerns regarding the post-registration audit program and 
use of the fee to incentivize an increase in audited files.
    Response: Applicants and registrants are required to submit all 
trademark filings electronically (i.e., online). 37 CFR 2.23. Since the 
fee is intended to incentivize all registrants to perform the due 
diligence necessary to ensure that the mark is in use on all goods and/
or services recited in the registration prior to the submission of a 
section 8 or 71 affidavit, not implementing the fee for an electronic 
filing would undermine the USPTO's express purpose in proposing the 
fee. Further, the fee is not charged if the registrant performs its due 
diligence and deletes any goods, services, and/or classes for which the 
mark is not in use within the section 8 or 71 affidavit at the time of 
filing.
    As noted above, the fee structure for requests to delete goods, 
services, and/or classes from a registration will protect and improve 
the integrity of the register and the efficiency of the process by 
incentivizing both more timely filings and proactive action by 
registrants to ensure the accuracy of their registrations. Undermining 
the quality of the register will generate potentially exorbitant undue 
costs and hardship on registrants, applicants, and the agency. The new 
fee needs to be high enough to reflect the significance of incomplete 
due diligence. At the same time, the fee should not be so low as to 
have limited deterrence. The USPTO believes that $250 is the 
appropriate fee to incentivize the desired practices. Further, the 
increased efficiencies realized through this rule will benefit all 
applicants and registrants by allowing registrations to be granted 
sooner and more efficiently by removing unused marks and unsupported 
goods and services from the register. In addition, revenue generated by 
this rule allows for continuing development of methods for detecting 
and addressing filing practices that threaten the integrity of the 
register.
    The USPTO assures the public that any decision to increase the 
number of registrations audited after submission of a post-registration 
maintenance document would be made to promote the accuracy and 
integrity of the register and not because of the possibility that it 
might increase revenue. As noted above, the no-fee option is available 
to, and the $250 (or $350) per-class fee will be assessed against, all 
registrants. The fee is applied to all registrations in which goods or 
services are deleted after submission, but prior to acceptance, of a 
section 8 or 71 affidavit, not only to deletions in registrations being 
audited.
    When filing a section 8 or 71 affidavit, all registrants are 
required to specify the goods and/or services for which the mark is in 
use in commerce. These fees will serve to improve the integrity and 
quality of the register by incentivizing all registrants to perform the 
due diligence necessary before submission of a section 8 or 71 
affidavit to maintain a registration. Thus, registrants who ensure that 
their marks are in use in commerce in connection with the goods and/or 
services listed in the registration before the submission of a section 
8 or 71 affidavit, and who delete those goods, services, and/or classes 
for which the mark is not in use when the affidavit is submitted, are 
not subject to this fee. However, registrants who later determine, 
either as part of an audit or not, that some of the goods, services, 
and/or classes included in the affidavit must be deleted are subject to 
the fee.
    D. TTAB Fees: This rule sets or adjusts 16 TTAB-related fees (8 for 
electronic filings and 8 for paper filings). Ten existing fees (5 
electronic/5 paper) are increased, specifically, those for initiating 
an ex parte appeal from an examining attorney's refusal to register a 
mark, for initiating an opposition proceeding, for initiating a 
cancellation proceeding, and for filing each of two different types of 
extensions of time to oppose. Six new filing fees (3 electronic/3 
paper) are established, and are explained below. The rule also codifies 
that the TTAB has discretion to grant a refund of a portion of the 
filing fee for a petition to cancel. While the percentage increase for 
a number of TTAB fees is larger than the application filing fees 
discussed above, the USPTO notes that many of the TTAB fees remain 
below cost recovery, considering the significant costs the Board incurs 
in conducting proceedings. In addition, TTABs fees are a small 
percentage of the total litigation costs incurred by a party before the 
Board, considering the attorney fees and other expenses of litigation.
    (1) Existing Fees for Trial Cases: To better align the costs of 
providing TTAB services with the fees charged for them, this rule 
increases the fee for petitions for cancellation and notices of 
opposition by $200 per class. The rule also amends Sec.  2.114(a) to 
allow the USPTO discretion to refund a portion of the petition fee in 
cases of default judgment where there is no appearance by a defendant 
and no filings are made other than the petition to cancel, reflecting 
reduced work needed on the part of the TTAB. The resulting lower net 
fee for a petition to cancel that meets these characteristics also 
furthers the policy goal of not discouraging the filing of petitions to 
cancel by petitioners with knowledge that a registered mark is no 
longer in use, or was never put to use, and therefore should be removed 
from the register. The refund will be in the amount of $200 per class, 
as explained below.
    Comments: Four IP stakeholder organizations provided comments on 
the proposed $200 per class increases in the fees for trial cases 
(Notices of Opposition and Petitions for Cancellation). Three of the 
four noted the increases of four years ago, and stated that they 
consider the proposed increases ``steep'' or ``excessive.''
    Response: The percentage of TTAB costs associated with processing 
of trial cases varies a great deal, as compared to the uniform per 
class filing fee. Clearly, in an opposition or cancellation case in 
which no appearance by a defendant is made, no filing other than the 
plaintiff's initial complaint is made, and the case is decided by way 
of default judgment, a higher percentage of TTAB operational costs is 
covered than in a case involving significant motion practice and a full 
trial. The original set of fee proposals discussed in the TPAC fee 
setting hearing with the public and stakeholders included a discussion 
of shifting some of the costs of TTAB trials to heavier users of trial 
case services, for example, by requiring a fee for the filing of a 
motion for summary judgment. However, initial stakeholder input during 
the fee setting hearing clearly indicated a preference for more uniform 
filing fees and fewer user fees for particular filings.
    The costs associated with processing trial cases are more 
substantial than with appeal cases because of the larger number of 
trial cases and the procedural complexities. For example, the Board's

[[Page 73208]]

staff of 18 interlocutory attorneys exists primarily to handle 
contested motions in trial cases. Since parties in trial cases pay no 
fees associated with the myriad motions, voluminous evidentiary 
submissions, and many briefs that can be filed, trial case filing fees 
need to be set for all commenced trial cases at a level that furthers 
cost recovery for all such cases. In addition, as noted above, USPTO 
initial fees for filing trial cases at the TTAB, compared to other 
costs associated with financing litigation, such as attorney fees, 
remain a small part of overall litigation costs.
    As noted in the NPRM, TTAB fee revenue presently covers only 31% of 
TTAB operating costs. Applicants and registrants making filings in the 
trademark operation, the vast majority of whom do not use TTAB 
services, subsidize TTAB costs. The TTAB can recover a more substantial 
percentage of its operating costs, thereby reducing the subsidization 
of TTAB operations, while still keeping TTAB filing fees low as a 
portion of the overall cost of litigation by attaching fees to the TTAB 
filings that are significant enough in number to bring in appreciable 
revenue. The most effective means for raising revenue that will allow 
the Board to recover more of its operating costs lies in filing fees 
for trial cases, and in particular, oppositions
    (2) Partial Refunds of Qualifying Cancellation Fees:
    Comments: Three IP stakeholder organizations addressed the proposal 
to grant the TTAB discretion to provide partial refunds in cancellation 
cases asserting abandonment or nonuse of a registered mark, where there 
is no appearance by a defendant, no filings are made other than the 
petition to cancel, and where a default judgment is entered. Commenters 
sought clarification regarding how the Board would exercise such 
discretion, whether the refund would be processed as a matter of course 
by the Board, or whether a refund request must be filed and whether the 
refund of $200 is per class or per proceeding. One of these commenters 
also sought clarification as to whether the petitioner would need to 
have a deposit account for the refund to issue.
    Response: First, the Office is granted discretion under revised 
Sec.  2.114(a) precisely because it must have the discretion to refund 
any portion of a fee otherwise required. The TTAB will process refunds 
as a matter of course during the process of termination of a 
cancellation case, so long as the stated requirements are met. 
Paralegals will have no need to exercise individual discretion to 
determine whether to provide a refund or not.
    Second, refunds will be handled by TTAB paralegals, during the 
process of terminating cancellation proceedings. The petitioner will 
not have to request the refund. The refund will be processed in the 
same way that refunds now are processed for cases that should not have 
been instituted and are dismissed as a nullity. Therefore, a filer who 
did not use a deposit account to pay the filing fee would not need to 
establish an account just for the purpose of receiving a refund.
    Third, as explained in the NPRM, under this rule a petitioner 
filing only an abandonment or nonuse claim, where no other filings are 
made, and in which a default judgment is entered, would receive a $200 
per class refund of the filing fee. That is, the net filing fee would 
be the same as it was prior to this rule. Notwithstanding the pressing 
need to cover more of the TTAB's operating costs, the refund of a 
portion of the fee for a petition to cancel provided for by this rule, 
under defined circumstances, means that many filers of petitions for 
cancellation will see no increase in the filing fee for such cases.
    Comments: One commenter sought clarification as to what would 
happen if the Board granted a motion to reopen a case in which the 
Board had entered default judgment.
    Response: To ensure that cancellation petitioners who do not obtain 
default judgments are treated equally, if a motion to reopen was 
granted in a cancellation case that was originally decided by default, 
the petitioner would be assessed the amount of the refund processed at 
the time of default.
    Comments: One commenter suggested that the refund conditions be 
expanded to allow for filing of some documents prior to entry of a 
default judgment (e.g., ``no substantive filings'' were made or only 
``simple, procedural'' filings were made).
    Response: The Office appreciates the comment that some cancellation 
cases asserting only abandonment or nonuse claims may have few filings 
and no ``substantive'' filings prior to entry of default judgment. 
However, the refund procedure is established with clear guidelines for 
determining when a refund will be provided to avoid case-by-case 
discretionary judgments on whether a filing was substantive or a 
``simple, procedural filing.''
    The Office will not expand the refund process to cancellation cases 
asserting abandonment that involve filing of more than just the initial 
complaint prior to entry of judgment. Extending the refund to 
cancellation cases asserting abandonment and that involve filings other 
than the initial complaint would require time-consuming case-by-case 
judgments regarding whether the filings were substantive or not or were 
simple and procedural. Moreover, cases that did not involve substantive 
filings might still involve many procedural filings that could cause 
the case to remain pending for a long period of time, and the refund 
proposal is designed to benefit cases that are terminated rapidly. In 
addition, decisions by TTAB personnel regarding whether filings were 
substantive or simple could then be subject to review on petition and 
would result in additional delays prior to termination.
    Comments: Commenters also proposed that a refund should be 
available in opposition cases and for all cases of default judgment, 
regardless of the grounds asserted by the plaintiff. Of the two 
stakeholder organizations that addressed the issue of the frequency 
with which default judgment is entered in opposition proceedings, one 
stated that the reported experience of its members is that default 
judgments are just as frequent in opposition proceedings as they are in 
cancellation proceedings. In contrast, the other acknowledged that 
default judgments are rare in opposition proceedings.
    Response: The TTAB's expedited cancellation proceeding pilot 
confirmed only the high rate of default judgment in cancellation cases 
asserting abandonment or nonuse alone. Thus, the Board did not have any 
basis to propose refunds in opposition cases or in cancellation cases 
asserting other grounds. The NPRM refund proposal was limited to 
cancellation cases asserting only abandonment or nonuse, in which the 
defendant does not enter an appearance, the only filing was the initial 
complaint, and that results in default judgment. This was rooted in the 
recognition of the high number of abandonment or nonuse claims, the 
high rate of default in cases in which those are the only claims, and 
the ability to handle refund processing in the normal course of 
terminating a cancellation proceeding. Based on statistics from the 
TTAB's recent two-year expedited cancellation proceeding pilot program, 
abandonment is the most common claim in cancellation proceedings, 
appearing in 34% of filings. The default rate in cancellation cases in 
which abandonment is the only claim is 60%. The decision to process 
refunds in such cases results in no net increase in the cancellation 
filing fee for many petitioners and also encourages filings that help 
ensure the integrity of the register. Cancellation cases

[[Page 73209]]

involving assertion of other grounds serve other purposes that may be 
unrelated to the integrity of the register. Opposition cases typically 
do not involve abandonment claims and, even if they result in default 
judgments do not result in removal of registered but unused marks from 
the register.
    (3) Fees for Extensions of Time to Oppose: This rule also increases 
fees for filing requests for an extension of time to file an 
opposition. Prior to enactment of this rule, applicants could request: 
(1) An initial 30-day extension for no fee, (2) a subsequent 60-day 
extension (or an initial 90-day extension) for a fee of $100 for 
electronic filings and $200 for paper filings, and (3) a final 60-day 
extension for a fee of $200 for electronic filings and $300 for paper 
filings. This rule maintains this tiered structure with an increase of 
$100 for the first 60-day (or initial 90-day) electronic extension and 
$200 for the final 60-day electronic extension. Paper-filed extension 
requests will increase by $200 for each filing. The fees are per 
application, not per class.
    These fees are designed to yield efficiencies by encouraging 
potential opposers to make decisions regarding filing an opposition 
sooner, thus reducing delays to applicants whose filings have been made 
the subject of extensions of time to oppose. Additionally, by 
encouraging earlier decisions to initiate proceedings, the uncertainty 
experienced by these applicants will be ameliorated by having their 
applications proceed to determination on the merits sooner. This will 
also help protect the integrity of the trademark register by 
encouraging timely decisions and filings to ensure that the rights of 
other applicants and the public are not adversely affected.
    Further, currently about two-thirds of the cost of TTAB operations 
is subsidized by revenue from other trademark processing fees. The 
increases in existing TTAB fees set by this rule, and the new fees set 
by this rule, will not recover the full costs of TTAB operations, but 
they are estimated to increase cost recovery by 7% and to bring the 
TTAB incrementally closer to full cost recovery.
    Finally, the extension of time to oppose fees will help offset TTAB 
processing costs. In FY 2019, the USPTO received 20,502 requests for 
extensions of time to file a notice of opposition. It is customary for 
requests that delay processing of records, such as extensions, to incur 
a fee, which offsets costs associated with processing the filing, as 
well as the overall cost of processing appeals and trials. These fees 
are necessary to help achieve primary Office goals of recovering the 
aggregate costs of operations, along with key policy considerations, 
such as encouraging efficient processing.
    Comments: Two IP stakeholder organizations and one law firm 
provided comments on the extension of time to oppose fees. One 
stakeholder organization noted only the proposed fee for the final 60-
day extension of time to oppose, and it is unclear whether the 
organization's comment concerns only that extension or both types of 
extensions that carry fees. All commenters noted that fees for these 
filings were first levied four years ago and that the proposed 
increases are, percentage-wise, substantial. Comments also suggested 
that an applicant engaged in settlement talks with a potential opposer 
could attempt to force an increase in costs for the potential opposer 
to continue settlement talks by not responding to attempts to settle 
the parties' differences. The law firm suggested that potential 
opposers might proceed to file a notice of opposition rather than pay 
the increased fees for the extensions of time to oppose. The law firm 
also suggested that processing of extensions of time to oppose is 
largely automated and, therefore, the fee increase cannot be justified 
on the grounds of cost recovery.
    Response: Many potential opposers are aware of applications that 
have been filed and that are perceived as potentially conflicting well 
before a mark is published for opposition, as demonstrated by the large 
number of Letters of Protest filed each year, many of which seek to 
ensure an examining attorney is aware of the protestor's prior 
registration or other concerns. A potential opposer and an applicant 
can initiate settlement discussions as soon as the application is 
approved for publication in the Trademark Official Gazette and before 
it actually publishes. Then, upon publication, there is a 30-day 
opposition period, and a 30-day extension of that period can be 
obtained at no cost. Extension of time to oppose fees do not apply 
until 60 days after the date of publication. The additional 60 days 
that can be obtained for the period covering 60-120 days from 
publication carry a fee that is charged per application, not per class 
of goods or services in the application. A final extension for another 
60 days can be obtained for a higher fee, also per application, not per 
class. The fee structure encourages parties to discuss settlement of 
differences, but charges more the longer the discussions go on and 
applications are delayed.
    When fees for extensions were first proposed, commenters posited 
that potential opposers might file oppositions rather than pay the 
extension fees. The Board has not seen any evidence of a significant 
change in practice. On the contrary, the number of extensions of time 
to oppose filed has generally increased on an annual basis. Opposition 
fees are paid per class for the opposed application, while fees that 
are required for extensions of the opposition period accrue on a per-
application basis. As such, filing an opposition to avoid paying an 
extension fee when negotiations to avoid commencement of an opposition 
are progressing would in most instances cost a potential opposer more. 
When negotiations are not progressing, the potential opposer may wish 
to consider an earlier determination as to whether filing of an 
opposition is desirable. In trial cases, it is not unusual for the 
Board to be informed that an adversary is not willing to engage in 
settlement talks. The Board has limited ability to force such 
discussions. In addition, the Board has received objections to its 
approval of extensions of time to oppose from applicants who assert 
that the potential opposer has no real basis for an opposition and 
seeks only to delay the application. Thus, the extension fees are 
intended to facilitate earlier discussion of settlement and recognize 
that delay can be a concern for both parties.
    As noted above in the discussion of increases in filing fees for 
trial cases, cost recovery by the TTAB is not assessed solely on the 
basis of each particular type of filing or Board proceeding. As 
stakeholders have indicated a preference for spreading out cost 
recovery over many filings, rather than be faced with steeply higher 
costs for involved and protracted proceedings, cost recovery for all 
Board operations is facilitated by apportionment of fees on filings 
that are most frequently made. Extensions of time to oppose are filed 
on an annual basis at three times the rate of the filing of notices of 
opposition. Therefore, they are a logical type of filing for which to 
charge nominal fees for longer extensions. In addition, the fact that 
processing of extensions of time to oppose is largely automated does 
not mean that there are no costs associated with their processing. 
Development and enhancements of automated processing systems cost a 
great deal.
    (4) Fees for Filing an Appeal Brief: This rule increases the fee 
for filing a notice of appeal by $25 per class, based on inflation, and 
establishes new fees for filing an appeal brief of $300 per class if 
filed on paper and $200 per class if filed through ESTTA. These fees

[[Page 73210]]

address the TPAC report recommendations to apply the majority of the 
aggregate increases in appeal fees to the costs incurred when an appeal 
brief is filed, which increases the likelihood that the appeal will 
have to be decided on the merits.
    (5) Fees for Filing Requests for Extension of Time to File an 
Appeal Brief: This rule sets fees for second and subsequent requests 
for extensions of time to file an appeal brief at $200 per application 
if filed on paper and $100 per application if filed through ESTTA. 
These fees yield efficiencies by encouraging applicants to move forward 
with their appeals, resulting in a quicker resolution of the appeal, 
the pendency of which can adversely impact the rights of other 
applicants and registrants. Implementing a tiered fee structure 
minimizes costs to all applicants, including smaller entities, as there 
is no fee for a first request for extension of time to file the appeal 
brief.
    (6) Fees for Oral Hearing: This rule sets the fee for a request for 
an oral hearing at $500 per proceeding. Oral hearings are not requested 
in the vast majority of cases before the TTAB. They are optional and 
are most useful when cases involve complex issues, a complex record, or 
highly technical goods and/or services. This fee will help offset the 
costs of scheduling and conducting the hearing, as well as the 
maintenance of equipment for remote participation.
    Comments: Two IP stakeholder organizations and one law firm 
addressed the proposed fee for an oral hearing in an ex parte appeal or 
trial case. One organization noted its concern but did not provide an 
explanation of the basis for its concern, though it did suggest 
limiting the fee to in-person arguments. The other organization 
concluded that the fee will discourage the use of oral hearings and 
could weaken a party's chance of success in a matter before the TTAB. 
The law firm considers trademark cases to be inherently complex and 
long and the fee to be a disservice to the bar, to the parties, and to 
fair determinations of cases.
    Response: This fee appropriately places Board costs on actual users 
of this service. Approximately 100 hearings have been requested on an 
annual basis in recent years. While some practitioners routinely 
request an oral argument for cases in which they are involved, most do 
not. The Board has no evidence that outcomes for parties that request 
an oral argument are appreciably different than for those that do not. 
No Board case is decided without thorough review of the record and 
briefs, which, as frequently stated, are of paramount importance. 
However, hearings are available for those who request them.
    Because there is no current fee for requesting an oral hearing, it 
is not unusual for a party to request one only to cancel shortly before 
the hearing. Charging a fee for requesting a hearing may help deter 
requests for hearings that could later be cancelled. Hearings incur 
costs that are not associated with cases submitted for decision on the 
briefs. The scheduling and running of hearings requires a dedicated 
staff position, and the TTAB must maintain a hearing room for use when 
in-person hearings are held and the technical infrastructure necessary 
to offer parties the option to appear by video rather than incur the 
costs associated with having to travel to the USPTO. This 
infrastructure has a finite lifespan and needs regular upgrading or 
replacement.

Discussion of Rule Changes

    The USPTO revises Sec.  2.6(a)(1)(i) to increase the per-class fee 
for filing an initial application on paper from $600 to $750.
    The USPTO revises Sec.  2.6(a)(1)(ii) to increase the per-class fee 
for filing an application under section 66(a) of the Act from $400 to 
$500.
    The USPTO revises Sec.  2.6(a)(1)(iii) to increase the per-class 
fee for filing a TEAS Standard application from $275 to $350.
    The USPTO revises Sec.  2.6(a)(1)(iv) to increase the per-class fee 
for filing a TEAS Plus application from $225 to $250.
    The USPTO revises Sec.  2.6(a)(1)(v) to decrease the processing fee 
under Sec.  2.22(c) from $125 to $100 per class.
    The USPTO adds Sec.  2.6(a)(11)(iii) to establish a fee of $0 for 
filing a section 7 request to amend a registration through TEAS prior 
to submission of a section 8 or section 71 affidavit and that consists 
only of the deletion of goods, services, and/or classes.
    The USPTO revises Sec.  2.6(a)(12)(i) and (ii) to increase the per-
class fee for filing a section 8 affidavit from $225 to $325 for a 
paper submission and from $125 to $225 for a TEAS submission.
    The USPTO adds Sec.  2.6(a)(12)(iii) and (iv) to establish fees for 
the deletion of goods, services, and/or classes after submission and 
prior to acceptance of a section 8 affidavit. The addition of Sec.  
2.6(a)(12)(iii) and (iv) sets the per-class fee at $350 for a paper 
submission and $250 for a TEAS submission.
    The USPTO revises Sec.  2.6(a)(15) to establish separate fees for 
petitions to the Director under Sec. Sec.  2.146 or 2.147 and petitions 
to revive an abandoned application under Sec.  2.66. The revisions to 
Sec.  2.6(a)(15)(i) and (ii) set the fee for filing a petition to the 
Director under Sec. Sec.  2.146 or 2.147 at $350 for a paper submission 
and $250 for a TEAS submission. The addition of Sec.  2.6(a)(15)(iii) 
and (iv) sets the fee for filing a petition to revive an abandoned 
application under Sec.  2.66 at $250 for a paper submission and $150 
for a TEAS submission.
    The USPTO revises Sec.  2.6(a)(16)(i) and (ii) to increase the per-
class fee for filing a petition to cancel from $500 to $700 for a paper 
submission and from $400 to $600 for an ESTTA submission.
    The USPTO revises Sec.  2.6(a)(17)(i) and (ii) to increase the per-
class fee for filing a notice of opposition from $500 to $700 for a 
paper submission and from $400 to $600 for an ESTTA submission.
    The USPTO revises Sec.  2.6(a)(18) to increase the fee for filing 
an ex parte appeal and to establish new fees for requests for an 
extension of time to file an appeal brief and for filing a brief in an 
ex parte appeal. The revisions to Sec.  2.6(a)(18)(i) and (ii) increase 
the per-class fee for filing an ex parte appeal from $300 to $325 for a 
paper submission and from $200 to $225 for an ESTTA submission. The 
addition of Sec.  2.6(a)(18)(iii) sets the per-application fee for 
filing a first request for an extension of time to file an appeal brief 
at $0. The addition of Sec.  2.6(a)(18)(iv) and (v) sets the per-
application fee for filing a second or subsequent request for an 
extension of time to file an appeal brief at $200 for a paper 
submission and $100 for an ESTTA submission. The addition of Sec.  
2.6(a)(18)(vi) and (vii) sets the per-class fee for filing a brief in 
an ex parte appeal at $300 for a paper submission and $200 for an ESTTA 
submission.
    The USPTO revises Sec.  2.6(a)(22)(i) and (ii) to increase the fee 
for filing a request for an extension of time to file a notice of 
opposition pursuant to Sec.  2.102(c)(1)(ii) or (c)(2) from $200 to 
$400 for a paper submission and from $100 to $200 for an ESTTA 
submission.
    The USPTO revises Sec.  2.6(a)(23)(i) and (ii) to increase the fee 
for filing a request for an extension of time to file a notice of 
opposition pursuant to Sec.  2.102(c)(3) from $300 to $500 for a paper 
submission and from $200 to $400 for an ESTTA submission.
    The USPTO adds Sec.  2.6(a)(24) to establish a fee for filing a 
request for an oral hearing before the TTAB of $500 per proceeding.
    The USPTO adds Sec.  2.6(a)(25) to establish a fee of $50 for the 
filing of a letter of protest per subject application.
    The USPTO revises Sec.  2.114(a) to provide that a partial refund 
of the fee for a petition to cancel, equal to the

[[Page 73211]]

increase in that fee otherwise enacted in this rulemaking, may be made 
in cases of default judgment where there was no appearance by a 
defendant and no filings are made other than the petition to cancel.
    The USPTO adds Sec.  2.149, which codifies the procedures and 
requirements for letters of protest.
    The USPTO revises the section title and restructures Sec.  2.161 to 
set out the requirements for section 8 affidavits or declarations more 
clearly. The USPTO also adds, at revised Sec.  2.161(c), a provision 
stating that if goods, services, and/or classes are deleted from a 
registration after submission and prior to the acceptance of a section 
8 affidavit or declaration, the deletion must be accompanied by the 
relevant fee under Sec.  2.6(a)(12)(iii) or (iv) for each class from 
which goods, services, and/or classes are deleted.
    The USPTO revises Sec.  7.6(a)(6)(i) and (ii) to increase the per-
class fee for filing a section 71 affidavit from $225 to $325 for a 
paper submission and from $125 to $225 for a TEAS submission.
    The USPTO adds Sec.  7.6(a)(6)(iii) and (iv) to establish fees for 
the deletion of goods, services, and/or classes after submission and 
prior to acceptance of a section 71 affidavit. The added Sec.  
7.6(a)(iii) and (iv) set the per-class fee at $350 for a paper 
submission and $250 for a TEAS submission.
    The USPTO revises the section title and restructures Sec.  7.37 to 
set out the requirements for section 71 affidavits or declarations more 
clearly. The USPTO also adds, at revised Sec.  7.37(c), a provision 
stating that if goods, services, and/or classes are deleted from a 
registration after submission and prior to acceptance of a section 71 
affidavit or declaration, the deletion must be accompanied by the 
relevant fee under Sec.  7.6(a)(6)(iii) or (iv) for each class from 
which goods, services, and/or classes are deleted.

Rulemaking Requirements

    A. America Invents Act: This rulemaking sets and adjusts fees under 
section 10(a) of the AIA as amended by the SUCCESS Act. Section 10(a) 
of the AIA authorizes the Director to set or adjust by rule any 
trademark fee established, authorized, or charged under the Trademark 
Act for any services performed by, or materials furnished by, the USPTO 
(see section 10 of the AIA, Pub. L. 112-29, 125 Stat. 284, 316-17, as 
amended by Pub. L. 115-273, 132 Stat. 4158). Section 10(e) of the AIA 
sets forth the general requirements for rulemakings that set or adjust 
fees under this authority. In particular, section 10(e)(1) requires the 
Director to publish in the Federal Register any proposed fee change 
under section 10 and include in such publication the specific rationale 
and purpose for the proposal, including the possible expectations or 
benefits resulting from the proposed change. For such rulemakings, the 
AIA requires that the USPTO provide a public comment period of not less 
than 45 days.
    The TPAC advises the Under Secretary of Commerce for Intellectual 
Property and Director of the USPTO on the management, policies, goals, 
performance, budget, and user fees of trademark operations. When 
adopting fees under section 10 of the AIA, the AIA requires the 
Director to provide the TPAC with the proposed trademark-related fees 
at least 45 days prior to publishing them in the Federal Register. The 
TPAC then has at least 30 days within which to deliberate, consider, 
and comment on the proposal, as well as hold a public hearing(s) on the 
proposed fees. The TPAC must make a written report available to the 
public of the comments, advice, and recommendations of the committee 
regarding the proposed fees before the USPTO issues any final fees. The 
USPTO will consider and analyze any comments, advice, or 
recommendations received from the TPAC before finally setting or 
adjusting fees.
    Consistent with the requirements of the AIA, on August 28, 2019, 
the Director notified the TPAC of the USPTO's intent to set or adjust 
trademark fees and submitted a preliminary trademark fee proposal with 
supporting materials. The preliminary trademark fee proposal and 
associated materials are available at http://www.uspto.gov/about-us/performance-and-planning/fee-setting-and-adjusting.
    The TPAC held a public hearing in Alexandria, Virginia, on 
September 23, 2019. Transcripts of this hearing and comments submitted 
to the TPAC in writing are available for review at http://www.uspto.gov/about-us/performance-and-planning/fee-setting-and-adjusting. The TPAC subsequently issued a report, dated October 31, 
2019, regarding the preliminary proposed fees. The report can be found 
online at http://www.uspto.gov/about-us/performance-and-planning/fee-setting-and-adjusting.
    B. 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 USPTO's proposed changes to trademark fees on small 
entities. Under the RFA, whenever an agency is required by 5 U.S.C. 553 
(or any other law) to publish an 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 
(see 5 U.S.C. 603, 605). The USPTO published an Initial Regulatory 
Flexibility Analysis (IRFA), along with the NPRM, on June 19, 2020 (85 
FR 37040). 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 discusses alternatives 
considered by the Office.
    1. Succinct statement of the need for, and objectives of, the rule:
    The USPTO is setting and adjusting certain trademark fees as 
authorized by section 10 of the AIA, as amended by Public Law 115-273, 
132 Stat. 4158 (the SUCCESS Act). The fee schedule established under 
section 10 in this rulemaking will, based on the assumptions found in 
the FY 2021 Congressional Justification, recover the aggregate 
estimated costs to the USPTO while achieving strategic and operational 
goals, such as implementing measures to maintain trademark pendency and 
high trademark quality, modernizing the trademark IT systems, 
continuing important programs for stakeholder and public outreach, 
enhancing operations of the TTAB, and maintaining a sufficient 
operating reserve. Aggregate costs are estimated through the USPTO 
budget formulation process with the annual preparation of a five-year 
performance-based budget request. Revenues are estimated based on the 
projected demand (workload) for trademark products and services and fee 
rates.
    The policy objectives of the rule are to: (1) Better align fees 
with costs, (2) protect the integrity of the trademark register, (3) 
improve the efficiency of USPTO processes related to trademark and TTAB 
operations, and (4) ensure financial sustainability to facilitate 
effective trademark operations. The legal basis for the rule is section 
10 of the AIA, as amended, which provides the authority for the 
Director to set or adjust by rule any fee established, authorized, or 
charged under the Trademark Act of 1946, 15 U.S.C. 1051 et seq., as 
amended. See also section 31 of the Trademark Act, 15 U.S.C. 1113.
    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,

[[Page 73212]]

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 fees in general, as 
well as particular fees, and their impact on small entities, 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 applicants, and this information 
would be required in order to determine the number of small entities 
that would be affected by the proposed rule.
    This rule applies to any entity filing trademark documents with the 
USPTO. The USPTO estimates, based on the assumptions found in the FY 
2021 Congressional Justification, that during the first full fiscal 
year under the fees as proposed, the USPTO would expect to collect 
approximately $76 million more in trademark processing and TTAB fees in 
FY 2021. The USPTO would receive an additional $40 million in fees from 
applications for the registration of a mark, including requests for 
extension of protection and subsequent designations; $2 million more 
from petitions and letters of protest; and $27 million more for section 
8 and section 71 affidavits. TTAB fees would increase by $6 million.
    Trademark fees are collected for trademark-related services and 
products at different points in time in the trademark application 
examination process and over the lifecycle of the registration. 
Approximately 55% of all trademark fee collections are from application 
filing fees. Fees for TTAB proceedings and appeals comprise 2.5% of 
revenues. Fees from other trademark activities, petitions, assignments 
and certifications, and Madrid processing are approximately 5% of 
revenues. Fees for filing post-registration and intent-to-use filings, 
which subsidize the costs of filing, search, examination, and TTAB 
activities, comprise 37.5%.
    The USPTO's five-year estimated aggregate trademark fee revenue is 
based on the number of trademark applications and other fee-related 
filings it expects to receive for a given fiscal year and work it 
expects to process in a given fiscal year (an indicator of future fee 
workload and budgetary requirements). Within the iterative process for 
estimating aggregate revenue, the USPTO adjusts individual fee rates up 
or down based on policy and cost considerations and then multiplies the 
resulting fee rates by appropriate workload volumes to calculate a 
revenue estimate for each fee, which is then used to calculate the 
aggregate revenue. Additional details about the USPTO's aggregate 
revenue, including projected workloads by fee, are available at https://www.uspto.gov/about-us/performance-and-planning/fee-setting-and-adjusting.
    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 reporting or recordkeeping 
requirements. The main purpose of the final rule is to set and adjust 
trademark fees. The final rule also codifies new procedural regulations 
at 37 CFR 2.149 for the submission of letters of protest. The USPTO 
does not collect or maintain statistics in trademark cases on small- 
versus large-entity applicants and is unable to provide an estimate of 
the classes of small entities that will be subject to the new 
procedural requirements. However, the USPTO does not anticipate that 
the final rule would have a disproportionate impact upon any particular 
class of small or large entities.
    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 final 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 considered four alternatives, based on the assumptions 
found in the FY 2021 Congressional Justification, before enacting this 
rule: (1) The adjustments included in this final rule, (2) an across-
the-board adjustment of 22%, (3) the unit cost of providing services 
based on FY 2019 costs, and (4) no change to the baseline of current 
fees. The alternatives are each explained here with additional 
information regarding how each alternative was developed and the 
aggregate revenue estimated. A description of the Aggregate Revenue 
Methodologies is available at http://www.uspto.gov/about-us/performance-and-planning/fee-setting-and-adjusting.
    The USPTO is setting or adjusting trademark fees codified in 37 CFR 
parts 2 and 7. Fees are adjusted for all application filing types 
(i.e., paper applications, applications filed via TEAS, and requests 
for extension of protection under section 66(a) of the Trademark Act 
(15 U.S.C. 1141f)). The USPTO also sets or adjusts certain other 
trademark processing fees to further effective administration of the 
trademark system. For example, the rule increases the fees for certain 
petitions to the Director as well as section 8 and section 71 
affidavits, sets a new fee and proposes procedural regulations for 
filing a letter of protest, and sets new fees for deleting goods, 
services, and/or classes from a registration after submission and prior 
to acceptance of a section 8 or section 71 affidavit.
    The USPTO chose the alternative established in this rule because it 
will enable the Office to achieve its goals effectively and efficiently 
without unduly burdening small entities, erecting barriers to entry, or 
stifling incentives to innovate. The alternative established here 
secures the USPTO's objectives for meeting the strategic goals of 
encouraging broader usage of IP rights-protection mechanisms and 
participation by more trademark owners and more efficient resolution of 
appeals and inter partes proceedings at the TTAB by increasing revenue 
to meet the Office's aggregate future costs. In particular, the new fee 
structure for requests to delete goods, services, and/or classes from a 
registration will protect the integrity of the register and the 
efficiency of the process by incentivizing both more timely filings and 
proactive action by applicants and registrants. The increased 
efficiencies realized through this rule will benefit all applicants and 
registrants by allowing registrations to be granted in a timely manner 
and more efficiently by removing unused marks and unsupported goods and 
services from the register. All trademark applicants and registrants 
should benefit from the efficiency that will be realized under the 
final rule.
    With regard to the new regulations governing the filing of letters 
of protest,

[[Page 73213]]

the USPTO anticipates that the impact to affected entities will be 
small. The proposed fee of $50 is set at a level high enough to 
recognize there are processing costs and deter the filing of 
unsupported or irrelevant filings, but low enough so as not to 
discourage the filing of relevant, well-supported letters of protest. 
In addition, the new procedural regulations for filing letters of 
protest are not anticipated to significantly impact affected entities 
because the new regulations are based on existing informal procedures 
set out in the TMEP.
    Finally, the new provision at Sec.  2.114(a) provides that a 
partial refund of the fee for a petition to cancel may be made in cases 
of default judgement where there was no appearance by a defendant and 
no filings were made other than the petition to cancel. This change 
will balance the cost recovery obtained from the increase in the fee 
for a petition to cancel, a case type that has increased markedly in 
recent years, against the benefit of having petitions to cancel filed 
to remove registrations from the register when petitioners have 
determined through their investigations that the registered marks are 
no longer in use. In such situations, default judgments often result, 
efficiently clearing the register of marks that would otherwise stand 
as potential bars to applications seeking to register similar marks. 
This reduces costs for applicants filing such applications.
    The fee schedule for this alternative (labeled ``Alternative 1--
Final Rule'') is available in the document entitled ``Final Regulatory 
Flexibility Act Tables'' at http://www.uspto.gov/about-us/performance-and-planning/fee-setting-and-adjusting.
    Another alternative to setting and adjusting fees that was 
considered was to increase all fees by the same 22% across the board. 
This alternative would maintain the status quo structure of cost 
recovery, where processing and examination costs are subsidized by fees 
paid for intent-to-use and post-registration maintenance filings (both 
of which exceed the cost of performing these services), given that all 
fees would be adjusted by the same escalation factor. This structure 
would promote innovation strategies and allow applicants to gain access 
to the trademark system through fees set below cost, while registrants 
would pay maintenance fees above cost to subsidize the below-cost 
front-end fees. This alternative was ultimately rejected. Although this 
alternative generates sufficient aggregate revenue to recover aggregate 
operating costs, unlike the final rule fee structure, there would be no 
improvements in fee schedule design. As such, this alternative would 
not accomplish the stated objective of enhancing the integrity of the 
register by incentivizing users to maintain accurate goods and/or 
services. Further, it would not enhance the efficiency of the process, 
as it would offer no new incentives for users to timely file 
applications and other filings or to resolve appeals and inter partes 
proceedings at the TTAB more expeditiously. The fee schedule for this 
alternative (labeled ``Alternative 2--Across-the-Board Adjustment'') is 
available in the document entitled ``Final Regulatory Flexibility Act 
Tables'' at http://www.uspto.gov/about-us/performance-and-planning/fee-setting-and-adjusting.
    A third alternative that was considered was to set all trademark 
fees to allow for the USPTO to recover 100% of the unit costs 
associated with each product or service provided, based on the 
historical unit costs of the products and services provided by the 
USPTO. The USPTO uses activity based information to determine the unit 
costs of activities that contribute to the services and processes 
provided by individual fees. It is common practice in the Federal 
Government to set a particular fee at a level that recovers the cost of 
a given good or service. In Office of Management and Budget (OMB) 
Circular A-25, User Charges, the OMB states that user charges (fees) 
should be sufficient to recover the full cost to the Federal Government 
of providing the particular service, resource, or good, when the 
Government is acting in its capacity as sovereign. Under the unit cost 
recovery alternative, fees are generally set in line with the FY 2019 
cost of providing the product or service. The USPTO recognizes that 
this approach does not account for changes in the fee structure or 
inflationary factors that could likely increase the costs of certain 
trademark services and necessitate higher fees in the out-years. 
However, the USPTO contends that the FY 2019 data is the best unit cost 
data available to inform this analysis. This alternative would produce 
a structure in which application and processing fees would increase 
significantly for all applicants, and intent-to-use and post-
registration maintenance filing fees would decrease dramatically when 
compared with current fees. In addition, these fees would change from 
year to year based on the number of applications submitted. This 
alternative was rejected because it was determined that the unit costs 
for any given product or service can vary from year to year, such that 
a yearly review of all, and an adjustment to many, trademark fees would 
be continually required and could also lead to consumer confusion 
regarding the amount at which any given trademark fee was currently set 
and what the relevant fee would be in the future. Additionally, this 
alternative does not address improvements in fee design to accomplish 
the stated objectives of encouraging broader usage of IP rights-
protection mechanisms and participation by more trademark owners as 
well as practices that improve the efficiency of the process. The fee 
schedule for this alternative (labeled ``Alternative 3--Unit Cost 
Recovery'') is available in the document entitled ``Final Regulatory 
Flexibility Act Tables'' at http://www.uspto.gov/about-us/performance-and-planning/fee-setting-and-adjusting.
    A final alternative to setting and adjusting fees would be to take 
no action at this time regarding trademark fees and to leave all 
trademark fees as currently set. This alternative was rejected because, 
due to changes in demand for certain services and rising costs, the 
Office has determined that a fee increase is needed to meet future 
budgetary requirements as described in the FY 2021 Congressional 
Justification. Further, as previously explained, the fee schedule 
established in this final rule will assist in promoting access to the 
trademark system, protecting the integrity of the register, and 
promoting the efficiency of the trademark registration process by 
incentivizing: (1) Maintenance of registrations for goods and services 
for which marks are actually in use, (2) more timely filing of 
applications and other documents, and (3) faster resolution of appeals 
and inter partes proceedings at the TTAB. The fee schedule for this 
alternative (labeled ``Alternative 4--Baseline--Current Fee Schedule'') 
is available in the document entitled ``Final Regulatory Flexibility 
Act Tables'' at http://www.uspto.gov/about-us/performance-and-planning/fee-setting-and-adjusting.
    C. Executive Order 12866 (Regulatory Planning and Review): This 
rule has been determined to be Significant for purposes of Executive 
Order 12866 (Sept. 30, 1993).
    D. 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; (2) tailored the rule to impose the least burden 
on society consistent with obtaining the regulatory objectives; (3)

[[Page 73214]]

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 online 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.
    E. Executive Order 13771 (Reducing Regulation and Controlling 
Regulatory Costs): This final rule is not subject to the requirements 
of Executive Order 13771 (Jan. 30, 2017) because this final rule 
involves a transfer payment.
    F. Executive Order 13132 (Federalism): This rule does not contain 
policies with federalism implications sufficient to warrant preparation 
of a Federalism Assessment under Executive Order 13132 (Aug. 4, 1999).
    G. Executive Order 13175 (Tribal Consultation): This rulemaking 
will not: (1) Have substantial direct effects on one or more Indian 
tribes; (2) impose substantial direct compliance costs on Indian tribal 
governments; or (3) preempt tribal law. Therefore, a tribal summary 
impact statement is not required under Executive Order 13175 (Nov. 6, 
2000).
    H. Executive Order 13211 (Energy Effects): This rulemaking is not a 
significant energy action under Executive Order 13211 because this 
rulemaking is not likely to have a significant adverse effect on the 
supply, distribution, or use of energy. Therefore, a Statement of 
Energy Effects is not required under Executive Order 13211 (May 18, 
2001).
    I. Executive Order 12988 (Civil Justice Reform): This rulemaking 
meets applicable standards to minimize litigation, eliminate ambiguity, 
and reduce burden as set forth in sections 3(a) and 3(b)(2) of 
Executive Order 12988 (Feb. 5, 1996).
    J. Executive Order 13045 (Protection of Children): This rulemaking 
does not concern an environmental risk to health or safety that may 
disproportionately affect children under Executive Order 13045 (Apr. 
21, 1997).
    K. Executive Order 12630 (Taking of Private Property): This 
rulemaking will not affect a taking of private property or otherwise 
have taking implications under Executive Order 12630 (Mar. 15, 1988).
    L. 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 rulemaking are not expected 
to result in an annual effect on the economy of $100 million 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 
rulemaking is not expected to result in a ``major rule'' as defined in 
5 U.S.C. 804(2).
    M. 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 (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 (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.
    N. National Environmental Policy Act of 1969: This rulemaking will 
not have any effect on the quality of the environment and is thus 
categorically excluded from review under the National Environmental 
Policy Act of 1969. See 42 U.S.C. 4321 et seq.
    O. National Technology Transfer and Advancement Act of 1995: The 
requirements of section 12(d) of the National Technology Transfer and 
Advancement Act of 1995 (15 U.S.C. 272 note) are not applicable because 
this rulemaking does not contain provisions that involve the use of 
technical standards.
    P. Paperwork Reduction Act of 1995: This final rule involves 
information collection requirements that are subject to review and 
approval by OMB under the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501 et seq.). The collections of information involved with this final 
rule have been reviewed and previously approved by OMB under OMB 
control numbers 0651-0009, 0651-0027, 0651-0028, 0651-0040, 0651-0050, 
0651-0051, 0651-0054, 0651-0055, 0651-0056, and 0651-0061. This final 
rule establishes and adjusts certain trademark fees, which updates the 
total annual non-hour cost burdens by $33,440,550 as set out in the 
following table:

------------------------------------------------------------------------
                                                             Estimated
                                                             update in
                                                           total annual
         OMB control No.          Information collection   non-hour cost
                                           title          burdens (fees)
                                                           due to final
                                                               rule
------------------------------------------------------------------------
0651-0009.......................  Applications for           $22,853,750
                                   Trademark
                                   Registration.
0651-0027.......................  Recording Assignments.               0
0651-0028.......................  Fastener Quality Act                 0
                                   Insignia Recordal
                                   Process.
0651-0040.......................  Trademark Trial and          4,904,000
                                   Appeal Board (TTAB)
                                   Actions.
0651-0050.......................  Response to Office              -4,300
                                   Action and Voluntary
                                   Amendment Forms.
0651-0051.......................  Madrid Protocol.......       3,205,450
0651-0054.......................  Substantive                    148,400
                                   Submissions Made
                                   During Prosecution of
                                   the Trademark
                                   Application.
0651-0055.......................  Post Registration            2,159,000
                                   (Trademark
                                   Processing).
0651-0056.......................  Submissions Regarding                0
                                   Correspondence and
                                   Regarding Attorney
                                   Representation.
0651-0061.......................  Trademark Petitions...         174,250
------------------------------------------------------------------------


[[Page 73215]]

    This estimated cost burden increase is based on the current OMB 
approved response volumes associated with these information 
collections, which may be slightly different than the workflow 
forecasts cited in other parts of this rule. In addition, updates to 
the aforementioned information collections as a result of this final 
rule will be submitted to OMB for approval prior to the rule's 
effective date.
    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 has a 
currently valid OMB control number.

List of Subjects

37 CFR Part 2

    Administrative practice and procedure, Courts, Lawyers, Trademarks.

37 CFR Part 7

    Administrative practice and procedure, Trademarks.

    For the reasons stated in the preamble and under the authority 
contained in section 10(a) of the AIA; 15 U.S.C. 1113, 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 part 2 is revised to read as follows:

    Authority: 15 U.S.C. 1113, 1123; 35 U.S.C. 2; sec. 10, Pub. L. 
112-29, 125 Stat. 284, unless otherwise noted. Sec. 2.99 also issued 
under secs. 16, 17, 60 Stat. 434; 15 U.S.C. 1066, 1067.


0
2. Amend Sec.  2.6 by:
0
a. Revising paragraphs (a)(1)(i) through (v);
0
b. Adding paragraph (a)(11)(iii);
0
c. Revising paragraphs (a)(12), (15) through (18), (22), and (23); and
0
d. Adding paragraphs (a)(24) and (25).
    The revisions and additions read as follows:


Sec.  2.6   Trademark fees.

    (a) * * *
    (1) * * *
    (i) For filing an application on paper, per class--$750.00
    (ii) For filing an application under section 66(a) of the Act, per 
class--$500.00
    (iii) For filing a TEAS Standard application, per class--$350.00
    (iv) For filing a TEAS Plus application under Sec.  2.22, per 
class--$250.00
    (v) Additional processing fee under Sec.  2.22(c), per class--
$100.00
* * * * *
    (11) * * *
    (iii) For filing an amendment to a registration prior to submission 
of an affidavit under section 8 or section 71 of the Act and consisting 
only of the deletion of goods, services, and/or classes--$0.00
    (12) Affidavit under section 8. (i) For filing an affidavit under 
section 8 of the Act on paper, per class--$325.00
    (ii) For filing an affidavit under section 8 of the Act through 
TEAS, per class--$225.00
    (iii) For deleting goods, services, and/or classes after submission 
and prior to acceptance of an affidavit under section 8 of the Act on 
paper, per class--$350.00
    (iv) For deleting goods, services, and/or classes after submission 
and prior to acceptance of an affidavit under section 8 of the Act 
through TEAS, per class--$250.00
* * * * *
    (15) Petitions to the Director. (i) For filing a petition under 
Sec.  2.146 or Sec.  2.147 on paper--$350.00
    (ii) For filing a petition under Sec.  2.146 or Sec.  2.147 through 
TEAS--$250.00
    (iii) For filing a petition under Sec.  2.66 on paper--$250.00
    (iv) For filing a petition under Sec.  2.66 through TEAS--$150.00
    (16) Petition to cancel. (i) For filing a petition to cancel on 
paper, per class--$700.00
    (ii) For filing a petition to cancel through ESTTA, per class--
$600.00
    (17) Notice of opposition. (i) For filing a notice of opposition on 
paper, per class--$700.00
    (ii) For filing a notice of opposition through ESTTA, per class--
$600.00
    (18) Ex parte appeal. (i) For filing an ex parte appeal to the 
Trademark Trial and Appeal Board on paper, per class--$325.00
    (ii) For filing an ex parte appeal to the Trademark Trial and 
Appeal Board through ESTTA, per class--$225.00
    (iii) For filing a first request for an extension of time to file 
an appeal brief, per application--$0.00
    (iv) For filing a second or subsequent request for an extension of 
time to file an appeal brief on paper, per application--$200.00
    (v) For filing a second or subsequent request for an extension of 
time to file an appeal brief through ESTTA, per application--$100.00
    (vi) For filing an appeal brief on paper, per class--$300.00
    (vii) For filing an appeal brief through ESTTA, per class--$200.00
* * * * *
    (22) Extension of time for filing a notice of opposition under 
Sec.  2.102(c)(1)(ii) or (c)(2). (i) For filing a request for an 
extension of time to file a notice of opposition under Sec.  
2.102(c)(1)(ii) or (c)(2) on paper--$400.00
    (ii) For filing a request for an extension of time to file a notice 
of opposition under Sec.  2.102(c)(1)(ii) or (c)(2) through ESTTA--
$200.00
    (23) Extension of time for filing a notice of opposition under 
Sec.  2.102(c)(3). (i) For filing a request for an extension of time to 
file a notice of opposition under Sec.  2.102(c)(3) on paper--$500.00
    (ii) For filing a request for an extension of time to file a notice 
of opposition under Sec.  2.102(c)(3) through ESTTA--$400.00
    (24) Oral hearing. For filing a request for an oral hearing before 
the Trademark Trial and Appeal Board, per proceeding--$500.00
    (25) Letter of protest. For filing a letter of protest, per subject 
application--$50.00
* * * * *

0
3. Amend Sec.  2.114 by revising paragraph (a) to read as follows:


Sec.  2.114  Answer.

    (a)(1) If no answer is filed within the time initially set, or as 
later may be reset by the Board, the petition may be decided as in the 
case of default. The failure to file a timely answer tolls all 
deadlines, including the discovery conference, until the issue of 
default is resolved.
    (2) If the cancellation proceeding is based solely on abandonment 
or nonuse and default judgment is entered with no appearance by the 
defendant, and no filings are made other than the petition to cancel, 
$200 per class of the petition to cancel fee may be refunded.
* * * * *

0
4. Add Sec.  2.149 before the center heading ``Certificate'' to read as 
follows:


Sec.  2.149  Letters of protest against pending applications.

    (a) A third party may submit, for consideration and entry in the 
record of a trademark application, objective evidence relevant to the 
examination of the application for a ground for refusal of registration 
if the submission is made in accordance with this section.
    (b) A party protesting multiple applications must file a separate 
submission under this section for each application.
    (c) Any submission under this section must be filed no later than 
30 days after the date the application is published for opposition 
under section 12(a) of the

[[Page 73216]]

Act and Sec.  2.80 of this part. If the subject application cannot be 
withdrawn from issuance of a registration while consideration of the 
protest is pending, the protest may be considered untimely.
    (d)(1) If the letter of protest is filed before publication of the 
subject application, the evidence must be relevant to the identified 
ground(s) for refusal, such that it is appropriate for the examining 
attorney to consider whether to issue a refusal or make a requirement 
under the Act or this part.
    (2) If the letter of protest is filed on or within 30 days after 
the date of publication of the subject application, the evidence must 
establish a prima facie case for refusal on the identified ground(s), 
such that failure to issue a refusal or to make a requirement would 
likely result in issuance of a registration in violation of the Act or 
parts 2 or 7 of this section.
    (e) Filing a submission under this section does not stay or extend 
the time for filing a notice of opposition.
    (f) Any submission under this section must be made in writing, 
filed through TEAS, and include:
    (1) The fee required by Sec.  2.6(a)(25);
    (2) The serial number of the pending application that is the 
subject of the protest;
    (3) An itemized evidence index that does not identify the protestor 
or its representatives, does not contain legal argument, and includes:
    (i) An identification of the documents, or portions of documents, 
being submitted as evidence. The submission may not total more than 10 
items of evidence in support of a specified ground of refusal and more 
than 75 total pages of evidence without a detailed and sufficient 
explanation that establishes the special circumstances that necessitate 
providing more than 10 items of evidence per refusal ground or more 
than 75 total pages of evidence; and
    (ii) A concise factual statement of the relevant ground(s) for 
refusal of registration appropriate in ex parte examination that each 
item identified supports; and
    (4) A clear and legible copy of each item identified in the 
evidence index where:
    (i) Copies of third-party registrations come from the electronic 
records of the Office and show the current status and title of the 
registration;
    (ii) Evidence from the internet includes the date the evidence was 
published or accessed and the complete URL address of the website; and
    (iii) Copies of printed publications identify the publication name 
and date of publication.
    (g) Any submission under this section may not be entered or 
considered by the Office if:
    (1) Any part of the submission is not in compliance with this 
section;
    (2) The application record shows that the examining attorney 
already considered the refusal ground(s) specified in the submission; 
or
    (3) A provision of the Act or parts 2 or 7 of this chapter 
precludes acceptance of the submission.
    (h) If a submission is determined to be in compliance with this 
section, only the specified ground(s) for refusal and the provided 
evidence relevant to the ground(s) for refusal will be included in the 
application record for consideration by the examining attorney. An 
applicant should not reply to the entry into the application record of 
evidence entered under this section.
    (i) Any determination whether to include in an application record 
the ground(s) or evidence for a refusal of registration in a submission 
under this section is not petitionable.
    (j) A third party filing a submission under this section will not 
receive any communication from the Office relating to the submission 
other than acknowledgement that it has been received by the Office and 
notification of whether the submission is found to be compliant or non-
compliant with this section. Communications with the third party will 
not be made of record in the application. The Office will not accept 
amendments to a non-compliant submission that was previously filed. 
Instead, a third party who previously filed a non-compliant submission 
may file another submission that meets the requirements of paragraph 
(f) of this section, provided the time period for filing a submission 
in paragraph (c) of this section has not closed.
    (k) The limited involvement of the third party ends with the filing 
of the submission under this section. The third party may not directly 
contact the examining attorney assigned to the application.

0
5. Revise Sec.  2.161 to read as follows:


Sec.  2.161  Requirements for a complete affidavit or declaration of 
use in commerce or excusable nonuse; requirement for the submission of 
additional information, exhibits, affidavits or declarations, and 
specimens; and fee for deletions of goods, services, and/or classes 
from a registration.

    (a) Requirements for a complete affidavit or declaration. A 
complete affidavit or declaration under section 8 of the Act must:
    (1) Be filed by the owner within the period set forth in Sec.  
2.160(a);
    (2) Include a verified statement attesting to the use in commerce 
or excusable nonuse of the mark within the period set forth in section 
8 of the Act. This verified statement must be executed on or after the 
beginning of the filing period specified in Sec.  2.160(a);
    (3) Include the U.S. registration number;
    (4)(i) Include the fee required by Sec.  2.6 for each class that 
the affidavit or declaration covers;
    (ii) If the affidavit or declaration is filed during the grace 
period under section 8(a)(3) of the Act, include the grace period 
surcharge per class required by Sec.  2.6; and
    (iii) If at least one fee is submitted for a multiple-class 
registration, but the fee is insufficient to cover all the classes, and 
the class(es) to which the fee(s) should be applied is not specified, 
the Office will issue a notice requiring either submission of the 
additional fee(s) or specification of the class(es) to which the 
initial fee(s) should be applied. Additional fees may be submitted if 
the requirements of Sec.  2.164 are met. If the additional fee(s) is 
not submitted within the time period set out in the Office action, and 
the class(es) to which the original fee(s) should be applied is not 
specified, the Office will presume that the fee(s) covers the classes 
in ascending order, beginning with the lowest numbered class;
    (5)(i) Specify the goods, services, or nature of the collective 
membership organization for which the mark is in use in commerce, and/
or the goods, services, or nature of the collective membership 
organization for which excusable nonuse is claimed under paragraph 
(a)(6)(ii) of this section; and
    (ii) Specify the goods, services, or classes being deleted from the 
registration, if the affidavit or declaration covers fewer than all the 
goods, services, or classes in the registration;
    (6)(i) State that the registered mark is in use in commerce; or
    (ii) If the registered mark is not in use in commerce on or in 
connection with all the goods, services, or classes specified in the 
registration, set forth the date when such use of the mark in commerce 
stopped and the approximate date when such use is expected to resume, 
and recite facts to show that nonuse as to those goods, services, or 
classes is due to special circumstances that excuse the nonuse and is 
not due to an intention to abandon the mark; and
    (7) Include one specimen showing how the mark is in use in commerce 
for each class in the registration, unless excusable nonuse is claimed 
under paragraph (a)(6)(ii) of this section. When requested by the 
Office, additional

[[Page 73217]]

specimens must be provided. The specimen must meet the requirements of 
Sec.  2.56.
    (8) Additional requirements for a collective mark: In addition to 
the above requirements, a complete affidavit or declaration pertaining 
to a collective mark must:
    (i) State that the owner is exercising legitimate control over the 
use of the mark in commerce; and
    (ii) If the registration issued from an application based solely on 
section 44 of the Act, state the nature of the owner's control over the 
use of the mark by the members in the first affidavit or declaration 
filed under paragraph (a)(1) of this section.
    (9) Additional requirements for a certification mark: In addition 
to the above requirements, a complete affidavit or declaration 
pertaining to a certification mark must:
    (i) Include a copy of the certification standards specified in 
Sec.  2.45(a)(4)(i)(B);
    (A) Submitting certification standards for the first time. If the 
registration issued from an application based solely on section 44 of 
the Act, include a copy of the certification standards in the first 
affidavit or declaration filed under paragraph (a)(1) of this section; 
or
    (B) Certification standards submitted in prior filing. If the 
certification standards in use at the time of filing the affidavit or 
declaration have not changed since the date they were previously 
submitted to the Office, include a statement to that effect. If the 
certification standards in use at the time of filing the affidavit or 
declaration have changed since the date they were previously submitted 
to the Office, include a copy of the revised certification standards;
    (ii) State that the owner is exercising legitimate control over the 
use of the mark in commerce; and
    (iii) Satisfy the requirements of Sec.  2.45(a)(4)(i)(A) and (C).
    (10) For requirements of a complete affidavit or declaration of use 
in commerce or excusable nonuse for a registration that issued from a 
section 66(a) basis application, see Sec.  7.37.
    (b) Requirement for the submission of additional information, 
exhibits, affidavits or declarations, and specimens. 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.
    (c) Fee for deletions of goods, services, and/or classes from a 
registration. Deletions by the owner of goods, services, and/or classes 
from a registration after submission and prior to acceptance of the 
affidavit or declaration must be accompanied by the relevant fee in 
Sec.  2.6(a)(12)(iii) or (iv).

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

0
6. The authority citation for part 7 continues to read as follows:

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


0
7. Amend Sec.  7.6 by revising paragraph (a)(6) to read as follows:


Sec.  7.6  Schedule of U.S. process fees.

    (a) * * *
    (6) Affidavit under section 71. (i) For filing an affidavit under 
section 71 of the Act on paper, per class--$325.00
    (ii) For filing an affidavit under section 71 of the Act through 
TEAS, per class--$225.00
    (iii) For deleting goods, services, and/or classes after submission 
and prior to acceptance of an affidavit under section 71 of the Act on 
paper, per class--$350.00
    (iv) For deleting goods, services, and/or classes after submission 
and prior to acceptance of an affidavit under section 71 of the Act 
through TEAS, per class --$250.00
* * * * *

0
8. Revise Sec.  7.37 to read as follows:


Sec.  7.37  Requirements for a complete affidavit or declaration of use 
in commerce or excusable nonuse; requirement for the submission of 
additional information, exhibits, affidavits or declarations, and 
specimens; and fee for deletions of goods, services, and/or classes 
from a registration.

    (a) Requirements for a complete affidavit or declaration. A 
complete affidavit or declaration under section 71 of the Act must:
    (1) Be filed by the holder of the international registration within 
the period set forth in Sec.  7.36(b);
    (2) Include a verified statement attesting to the use in commerce 
or excusable nonuse of the mark within the period set forth in section 
71 of the Act. The verified statement must be executed on or after the 
beginning of the filing period specified in Sec.  7.36(b). A person who 
is properly authorized to sign on behalf of the holder is:
    (i) A person with legal authority to bind the holder;
    (ii) A person with firsthand knowledge of the facts and actual or 
implied authority to act on behalf of the holder; or
    (iii) An attorney, as defined in Sec.  11.1 of this chapter, who 
has an actual written or verbal power of attorney or an implied power 
of attorney from the holder;
    (3) Include the U.S. registration number;
    (4)(i) Include the fee required by Sec.  7.6 for each class that 
the affidavit or declaration covers;
    (ii) If the affidavit or declaration is filed during the grace 
period under section 71(a)(3) of the Act, include the grace period 
surcharge per class required by Sec.  7.6;
    (iii) If at least one fee is submitted for a multiple-class 
registration, but the fee is insufficient to cover all the classes, and 
the class(es) to which the fee(s) should be applied is not specified, 
the Office will issue a notice requiring either submission of the 
additional fee(s) or specification of the class(es) to which the 
initial fee(s) should be applied. Additional fees may be submitted if 
the requirements of Sec.  7.39 are met. If the additional fee(s) is not 
submitted within the time period set out in the Office action, and the 
class(es) to which the original fee(s) should be applied is not 
specified, the Office will presume that the fee(s) covers the classes 
in ascending order, beginning with the lowest numbered class;
    (5)(i) Specify the goods, services, or nature of the collective 
membership organization for which the mark is in use in commerce, and/
or the goods, services, or nature of the collective membership 
organization for which excusable nonuse is claimed under paragraph 
(a)(6)(ii) of this section; and
    (ii) Specify the goods, services, or classes being deleted from the 
registration, if the affidavit or declaration covers fewer than all the 
goods, services, or classes in the registration;
    (6)(i) State that the registered mark is in use in commerce; or
    (ii) If the registered mark is not in use in commerce on or in 
connection with all the goods, services, or classes specified in the 
registration, set forth the date when such use of the mark in commerce 
stopped and the approximate date when such use is expected to resume, 
and recite facts to show that nonuse as to those goods, services, or 
classes is due to special circumstances that excuse the nonuse and is 
not due to an intention to abandon the mark; and
    (7) Include one specimen showing how the mark is in use in commerce 
for each class in the registration, unless excusable nonuse is claimed 
under

[[Page 73218]]

paragraph (a)(6)(ii) of this section. When requested by the Office, 
additional specimens must be provided. The specimen must meet the 
requirements of Sec.  2.56 of this chapter.
    (8) Additional requirements for a collective mark: In addition to 
the above requirements, a complete affidavit or declaration pertaining 
to a collective mark must:
    (i) State that the holder is exercising legitimate control over the 
use of the mark in commerce; and
    (ii) State the nature of the holder's control over the use of the 
mark by the members in the first affidavit or declaration filed under 
paragraph (a)(1) of this section.
    (9) Additional requirements for a certification mark: In addition 
to the above requirements, a complete affidavit or declaration 
pertaining to a certification mark must:
    (i) Include a copy of the certification standards specified in 
Sec.  2.45(a)(4)(i)(B) of this chapter;
    (A) Submitting certification standards for the first time. In the 
first affidavit or declaration filed under paragraph (a)(1) of this 
section, include a copy of the certification standards; or
    (B) Certification standards submitted in prior filing. If the 
certification standards in use at the time of filing the affidavit or 
declaration have not changed since the date they were previously 
submitted to the Office, include a statement to that effect. If the 
certification standards in use at the time of filing the affidavit or 
declaration have changed since the date they were previously submitted 
to the Office, include a copy of the revised certification standards;
    (ii) State that the holder is exercising legitimate control over 
the use of the mark in commerce; and
    (iii) Satisfy the requirements of Sec.  2.45(a)(4)(i)(A) and (C) of 
this chapter.
    (b) Requirement for the submission of additional information, 
exhibits, affidavits or declarations, and specimens. 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.
    (c) Fee for deletions of goods, services, and/or classes from a 
registration. Deletions by the holder of goods, services, and/or 
classes from a registration after submission and prior to acceptance of 
the affidavit or declaration must be accompanied by the relevant fee in 
Sec.  7.6(a)(6)(iii) or (iv).

Andrei Iancu,
Under Secretary of Commerce for Intellectual Property and Director of 
the United States Patent and Trademark Office.
[FR Doc. 2020-25222 Filed 11-16-20; 8:45 am]
BILLING CODE 3510-16-P