Fourth Circuit clarifies district court’s power to subpoena in USPTO proceedings

Addressing the district courts’ power to subpoena evidence for use in USPTO proceedings, the US Court of Appeals for the Fourth Circuit has upheld a district court decision – albeit on alternative grounds. The court ruled that the district court’s authority to issue subpoenas in support of USPTO proceedings is limited by the Rules of Procedure (Xactware Solutions Inc v Buildxact Software Ltd, case 22/1871, 13 March 2024, Gregory, Harris, Floyd, JJ).

Case background

Australian software company Buildxact filed an application for the mark BUILDXACT at the USPTO. However, Xactware opposed the application at the TTAB and requested to depose three of Buildxact’s officers via video. Buildxact objected, indicating that it would only allow written depositions. It cited the USPTO rules, which state that foreign depositions must be in writing unless the parties stipulate otherwise or the deposing party shows good cause. Xactware subpoenaed Buildxact through service on Buildxact’s default agent – the USPTO director – for an in-person deposition of a corporate representative.

Buildxact filed a motion in the district court to quash the subpoena, which the magistrate judge granted. The judge found that Buildxact – which has no office, employees or regular business in or near Virginia – did not have sufficient contacts to qualify as “being within” the district. Xactware moved for a review of the order, but the district court agreed with the judge’s ruling. Xactware appealed.

Relevant legislation

The USPTO may establish its own rules for depositions in cases before the board as per Section 23 of US Code 35. Further, Section 24 of US Code 35 grants the “clerk of any United States court for the district wherein testimony is to be taken for use in any contested case in the Patent and Trademark Office” the power to “issue a subpoena for any witness residing or being within such district, commanding him to appear and testify before an officer in such district authorized to take depositions and affidavits”.

Xactware argued that Buildxact is within the district because it has an agent – the USPTO director – designated to receive service of process there. The USPTO argued that even if Buildxact were within the district, the subpoena must still be quashed as the deposition was improper under the rules. The Fourth Circuit agreed, noting that it did not need to address whether Buildxact was within the district.

Court decisions

The Fourth Circuit held that the district court lacked the authority to issue a subpoena for Buildxact’s deposition because this deposition was prohibited by the rules and was therefore inadmissible in any USPTO proceedings. Looking at the legislative history, the Fourth Circuit noted that the district court’s subpoena power under Section 24 is only available to the extent that the courts are empowered to aid the USPTO: “Section 24 assigns a supportive role to the district courts to ensure the smooth functioning of the [PTO] procedures.” Moreover, the explicit language of Section 24 states that a district court can only subpoena testimony “for use in any contested case”, meaning “any oral testimony taken in a foreign country that does not comply with [the PTO rules] is not ‘taken for use in’ a contested case”.

Xactware further argued that “for use in” should not be limited to USPTO proceedings, as parties may file a separate suit at the district court if they are dissatisfied with the board’s decision. The Fourth Circuit rejected Xactware’s argument, noting that any such suit in the district court is not an appeal but “a wholly separate suit, where new evidence is allowed” and that “[t]he Federal Rules of Civil Procedure and Evidence – not Appeal Board internal rules – govern the proceedings”. However, this was not the case here, as Xactware did not oppose the registration of Builxact’s mark at a district court.

Key takeaways

This case serves as a reminder that the differences between rules that govern procedures at the board as opposed to the district courts can have strategic implications.