[author: Courtenay C. Brinckerhoff]
On April 18, 2012, the U.S. Supreme Court decided Kappos v. Hyatt, which raised questions regarding the ability to introduce new evidence and the applicable standard of review when a patent applicant challenges the USPTO’s refusal to grant a patent in a district court proceeding under 35 USC § 145 (“Civil Action to Obtain a Patent”). The Supreme Court affirmed the decision of the en banc Federal Circuit, holding that “there are no evidentiary restrictions beyond those already imposed by the Federal Rules of Evidence and the Federal Rules of Civil Procedure,” and that “when new evidence is presented on a disputed question of fact,” the district court must “make a de novo finding.” The Court agreed with the Federal Circuit that the district court may “consider whether the applicant had an opportunity to present the evidence to the PTO” when deciding how much weight the new evidence should be given. This decision will be welcomed by patent applicants who have received negative USPTO decisions on patentability, and reflects the realities — and difficulties — of marshalling evidence during patent prosecution.
Background
A patent applicant who is denied a patent after appealing to the USPTO’s Board of Appeals and Interferences has the option of either appealing directly to the Federal Circuit under 35 USC § 141 or challenging the USPTO decision in district court under 35 USC § 145. While the Federal Circuit would review the USPTO decision on the record that was before the agency, the applicant can introduce new evidence in a district court proceeding. In Hyatt, the USPTO had argued that only evidence that could not have been submitted to the USPTO (such as live testimony) should be admitted by the district court, and that the district court still should give deference to the USPTO’s decision.
The Supreme Court Decision
The Supreme Court reviewed the statutory language, general principles of administrative law, and the “evidentiary and procedural rules that were in effect when Congress enacted § 145 in 1952.” After undertaking this analysis, the Court stated:
[W]e conclude that a district court conducting a §145 proceeding may consider “all competent evidence adduced . . . and is not limited to considering only new evidence that could not have been presented to the PTO.” Thus, we agree with the Federal Circuit that “Congress intended that applicants would be free to introduce new evidence in §145 proceedings subject only to the rules applicable to all civil actions, the Federal Rules of Evidence and the Federal Rules of Civil Procedure.”
On the standard of review, the Court explained:
As we noted in Zurko, the district court acts as a factfinder when new evidence is introduced in a §145 proceeding. . . . The district court must assess the credibility of new witnesses and other evidence, determine how the new evidence comports with the existing administrative record, and decide what weight the new evidence deserves. As a logical matter, the district court can only make these determinations de novo because it is the first tribunal to hear the evidence in question.
The Court, like the Federal Circuit, recognized that some consideration must be given to the USPTO’s role as the agency charged with granting patents. The Court addressed this concern by noting that a district court may give deference to the USPTO through the weight that it accords the new evidence:
Though the PTO has special expertise in evaluating patent applications, the district court cannot meaningfully defer to the PTO’s factual findings if the PTO considered a different set of facts. . . . For this reason, we conclude that the proper means for the district court to accord respect to decisions of the PTO is through the court’s broad discretion over the weight to be given to evidence newly adduced in the §145 proceedings.
The Concurring Opinion
Justice Sotomayor wrote a concurring opinion (joined by Justice Breyer) that expresses the view that equitable principles would permit a district court to exclude new evidence in a § 145 Civil Action under certain, limited circumstances. Although Justice Sotomayor would not exclude evidence that was not presented to the USPTO “due to ordinary negligence, a lack of foresight, or simple attorney error,” she would permit the district court to exercise its “equitable authority to exclude evidence” when the applicant’s “conduct before the PTO calls into question the propriety of admitting evidence presented for the first time in a §145 proceeding,” such as if the evidence at issue was “‘deliberately suppressed’ from the PTO or otherwise withheld in bad faith.”
A Useful Option for Applicants
Although §145 civil actions are relatively uncommon, this Supreme Court decision confirms that they can be a useful option for patent applicants who disagree with the USPTO’s refusal to grant their patent, but would like to present new evidence to shore up their case. Indeed, because patentability issues often are not fully developed until the case reaches the USPTO Board of Appeals and Interferences (when the ability to submit new evidence is severely limited), patent applicants often resort to reopening prosecution or filing continuation applications to develop a stronger record. The Hyatt decision makes clear that a §145 civil action could be a viable alternative to another round of prosecution, and might offer faster resolution of patentability issues.
