United States: U.S. Supreme Court Holds That New Evidence May Be Introduced In District Court Suits Brought Against The Patent Office For Rejecting A Patent Application

The Supreme Court on April 18, 2012 held in Kappos v. Hyatt, slip no. 10-1219, that new evidence, as permissible under the Federal Rules of Evidence (FRE) and the Federal Rules of Civil Procedure (FRCP), may be introduced in a civil suit challenging the rejection of a patent application by the Patent and Trademark Office (PTO). The Supreme Court further held that "the district court must make a de novo finding when the new evidence is presented on a disputed question of fact." In the future, more patent applicants may avail themselves of such civil suits in order to have a fresh opportunity to obtain patent coverage following a denial of an application by the PTO.

Pursuant to the Patent Act of 1952, a patent examiner first determines whether a patent application satisfies the requirements for granting a patent. If the examiner denies the application, the applicant may file an appeal to the Board of Patent Appeals and Interferences (Board). If the Board also denies the application, the applicant may choose one of two options for further review.

One option is to appeal the decision to the U.S. Court of Appeals for the Federal Circuit. This appeal is solely based on the administrative record below. No new evidence may be offered.

The other option is to file a civil action in the U.S. District Court for the District of Columbia pursuant to 35 U.S.C. §145. (The America Invents Act which was enacted on September 16, 2011, changed the venue for §145 proceedings to the U.S. District Court for the Eastern District of Virginia, and changed the name of the Board to the Patent Trial and Appeal Board.)

In the case at hand, Hyatt filed a patent application in 1995. The patent examiner rejected each claim for lack of an adequate written description of Hyatt's invention. The Board affirmed the rejection of most of Hyatt's claims. Hyatt then filed a civil suit in district court against the PTO. To refute the Board's conclusion that his patent application lacked an adequate written description, Hyatt submitted a written declaration to the court. In the declaration, Hyatt identified portions of the patent specification that, in his view, supported the claims. The district court refused to consider the declaration stating that Hyatt was "precluded from presenting new issues, at least in the absence of some reason of justice put forward for failure to present the issue to the [PTO]." Because no other new evidence was provided, the district court reviewed the PTO's findings under the Administrative Procedure Act's deferential "substantial evidence" standard and granted summary judgment to the PTO.

On appeal, the Federal Circuit en banc reversed the district court and held that new evidence could be introduced during a §145 proceeding, subject only to any limitation under the FRE and FRCP. The Federal Circuit also held that when new, conflicting evidence is introduced in such proceedings, the district court must make de novo findings to take such evidence into account.

The Supreme Court affirmed the Federal Circuit's decision. The Court pointed out that the PTO concedes that new evidence may be submitted in §145 proceedings. Because the PTO never saw the new evidence, a de novo finding is required. The Court also rejected the PTO's contention that patent applicants must present all available evidence to the PTO in the first instance. A district court in a §145 proceeding does not act as a court of appeals, and is competent to receive new evidence and act as a factfinder. Furthermore, "the district court may, in its discretion, consider the proceedings before and findings of the [PTO] in deciding what weight to afford an applicant's newly admitted evidence."

Justice Sotomayor, in a concurring opinion, argued that "there may be situations in which a litigant's conduct before the PTO calls into question the propriety of admitting evidence presented for the first time in a §145 proceeding." The district court's equitable authority to exclude evidence in a §145 proceeding, however, is limited. The failure to present evidence to the PTO due to ordinary negligence, a lack of foresight, or simple attorney error, according to Justice Sotomayor, should not estop the patent applicant from presenting the evidence for the first time in a §145 proceeding.

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