19 April 2012
When the United States Patent and Trademark Office (“PTO”) denies an application for a patent, the applicant may seek judicial relief in two different ways. The applicant may obtain review directly in the Federal Circuit (pursuant to 35 U.S.C. § 141) or, in the alternative, the applicant may file a civil action against the PTO in federal district court (pursuant to 35 U.S.C. § 145). On April 18, 2012, in Kappos v. Hyatt, No. 10-1219, the Supreme Court clarified both the scope of evidence that a patent applicant may proffer in a Section 145 proceeding and the appropriate standard of review. Justice Thomas authored the Court’s opinion, which was unanimous.
As to the scope of the evidence, the Court concluded that “there are no limitations on a patent applicant’s ability to introduce new evidence in a [Section] 145 proceeding beyond those already present in the Federal Rules of Evidence and the Federal Rules of Civil Procedure.” Slip op. 14. The Court rejected the argument of the PTO Director, Kappos, who contended that the evidence to be considered by the district court should be limited to the record before the PTO. Finding that Section 145 contained no explicit limit on the scope of evidence that may be considered, and that the predecessor statute similarly permitted applicants to adduce new evidence in a district court action, the Court declined to import “background principles of administrative law” into Section 145. Id. at 5–13. The Court rejected the Director’s argument that permitting new evidence in Section 145 proceedings would encourage gamesmanship by applicants, finding it “unlikely” that an applicant would “intentionally undermin[e] his claims before the PTO on the speculative chance that he will gain some advantage in the [Section] 145 proceeding.” Id. at 14.
Next, the Court found that “if new evidence is presented on a disputed question of fact, the district court must make de novo factual findings that take account of both the new evidence and the administrative record before the PTO.” Slip op. 14. “[I]t makes little sense,” the Court explained, “for the district court to apply a deferential standard of review to PTO factual findings that are contradicted by the new evidence.” Id. at 6.
Because an appeal of an application denial pursuant to 35 U.S.C. § 141 is limited to “the same administrative record that was before the PTO” (slip op. 2), Hyatt underscores the preferability of Section 145 proceedings for applicants who wish to proffer additional materials in support of a patent application that has been rejected by the PTO.
Justice Sotomayor, joined by Justice Breyer, concurred to express her view that the Court’s decision leaves intact a district court’s ability to reject, on an equitable basis, evidence that was purposely suppressed from the PTO proceeding, writing that she “do[es] not understand today’s decision to foreclose a district court’s authority . . . to exclude evidence ‘deliberately suppressed’ from the PTO or otherwise withheld in bad faith.” Concurrence 3. According to Justice Sotomayor, “when a patent applicant fails to present evidence to the PTO due to ordinary negligence, a lack of foresight, or simple attorney error, the applicant should not be stopped from presenting the evidence for the first time in a [Section] 145 proceeding,” but courts “retain their ordinary authority to exclude evidence from a [Section] 145 proceeding when its admission would be inconsistent with regular equity practice and procedure.” Id. at 2-3.