Hyatt v. Kappos: A New Standard for the Admissibility of Evidence in a Section 145 Action
When the Board of Patent Appeals & Interferences (the “Board”) of the United States Patent and Trademark Office (“PTO”) rejects a patent application, the applicant has two avenues available. He can appeal the decision to the United States Court of Appeals for the Federal Circuit. In that case, the record on appeal is the record from the PTO. New issues cannot be raised, and new evidence cannot be introduced. Alternatively, the applicant can file a civil action under Section 145 of the Patent Code in the U.S. District Court for the District of Columbia. As with an appeal, new issues cannot be raised. However, unlike an appeal, evidence not presented to the PTO can be introduced. In Hyatt v. Kappos, 625 F.3d 1320 (Fed. Cir. 2010), the en banc Federal Circuit recently held that there is no limitation in a Section 145 proceeding on the introduction of new evidence at the District Court level apart from limitations imposed by the Federal Rules of Evidence and the Federal Rules of Civil Procedure. Having twice had the time period extended, the PTO has until April 7, 2011, to seek certiorari.
The Board confirmed the examiner’s rejection of 79 of the 117 claims in Hyatt’s patent application on the grounds that they failed to satisfy Section 112’s written description requirement. In the District Court, the PTO moved for summary judgment upholding the Board’s decision. In opposing the motion for summary judgment, Hyatt filed his declaration to provide additional support to refute the written description rejections. In granting the PTO’s motion, the Court refused to admit the declaration, holding that Hyatt had been negligent in not providing it to the PTO. Without new evidence, the Court employed the deferential “substantial evidence” standard and upheld the Board’s decision.
This decision was appealed to the Federal Circuit. On August 11, 2009, a divided panel issued its decision affirming the District Court’s exclusion of the declaration and the grant of summary judgment. This opinion was subsequently vacated. The en banc Court reversed the District Court’s decision. In the en banc decision, Judge Moore wrote the majority opinion, which was joined in by six other judges on the admissibility issue.
The En Banc Decision
After a lengthy review of the legislative history of the statute and prior statutes going back 200 years, the Court held that :
“35 U.S.C. § 145 imposes no limitation on applicant’s right to introduce new evidence before the District Court, apart from the evidentiary limitations applicable to all civil actions contained in the Federal Rules of Evidence and Federal Rules of Civil Procedure.” Id. at 1323.
The Court’s extensive review of the legislative history led it to conclude that Congress intended Section 145 to be a new “civil action in which an applicant would be free to introduce new evidence.” Id. at 1327. Having determined that Section 145 did not impose any limitation on the evidence that could be presented in a Section 145 proceeding, the Court held that when new evidence was provided, review by the District Court would be de novo. If new evidence were not provided on an issue, substantial evidence would be the standard. In neither circumstance, was the patent applicant entitled to raise new issues in the proceedings. The Court indicated that its decision was supported not only by the legislative history, but Supreme Court precedent.
The Impact of the En Banc Decision
Although only about 30 Section 145 proceedings are filed in a year, the lack of limitation on the admissibility of evidence, coupled with de novo review for issues that rely on new evidence, indicate that the number of these actions will increase.
A patent applicant should pay particularly close attention during patent prosecution to make sure that all necessary legal issues have been raised. New issues cannot be raised in Court, but new evidence can be presented on all issues. This includes live fact and expert testimony. Further, the pendency of a Section 145 proceeding will not shorten the patent term. Thus, for commercially important patent applications, a patent applicant should consider bypassing continuation practice and instead file a Section 145 proceeding to present a strong factual record to a new fact finder who will conduct a de novo review and decide the case without a jury.