Print PDF

En Banc Court Refuses to Limit New Evidence in § 145 Actions Apart from the Federal Rules of Evidence and Civil Procedure

November 08, 2010

Decision icon Decision, en banc

Last Month at the Federal Circuit - December 2010

Judges: Rader, Newman (concurring-in-part, dissenting-in-part), Lourie, Bryson, Gajarsa (dissenting), Linn, Dyk (dissenting), Prost, and Moore (author)

[Appealed from: D.D.C., Judge Kennedy]

In Hyatt v. Kappos, No. 07-1066 (Fed. Cir. Nov. 8, 2010) (en banc), the Federal Circuit vacated the district court’s grant of SJ relating to claim unpatentability.  The Court remanded for further proceedings that allow the patent applicant, Gilbert P. Hyatt (“Hyatt”), to present new evidence in a 35 U.S.C. § 145 action that he could have submitted during the earlier administrative proceedings.  In doing so, the en banc Court reversed the stance of its panel and held that § 145 “imposes no limitation on an 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.”  Slip op. at 5. 

Hyatt is the sole named inventor of U.S. Patent Application No. 08/471,702, which relates to a computerized display system for processing image information.  The patent examiner issued a final office action rejecting all claims on various grounds, including failure to comply with the written description requirement.  Hyatt appealed to the Board, which affirmed numerous of the examiner’s rejections.  The Board later dismissed Hyatt’s Request for Rehearing.  In the proceedings before both the examiner and the Board, Hyatt presented evidence in an effort to satisfy the written description requirement. 

Hyatt then filed a civil action in the United States District Court for the District of Columbia against the Director of the Patent Office (“Director”) pursuant to 35 U.S.C. § 145.  The Director moved for SJ that the pending claims were invalid for failure to comply with the written description requirement.  Hyatt opposed the motion and submitted a new written declaration in which he identified portions of the specification that one of skill in the art would understand to describe the limitations challenged by the Director.  The district court determined that it could not consider Hyatt’s new declaration and granted SJ in favor of the Director.  Hyatt appealed. 

The Federal Circuit agreed to hear the appeal en banc to determine, among other things: (1) whether there are any limitations on the admissibility of evidence in § 145 proceedings; and (2) what standard of review is applicable in § 145 cases.

The Court first considered the text of § 145, which provides a dissatisfied patent applicant “remedy by civil action” unless appeal has been taken to the Federal Circuit.  35 U.S.C. § 145.  According to the Court, this statute provides no indication that a § 145 civil action is somehow different from a customary civil action, nor does it provide any unique rules of evidence.  The Court also noted that § 145 makes clear that the civil action is distinct from an appeal, in which the applicant would be limited to the record before the PTO.  Rather, the Court reasoned, the statute directs that the district court may “adjudge that such applicant is entitled to receive a patent for his invention . . . as the facts in the case appear.”  Id.

Next, the Federal Circuit turned to the lengthy legislative history of the statute.  In particular, the Court considered § 4915 of the Revised Statutes, a predecessor to 35 U.S.C. § 145.  The Court stated that proponents and opponents of § 4915 alike recognized, and conveyed to Congress, that the remedy by bill in equity allowed an applicant to introduce new evidence in the district court, regardless of whether that evidence had been provided to the PTO in earlier proceedings.  Based on the legislative history, the Court reasoned that Congress intended that applicants would be free to introduce new evidence in § 145 proceedings subject only to the rules applicable in all civil actions, the Federal Rules of Evidence, and the Federal Rules of Civil Procedure.  Specifically, the Court rejected the argument that Congress intended that only evidence that could not have reasonably been presented to the PTO in the first instance should be admissible in § 145 proceedings.

The Federal Circuit further noted that no Supreme Court case had ever placed any limitations on the admissibility of evidence in a § 145 proceeding apart from the ordinary rules applicable to all civil actions.  The Court found no support in Supreme Court precedent for allowing new evidence only if the evidence could not reasonably have been provided to the PTO.

Although the Court held that new evidence is generally admissible in a § 145 case, it also recognized that the proceedings before the PTO remain relevant in a § 145 action.  First, the Federal Circuit explained that in adjudicating entitlement to a patent, the district court must consider the record before the PTO, as well as any new evidence admitted by the applicant.  Second, although the Court noted that Hyatt did raise the written description issue before the PTO, it stated that “issues (and evidence relating to new issues) that were not raised in the Patent Office proceedings generally may not be raised in a § 145 proceeding.”  Slip op. at 29.  Thus, the Court recast its holding and concluded that “consonant with the language of the statute, legislative history, and Supreme Court precedent, the only limitations on the admissibility of evidence in § 145 proceedings (for issues raised before the Patent Office) are the Federal Rules of Evidence and Civil Procedure.”  Id. at 30.

Even though district courts may be required to admit new evidence in § 145 cases, the Federal Circuit explained that district courts may consider the proceedings before, and findings of, the PTO in deciding what weight to afford an applicant’s newly admitted evidence.  The Court noted that, should the facts of a particular case cast suspicion on new evidence that an applicant failed to introduce before the PTO, the district court in a § 145 action would be within its discretion to give that evidence less weight.

Next, the Federal Circuit addressed the applicable standard of review in § 145 proceedings.  The Court explained that, if the parties to a § 145 action do not introduce any new evidence before the district court, the court reviews the case on the same record presented to the agency and the reviewing court must apply the APA’s substantial evidence standard to PTO findings of fact.  But when new evidence is introduced, the Federal Circuit instructed that the district court is to act as a fact finder with respect to that new evidence and make de novo factual findings if the evidence conflicts with any related PTO finding.  The Court recognized, however, that the district court must still consider the administrative record in making its de novo factual findings.

In a separate opinion concurring-in-part and dissenting-in-part, Judge Newman agreed that new evidence may be provided in a civil action brought under 35 U.S.C. § 145.  Judge Newman, however, stated that issues in a § 145 proceeding should receive a de novo determination, whether or not new evidence is adduced in the district court.  It is contrary to statute, Judge Newman noted, when the same deferential review is applied to both civil actions under § 145 and APA direct appeals to the Federal Circuit.  “The statutory plan is designed to differ from such a duplicative procedure, not to create it.”  Newman op. at 2.  Judge Newman further explained that “[t]he purpose of the section 145 proceeding is to achieve fresh judicial determination of patentability issues that had been decided by the Patent Office, and to conduct this determination de novo on the evidence before the court, whether or not the same evidence or all of it was before the examiner.”  Id. at 2-3.

In a separate dissenting opinion, which Judge Gajarsa joined, Judge Dyk stated that district court proceedings in § 145 actions should follow the established administrative law standard embodied in  § 706 of the APA.  Judge Dyk explained that the APA requires judicial review on the agency record and submission of all relevant evidence to the agency.  While Judge Dyk agreed that § 145 contemplates the introduction of new evidence, he noted that this should only be allowed when agency procedures are inadequate.  With regard to the PTO, Judge Dyk found that the agency procedures are inadequate only insofar as they do not provide for live testimony when it is deemed necessary.  Judge Dyk noted that allowing a trial de novo in the district court denigrates the important expertise of the PTO.  In addition, Judge Dyk wrote that the majority opinion invites applicants to deliberately withhold evidence from the PTO in favor of a more hospitable district court forum.  Judge Dyk also warned that the majority’s decision “reflects yet another misguided effort to craft special rules for patent cases that the Supreme Court in other cases has held to be impermissible.”  Dyk op. at 3.


Summary authored by Adam J. Sibley, Esq.