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Blog Home | July 25, 2014

United States Supreme Court Grants Certiorari to Review en banc Decision in Hyatt v. Kappos

On Monday, June 27, 2011, the United States Supreme Court granted certiorari to review the en banc Federal Circuit decision in Hyatt v. Kappos, which held that district courts have broad power to consider new evidence in cases that contest United States Patent and Trademark Office (PTO) decisions.  The Supreme Court decision may discourage patent applicants from using district court proceedings to challenge PTO decisions.

Under 35 U.S.C. §§ 145 and 146, a patent applicant may challenge a decision of the Board of Patent Appeals and Interferences by appealing to the Court of Appeals for the Federal Circuit.  The Court of Appeals will review the Board’s decision based on the record submitted to the PTO under a deferential standard outlined in the Administrative Procedure Act.  Alternatively, a patent applicant may file a civil action in district court so that the case would be evaluated under a de novo standard of review.  Because the PTO has spent time, money, and resources to resolve the patent applicant’s underlying issues, many legalists believe that PTO decisions should be given deference on appeal to a district court.

The Federal Circuit ruled in Hyatt v. Kappos that in district court actions, to review a PTO decision, (1) there were virtually no limits on new evidence other than the ordinary rules of evidence and civil procedure, and (2) when new evidence is admitted, the PTO decision is reviewed de novo.  The Federal Circuit held that “35 U.S.C. § 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.”  The only limitation that the Federal Circuit addressed was that new evidence must relate to issues that were evaluated by the PTO.  Additionally, the Federal Circuit held that “if no new evidence is introduced, the district court reviews the action on the administrative record, subject to the court/agency standard of review.”  However, if a patent applicant introduces new evidence that is relevant to an issue considered by the PTO, the Federal Circuit ruled that the district court must review the issue de novo.

Following the Federal Circuit’s decision in Hyatt v. Kappos, the United States filed a petition for writ of certiorari.  The United States is requesting that the Supreme Court hold that an applicant in a 35 U.S.C. § 145 action may not introduce new evidence that could have initially been submitted to the PTO, and that the district court should give deference to prior PTO decisions when a patent applicant presents new evidence.
The following issues will be addressed by the United States Supreme Court: (1) whether a patent applicant who files a 35 U.S.C. § 145 action may present new evidence to the Federal District Court that could have been presented to the PTO in the first place; and (2) when new evidence is introduced under 35 U.S.C. § 145, whether the district court may decide related factual questions de novo without giving deference to the prior decision of the PTO.

The Supreme Court’s decision in this case could greatly impact the route a dissatisfied patent applicant will take in response to a PTO rejection.  If the Supreme Court upholds the judgment of the Federal Circuit, then a patent applicant has an incentive to challenge PTO decisions in district court because new evidence may be evaluated under a de novo standard of review.  However, if the Supreme Court vacates the judgment of the Federal Circuit, a patent applicant may be less compelled to pursue review in district court because deference would be accorded to the PTO.  Thus, under the latter circumstances, a patent applicant would be encouraged to appeal directly to the Court of Appeals for the Federal Circuit.

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