Supreme Court Holds that New Evidence May Be Presented in § 145 Actions, Must Be Reviewed De Novo

By Charles Pierce

In Kappos v. Hyatt, 566 U.S. ___ (2012), the Supreme Court unanimously ruled that in a 35 U.S.C. § 145 action, there are no evidentiary restrictions beyond those imposed by the Federal Rules of Evidence, and the Federal Rules of Civil Procedure.  The Supreme court also held that when new evidence is presented, the district court must make a de novo finding on a disputed question of fact.

In 1995, Gilbert Hyatt filed U.S. Patent Application No. 08/471,701 (the ‘702 application), “Improved Memory Architecture Having a Multiple Buffer Output Arrangement.”  After amendments, the ‘702 application had a total of 117 claims, which were all rejected by the examiner.  Hyatt appealed to the Board of Patent Appeals and Interferences,  and the Board approved 38 claims, but upheld the examiner’s rejection for lack of adequate written description for the rest.  Hyatt then filed an action under 35 U.S.C. § 145 in District Court.

35 U.S.C. § 145 states,

An applicant dissatisfied with the decision of the Board of Patent Appeals and Interferences in an appeal under section 134(a) of this title may, unless appeal has been taken to the United States Court of Appeals for the Federal Circuit, have remedy by civil action against the Director in the United States District Court for the District of Columbia if commenced within such time after such decision, not less than sixty days, as the Director appoints. The court may adjudge that such applicant is entitled to receive a patent for his invention, as specified in any of his claims involved in the decision of the Board of Patent Appeals and Interferences, as the facts in the case may appear, and such adjudication shall authorize the Director to issue such patent on compliance with the requirements of law. All the expenses of the proceedings shall be paid by the applicant.

In his § 145 action, Hyatt submitted to the District Court a written declaration identifying portions of the patent specification that he viewed as supporting his claims.  The District Court declined to consider Hyatt’s declaration, on the ground that applicants may not present new issues unless there was some reason presented for failure to present the issue to the Patent Office.  The District Court then granted summary judgment to the Director of the Patent Office, after reviewing the remaining evidence under the substantial evidence standard.

On appeal, the Federal Circuit first affirmed the district court’s decision, then granted rehearing en banc and held that new evidence in §145 proceedings is subject only to the Federal Rules of Evidence and the Federal Rules of Civil Procedure, and that when new evidence is introduced, the district court must make a de novo finding.  The Director then appealed, and the Supreme Court affirmed the en banc decision.

The Supreme Court reasoned that “§ 145 neither imposes evidentiary limits nor establishes a heightened standard of review.”  566 U.S. ___, ___ slip op. at 6.  Rejecting the Director’s argument that administrative law principles should apply to § 145, the Supreme Court noted that unlike the APA, 35 U.S.C. § 145 does not limit judicial review to the administrative record.  The Supreme Court also cited the lack of limits in the text of the statute, the competence of a district court to receive new evidence and act as fact finder, and that § 145 does not provide for remand to the PTO.

The Supreme Court also based its reasoning on Butterworth v. United States ex rel. Hoe, 112 U.S. 50 (1884), a case filed under R. S. 4915, the direct predecessor to § 145.  In Butterworth, the court had described R. S. 4915 proceedings as independent from Patent Office hearings, and ruled that parties may introduce additional evidence.  The Supreme Court also distinguished Morgan v. Daniels, 153 U.S. 120 (1894) (which applied a deferential standard to an R. S. 4915 review), as Morgan involved an interference proceeding and such proceedings are no longer addressed in the same section of the Patent Act as district court challenges.  Finally, in Morgan, no new evidence was presented.  Butterworth being closer than Morgan to the facts of this case, the Supreme Court held that new evidence may be presented with no restriction save for the Federal Rules of Evidence and the Federal Rules of Civil Procedure, and that where new evidence is presented, the district court must review it de novo.

Federal Circuit considers boundaries of spoilation

In Hynix Semiconductor Inc. v. Rambus Inc., Nos. 2009-1299, 1347 (Fed. Cir. May 13, 2011), Hynix Semiconductor Inc. (“Hynix”) appealed the District Court of Northern California’s denial of Hynix’s motion to dismiss arising from Rambus Inc.’s (“Rambus) alleged spoliation of documents.

Hynix Semiconductor is a companion case to Micron Technology, Inc. v. Rambus Inc., No. 2009-1263, slip.op. (Fed. Circ. May 13, 2011) (“Micron II”). In Micron II the District Court of Delaware held that Rambus spoilated documents in dereliction of a duty to preserve and held Rambus’ patents unenforceable as a sanction. Both cases were decided contemporaneously by the Federal Circuit. Continue reading