Supreme Court Decides Kappos v. Hyatt

On April 18, the U.S. Supreme Court decided Kappos v. Hyatt, No. 10-1219. The Court held that in a civil action brought pursuant to 35 U.S.C. § 145, there are no limitations on a patent applicant's ability to introduce new evidence beyond those already present in the Federal Rules of Evidence and the Federal Rules of Civil Procedure. If new evidence is presented on a disputed question of fact, the district court must make de novo factual findings that take account both of the new evidence and the administrative record before the Patent and Trademark Office ("PTO").

Gilbert Hyatt filed a patent application that included 117 claims. A patent examiner at the PTO denied each claim for lack of an adequate written description. Hyatt appealed the examiner's decision to the PTO's Board of Patent Appeals and Interferences (the "Board"). The Board eventually approved 38 claims but denied the rest. Hyatt then filed a civil action in district court against the director of the PTO (the "Director") pursuant to 35 U.S.C. § 145.

In the district court, Hyatt submitted a written declaration refuting the Board's conclusion that his patent application lacked an adequate written description. The court did not consider Hyatt's declaration because it determined that patent applicants are precluded from presenting new issues in a § 145 action in the absence of a "reason of justice" for failing to present the issues first to the PTO. The only remaining evidence consisted of the PTO's administrative record, which the district court reviewed under a deferential "substantial evidence" standard and then granted summary judgment to the Director. Hyatt appealed to the Federal Circuit, which initially affirmed the decision and held that a district court's review in § 145 proceedings is not "wholly de novo." Upon en banc review, however, the Federal Circuit reversed the district court's decision, concluding that patent applicants were free to introduce new evidence in § 145 hearings, subject only to the rules applicable in all civil actions, even if the applicant had no justification for failing to present the evidence to the PTO. The en banc Federal Circuit further held that when new, conflicting evidence is introduced, the district court must make de novo findings to take such evidence into account.

The Supreme Court affirmed the opinion of the en banc court. The Court found no support in the text of § 145 for the Director's arguments that there should be a new evidentiary rule or a heightened standard of review in § 145 proceedings. Nor was the Court persuaded that "background principles of administrative law" compelled a different result. The Court reviewed the evidentiary and procedural rules that were in effect when § 145 was enacted, as well as its own precedent, and concluded that "a district court conducting a § 145 proceeding may consider ‘all competent evidence adduced' ... and is not limited to considering only new evidence that could not have been presented to the PTO." The Court also adopted the Federal Circuit's view in holding that "where new evidence is presented to the district court on a disputed fact question, a de novo finding will be necessary to take such evidence into account together with the evidence before the board." The proper means for a district court to accord respect to decisions of the PTO, rather than through a deferential standard of review, is through the court's broad discretion over the weight to be given to new evidence in the § 145 proceedings.

Justice Thomas delivered the opinion for a unanimous Court. Justice Sotomayor filed a concurring opinion, in which Justice Breyer joined.

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