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Supreme Court Rules on Introduction of New Evidence in Article III Patent Appeals

Posted Tuesday, May 1, 2012 by Mike Gibbons

In March, the U.S. Supreme Court issued a patent-related opinion in Mayo Collaborative Services v. Prometheus Laboratories, Inc. (Read more about that opinion here.) Little more than a month later, the Supreme Court has now issued a second patent-related opinion in the case of Kappos v. Hyatt. While the Prometheus case was more a question of what types of inventions are patent-eligible, in Kappos v. Hyatt the Court considered an aspect of appeals in patent prosecution.

When an application for a patent has been twice rejected by the USPTO, the applicant may appeal the rejection to the USPTO’s Board of Patent Appeals and Interferences (BPAI). (The BPAI will shortly be renamed the Patent Trial and Appeal Board, aka the PTAB, as a result of the America Invents Act patent reform legislation that was enacted last September. The Supreme Court holding here will apply equally to the PTAB.)

Should the BPAI agree with the patent examiner that the patent application should be rejected, an applicant has two options to continue the quest for the patent. Both options involve legal action in an Article III court. An applicant may appeal the BPAI’s rejection of the application to the U.S. Court of Appeals for the Federal Circuit. (Read more about the CAFC here.) Or, an applicant may initiate a lawsuit in the U.S. District Court for the District of D.C. against the Director of the USPTO. (This route will also change as a result of the America Invents Act, as such a lawsuit will be required to be initiated in the U.S. District Court for the District of Eastern Virginia. The change in venue makes sense geographically, as the USPTO is located in Alexandria, VA.)

It may seem obvious from the names of the courts, but the primary difference between appealing the BPAI’s rejection to the Federal Circuit and suing the Director of the USPTO in the District Court is that the first proceeding is held in an appellate court, while the latter is held in a trial court.

Generally, in any appeal, the panel of appellate judges does not hear new evidence. They consider only evidence which was introduced at the trial level. Therefore, for a patent applicant choosing between the Federal Circuit or the district court, a primary consideration is going to be whether the applicant wants to be able to introduce new evidence that was not previously considered by the USPTO.

Turning to Kappos v. Hyatt, the USPTO was asking the Supreme Court to restrict the ability of patent applicants who bring suit in the district court to introduce new evidence. The PTO wanted new evidence to be allowed only where the applicant was unable to present it to the PTO during the prosecution of the patent. The PTO also asked the Supreme Court to change the standard of review in such litigation, such that the trial court would give deference to evidence that was already in the record from the prosecution. In other words, the PTO wanted future decisions issued by the district court to only be able to be reversed where the court finds clear error on the part of the PTO.

Regarding both issues, the Supreme Court declined to side with the PTO. Writing for the Court, Justice Thomas first found nothing in the text of the statue permitting patent applicants to sue the PTO for a patent which limits the evidence which may be introduced. The only limitations on introduction of evidence will continue to be governed by the Federal Rules of Civil Procedure and the Federal Rules of Evidence.

Secondly, the Court declined to apply the more deferential standard to the PTO’s evidence, requiring trial courts to instead make de novo factual findings. The Court stated that where the applicant’s own evidence newly introduced at trial contradicts the PTO, it does not make sense to deny the trial court the ability to evaluate the evidence the same way it would be reviewed in any other type of trial.

The Supreme Court did rule that a trial court may consider whether the patent applicant had the ability to introduce the evidence at the PTO during prosecution, allowing that fact to influence the weight given to the evidence adduced by the PTO at trial. Apart from that holding, the bulk of the Kappos v. Hyatt decision would seem to be favorable for patent applicants who choose to bring suit in the district court.

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