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Supreme Court Holds Section 145 Actions Follow Civil Action Standards on New Evidence

 

4/18/2012

The Supreme Court on April 18, 2012, held that there are no limits on a patent applicant's ability to introduce new evidence in a district court action under 35 U.S.C. §145 beyond those already present in the Federal Rules of Evidence and Federal Rules of Civil Procedure.  Kappos v. Hyatt, U.S. No. 10-1219, 4/18/2012.

In a unanimous decision affirming the en banc Federal Circuit, the Court also held the Administrative Procedure Act does not bar the introduction of new evidence, and that de novo review of such evidence is the applicable standard. A concurring opinion, filed by Justice Sotomayor and joined by Justice Breyer, added that district courts retain their ordinary equitable authority to exclude evidence that was "deliberately suppressed" from the PTO or otherwise withheld in bad faith.

Writing for the Court, Justice Thomas rejected the PTO contention that new evidence is admissible in a Section 145 action only if the proponent had no reasonable opportunity to present it to the PTO in the first instance. Nor was the Court persuaded that background principles of administrative law govern the admissibility of new evidence and require a deferential standard of review in Section 145 proceedings. Justice Thomas cited Dickinson v. Zurko, 527 U. S. 150 (1999), for the proposition that, unlike Federal Circuit proceedings under Section 141, Section 145 permits the applicant to present new evidence to the district court that was not presented to the PTO.  In doing so, the district court is acting within its competence as a fact finder with respect to evidence the PTO has never seen. "[I]t makes little sense for the district court to apply a deferential standard of review to PTO factual findings that are contradicted by the new evidence," Justice Thomas wrote.

The Court also concluded that the exhaustion doctrine is inapplicable, explaining that: (1) the purpose of exhaustion is to avoid premature interruption of the process, and the PTO process in a Section 145 action is concluded; and (2) the district court is competent to receive new evidence and act as factfinder.  Responding to the PTO's contention that this evidentiary standard will encourage gamesmanship by applicants, Justice Thomas was skeptical, writing: "An applicant who pursues such a strategy would be intentionally undermining his claims before the PTO on the speculative chance that he will gain some advantage in the §145 proceeding by presenting new evidence to adistrict court judge."

After reviewing the history of Section 145, the Court agreed with the Federal Circuit that Congress intended applicants to be free to introduce new evidence in Section 145 proceedings subject only to the rules applicable to all civil actions. However, the Court added that the district court, in its discretion, may consider the proceedings and findings in the PTO in deciding what weight to afford an applicant's newly admitted evidence.

To read the Court's opinion and the concurring opinion in this case, click here.

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