Hyatt v. Kappos

On November 8, after a rehearing en banc, the Federal Circuit vacated and remanded a patent application suit on appeal from the U.S. District Court for the District of Columbia.

In Hyatt v. Kappos, Gilbert Hyatt, who was listed as an inventor on a patent application, had appealed several patent examiner rejections to the Board of Patent Appeals and Interferences (BPAI). The BPAI reversed most of the rejections and affirmed the relatively few remaining rejections. Mr. Hyatt filed a civil action concerning the remaining rejections against the Director of the USPTO in the D.C. District Court pursuant to 35 U.S.C. § 145. When the USPTO Director moved for summary judgment that the patent application did not comply with the written description requirement, Mr. Hyatt opposed, submitting a new, written declaration identifying the portions of the specification that, he alleged, demonstrated adequate written description. Finding that Mr. Hyatt could have submitted the same written declaration at least as early as the BPAI hearing, but that he did not do so, the district court determined that it could not consider the written declaration and granted summary judgment in favor of the Director.

Admissibility of evidence in § 145 actions is related to the amount of deference the D.C. District Court should give to USPTO decisions. The Administrative Procedure Act (APA), which applies to government agencies and agency-related court actions, generally provides that courts should view state agency decisions with deference. In this case, the USPTO ultimately argued that such deference instructs district courts to examine agency decisions based solely on the agency’s records, without new evidence like Mr. Hyatt’s written description. On the other hand, Mr. Hyatt ultimately argued in this case that the language and legislative history of § 145 contemplate a fresh “civil action,” distinct from an appeal of agency decision, to examine an issue “as the facts in the case may appear,” allowing for new evidence.

Mr. Hyatt appealed the D.C. District Court decision to the Federal Circuit, where a divided panel affirmed the exclusion of the written declaration because it was “evidence which a party could and should have introduced before the Patent Office but did not despite an obligation to do so.” Hyatt v. Doll, 576 F.3d 1246, 1266 (Fed. Cir. 2010). The panel noted that the D.C. District Court has no uniform practice on whether or not to exclude evidence in its § 145 proceedings. Id. at 1266. The panel argued that court review of an agency decision, including a USPTO decision, is presumptively deferential to the agency under the APA, more narrowly limiting the evidence to the agency record. Id. at 1267-1270.

In the en banc rehearing at the Federal Circuit, a majority disagreed with the panel’s decision and instead held that admissible evidence in a § 145 action can be as broad as allowed by the Federal Rules of Evidence and the Federal Rules of Civil Procedure. The en banc opinion examined the history of patent suits and appeals, noting that while various district courts have historically taken different positions, Congress and the Supreme Court have long used § 145 matters and their predecessors to ensure an opportunity within the court system for newly-introduced patent evidence. The court further found that, in § 145 actions, the APA standards of review apply with respect to the record from the USPTO proceedings, but that the district court acts as a finder of fact with respect to newly presented evidence. The court therefore ruled that, though the district court found Mr. Hyatt to be negligent in not presenting his written declaration to the USPTO, the district court erred in using this finding in excluding the written declaration as evidence.

Judge Newman concurred with the holding of the majority, dissenting only to argue that de novo review, not APA deference, applies to § 145 actions in their entirely, even concerning evidence that was previously before the USPTO. In dissent, Judge Dyk, joined by Judge Gajarsa, wrote that USPTO decisions that form the basis for § 145 actions should receive APA deference, in the same way as with other agency decisions that come before Article III courts.

Where, as in Hyatt v. Kappos, additional evidence may bolster the case for the application after a final decision from the BPAI, the applicant has the option of pursuing a § 145 action before the D.C. District Court and bringing in the additional evidence. However, regardless of the en banc ruling in Hyatt v. Kappos, patent applicants should strive to provide relevant evidence to the USPTO long before any § 145 action in the D.C. District Court, because § 145 demands that the applicant shall pay all of the expenses of such an action. Patent applicants should not plan from the outset to introduce additional evidence in a § 145 action or save evidence for a § 145 action, but § 145 actions nonetheless provide a later strategic option to introduce new evidence to counter an unfavorable BPAI ruling.