By Dennis Crouch
Kappos v. Hyatt (Supreme Court 2012)
This case involves a patentee’s right to a file a civil action in district court challenging the USPTO’s refusal to grant a patent. 35 U.S.C. § 145. In a unanimous decision, the Supreme Court has affirmed the Federal Circuit ruling that the patent applicant’s presentation of new evidence to the district court requires that court to make de novo factual findings that consider both the new evidence and the administrative record. The USPTO had asked that the court to apply a higher standard of deference to agency factual findings.
This ruling has two major caveats:
- Deference will be given to PTO factual findings if the applicant fails to present any new contradictory evidence at the trial.
- Although it must undertake a de novo review, a court can give less weight to newly presented evidence based upon its consideration of “the proceedings before and findings of the Patent Office.”
In its brief, the USPTO argued that the standard employed here would “encourage patent applicants to withhold evidence from the PTO intentionally with the goal of presenting that evidence for the first time to a nonexpert judge.” The Supreme Court rightfully rejected that scenario as “unlikely” in most cases. There are two reasons for this: (1) as the Court notes, this strategy would serve to undermine their chances of directly obtaining a patent from the USPTO based upon the speculative strategy of having a court find the invention patentable; and (2) in my estimation, some amount of new evidence (such as expert testimony and test results) can always be obtained after trial. This is especially true because of the limited manner in which testimony can be presented to an examiner or in an ex parte appeal to the Board.
In this particular case, however, Hyatt has some reason to sandbag because his application was filed pre-1995 and covers basic building blocks of the modern computer. The delay in issuance likely means additional revenue sources that may persist for 17 years from the issue date.
This result here is appropriate in our current world where ex parte appeals to the PTO Board have become a standard and regular aspect of patent prosecution. Those appeals have become somewhat commodified and many firms offer a fixed price. This makes business sense under Hyatt because the applicant still has a chance to fully press its case and present additional evidence after losing at the Board.
Justice Thomas penned the majority opinion.
In a concurring opinion, Justice Sotomayor (joined by Justice Breyer) offered some thought as to particular times when a district court may offer less weight to evidence presented only at trial. Justice Sotomayor primarily discussed the 1927 deliberate suppression case of Barrett Co. v. Koppers Co., 22 F. 2d 395, 396 (3rd Cir. 1927). In that case, the patent applicant refused to allow their witnesses to answer questions from the chief examiners. The appellate court in that case ruled that the applicant was estopped from later introducing evidence that it had purposely withheld. Learned Hand wrote in a later case that estoppel should not apply when the suppression was merely negligent. Relying on these cases, Justice Sotomayor wrote her suggestion that
when a patent applicant fails to present evidence to the PTO due to ordinary negligence, a lack of foresight, or simple attorney error, the applicant should not be estopped from presenting the evidence for the first time in a §145 proceedings.
Although not expressly stated, I suspect that the purpose of “keeping costs low” would fall within Justice Sotomayor’s category of permissible suppression. Of course, these suggestions from Sotomayor are not part of the majority opinion, which did not cite Barrett or the Learned Hand decision of Dowling v. Jones, 67 F. 2d 537 (2nd Cir. 1933).
In application of this rule to the facts here, Justice Sotomayor began with the presumption that new evidence should be allowed and found that the USPTO had not (yet) met its burden to show wrongful suppression.