En Banc Decision Allows Rejected Patent Applicants to Introduce New Evidence

Filing an application with the United States Patent and Trademark Office (USPTO) can be an arduous process. If rejected, applicants can appeal to the Board of Patent Appeals and Interferences (BPAI). From there, unsuccessful applicants can refile or take their cases to court, either filing in district court or appealing directly to the Federal Circuit. Historically, experts say, only a small percentage of applicants file in district court, but some predict that may change as a result of a recent Federal Circuit decision.

The Federal Circuit's Nov. 8 decision in Hyatt v. Kappos affirms that patent applicants are allowed to enter new evidence in a Section 145 civil action filed in response to a USPTO decision to deny patent rights. In a 6-2-1 en banc decision, the Federal Circuit reversed an earlier panel ruling that limited the admissibility of new evidence in such cases.

Paul Devinsky, a partner at McDermott, Will & Emery, says that it's interesting that the Federal Circuit decided to take the case en banc, given its relatively limited impact. He says that the USPTO's tendency to respond to Section 145 cases with pre-emptive summary judgment motions, rather than answering the complaints and engaging in an exchange of discovery, might have contributed to the court's decision to hear the case en banc.

"The USPTO, for years now, has been trying to weed 145 [cases] out of the jurisprudence to avoid having to deal with new evidence," he says. "I think it was becoming disruptive and a waste of time, because it meant all of these cases were getting started months later than they should have."

The Federal Circuit's ruling removes all question about the admissibility of new evidence in Section 145 cases filed in response to USPTO decisions, holding that "the only limitations on the admissibility of evidence applicable to a Section 145 proceeding are the limitations imposed by the Federal Rules of Evidence and Federal Rules of Civil Procedure."

For many patent attorneys, however, the en banc ruling doesn't change how they view the law.

"The en banc decision actually confirmed what we all thought was the rule," says Foley & Lardner Partner Courtenay Brinckerhoff. "That's how you learn it in law school or for the patent bar. If you take the direct route to the Federal Circuit, you can't introduce new evidence. If you want new evidence, you go to the district court first."

Fear Itself

That's the course inventor Gil Hyatt took after the BPAI rejected his appeal of a USPTO decision. Because a Section 145 action is a new, separate lawsuit and not an appeal, Hyatt took the position that he could introduce new evidence at the district court.

Hyatt addressed the rejections the USPTO examiner had issued against him in a new declaration offering new evidence in his favor. The director of the Patent Office argued, however, that because Hyatt's declaration had not been submitted to the BPAI or the USPTO examiner, it should be excluded. The district court agreed, as did a Federal Circuit panel on appeal.

Although the en banc Federal Circuit reversed the panel's ruling, the dissenting opinion from the en banc decision argues that allowing new evidence to be introduced in appeals of BPAI decisions will undermine the patent office and encourage applicants to willfully withhold evidence until the district court level, says Peter Zura, a partner at Barnes & Thornburg. That fear may be unwarranted. Zura says that the cost involved in pursuing a patent that way--in Section 145 proceedings, the appellant covers all expenses--makes it unlikely that many, if any, applicants would adopt it as
a strategy.

"Any applicant that would take that as a de facto strategy for a patent, for even one of the more important patents, is going about it in possibly the most expensive way possible," he explains. "But there are instances where certain rulings will come out that applicants may feel, 'wait a minute, you're not really getting this,' and to have the option of putting that new evidence in is going to be very, very helpful."

The Kitchen Sink

For Section 145 to be helpful for applicants though, Devinsky says it's essential to establish clearly in the district court that new evidence has been introduced. Without new evidence, the district court is left to rely on the USPTO's fact finding. Devinsky points to new documentary evidence, live witnesses and declarations as strong ways to establish de novo review.

"Don't leave any gray area in connection with the issue of whether or not you introduced new evidence and turned it into a de novo review," he says. "In every instance you want to be sure that you have a de novo hearing so that if there's a Federal Circuit appeal from the district court, any legal issues are reviewed de novo as a matter of law."

In an effort to establish new evidence and ensure a de novo review, many applicants may be tempted to introduce every piece of evidence they can. Zura says that's not necessarily a bad idea.

"I do think that in cases where clients choose to take this route, you're almost actually better served at this point by using the kitchen sink approach," he says. "If you're going to go for the patent, you might as well throw everything you possibly can at the district court, within reason of course."

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