Federal Circuit to Look at Admissibility of New Evidence for BPAI Appeals

Hyatt v. Kappos, __Fed.App.__ (Fed. Cir. 2010)(en banc)(order)

Hyatt filed for an application in the USPTO that was rejected for lack of adequate written description and lack of enablement, among other reasons. The BPAI upheld the rejections.

Hyatt appealed the rejection by filing a district court action under 35 U.S.C. § 145 against the Director.  During the district court proceedings, Hyatt tried to introduce a declaration with new descriptions to support his filed claims, but the district court denied the submission, stating that Hyatt had an “affirmative duty” or “obligation” to disclose this evidence to the PTO earlier in the process.  On appeal, the Federal Circuit upheld the district court, finding that Hyatt "could have" submitted the evidence earlier, but didn't.  As a result, the declaration was properly excluded.

In the Federal Circuit opinion, Judge Moore issued a sharp dissent on the majority opinion:

In this case, the majority blurs the line between an appeal pursuant to § 141 and the civil action of § 145. The admissibility of new evidence is exactly what distinguishes § 145 from § 141. “We must be vigilant to preserve to patent applicants the alternative procedures that the law provides, and to preserve the historical distinction between them.” Fregeau, 776 F.2d at 1041 (Newman, J., concurring-in-part). The legislative history and Supreme Court precedent make clear that the hallmark distinction is the admissibility of “all competent evidence,” “to build up a new record,” “to start de novo in court,” “and file testimony bringing in evidence that they could have brought in before [the PTO] but did not bring in before.” This evidence, admissible in this civil action, should be governed as the Supreme Court indicated by “equity practice and procedure,” i.e., the Federal Rules of Evidence and Civil Procedure.

Since only the presence of new evidence invokes the de novo standard of review (otherwise the district court will give the Board fact findings substantial evidence deference, see Fregeau, 776 F.2d at 1038), the majority’s decision in this case makes the § 145 action virtually indistinguishable from an appeal under § 141. This version of a “civil action” under § 145 is contrary to Congressional intent and to the Supreme Court’s rulings. While it is sound policy to encourage full disclosure to administrative tribunals such as the PTO, we are not the body that makes the decision of how best to do this. Congress held numerous hearings over this legislation, considered the concerns over permitting a civil action, and decided to enact the legislation despite these concerns.

A request for rehearing en banc was filed, and was granted yesterday by Federal Circuit (link).  The requested the parties to file new briefs addressing at least the following issues:

The parties are requested to file new briefs addressing at least the following issues:

(a) Are there any limitations on the admissibility of evidence in section 145 proceedings? In particular -
     (i) Does the Administrative Procedure Act require review on the agency record in proceedings pursuant to section 145?

     (ii) Does section 145 provide for a de novo proceeding in the district court?

     (iii) If section 145 does not provide for a de novo proceeding in the district court, what limitations exist on the presentation of new evidence before the district court?

(b) Did the district court properly exclude the Hyatt declaration?

The Federal Circuit also indicated that  "Briefs of amici curiae will be entertained, and any such amicus briefs may be filed without leave of court but otherwise must comply with Federal Rule of Appellate Procedure 29 and Federal Circuit Rule 29."