Kappos v. Hyatt

• Decision Date: 18 April 2012
• Docket Number: No. 10–1219.,10–1219.
• Citation: 566 U.S. 431,132 S.Ct. 1690,182 L.Ed.2d 704
• Parties: David J. KAPPOS, Under Secretary of Commerce for Intellectual Property and Director, Patent and Trademark Office, Petitioner v. Gilbert P. HYATT.
• Court: U.S. Supreme Court

566 U.S. 431

132 S.Ct. 1690

182 L.Ed.2d 704

David J. KAPPOS, Under Secretary of Commerce for Intellectual Property and Director, Patent and Trademark Office, Petitioner

v.Gilbert P. HYATT.

No. 10–1219.

Supreme Court of the United States

Argued Jan. 9, 2012.

Decided April 18, 2012.

Ginger D. Anders, Washington, DC, for Petitioner.

Aaron M. Panner, Washington, DC, for Respondent.

Bernard J. Knight, Jr., General Counsel, Raymond T. Chen, Solicitor and Deputy General Counsel, Robert J. McManus, Thomas W. Krause, Associate Solicitors, U.S. Patent and Trademark Office, Alexandria, VA, Donald B. Verrilli, Jr., Solicitor General, Tony West, Assistant Attorney General, Malcolm L. Stewart, Deputy Solicitor General, Beth S. Brinkmann, Deputy Assistant Attorney General, Ginger D. Anders, Assistant to the Solicitor General, Counsel of Record, Scott R. McIntosh, Attorney, Department of Justice, Washington, DC, for Petitioner.

Gregory L. Roth, La Palma, CA, Aaron M. Panner, Counsel of Record, Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., Washington, DC, for Respondent.

Justice THOMAS delivered the opinion of the Court.

The Patent Act of 1952, 35 U.S.C. § 100 et seq., grants a patent applicant whose claims are denied by the Patent and Trademark Office (PTO) the opportunity to challenge the PTO's decision by filing a civil action against the Director of the PTO in federal district court. In such a proceeding, the applicant may present evidence to the district court that he did not present to the PTO. This case requires us to consider two questions. First, we must decide whether there are any limitations on the applicant's ability to introduce new evidence before the district court. For the reasons set forth below, we conclude that there are no evidentiary restrictions beyond those already imposed by the Federal Rules of Evidence and the Federal Rules of Civil Procedure. Second, we must determine what standard of review the district court should apply when considering new evidence. On this question, we hold that the district court must make a de novo finding when new evidence is presented on a disputed question of fact. In deciding what weight to afford that evidence, the district court may, however, consider whether the applicant had an opportunity to present the evidence to the PTO.

I

The Patent Act of 1952 establishes the process by which the PTO examines patent applications. A patent examiner first determines whether the application satisfies the statutory prerequisites for granting a patent. 35 U.S.C. § 131. If the examiner denies the application, the applicant may file an administrative appeal with the PTO's Board of Patent Appeals and Interferences (Board). § 134. If the Board also denies the application, the Patent Act gives the disappointed applicant two options for judicial review of the Board's decision. The applicant may either: (1) appeal the decision directly to the United States Court of Appeals for the Federal Circuit, pursuant to § 141 ; or (2) file a civil action against the Director of the PTO in the United States District Court for the District of Columbia pursuant to § 145.¹

In a § 141 proceeding, the Federal Circuit must review the PTO's decision on the same administrative record that was before the PTO. § 144. Thus, there is no opportunity for the applicant to offer new evidence in such a proceeding. In Dickinson v. Zurko,

527 U.S. 150, 119 S.Ct. 1816, 144 L.Ed.2d 143 (1999), we addressed the standard that governs the Federal Circuit's review of the PTO's factual findings. We held that the Administrative Procedure Act (APA), 5 U.S.C. § 701 et seq., applies to § 141 proceedings and that the Federal Circuit therefore should set aside the PTO's factual findings only if they are " ‘unsupported by substantial evidence.’ " 527 U.S., at 152, 119 S.Ct. 1816 (quoting 5 U.S.C. § 706 ).

In Zurko, we also noted that, unlike § 141, § 145 permits the applicant to present new evidence to the district court that was not presented to the PTO. 527 U.S., at 164, 119 S.Ct. 1816. This opportunity to present new evidence is significant, not the least because the PTO generally does not accept oral testimony. See Brief for Petitioner 40, n. 11. We have not yet addressed, however, whether there are any limitations on the applicant's ability to introduce new evidence in such a proceeding or the appropriate standard of review that a district court should apply when considering such evidence.

II

In 1995, respondent Gilbert Hyatt filed a patent application that, as amended, included 117 claims. The PTO's patent examiner denied each claim for lack of an adequate written description. See 35 U.S.C. § 112 (requiring patent applications to include a "specification" that provides, among other information, a written description of the invention and of the manner and process of making and using it). Hyatt appealed the examiner's decision to the Board, which eventually approved 38 claims, but denied the rest. Hyatt then filed a § 145 action in Federal District Court against the Director of the PTO (Director), petitioner here.

To refute the Board's conclusion that his patent application lacked an adequate written description, Hyatt submitted a written declaration to the District Court. In the declaration, Hyatt identified portions of the patent specification that, in his view, supported the claims that the Board held were not patentable. The District Court determined that it could not consider Hyatt's declaration because applicants are " ‘precluded from presenting new issues, at least in the absence of some reason of justice put forward for failure to present the issue to the Patent Office.’ " Hyatt v. Dudas, Civ. Action No. 03–0901, 2005 WL 5569663 (D.D.C., Sept. 30, 2005), p. 9, App. to Pet. for Cert. 182a (quoting DeSeversky v. Brenner, 424 F.2d 857, 858 (C.A.D.C.1970) ). Because the excluded declaration was the only additional evidence submitted by Hyatt in the § 145 proceeding, the evidence remaining before the District Court consisted entirely of the PTO's administrative record. Therefore, the District Court reviewed all of the PTO's factual findings under the APA's deferential "substantial evidence" standard. See supra, at 1694; see also Mazzari v. Rogan, 323 F.3d 1000, 1004–1005 (C.A.Fed.2003). Applying that standard, the District Court granted summary judgment to the Director.

Hyatt appealed to the Federal Circuit. A divided panel affirmed, holding that the APA imposed restrictions on the admission of new evidence in a § 145 proceeding and that the district court's review is not "wholly de novo." Hyatt v. Doll, 576 F.3d 1246, 1269–1270 (2009). The Federal Circuit granted rehearing en banc and vacated the District Court's grant of summary judgment. The en banc court first held "that Congress intended that applicants would be free to introduce new evidence in § 145 proceedings subject only to the rules applicable to all civil actions, the Federal Rules of Evidence and the Federal Rules of Civil Procedure," even if the applicant had no justification for failing to present the evidence to the PTO. 625 F.3d 1320, 1331 (2010). Reaffirming its precedent, the court also held that when new, conflicting evidence is introduced in a § 145 proceeding, the district court must make de novo findings to take such evidence into account. Id., at 1336. We granted certiorari, 564 U.S. ––––, 131 S.Ct. 3064, 180 L.Ed.2d 885 (2011), and now affirm.

III

The Director challenges both aspects of the Federal Circuit's decision. First, the Director argues that a district court should admit new evidence in a § 145 action only if the proponent of the evidence had no reasonable opportunity to present it to the PTO in the first instance. Second, the Director contends that, when new evidence is introduced, the district court should overturn the PTO's factual findings only if the new evidence clearly establishes that the agency erred. Both of these arguments share the premise that § 145 creates a special proceeding that is distinct from a typical civil suit filed in federal district court and that is thus governed by a different set of procedural rules. To support this interpretation of § 145, the Director relies on background principles of administrative law and pre-existing practice under a patent statute that predated § 145. For the reasons discussed below, we find that neither of these factors justifies a new evidentiary rule or a heightened standard of review for factual findings in § 145 proceedings.

A

To address the Director's challenges, we begin with the text of § 145. See, e.g., Magwood v. Patterson, 561 U.S. ––––, ––––, 130 S.Ct. 2788, 2796–97, 177 L.Ed.2d 592 (2010). Section 145 grants a disappointed patent applicant a "remedy by civil action against the Director." The section further explains that the district court "may adjudge that such applicant is entitled to receive a patent for his invention, as specified in any of his claims involved in the decision of the [PTO], as the facts in the case may appear and such adjudication shall authorize the Director to issue such patent on compliance with the requirements of law." By its terms, § 145 neither imposes unique evidentiary limits in district court proceedings nor establishes a heightened standard of review for factual findings by the PTO.

B

In the absence of express support for his position in the text of § 145, the Director argues that the statute should be read in light of traditional principles of administrative law, which Congress codified in the APA. The Director notes that § 145 requires a district court to review the reasoned decisionmaking of the PTO, an executive agency with specific authority and expertise. Accordingly, the Director contends that a district court should defer to the PTO's factual findings. The Director further contends that, given the traditional rule that a party must exhaust his administrative remedies, a district court should consider new evidence only if the party did not have an...