Source: https://www.complexip.com/supreme-court-holds-that-no-deferential-evidence-standard-applies-to-district-court-appeals-of-pto-rejections/
Timestamp: 2019-04-26 06:29:49+00:00

Document:
The Supreme Court expanded the appeal rights of a patent applicant whose patent has been rejected by the U.S. Patent and Trademark Office. In Kappos v. Hyatt, Case No. 10-1219 (Apr. 18, 2012)(available here), the questions before the Court were: (i) whether there are any limitations on the applicant’s ability to introduce new evidence before the district court when the applicant appeals the the district court from a USPTO final rejection and (ii) what standard of review should the district court apply when considering new evidence. The Court held that (i) there are no evidentiary restrictions beyond those already imposed by the Federal Rules of Evidence and the Federal Rules of Civil Procedure and (ii) the district court must make a de novo finding when new evidence is presented on a disputed question of fact but the trial court may consider what weight to afford that evidence when the applicant had an opportunity to present the evidence to the PTO.
“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.” Slip opn. P. 1.
As for the “new evidence” issue, an applicant for patent may either (a) appeal a final USPTO agency decision to the court of Appeals for the Federal Circuit on the evidence presented to the PTO or (b) file a civil action against the Director of the PTO in the United States District Court for the District of Columbia pursuant to 35 U.S.C. §145 (under the newly enacted AIA, the Northern District of Virginia). The District Court action is a trial de novo which also includes the PTO administrative record.
In Dickinson v. Zurko, 527 U. S. 150 (1999), the Court 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 (quoting 5 U. S. C. §706).” P. 2-3. Therefore, a rejected applicant, when appealing to the Federal Circuit, must show that the PTO’s decision is ‘unsupported by substantial evidence’ or contrary to law.
In the Hyatt case, the District Court applied the APA’s deferential “substantial evidence” standard when it reviewed the PTO’s factual findings and ruled against inventor Hyatt. Hyatt appealed to the Federal Circuit which reversed the lower court’s dismissal and ruled 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. The Supreme Court affirmed the Federal Circuit.
The Supreme Court also held that the heightened standard of review for factual findings of an agency in §145 District court proceedings should not be applied. P. 7.
“We also agree with the Federal Circuit’s longstanding view that, ‘where new evidence is presented to the district court on a disputed fact question, a de novo finding will be necessary to take such evidence into account together with the evidence before the board.’ Fregeau v. Mossinghoff, 776 F. 2d 1034, 1038 (1985). As we noted in Zurko, the district court acts as a factfinder when new evidence is introduced in a §145 proceeding. 527 U. S., at 164. The district court must assess the credibility of new witnesses and other evidence, determine how the new evidence comports with the existing administrative record, and decide what weight the new evidence deserves.” P. 13.
In conclusion, since some patent applicants are disappointed by Patent Office rejections of their patent claims, an appeal to the District Court may provide a better opportunity to obtain patent protection rather than an appeal to the Federal Circuit where the APA’s deferential “substantial evidence” standard applies to PTO decisions.

References: v. 
 §100
 §145
 v. 
 §701
 §141
 §706
 §145
 §145
 v. 
 §145