Opinion ID: 615661
Heading Depth: 1
Heading Rank: 3

Heading: District Court Procedure

Text: Streck filed a civil action under § 146, and the parties and the district court agreed that the issue of priority would be decided on the evidentiary record relevant to priority as adduced in the infringement trial, together with the record in the PTO interference proceeding. Section 146 provides for admission of the PTO record in the district court: In such suits the record in the Patent and Trademark Office shall be admitted on motion of either party upon the terms and conditions as to costs, expenses, and the further cross-examination of the witnesses as the court imposes, without prejudice to the right of the parties to take further testimony. The testimony and exhibits of the record in the Patent and Trademark Office when admitted shall have the same effect as if originally taken and produced in the suit. The PTO record was duly admitted. The district court stated that [t]he record now before the court includes live testimony, evidence that was not presented to the Board, and evidence that conflicts with that provided to the Board. Over fifty exhibits were admitted in the infringement trial that were not considered by the Board in the Interference Action. Streck, 744 F.Supp.2d at 972 (footnote omitted). The district court stated that its obligation was to find the facts of priority de novo, on the entirety of the evidence at trial and in the PTO record. Id. at 982. R & D had objected to this procedure, and argues that the district court erred in employing it. R & D states that the district court in a § 146 proceeding must accept the findings of the Board if those findings were supported by substantial evidence in the PTO record. R & D states that it was procedurally incorrect for the district court to make de novo findings on issues on which the PTO's findings were supported by substantial evidence in the record before the PTO. Thus R & D argues that the district court should have reviewed each of the Board's factual findings in the interference to determine if the finding was supported by substantial evidence and, if so, the district court should have accepted and applied the Board's finding, refusing to accept new evidence on any such finding or to otherwise reconsider it. The district court rejected R & D's theory of the role of the district court under § 146. The district court cited Winner International Royalty Corporation v. Wang, 202 F.3d 1340 (Fed.Cir.2000), where this court held that the admission of live testimony on all matters before the Board in a section 146 action, as in this case, makes a factfinder of the district court and requires a de novo trial. 202 F.3d at 1347. The Federal Circuit held that the district court must find the facts de novo, even if the live testimony before the district court might be of the same or similar to testimony before the Board in the form of affidavits and deposition transcripts. Id. The court stated that our holding also establishes a clear rule that live testimony admitted on all matters that were before the Board triggers a de novo trial. Id. at 1347-48. Section 146 provides that the civil action is without prejudice to the right of the parties to take further testimony. In Agilent Technologies, Inc. v. Affymetrix, Inc., 567 F.3d 1366 (Fed.Cir.2009) the court explained that [s]ection 146 affords a litigant the option of shoring up evidentiary gaps. 567 F.3d at 1380; see also Koninklijke Philips Elecs. N.V. v. Cardiac Sci. Operating Co., 590 F.3d 1326, 1332 (Fed.Cir.2010) (§ 146 grants parties the right to present new testimony. . . .). This court thus recognized that the opportunity to receive additional evidence, as well as to hear and see witnesses at trial, can facilitate findings having depth beyond that available on review of a cold record. See Winner, 202 F.3d at 1347 ([B]ecause the district court may observe witnesses under examination and cross-examination it can have a `powerful advantage' over the Board which can never receive testimony in such a manner.) (quoting Burlington Indus., Inc. v. Quigg, 822 F.2d 1581, 1582 (Fed.Cir.1987)); cf. Hyatt v. Kappos, 625 F.3d 1320, 1331 (Fed.Cir.2010) (en banc), cert. granted, ___ U.S. ___, 131 S.Ct. 3064, ___ L.Ed.2d ___ (2011) (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.). [2] R & D also argues that, assuming some new evidence may be considered, it is only when the evidence adduced in the district court is in conflict with the evidence before the Board that the district court may make de novo findings as to the facts to which that evidence relates. Neither statute nor precedent supports such a distinction, whose impracticality was explored in Winner: [I]f the test for determining whether de novo adjudication is appropriate were based on exactly what the witness said in the district court and whether it was truly `new or different' than what was disclosed in affidavits and deposition transcripts of the same or other witnesses before the Board, then the district court, and this court on appeal, would be required to search nearly line-by-line through the respective records as to each witness and issue to determine which standard applied. Aside from being difficult, such a test would provide scant guidance for a prospective litigant attempting to discern which standard would apply should it file a section 146 action. 202 F.3d at 1348; cf. Hyatt, 625 F.3d at 1336 (Because the court must determine the weight and import of this new evidence, we have held that the district court in a § 145 action must make de novo fact findings with respect to factual issues to which the new evidence relates.). R & D argues that  Winner is not controlling, and that this court's acceptance of the de novo § 146 standard was modified in Agilent. However, the court in Agilent did not hold that the district court cannot make its own factual findings unless the evidence in the district court conflicts with the PTO record. To the contrary, in Agilent the court held that [t]he district court's decision to deferentially review the Board's written description holding in the face of newly submitted conflicting evidence constituted legal error. 567 F.3d at 1380. The standard for trial and decision of a § 146 action in the district court is not the same as the standard for review by the Federal Circuit in a § 141 direct appeal from the PTO on the Board record. See Dickinson v. Zurko, 527 U.S. 150, 152, 119 S.Ct. 1816, 144 L.Ed.2d 143 (1999) (on direct appeal, the Federal Circuit applies the standard of review established by the Administrative Procedure Act). The circumstances of this case highlight the importance of interpreting § 146 as we have to date and continue to do here. The Board premised its factual findings on the sworn statements and documents submitted to it. The statements did not allow for live credibility assessments, however, and the documents submitted to the Board were highly redacted. As discussed below, the district court expressly found, upon examination of the unredacted documents and with the benefit of live testimony from the declarants, that many of the representations upon which the Board relied were not accurate or credible. In other words, the nature of the administrative proceeding limited the scope of the Board's inquiry and potentially the accuracy of its fact finding. Section 146 recognizes that, while the Board is fully capable of assessing all matters presented to it, there are inherent limits to its fact finding function that arise from the sterile nature of a proceeding that is limited to documentary and declaration or deposition evidence. In accordance with statute and precedent, the district court appropriately considered additional evidence and conducted a de novo determination of the issue of priority under § 146.