Kappos v. Hyatt: New Evidence and De Novo Review in Section 145 Suits

Kappos v. Hyatt, 566 U.S. 431 (2012), decided April 18, 2012, defines the most powerful escape hatch available to a patent applicant who loses at the Patent and Trademark Office. A rejected applicant can bypass the deferential appellate route and instead file a civil action under 35 U.S.C. Section 145, and in that suit, the Supreme Court unanimously held, the applicant may introduce new evidence beyond anything in the agency record, limited only by the ordinary rules that govern any federal trial. When that new evidence bears on a disputed fact, the district court must decide the fact de novo rather than defer to the agency. Justice Thomas wrote for the Court.

The decision draws a sharp contrast between the two paths a losing applicant can take. Appeal to the Federal Circuit under Section 141 confines the review to the administrative record and applies the deferential substantial-evidence standard. The Section 145 civil action is a different animal, and Hyatt explains just how different.

At a glance

• Case: Kappos v. Hyatt, 566 U.S. 431 (2012)
• Decided: April 18, 2012, United States Supreme Court, unanimous opinion by Justice Thomas, with a concurrence by Justice Sotomayor joined by Justice Breyer
• Holding: A Section 145 applicant faces no evidentiary limits beyond the Federal Rules, and where new evidence is admitted on a disputed fact, the district court must make de novo findings.
• Significance: Establishes the evidentiary and standard-of-review framework for the district-court alternative to appealing a patent rejection.

Two routes out of a rejection

When an examiner rejects claims and the Patent Trial and Appeal Board affirms, the applicant has a choice codified in the Patent Act. Under 35 U.S.C. Section 141, the applicant may appeal directly to the Court of Appeals for the Federal Circuit, which reviews the Board’s decision on the closed administrative record and sustains the Board’s factual findings if they are supported by substantial evidence. Under 35 U.S.C. Section 145, the applicant may instead sue the Director of the Patent and Trademark Office in the United States District Court for the Eastern District of Virginia, seeking a judgment that the applicant is entitled to a patent. The Section 145 route is a civil action, tried like other civil actions, and it has existed in one form or another since the nineteenth century.

The question in Hyatt was what that civil action actually allows. If the district court is confined to the same record and the same deferential standard as the Federal Circuit, Section 145 offers little that Section 141 does not. If instead the applicant can build a fresh evidentiary record and get de novo factfinding, Section 145 becomes a meaningful second chance.

The dispute below

Gilbert Hyatt, a prolific inventor, had claims rejected for failure to satisfy the written-description requirement of 35 U.S.C. Section 112. He brought a Section 145 action and offered a new written declaration supporting the adequacy of his disclosure, evidence he had not put before the Patent and Trademark Office. The district court refused to consider the declaration, reasoning that an applicant who could have presented evidence to the agency but did not should not be allowed to introduce it later. Applying the Administrative Procedure Act’s deferential substantial-evidence standard to the agency’s factual findings, the court granted summary judgment to the Director.

The Federal Circuit, sitting en banc, vacated. It held that a Section 145 applicant may introduce new evidence subject only to the Federal Rules of Evidence and Civil Procedure, and that when new, conflicting evidence is admitted, the district court must make de novo findings. The Director sought certiorari, and the Supreme Court affirmed the Federal Circuit’s judgment and remanded for further proceedings.

The Court’s reasoning

Justice Thomas grounded the holding in the statute’s text and history. Section 145 says nothing about limiting the evidence an applicant may present, and the Court declined to read in restrictions Congress did not write. The background against which Congress legislated confirmed the point. The predecessors to Section 145 had long been understood to permit the applicant to introduce new evidence in a district court proceeding that functioned as something closer to a trial than an appeal. The Court rejected the Director’s proposed analogy to ordinary APA review of agency action, explaining that Section 145 authorizes a distinctive kind of proceeding in which the district court itself acts as a factfinder rather than a reviewing court sitting on a closed record.

From that premise the two operative rules followed. First, the only limits on new evidence are the ordinary Federal Rules of Evidence and Civil Procedure. The Court refused to limit new evidence to proof the applicant had no reasonable opportunity to present to the agency, and it rejected the Director’s fear that applicants would sandbag the examiner on purpose. It did acknowledge that the applicant’s opportunity to present the evidence to the Patent and Trademark Office may affect the weight a court gives it. Justice Sotomayor, joined by Justice Breyer, concurred to add that the decision does not foreclose a district court’s ordinary equitable authority to exclude evidence deliberately suppressed or otherwise withheld in bad faith, while evidence omitted through negligence, lack of foresight, or attorney error should not be excluded. Second, once new evidence on a disputed fact is admitted, the district court cannot defer to the agency on that fact. It must find the fact de novo, weighing the new evidence together with the administrative record. Where no new evidence is offered on a point, the court may still give appropriate deference to the agency’s findings on that point under the substantial-evidence standard.

Open questions

Hyatt answered the evidentiary and standard-of-review questions cleanly, but it left the strategic and practical consequences to develop in later litigation. The Court noted that an applicant’s failure to present evidence to the agency may bear on the weight of that evidence, without specifying how much a district court may discount tardy proof, so the tension between “no exclusion” and “reduced weight” remains a live one. The decision also did not resolve how the two-track system interacts with the applicant’s duty of candor, or how a court should handle a record where some facts are supplemented and others are not, producing a hybrid of de novo and deferential review within a single case. And the practical costs of Section 145, including the applicant’s obligation to pay the Patent and Trademark Office’s expenses regardless of outcome, an issue the Supreme Court later addressed in the context of attorney’s fees in Peter v. NantKwest, Inc., 589 U.S. 23 (2019), continue to shape whether the route is worth taking.

Implications for inventors and businesses

• Section 145 is a genuine second chance. Because new evidence is admissible and disputed facts are found de novo, an applicant with proof that did not make it into the agency record has a real reason to choose the district court over a direct appeal.
• Build the strongest record you can at the agency anyway. Hyatt lets courts weigh late evidence less heavily, and the expense and delay of a district-court trial mean the smart practice is still to put the best case before the examiner and the Board.
• Match the forum to the problem. If the loss turns on the closed record and legal error, a Federal Circuit appeal under Section 141 is faster and cheaper; if it turns on a factual showing you can now prove, Section 145 may be the better tool.
• Budget for the cost. Section 145 actions carry the applicant’s obligation to pay the agency’s expenses, so the decision to sue should account for the financial exposure as well as the evidentiary upside.

Frequently asked questions

What is a Section 145 action? Under 35 U.S.C. Section 145, a patent applicant dissatisfied with a Patent Trial and Appeal Board decision may file a civil action against the Director of the Patent and Trademark Office in federal district court, as an alternative to a direct appeal to the Federal Circuit. The district court can order that a patent issue on the claims it finds the applicant is entitled to.

What did Kappos v. Hyatt decide about new evidence? The Supreme Court held that a Section 145 applicant may introduce new evidence beyond the administrative record, subject only to the ordinary Federal Rules of Evidence and Civil Procedure. There is no heightened barrier, even for evidence the applicant could have presented to the Patent and Trademark Office but did not.

How does the district court weigh new evidence in a Section 145 case? When new evidence is admitted on a disputed factual question, the district court acts as a factfinder and must make de novo findings that take account of both the new evidence and the administrative record. The deferential substantial-evidence standard does not control those facts once new evidence is in play.

Authorities and sources

• Kappos v. Hyatt, 566 U.S. 431 (2012) (Cornell LII, full opinion)
• Kappos v. Hyatt, 566 U.S. 431 (2012) (official U.S. Reports PDF, Library of Congress)
• 35 U.S.C. Section 145, Civil action to obtain patent (Cornell LII)
• 35 U.S.C. Section 141, Appeal to Court of Appeals for the Federal Circuit (Cornell LII)
• Cornell LII, “Kappos v. Hyatt” Supreme Court Bulletin
• Peter v. NantKwest, Inc., 589 U.S. 23 (2019) (slip opinion, supremecourt.gov)