Troy v. Samson Manuf. Corp.: Hyatt Allows Admission of New Evidence for New Issues in 35 U.S.C. § 146 Actions

Category: Administrative Law  
By: John Kirkpatrick, Contributor 
TitleTroy v. Samson Manuf. Corp., No. 2013-1565 (Fed. Cir. July 11, 2014).
[1] Mr. Troy challenges the district court’s refusal to consider evidence pertaining to issues not raised before the Board [in a civil action under 35 U.S.C. § 146].
Troy at *4 (text added).
[2] [E]ven if [Kappos v. Hyatt, 132 S. Ct. 1690 (2012)] requires that the district court admit such new evidence, this holding is applicable to [35 U.S.C. § 145] actions only.
Id. at *8 (text added).
[1] "We conclude that the Supreme Court’s decision in Hyatt permits new evidence to be admitted without regard to whether the issue was raised before the Board."  Troy at *5 (text added). "[T]o the extent that our prior precedent, see, e.g., Conservolite v. Widmayer, 21 F.3d 1098, 1102 (Fed. Cir. 1994), held that new evidence on an issue not presented to the Board was generally to be excluded in district court proceedings, it is no longer viable following the Supreme Court’s Hyatt decision." Id. at *6 (text added).
[2] [T]he Supreme Court’s decision in Hyatt applies with equal force to both § 145 and § 146 actions.
Id. at *10 (text added).
Procedural HistoryThe [Board of Patent Appeals and Interferences] declared an interference between Mr. Troy’s [U.S. Patent No. 7,216,451] and Samson’s U.S. Patent Application No. 11/326,665. [...] The Board therefore entered judgment against Mr. Troy and ordered all claims of the ’451 patent cancelled. Mr. Troy challenged the Board’s decision in district court under § 146. [...] The district court affirmed the Board’s order canceling all claims of Mr. Troy’s patent. [...] Mr. Troy appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(4)(C).
Troy at *2-4 (text added, footnote removed).
Legal Reasoning (Prost, Bryson, MOORE)
Factual BackgroundThe Board concluded that Mr. Troy failed to prove actual reduction to practice in February 2004. [...] [In district court, Mr. Troy] introduced new evidence of actual reduction to practice in July 2004. Additionally, Mr. Troy argued Samson engaged in “inequitable conduct” by including in its provisional application confidential drawings that Samson misappropriated from Mr. Troy. [...] [The court] concluded that [new evidence] was barred because “[a] party is generally precluded from raising issues or theories of law in a Section 146 proceeding that were not previously raised before the board.” [...] The court also rejected as a new issue Mr. Troy’s argument that Samson used Mr. Troy’s confidential proprietary drawings in its provisional application, which Troy alleged demonstrated Samson’s inequitable conduct. The district court concluded that Mr. Troy “failed . . . to articulate where in the record he actually presented arguments to the Board regarding the alleged inequitable conduct of Samson.”
Troy at *3-4 (text added, internal citations removed).
Standard of Review“The district court’s determination of priority in a § 146 action is reviewed de novo on appeal, and the court’s factual findings supporting its legal conclusions are reviewed for clear error.”
Id. at *4 (internal citations removed).
[1] Evidence Admissible Regardless of Whether the Issue Was Raised Before the Board
No Evidentiary Restrictions Beyond the
FRE and the FRCP
In its amicus brief, the [United States Patent and Trademark Office, hereinafter, PTO] argues that our opinion in Hyatt “expressly endorsed the district court’s ability to prohibit parties from raising new issues during its review of Board decisions.” [...] The Supreme Court held [in Hyatt], without qualification, that “there are no evidentiary restrictions beyond those already imposed by the Federal Rules of Evidence and the Federal Rules of Civil Procedure. [...] “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.” [...] Introducing new evidence on a new issue in a civil action is not barred by any Federal Rule of Evidence or Federal Rule of Civil Procedure.
Troy at *5-6 (text added, internal citations removed).
Administrative Law Principles Are No
Basis for Limiting Evidence in a § 145
The Court expressly rejected the notion that administrative law principles could form the basis for limiting the evidence admissible in a § 145 proceeding: “We reject the [PTO] Director’s contention that background principles of administrative law govern the admissibility of new evidence. . . . Consequently, the district court must make its own findings de novo and does not act as the ‘reviewing court’ envisioned by the APA. We also conclude that the principles of administrative exhaustion do not apply in a § 145 proceeding.” [...] We find it impossible to reconcile the limitation on evidence that Samson and the PTO seek with the Supreme Court’s unequivocal language, analysis, and holding in Hyatt.
Id. at *6 (text added, internal citations removed).
Conservolite No Longer Viable “[T]he issues decided by the higher court need not be identical to be controlling. Rather, the relevant court of last resort must have undercut the theory or reasoning underlying the prior circuit precedent in such a way that the cases are clearly irreconcilable.” [...] This, of course, only addresses whether the Supreme Court’s decision in Hyatt prevents a limitation on evidence based on administrative law principles where such a limitation does not exist in the Federal Rules of Evidence or Federal Rules of Civil Procedure. We conclude that this limitation is inconsistent with the Supreme Court’s decision in Hyatt.
Id. at *7-8 (text added, internal citations removed).
[2] Hyatt Applies to Both § 145 and § 146 Actions
Samson argues that the proceeding at issue in this case, an interference arising under § 146, ought not be governed by the same rules [as § 145]. [...] However, we conclude that the language of § 146 is stronger in its indication that new evidence be admissible. Section 146 explains: “In such suits the record in the Patent and Trademark Office shall be admitted on motion of either party . . . [and] when admitted shall have the same effect if originally taken and produced in the suit.” By its express terms, the PTO record is not required to be part of the § 146 civil action at the district court. We interpret this language as contemplating a fresh start in the district court. Moreover, § 146 expressly states that the parties have “the right . . . to take further testimony.” [...] Based upon the language of the statute, we see no basis for concluding that new evidence is permitted in § 145, but not in § 146.
Id. at *8, 10 (text added).
[W]e vacate the district court’s decision and remand with instructions to consider the new evidence and arguments raised by Mr. Troy in his district court filings.
Troy at *12 (text added).
Contributor's Note
Butterworth v. United States and Morgan v. Daniels Distinguished[T]he Supreme Court in Hyatt discussed possible tension between language in two of its precedents—Butterworth v. United States ex rel. Hoe, 112 U.S. 50 (1884), and Morgan v. Daniels, 153 U.S. 120 (1894). The Court explained that [...] the two cases addressed different circumstances. [...] Morgan was an interference proceeding, [...] whereas Butterworth concerned a proceeding in which a disappointed patent applicant challenged whether the Secretary of the Interior had the authority to reverse a decision of the Commissioner of Patents in an interference. [...] "[Butterworth] is not a technical appeal from the Patent-Office . . . confined to the case as made in the record of that office, but is prepared and heard upon all competent evidence adduced and upon the whole merits." [...] Morgan involved the standard of review that ought to apply in interferences when no new evidence has been introduced. [...] The Morgan Court was not making any determinations about admissibility of evidence. [...] In Hyatt, the Supreme Court decided that when new evidence is introduced, the district court must make de novo fact findings. [...] Our decision today, like the Supreme Court’s decision in Hyatt, is consistent with Morgan. [It] is not concerned with the standards of review enunciated in either Hyatt (de novo if new evidence is admitted) or Morgan (deferential if on the same record).
Troy at *10-11 (text added).
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