Author Archives: Joe Carnicella

Patent Prosecution Law Firms Beware . . .

Posted on April 17, 2013 | Leave a comment

By: Joe Carnicella, intellectual property attorney with Picadio Sneath Miller & Norton, P.C.

On April 15, Thomson Reuters published a very interesting article that should be read by attorneys who represent clients in preparing and filing patent applications.  The article can be found here.  The article reports that at least three cases have been filed by publishers and copyright holders of scientific, technology and medical journals (American Institute of Physics and John Wiley & Sons Ltd.) against law firms for using copyrighted materials as part of the patent application process.  The law firms have been accused of “wrongly using copyrighted works to promote their business interests.”  In particular, the article reports that the plaintiffs are not complaining about copies being submitted to the USPTO, but rather, they are objecting to the fact that law firms made and kept additional copies of the copyrighted materials.  The law firms have responded by arguing that, inter alia, copies made during the course of the representation constitute fair use.  We will continue to monitor these cases.

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U.S. Supreme Court Interprets the “First Sale” Doctrine

Posted on March 20, 2013 | Leave a comment

Supreme Court

By: Joe Carnicella, intellectual property attorney with Picadio Sneath Miller & Norton, P.C.

On March 19, 2013, in Kirtsaeng v. Wiley & Sons, Inc., No. 11-697, the U.S. Supreme Court held that the “first sale” doctrine applies to copies of a copyrighted work lawfully made abroad.  Specifically, a buyer or other lawful owner of a copy (of a copyrighted work) lawfully manufactured abroad is protected under the “first sale” doctrine and such buyer may bring that copy into the United States (and sell it or give it away) without obtaining permission to do so from the copyright owner.

Section 106 of the Copyright Act grants the owner of copyright exclusive rights including the right to distribute copies of the copyrighted work to the public by sale or other transfer of ownership.  One limitation on these exclusive rights falls under Section 109(a) of the Copyright Act (commonly referred to as the “first sale” doctrine), which provides that the owner of a particular copy lawfully made under this title is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy.  Thus, once a copy has been lawfully sold or its ownership otherwise lawfully transferred, the buyer of that copy and subsequent owners are free to dispose of the copy as they wish.  Section 602(a)(1) further provides that importation into the United States, without the authority of the owner of copyright under this title, of copies of a work that have been acquired outside the United States is an infringement of the exclusive rights to distribute copies under Section 106.

Wiley & Sons publishes academic books and assigns rights to publish, print and sell the English language textbooks abroad to its wholly owned foreign subsidiary.  Supap Kirtsaeng, while studying in the United States, asked his friends and family to purchase copies of foreign edition English-language textbooks at Thai book shops, which sold the books at low prices, and to mail the books to him in the United States, wherein he used the books, sold them, reimbursed his family and friends and kept the profit.

In 2008, Wiley initiated a lawsuit against Kirtsaeng for copyright infringement on the grounds that Kirtsaeng’s unauthorized importation of its books and his later resale of those books amounted to an infringement of Wiley’s Section 106(3) exclusive right to distribute as well as the Section 602 related import prohibition.  Kirtsaeng defended against the claim on the ground that the books he had acquired were “lawfully made” and that he had acquired them legitimately.  His position was that the “first sale” doctrine under Section 109(a) permitted him to resell or otherwise dispose of the books without the copyright owner’s further permission.  The District Court ruled that the “first sale” defense was not available to Kirtsaeng because the doctrine does not apply to “foreign-manufactured goods.”  The Second Circuit agreed with the District Court.

The Court analyzed the language within these statutes, and in particular the phrase “lawfully made under this title.”  Wiley argued that the phrase imposes a form of geographical limitation and that the “first sale” doctrine does not apply to copies of American copyrighted works manufactured abroad.  Kirtsaeng argued that the phrase imposes a non-geographical limitation, and in particular, that the intention was for the phrase to mean “made in accordance with” or “in compliance with the Copyright Act.”  In this case, Kirtsaeng asserted that the “first sale” doctrine would apply to copyrighted works as long as their manufacture met the requirements of American copyright law, e.g. copies manufactured abroad with the permission of the copyright owner.  The Court considered the language of Section 109(a), its context and the common-law history of the “first sale” doctrine and concluded that Section 109(a) favors a non-geographical interpretation.  The U.S. Supreme Court determined that, while Section 602(a)(1) makes clear that importing a copy without permission violates the owner’s exclusive distribution right, it also refers explicitly to Section 106(3), which is by its terms is subject to various limitations including the “first sale” limitation under Section 109(a).

A complete copy of the Court’s Opinion can be found on the United States Supreme Court’s website.

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Posted in Copyrights, Intellectual Property Litigation, Rules and Procedures, United States Supreme Court

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Under Armour Seeking to “Protect Its House”

Posted on February 22, 2013 | Leave a comment

By: Joseph R. Carnicella, intellectual property attorney with Picadio Sneath Miller & Norton, P.C.

Under Armour has filed suit against Nike alleging that Nike has infringed certain Under Armour trademarks as a result of Nike’s use of the phrase “I Will” in advertisements.  Under Armour alleges that Nike’s use of “I Will” infringes its trademark rights, dilutes a famous mark, e.g. the slogan “I will protect this house,” and constitutes unfair competition.  Under Armour alleges that Nike launched an advertising campaign on its Facebook page and YouTube video page that repeatedly use the “I Will” trademark/tagline, and as a result, consumers have already associated Nike’s use of “I Will” with Under Armour.

Under Armour filed the lawsuit on February 21, 2013, in the United States District Court for the District of Maryland, Baltimore Division (1:13-cv-00571).  Nike has not yet filed a response to the complaint.  We will continue to monitor this action.

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Posted in Intellectual Property Litigation, Lanham Act, Trademarks

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Federal Circuit Ruling: Any Argument Supported by the Record Should be Considered by the PTO Board

Posted on January 25, 2013 | Leave a comment

By: Joseph Carnicella, intellectual property attorney with Picadio Sneath Miller & Norton, P.C.

On January 23, 2013, the Federal Circuit in Rexnord Industries LLC v. Kappos (2011-1434) determined that the USPTO Board of Patent Appeals and Interferences (the “PTO Board”) erred when it declined to consider arguments that were made to the patent examiner but not raised on appeal to the PTO Board.

Habasit Belting, Inc. filed a patent infringement suit against Rexnord Industries LLC with respect to U.S. Patent No. 6,523,680 (the ’680 patent), wherein Rexnord requested inter partes reexamination of the ’680 patent.  On reexamination, the examiner held all of the claims in the ’680 patent unpatentable for anticipation and obviousness based on four prior art references cited by Rexnord.  However, on appeal by Habasit (the appellant regarding the reexamination decision), the PTO Board held the claims patentable.  As a result of the PTO Board’s reversal, Rexnord (the appellee regarding the reexamination decision) requested rehearing and argued that the PTO Board overlooked a portion of the examiner’s analysis in rejecting the claims.  The PTO Board denied the rehearing request.

Rexnord subsequently appealed the PTO Board’s decision and its refusal to review all of the arguments raised by Rexnord regarding the unpatentability of the ’680 patent.  On this appeal, the PTO argued that the PTO Board need not consider other grounds that had been presented during the reexamination if those arguments were not raised on the appeal to the PTO Board.  However, the Federal Circuit concluded that Rexnord presented the prior art references to the examiner and that the references did not relate to a patentability issue again until after the PTO Board reversed the examiner.  The Federal Circuit held that the correctness of the decision appealed from can be defended by the appellee on any ground that is supported by the record, whether or not the appellant raised the argument.  In this matter, the Federal Circuit determined that Rexnord requested on rehearing that the PTO Board consider the other grounds in support of the examiner’s decision, and that the PTO Board erred in declining to consider the references presented for reexamination and in declining to consider Rexnord’s arguments in support of the examiner’s decision.

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Apple’s Permanent Injunction Bid Against Samsung Denied

Posted on December 20, 2012 | Leave a comment

By: Joe Carnicella, intellectual property attorney with Picadio Sneath Miller & Norton, P.C.

On December 17, 2012, U.S. District Judge Koh denied Apple’s request for a permanent injunction against Samsung.  As a reminder, a jury awarded Apple $1.05 billion in damages in August after finding that Samsung had copied certain features of Apple’s iPhone and iPad.  (See our earlier blog post summarizing this verdict).  With respect to the court’s most recent ruling, Judge Koh followed the Federal Circuit’s heightened standard that requires patent-holders to show a direct link between lost market-share and a specific infringing feature of a competitor’s product.  In fact, in a previous ruling related to another lawsuit between Apple and Samsung over the patented search technology used in Apple’s Siri feature, the Federal Circuit overturned Jodge Koh’s decision to grant a preliminary injunction against Samsung’s Galaxy Nexus phone.  In the present matter, Judge Koh found that Apple’s evidence for injunctive relief fell short of the strict “causal nexus” standard because the lawyers did not prove that the copied features specifically drove consumers to buy Samsung devices.

Some attorneys believe that Apple’s main objective was to block Samsung’s sale of its products and not to obtain a financial remedy.  In this regard, attorneys are of the opinion that the record verdict was a mere slap on the wrist to Samsung, which generates approximately $100 billion in annual revenues.  Nonetheless, this recent ruling has a significant impact on the parties’ leverage in the mobile patent litigation arena.

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Posted in Intellectual Property Litigation, Patents, Technology

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Method to Estimate Risk of Fetal Down’s Syndrome Not Patent-Eligible Subject Matter

Posted on November 26, 2012 | Leave a comment

By: Joe Carnicella, intellectual property attorney at Picadio Sneath Miller & Norton, P.C.

On November 20, 2012, the Federal Circuit held that a method to assess the risk of fetal Down’s syndrome is not patent-eligible subject matter pursuant to 35 U.S.C. 101.  In PerkinElmer Inc. v. Intema Ltd., a unanimous panel considered the issue of patentability under section 101 and concluded that Intema’s screening patent, U.S. Patent No. 6,573,103 (“the ’103 patent”), was not drawn to patent-eligible subject matter.

According to 35 U.S. C. 101, “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor . . . .”  The U.S. Supreme Court has held that section 101, while broad in nature, is subject to certain limitations, and laws of nature, natural phenomena, and abstract ideas are not patentable.  Mayo Collaborative Servs. v. Prometheus Labs, Inc., 132 S. Ct. 1289, 1293 (2012).  For example, mental processes and products of nature are not patent-eligible subject matter.  For a process claim to cover a patentable application of, for example, a natural law, it must contain other elements or a combination of elements sufficient to ensure that the patent in practice amounts to significantly more than a ptent upon the natural law itself.

The ’103 patent disclosed specific screening methods, which used markers from both the first and second trimesters of pregnancy, to estimate the risk of fetal Down’s syndrome.  The Federal Circuit relied on two decisions to support its ruling that such methods do not cover patent-eligible subject matter.  In Mayo Collaborative Services, the U.S. Supreme Court held that two patents on a diagnostic test used to treat autoimmune diseases were invalid because patents based on the use of a natural law must also contain an inventive concept.  In Association for Molecular Pathology v. Myriad Genetics Inc., the Federal Circuit held that isolated human genes are patent-eligible but method claims for comparing or analyzing DNA sequences are not patent-eligible because the process claims were drawn to abstract mental processes.  With respect to PerkinElmer, the Federal Circuit noted that the ’103 patent did not require any action besides comparing data with known statistical information.  Also, the court concluded that the relationship between screening marker levels and the risk of fetal Down’s syndrome related to a law of nature claim.  According to the Federal Circuit, because the asserted claims recite an ineligible mental step and natural law, and no aspect of the method converts these ineligible concepts into patent applications of those concepts, the claims cannot stand.

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Pittsburgh Technology Council Tech 50 Award Winners Announced

Posted on November 2, 2012 | 1 Comment

By: Joseph R. Carnicella, intellectual property attorney with Picadio Sneath Miller & Norton, P.C.

On behalf of our firm, I would like to thank The Pittsburgh Technology Council for hosting such a spectacular event last evening.  Also, I would like to congratulate all of the award winners who were recognized by the Council as leaders in technology and innovation within the Pittsburgh area.

The Pittsburgh Technology Council holds an annual Tech 50 awards presentation as a way to honor companies that have demonstrated an ability to grow and succeed as technology-oriented companies in Pittsburgh.  The event last evening provided an excellent opportunity for business leaders to come together and recognize and celebrate all of the creative contributions made by these companies on a local, national and global stage.  The Tech 50 award winners are as follows:

  • Calgon Carbon Corporation – Advanced Manufacturer of the Year
  • Epiphany Solar Water Systems, LLC - Innovator of the Year
  • ERT, formerly invivodata, inc. – Life Sciences Company of the Year
  • TrueFit – New Media Company of the Year
  • Summa Technologies – Solution Provider of the Year
  • Branding Brand – Start-Up of the Year
  • ANSYS, Inc. – Tech Titan of the Year
  • Scott Pearson, Aquion Energy, Inc. – CEO of the Year

Again, congratulations!  We wish you and all of the other Pittsburgh tech companies the best.

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Numerous AIA Provisions Implemented by USPTO

Posted on September 21, 2012 | Leave a comment

By: Joe Carnicella, intellectual property attorney at Picadio Sneath Miller & Norton, P.C.

On September 16, 2012, numerous provisions of the America Invents Act (AIA) went into effect with the United States Patent and Trademark Office.  These rules include new administrative trial provisions, the supplemental examination provision, the inventor oath and declaration provision and the citation of prior art and written statements provision.  The new administrative trial provisions include inter partes review, post-grant review and a transitional program for covered business method patents, all of which are designed to provide third-parties that want to challenge the patentability of an issued patent with alternatives to district court litigation that are more timely and cost-effective.  The supplemental examination provision affords applicants an opportunity to submit additional information relevant to the patentability of an issued patent that may protect a patent from an inequitable conduct charge.  Under the inventor oath and declaration provision, assignees may now file a patent application.  Finally, with respect to the citation of prior art and written statements provision, the USPTO will now be able to treat the claims in a patent consistent with how the patent owner represents the claims in proceedings before a court or the USPTO.  According to David Kappos, Under Secretary of Commerce for Intellectual Property and Director of the USPTO, “These new AIA provisions now in effect give us tools to deliver cutting-edge technologies to the marketplace sooner, further reducing the backlog of patent applications, and getting high-quality patents issued faster.”  Other provisions of the AIA, including the first-to-file provision, are scheduled to go into effect on March 16, 2013.

The USPTO received one of its first high-profile test cases for these latest provisions when Microsoft filed an inter partes review petition on September 18, 2012, asking the USPTO to invalidate a patent that its owner has accused Microsoft and other major companies of infringing.  Microsoft included a declaration that nine of the claims in the patent should be invalidated because the claims contain nothing innovative when compared to the prior art.  The USPTO will institute a review if Microsoft is able to convince the USPTO that there is a reasonable likelihood that Microsoft would prevail on at least one challenged claim, which may only address issues of novelty and obviousness.  The board would then hold a mini-trial and issue a final determination within one year.

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Posted in America Invents Act, Intellectual Property Litigation, Patents

Jury Finds in Favor of Apple and Against Samsung

Posted on August 27, 2012 | Leave a comment

By:Joe Carnicella, intellectual property attorney at Picadio Sneath Miller & Norton, P.C.

On Friday, August 24, a nine member jury entered a verdict in favor of Apple and awarded almost $1.05 billion in damages.  Apple filed suit against one of its largest competitors, Samsung Electronics, in April 2011, and alleged that Samsung’s Galaxy line of smartphones and tablets infringed seven of Apple’s patents covering the iPhone and iPod products.  In turn, Samsung countersued alleging that Apple infringed Samsung’s patents covering various wireless software components of its products.  After more than a year of highly contentious litigation and following a trial that began at the end of July and lasted the better part of August, the jury deliberated for less than three days before delivering the verdict in favor of Apple.

Prior to trial, Apple received a significant e-discovery victory when the court sanctioned Samsung for its failure to preserve emails after Samsung should have anticipated the lawsuit by Apple.  The court determined that Samsung had a duty to preserve evidence as of August 23, 2010, and while Samsung issued a litigation hold and provided instructions detailing how to save emails using its email system, Samsung failed to disable the auto-delete function of its email system, which automatically deleted all emails every two weeks in Samsung’s Korean offices.  The court ordered that, as part of the sanctions, the jury would be allowed to draw an adverse inference against Samsung and that the jury would be told to presume that relevant evidence was destroyed and that the lost evidence was favorable to Apple.

The court also entered pretrial preliminary injunctions against Samsung barring the sale of the Galaxy Nexus phone and the Galaxy Tab 10.1 in the United States.  Moreover, the court delivered various ruling for and against both parties on various in limine motions.  One ruling against Samsung appeared to be very significant: Samsung took issue with the court’s ruling that, because Samsung failed to disclose in time contentions that Samsung’s designs were in development before the iPhone, Samsung was precluded from using slides containing images of the Samsung designs.  This particular issue surfaced again during the afternoon while opening statements were being made when a press release issued saying that “the excluded evidence would have established beyond doubt that Samsung did not copy the iPhone design” and that “fundamental fairness requires that the jury decide the case based on all the evidence.”  Counsel for Apple raised this issue with the judge claiming that the release was an attempt to influence the jurors.  The court ordered that counsel for Samsung disclose who authorized the release and also required that one of the lead attorneys, John Quinn, file an affidavit about his involvement in the release.  Quinn complied with the court’s order and disclosed that Samsung did not issue the press release but was responding to press inquiries about the issue.  Quinn acknowledged that he authorized the press statement but declared that the purpose was not to influence the jury.  Apple filed a motion for sanctions, which was ultimately denied by the court; however, the judge indicated that the issue may be investigated further following trial.

Apple established at trial its theory that Samsung had ripped off the unique design features of the iPad and iPhone and infringed certain utility patents.  Apple focused on comparisons between Samsung’s phones from 2006 to its newer smartphones from 2010.  Also, Apple relied on internal documents from Samsung comparing Samsung’s products with the iPhone hardware.  Apple called one of its design veterans as its first witness, who described how Apple’s design team discussed most of their work at the kitchen table and how they were constantly questioning one another as designs were suggested and developed until they agreed on a final product.  Apple also called a former employee who designed icons for the original Macintosh computers to opine on the confusion with the icons and layouts on screens of various Samsung phones.  Furthermore, Apple relied on a marketing expert who opined that people don’t associate Samsung touchphones as groundbreaking technology and based such an opinion in part on Samsung internal documents that described the iPhone as a competitive threat.  Moreover, Apple called its patent portfolio director who described the company’s licensing strategy and stated that he could count on one hand the number of instances wherein Apple entered into a license for a company to use its design patents.

On the other hand, Samsung maintained the position that Apple had no right to claim a monopoly on certain design features that were not revolutionary.  Samsung’s theory to demonstrate non-infringement was to get the jury to focus on the specific legal requirements relating to each of Apple’s patents.  Samsung called one its designers who testified that she did not rely on Apple designs to create icons for the Galaxy smartphone lines.  Samsung also went on the offensive by attempting to prove that Apple’s products use certain Samsung features for mobile devices, such as the process for emailing photos and the technology relating to easily finding photos in an album.  Samsung called an expert who testified that the iPhone and iPad violated three of Samsung’s patents.  Moreover, Samsung attempted to demonstrate that Apple’s patents were invalid due to developments in technology that existed before Apple claimed to have invented such technology.

The significance of this trial must be underscored.  As a threshold matter, the trial may serve as a precursor to Apple’s global patent war against Google, which was an “extra” in this litigation because Samsung’s smartphones run on Google’s Android operating system.  As a reminder, Steve Jobs vowed that he is “willing to go thermonuclear war on this.”  Also, this trial served as a gateway that uncovered some of Apple’s secret world.  Apple moved to keep under seal many documents and trial exhibits that contained competitively sensitive information, such as financial data and proprietary market research including customer surveys.  The court granted some of the motions that related to production capacity, source code and licensing agreements; however, the court denied most of the motions regarding financial data and marketing.  The court rationalized the decisions by explaining that “because Apple updates its product lines relatively frequently, it is not obvious that historical profit, profit margin, cost, or unit sales data for past products would provide competitors with an advantage over future products.”  The court determined that there was a strong interest in making the data public due to the total amount of damages on the line.

What’s next?  The jury’s verdict was favorable to Apple in every way but one: the jury decided that the Samsung Galaxy Tab 10.1 did not infringe Apple’s patent covering design elements on the iPad.  This decision by the jury was contrary to a decision made by the court prior to trial.  As mentioned above, the court entered a preliminary injunction barring Samsung from selling the Galaxy Tab 10.1 in the United States.  Following the verdict, Samsung filed a motion requesting that the court dissolve the preliminary injunction order on the grounds that there is no proper basis for maintaining the injunction based on the jury’s verdict.  However, because the jury also decided that the Galaxy Tab 10.1 infringed some of Apple’s software patents, the issue may be more complicated.  Moreover, the court is within its rights to overrule the jury’s decision and issue a ruling that the Galaxy Tab 10.1 does, in fact, infringe Apple’s design patent.  Also, the jury found that Samsung willfully infringed the patents, and thus, the court must decide how much to increase the damages award, which could be up to three times.  Finally, and perhaps most importantly, the question remains whether the court will issue a permanent injunction against Samsung, and if so, what would be the extent of the injunction, i.e. would an injunction cover only those products identified by Apple in this lawsuit or any/all current and future similar products.

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Posted in Intellectual Property Litigation, Patents

U.S. Supreme Court Decides Kappos v. Hyatt

Posted on April 19, 2012 | Leave a comment

By: Joseph R. Carnicella, intellectual property and commercial litigation attorney at Picadio Sneath Miller & Norton, P.C.

In Kappos v. Hyatt, 566 U.S. ___ (2012), decided on April 18, 2012, a unanimous Supreme Court affirmed a Federal Circuit decision that (a) a patent applicant faces no limitations on their ability to introduce new evidence in a Section 145 (35 U.S.C. § 145) proceeding beyond those already in place in the Federal Rules of Evidence and the Federal Rules of Civil Procedure, (b) the district court must take de novo factual findings of both new evidence presented on a disputed question of fact and the administrative record before the PTO, and (c) the district court may consider what weight to afford any new evidence taking into account whether the applicant had an opportunity to present the new evidence before the PTO.

In this case, Gilbert Hyatt (Respondent) filed a patent application that included 117 claims.  The PTO’s patent examiner denied each of the claims for lack of an adequate written description pursuant to 35 U.S.C. § 112.  Hyatt appealed the decision to the Board of Patent Appeals and Inferences (Board), and after receiving approval of 38 claims, Hyatt filed a Section 145 action in federal district court against the Director of the PTO (Petitioner).  In support of his position that the patent application included an adequate written description, Hyatt included a written declaration with his submission to the district court setting forth the portions of the patent specification that, in his opinion, supported the claims that were deemed unpatentable by the Board.  The district court refused to consider the declaration on the grounds that 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 PTO.  The district court then applied a deferential substantial evidence standard under the Administrative Procedure Act (APA) in reviewing only the PTO’s administrative record and subsequently granted summary judgment to the Director.

Hyatt appealed to the Federal Circuit, and a divided panel affirmed the district court’s decision that the APA imposed restrictions on the admission of new evidence in a Section 145 proceeding and that the district court’s review is not wholly de novo.  The Federal Circuit granted rehearing en banc and vacated the grant of summary judgment.  The Supreme Court granted certiorari following the ruling from the en banc court.  The Director argued before the Supreme Court that a district court should admit new evidence in a Section 145 action only if the proponent of the evidence had no reasonable opportunity to present the evidence to the PTO in the first instance.  Also, the Director argued 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 committed error in its findings.

The Supreme Court began its analysis of the Director’s arguments by first reviewing the text of Section 145: “An applicant dissatisfied with the decision of the Board of Patent Appeals and Interferences in an appeal under section 134(a) may, unless appeal has been taken to the United States Court of Appeals for the Federal Circuit, have remedy by civil action against the Director . . . . The 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 Board, 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.”  The Supreme Court concluded that the plain text neither imposes unique evidentiary limits in district court proceedings nor establishes a heightened standard of review for factual findings by the PTO.

The Supreme Court next considered the Director’s argument that the statute should be read in light of traditional principles of administrative law under the APA.  The Director argued that (a) the district court should defer to the PTO’s factual findings and (b) in line with the traditional rule that a party first must exhaust administrative remedies, the district court should consider new evidence only if the party did not have an opportunity to present the evidence to the PTO.  The Supreme Court disagreed with the Director’s positions.  First, the Director conceded that Section 145 proceedings are not limited in the same manner as judicial review of an agency decision under the APA, which is typically limited to the administrative record.  The Supreme Court noted that the PTO cannot account for evidence that was not presented, and as a result, the district court must make its own findings de novo.  Also, the Supreme Court determined that administrative exhaustion does not apply to Section 145 because, while administrative exhaustion avoids premature interruption of the administrative process, the PTO’s process is complete by the time a Section 145 proceeding occurs.

The Supreme Court then analyzed the evidentiary and procedural rules in effect at the time when Congress enacted Section 145 in 1952.  The Supreme Court traced the history of Section 145 back to the 1836 Act, which established the Patent Office, and noted that the specific language in Section 145 originated in the 1870 Act.  According to the Supreme Court, in 1878, the relevant provision of the 1870 Act was codified by Congress as Revised Statute § 4915 (R.S. 4915), which served as the immediate predecessor to Section 145.  The parties agreed that R.S. 4915 and judicial interpretations of that statute provided the foundation for the understanding of Section 145.  The Supreme Court analyzed the two primary cases describing the nature of R.S. 4915, and concluded that Congress intended that applicants would be free to introduce new evidence in Section 145 proceedings subject to the rules applicable to all civil actions and that, where new evidence is presented to the district court, a de novo finding would be necessary.

Finally, in agreeing with the Federal Circuit that the district court may decide what weight to afford an applicant’s newly admitted evidence, the Supreme Court noted that the proper means for the district court to accord respect to decisions of the PTO would be through the court’s broad discretion over the weight to be given to such new evidence in Section 145 proceedings.

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