Monday’s oral argument suggests that the Court is not at all certain where it will come out in Kappos v. Hyatt, with the Justices tossing out a wide variety of inconsistent trial balloons.  But the course that seems least likely is to adopt the bright-line rule pressed by the government.  The case involves the procedures a district court follows in a case under Patent Act Section 145, a little-used provision that allows a rejected applicant to file a new action in federal district court challenging the PTO’s denial.

The case posed a stark contrast to the almost apologetic tone of the government’s presentation in Sackett v. EPA, argued on Monday by Deputy Solicitor General Malcolm Stewart (a veteran with decades of experience in the Department), and already summarized by Lyle Denniston for this blog.  Assistant to the Solicitor General Ginger Anders relentlessly pressed the government’s position, which combines a high threshold for admissibility of evidence in the district court proceedings with an elevated standard of review for overturning the PTO’s decision to deny the application.

Shortly after the argument began, Justices Sotomayor and Ginsburg honed in on the key weakness in the government’s position.  Although the statute and the Court’s precedents plainly contemplate the admissibility of some types of evidence in a Section 145 proceeding, it is hard to identify substantial categories of evidence that would be admissible under the government’s argument, which limits new evidence to material that could not have been presented to the PTO.  Anders suggested that the district court properly could admit oral testimony (which is not admissible before the PTO) or evidence that did not exist at the time of the application (such as evidence that the invention was commercially successful).

The Justices seemed largely unpersuaded by Anders’s argument.   Justice Scalia (joined by Justice Sotomayor) suggested early in the argument that the government was confusing new evidence with new arguments (implicitly suggesting that it is unreasonable to ban new arguments).  Anders’s former boss Justice Kagan was more direct, remarking at one point that “the standard that you suggest just can’t be derived from the statutory language, isn’t that right?”  Finally, Justice Sotomayor occupied the last few minutes of Anders’s presentation with an extended explanation of her view that the legislative history and prior case law are directly inconsistent with the government’s argument.

The harder problem for the Justices was coalescing around a reasonably precise specification of what the district court is supposed to do in a proceeding that is both based on an agency judgment and open to the admission of new evidence.  Justice Sotomayor pressed Anders and Aaron Panner (appearing on behalf of the disappointed patent applicant) on a standard she derived from the Court’s 1894 decision in Morgan v. Daniels: the district court must accept the PTO’s decision unless it is “thoroughly convinced” by new evidence that the PTO had erred.  On an apparently similar tack, Justice Kagan emphasized the idea that the Court should separate the question of an appropriate level of deference (as to which the statute is at least ambiguous) with a low standard for admitting new evidence (which the statute seems to compel).

This is not to say that Panner had all that easy a time of it.  The Justices seemed not at all persuaded that the Federal Circuit had selected the appropriate standard, and they pressed Panner to offer similar statutory schemes to which they could refer for analogy.  Although he was quick to suggest an obscure FCC proceeding and a variety of similar matters, the Justices seemed to find his analogies unpersuasive, at least in part because the other statutes don’t include the odd language of Section 145 that requires district courts to decide factual questions “as the facts in the case may appear.”

Several of the Justices seemed particularly preoccupied with the precise standard for justifying an applicant in withholding evidence from the PTO.  When he proffered an estoppel standard (which would allow new evidence unless misconduct before the agency estopped the applicant), Justice Breyer suggested a more strict standard based on negligence or deliberate conduct, which would prevent new evidence withheld for strategic reasons.

Those lines of questioning underscored the difficult position in which the case places Panner.  Because the statute is so vague, and because it is used so rarely that there is little in the way of guiding precedent, the only thing motivating the Supreme Court to adopt precisely the same standard as the Federal Circuit is deference to the Federal Circuit’s expertise – not something with which the Supreme Court has been overladen in recent years.  And if the Supreme Court’s elucidation of the standard differs in any marked way from the Federal Circuit’s explication, then there is a good chance, even if the Court rejects the government’s arguments out of hand (as seems likely), that the judgment will be reversed and the case remanded for further proceedings.

 

Posted in Kappos v. Hyatt, Featured, Merits Cases

Recommended Citation: Ronald Mann, Argument recap: Court wary of government’s hard line in patent denial litigation, SCOTUSblog (Jan. 11, 2012, 9:27 AM), http://www.scotusblog.com/2012/01/argument-recap-court-wary-of-government%e2%80%99s-hard-line-in-patent-denial-litigation/