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The Rocket Docket Takes on Rocket Science

Dec 27, 2012
Damon W.D. Wright and Matthew R. Farley

A New Launch Pad To Get Your Patent Issued

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The U.S. District Court for the Eastern District of Virginia, known as the "Rocket Docket," has a national reputation as one of the country's fastest-paced federal courts. The time from complaint to trial can be six months. A discovery motion is usually decided in a week. The district and magistrate judges strictly enforce deadlines. The Court is fair but fast. And now … the nickname "Rocket Docket" may refer to more than just speed.

The Court is poised to explore everything from rocket science to the human genome, as patent applicants turn to the Eastern District as a new launch pad for obtaining a patent. In the past, a patent applicant who lost before the U.S. Patent & Trademark Office (“PTO”) had two options for judicial review — either appeal to the U.S. Court of Appeals for the Federal Circuit or file a civil action in the U.S. District Court for the District of Columbia. With recent changes in the law, the second option has now changed and become far more attractive.

With the Leahy-Smith America Invents Act (“AIA”), Congress transferred exclusive venue over civil actions to obtain a patent from the District of Columbia to the faster-paced Eastern District of Virginia. With Kappos v. Hyatt, the U.S. Supreme Court also held that new evidence is admissible in these civil actions and that district judges must apply a de novo standard of review to all the evidence when new evidence is admitted.

Together, these changes provide a valuable opportunity for potential patentees creatively to “show and tell” a district court why an invention is useful, novel, and non-obvious. Across the country, inventors, companies, and patent prosecution firms dissatisfied with the PTO’s denial of a patent application should consider the Rocket Docket, learn its unique and streamlined procedures, and evaluate how to persuade the district court that the PTO got it all wrong. Here’s some background to get you started.

The America Invents Act: A Ticket to Ride the Rocket Docket

The AIA extensively revised U.S. patent law. With the AIA, the United States moved from a “first to invent” rule to a “first to file” rule, making diligent prosecution integral to securing rights in an invention. The AIA also included a less-publicized change, moving venue for civil actions to obtain a patent from the District of Columbia to the Eastern District of Virginia. The change was practical: the PTO’s office is a stone’s throw away from the Eastern District’s Albert V. Bryan U.S. Courthouse. Thus, the Rocket Docket is now the turf for challenging various decisions of the PTO, including final decisions from the Patent Trial and Appeal Board (“PTAB”), the entity tasked with reviewing written appeals from adverse examiner decisions.

In the PTO, when a patent application has been rejected twice by the examiner, the applicant may appeal to PTAB for inter-agency review of the examiner’s decision to reject. If the PTAB determines that a patent application was properly rejected, an applicant appeal to the Federal Circuit or file a civil action to obtain a patent in the Eastern District of Virginia. These independent civil actions to obtain a patent, or “Section 145 actions,” are steadily increasing and gaining prominence in the Rocket Docket. As the inventor and legal community comes to understand the Rocket Docket and the significance of Hyatt, this will only continue.

Life after PTAB: Where to Turn Following an Adverse Decision

Where to turn after an adverse decision from the PTAB is an important, strategic decision. Following defeat before the PTAB, many patent applicants opt to file a request for continued examination, a procedure that buys the applicant another full examination without re-filing the application. While a continued examination may be inexpensive, it is often not the wisest choice. As of March 2012, the PTO had a backlog of approximately 85,000 continued examination applications awaiting initial action, and many applicants wait a year or longer for an examiner to take another look at their application. By contrast, the Rocket Docket has a reputation for trying cases within six months of the initial filing.

Another option is to appeal to the Federal Circuit. Consistent with its role as an appeals court, however, the Federal Circuit is limited to reviewing the administrative record as it stood before the PTO. No new evidence may be presented to the Federal Circuit. The scope of review by the Federal Circuit is also limited by the Administrative Procedure Act (“APA”), which generally requires a reviewing court to affirm the PTO’s decision if supported by “substantial evidence.” This deferential level of review can sometimes be just “rubber stamp” review.

For many, the best option may now be a Section 145 civil action in the Eastern District. As explained in Hyatt, the applicant-plaintiff can take discovery and introduce new evidence not presented to the PTO, and the district court must then consider all the evidence de novo. Moreover, given the Rocket Docket’s speed, the applicant-plaintiff may receive quicker relief. Further, if the applicant ultimately loses the civil action, he may still appeal to the Federal Circuit, providing another layer of review. Another advantage of the Section 145 action is the possibility of a negotiated settlement with the PTO, which usually will be accompanied by agreed-upon amendments to one or more claims.

There is one feature to the Section 145 civil action route, however, that may make it less appealing. A single, somewhat vague sentence at the end of 35 U.S.C. § 145 states that the applicant shall pay “[a]ll the expenses of the proceedings.” Perhaps because so few Section 145 actions have been filed in the past, there is almost no case law construing this sentence and also no meaningful legislative history. On its face, it would appear to apply even if the applicant is the prevailing party; yet this interpretation would bring it in conflict with 28 U.S.C. § 1920, the bill of costs statute, allowing recovery of “costs” to the prevailing party. It is also not yet clear whether the Eastern District of Virginia will interpret “expenses” in 35 U.S.C. § 145 as coterminous with “costs” in 28 U.S.C. § 1920 or will instead, for instance, allow the PTO to recover “expenses” for its experts. Nor is it clear when the “expenses” should be submitted, ordered or paid or whether judgment in plaintiff’s favor could enter before or be conditioned on such payment. In any event, case law does establish that, as with an award of “costs,” any such “expenses” must be reasonable.

Kappos v. Hyatt: An Opportunity Like No Other

In Hyatt, an inventor-attorney prosecuted his own patent application for a computerized display system before the PTO. The application was twice rejected by the patent examiner and rejected again on appeal to the PTAB. Mr. Hyatt then filed a Section 145 action in the U.S. District Court for the District of Columbia. There, Mr. Hyatt attempted to introduce a written declaration to support his claims, but the court refused to consider the new evidence because it was not in the PTO administrative record. In the district court’s view, Section 145 actions were limited to the record below, and new evidence was prohibited. Hyatt appealed to the Federal Circuit, where the full court reversed the trial court’s decision and sided with Hyatt. Ultimately, the Federal Circuit held that a Section 145 action is subject to no evidentiary limitations other than those contained in the Federal Rules of Evidence and Civil Procedure and that, if new evidence is introduced, the district court must make its own de novo factual findings.

Dissatisfied, the PTO urged the Supreme Court to reverse and find a Section 145 action is governed by the APA’s highly deferential standard of review, where no new evidence may be allowed. On April 18, 2012, the Court unanimously rejected the PTO’s arguments and affirmed that a Section 145 action is a complete and separate civil action. Echoing the Federal Circuit, the Supreme Court concluded “there are no limitations on a patent applicant’s ability to introduce new evidence in a § 145 proceeding beyond those already imposed by the Federal Rules of Evidence and Civil Procedure.” The Court added that the district court in a Section 145 action does not act as a “reviewing court” envisioned by the APA but instead must make de novo factual findings that take into account both new evidence and that already in the PTO administrative record. As the Court explained, no matter how great the PTO’s technical expertise, it cannot assess evidence it has never seen.

New Evidence: A Better Opportunity to Prove your Better Rocket

Section 145 empowers the district court to award a patent to the applicant “as the facts in the case may appear.” Although this language is very broad, historically, very few Section 145 civil actions were ever filed. With the change in venue to the Eastern District of Virginia and the benefits afforded by Hyatt, this is rapidly changing. The opportunity to take discovery, introduce new evidence and obtain judicial review in a fast-moving federal court makes a Section 145 action much more attractive. The challenge for patent applicants will be to identify and effectively introduce new and better evidence to persuade the district court that the PTO got it wrong.

In Hyatt, the new evidence was a declaration by the inventor. However, the Supreme Court in Hyatt made clear that an applicant may proceed with relevant and admissible evidence, subject only to the limitations in the applicable Federal Rules. This expansion is revolutionary for patent prosecution. The PTO’s examiners have large caseloads and limited time to examine each application. Thus, a PTO examiner does not typically receive live or demonstrative testimony from the inventor, an expert, or one “ordinarily skilled in the art.” A PTO examiner does not typically look at actual prototypes of the invention or observe the invention in action. A PTO examiner does not typically consider sales figures showing commercial success, which are often proof of an invention’s usefulness and novelty. All of this evidence is potentially admissible before the district court in a Section 145 action, and it could make the difference between a patent and a final rejection. It is clear that Hyatt affords a second chance, and quite possibly a better chance, to prove you have a better rocket.

Without a doubt, securing competent legal representation is imperative, and the evidentiary needs of each Section 145 civil action will vary. Some patent applicants will benefit from designating and introducing expert testimony to demonstrate an invention’s novelty. Others may be best served by introducing evidence of sales figures to bolster a claim of utility, or simply by introducing documentary evidence to demonstrate an invention is not anticipated by prior art. A patent applicant may also be able to introduce evidence about the PTO examiner’s credentials or statistical track record to demonstrate that the examiner has a propensity to refuse patent applications in a certain area. An applicant may also obtain useful admissions from taking discovery, including depositions, of any PTO fact or expert witnesses. This discovery could also be fruitful and far-reaching as the PTO has so far designated outside experts (i.e., from outside its walls), whose prior experience and prior testimony could become highly relevant (e.g., if the expert previously worked for the applicant’s competitor). In addition, the PTO has served discovery in recent Section 145 actions, signaling that it is also prepared to go beyond the record below and underscoring the need to define the issues and manage discovery. It is also important to stress that the Rocket Docket strictly adheres to discovery deadlines and any misstep could result in exclusion of potentially dispositive evidence.

Absent decision on summary judgment, a Section 145 action can provide the applicant with the ability to introduce live evidence and literally show the decision maker why an invention is deserving of patent protection. No doubt, however, the technical complexity of the subject matter will also present challenges for the district court. This can be complicated stuff, especially for a person who has not spent years studying the finer points of chemical, mechanical or electrical engineering. Because a Section 145 action is a non-jury proceeding, it is also likely that evidentiary issues will be resolved so as to favor admissibility. In the face of conflicting expert testimony or underdeveloped scientific or technological issues, the district court also has authority to appoint its own expert, either to provide neutral testimony or to advise the court so it can make informed decisions regarding case and trial management. While the district judges have not yet called on a technical advisor for assistance in the now-pending Section 145 actions, an applicant should anticipate this possibility and be ready to assist the court in selecting such an expert. It is also possible that the district judge may refer a Section 145 action to the assigned magistrate judge for a report and recommendation.

A Section 145 civil action in the Rocket Docket can be a remarkable opportunity for patent applicants to obtain protection for their inventions. Perhaps more than any other case, the key to winning will be to guide, educate, and most importantly, engage the district court with a clear, thoroughly-developed, and effective presentation of the issues and the evidence. With several actions now pending, it remains to be seen how the Eastern District of Virginia’s judges will adjust to their expanded role in deciding whether patents should issue. But one thing is for certain: the Rocket Docket knows how to “get up to speed.”

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