The Supreme Court's New Standard of Appellate Review for Claim Construction | White & Case LLP International Law Firm, Global Law Practice
The Supreme Court's New Standard of Appellate Review for Claim Construction

The Supreme Court's New Standard of Appellate Review for Claim Construction

White & Case Technology Newsflash

On January 20, 2015, the United States Supreme Court redefined the standard of appellate review for claim construction. In Teva Pharm. USA, Inc. v. Sandoz, Inc.,[1] the Supreme Court vacated well-established Federal Circuit precedent that applied de novo review to all aspects of claim construction. The Supreme Court remanded the case with instructions to apply the "clearly erroneous" standard when reviewing factual underpinnings in claim construction. While it is still too early to assess the impact of this ruling, the Supreme Court's holding in Teva is significant because claim construction is, in most cases, critical in patent litigation.

Background
Nearly two decades ago, in Markman v. Westview Instruments, Inc.,[2] the Supreme Court held that the determination of the meaning and scope of patent claims—called patent "claim construction"—is a job for the judge, not a jury. Shortly thereafter, the Federal Circuit established the standard of appellate review of patent claim construction. In Cybor Corp. v. FAS Technologies, Inc.,[3] the Federal Circuit held that patent claim construction receives de novo determination on appeal, without deference to the district court ruling. In a 2014 en banc decision,[4] the Federal Circuit upheld the Cybor standard on the basis of stare decisis, finding that the Cybor rule "provid[ed] national uniformity, consistency and finality to the meaning and scope of patent claims."[5]

In the district court proceeding underlying the Teva opinion, Teva sued Sandoz for patent infringement, asserting a patent that purportedly covered Copaxone, a drug used to treat multiple sclerosis. Sandoz challenged the validity of the patent under 35 U.S.C. § 112(b), arguing the patent was fatally indefinite because the term "molecular weight" potentially had three different meanings. The district court, after taking evidence from experts, found the patent sufficiently definite, and thus valid, because a person of ordinary skill in the art would understand the correct method for calculating "molecular weight." On appeal, the Federal Circuit reversed the decision of the district court, reviewing de novo all aspects of the district court's claim construction and finding the patent invalid for indefiniteness.

The Supreme Court's New Standard of Review for Claim Construction
In Teva, the Supreme Court reversed the Federal Circuit's opinion, creating a new standard of review for claim construction. The Supreme Court emphasized that Federal Rule of Civil Procedure Rule 52(a) requires appellate courts to review all factual findings under the "clearly erroneous" standard, including "evidentiary underpinnings" in claim construction.

In an unusually instructive opinion, the Supreme Court provided a framework for application of the new standard. When a district court's claim construction rests solely on the consideration of intrinsic evidence, including patent claims, specification and prosecution history, the determination is solely of law, and thus the appropriate standard of review is de novo. In some cases, however, the district court will need to look beyond the patent's intrinsic evidence and consult extrinsic evidence, such as the meaning of a term in the relevant art during the relevant time period. In cases where those subsidiary facts are in dispute, courts will need to make subsidiary factual findings about the extrinsic evidence. The subsidiary fact finding of "evidentiary underpinnings" must be reviewed for clear error. However, it is important to note that, while subsidiary fact finding is reviewed for clear error, the ultimate decision of each claim's proper construction remains one of law, and thus retains the de novo standard.

Implications
At first blush, it seems the Teva opinion provides for more deference to district courts, meaning the Federal Circuit should affirm some claim construction decisions that it might have overturned under the old standard. However, it is too early to tell whether the opinion will have this effect in practice. In the handful of opinions issued since the Teva opinion, the Federal Circuit has continued to review claim constructions de novo, finding that the district court opinions were based purely on intrinsic evidence.[6]

In the conceivable future, trial courts could intentionally rely on greater amounts of extrinsic evidence to insulate their opinions from reversal. This could, in turn, prompt the Federal Circuit to place even more emphasis on intrinsic evidence in the ultimate decision of law, thus reducing the deference to district courts to pre-Teva levels.

 

[1] - 190 L. Ed. 2d 719, 735 (U.S. 2015).
[2] - Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996).
[3] - 138 F.3d 1448 (Fed. Cir. 1998).
[4] - See Lighting Ballast Control LLC v. Philips Elecs. North Am. Corp., 744 F.3d 1272 (Fed. Cir. 2014).
[5] - Id. at 1277.
[6] - See, e.g., Lexington Luminance LLC v. Amazon.com Inc., 2015 U.S. App. LEXIS 2123, 15 (Fed. Cir. Feb. 9, 2015); FenF, LLC v. SmartThingz, Inc., 2015 U.S. App. LEXIS 1955, 5 (Fed. Cir. Feb. 6, 2015); In re Cuozzo Speed Techs., LLC, 2015 U.S. App. LEXIS 1699, 24 (Fed. Cir. Feb. 4, 2015); Papst Licensing GmbH & Co. KG v. Fujifilm Corp. (In re Papst Licensing Digital Camera Patent Litig.), 2015 U.S. App. LEXIS 1597, 10 (Fed. Cir. Feb. 2, 2015); In re Imes, 2015 U.S. App. LEXIS 1395, 3 n. 1 (Fed. Cir. Jan. 29, 2015).

 

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