Supreme Court Calls for Some Deference in Claim Construction Standard of Review

22 January 2015 PharmaPatents Blog

On January 20, 2015, the Supreme Court issued its decision in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc.finding that the Federal Rules of Civil Procedure call for some deference in the claim construction standard of review. In particular, the Court held that when claim construction is based on external evidence, a district court’s findings of subsidiary facts are to be reviewed for clear error, while its ultimate claim construction is to be reviewed de novo. Although this decision changes the Federal Circuit’s nearly 20-year practice of applying full de novo review since the Supreme Court’s 1996 decision in Markman v. Westview Instruments, Inc., it is not surprising in view of the Court’s recent decisions that refuse to make exceptions to the usual rule for patent matters.

The Claim Construction Issue

The claim construction at issue related to the term “molecular weight,” which Sandoz argued was indefinite because it could have three possible meanings: (1) peak average molecular weight, (2) number average molecular weight, or (3) weight average molecular weight. The district court found that a skilled artisan would have understood a figure in the patent to support the peak average molecular weight definition, and construed the claims accordingly. The Federal Circuit reviewed that claim construction de novo, did not adopt the district court’s finding as to the figure, and determined that the claim was indefinite because the meaning of “molecular weight” was “insolubly ambiguous.”

The Federal Rules of Civil Procedure

The Supreme Court decision was authored by Justice Breyer and joined by Chief Justice Roberts and Justices Scalia, Kennedy, Ginsburg, Sotomayor and Kagan. Justice Thomas wrote a dissenting opinion which was joined by Judge Alito.

The heart of the Court’s decision rests on Rule 52(a)(6) of the Federal Rule of Civil Procedure, which provides:

(6) Setting Aside the Findings. Findings of fact, whether based on oral or other evidence, must not be set aside unless clearly erroneous, and the reviewing court must give due regard to the trial court’s opportunity to judge the witnesses’ credibility.

According to the Court, “this rule and the standard it sets forth must apply when a court of appeals reviews a district court’s resolution of subsidiary factual matters made in the course of its construction of a patent claim.”

Questions of Fact versus Questions of Law

As this case was pending review, commentators asked how one would identify questions of fact versus questions of law in a claim construction context. The Supreme Court drew this bright line:

As all parties agree, when the district court reviews only evidence intrinsic to the patent (the patent claims and specifications, along with the patent’s prosecution history), the judge’s determination will amount solely to a determination of law, and the Court of Appeals will review that construction de novo.

[On the other hand, i]n cases where … subsidiary facts are in dispute, courts will need to make subsidiary factual findings about that extrinsic evidence …. and this subsidiary fact finding must be reviewed for clear error on appeal.

The Court gave “the background science or the meaning of a term in the relevant art during the relevant time period” as examples of subsidiary facts that could underlie claim construction.

Practically speaking, the Court explained that once a district court has resolved “a subsidiary factual dispute” it will “interpret the patent claim in light of the facts as he has found them.” The Court emphasized that “[t]his ultimate interpretation is a legal conclusion” that “[t]he appellate court can still review … de novo.” However, “to overturn the judge’s resolution of an underlying factual dispute, the Court of Appeals must find that the judge, in respect to those factual findings, has made a clear error”

Turning to the claim construction issue before it, the Court noted that the district court had made a factual finding ”about how a skilled artisan would understand the way in which a curve created from chromatogram data reflects molecular weights,” and held that Federal Circuit erred when it did not give that finding due consideration when reviewing claim construction:

The Federal Circuit should have accepted the District Court’s finding unless it was “clearly erroneous.” Our holding today makes clear that, in failing to do so, the Federal Circuit was wrong.

Thus, the Court vacated and remanded the Federal Circuit decision.

Justice Thomas’s Dissent

Justice Thomas’s dissenting opinion disagrees that claim construction rests on “findings of fact” as that term is used in FRCP 52(a)(6). Rather, he believes that patent claims are more like statutes, the construction of which must be reviewed de novo.

[B]ecause the ultimate meaning of a patent claim, like the ultimate meaning of a statute, binds the public at large, it should not depend on the specific evidence presented in a particular infringement case. Although the party presentations shape even statutory construction, de novo review on appeal helps to ensure that the construction is not skewed by the specific evidence presented in a given case.

The Uniformity Problem

I share Justice Thomas’s concerns regarding the ability of specific parties to shape a claim construction that will impact the public at large, and the inconsistent claim constructions that could result from concurrent or consecutive proceedings. Although the majority opinion addresses these concerns, I am not satisfied by its assurances. For example the Court seems to assume that ”divergent claim construction stemming from divergent findings of fact (on subsidiary matters) should [not] occur more than occasionally,” because “the Federal Circuit will continue to review de novo the district court’s ultimate interpretation of the patent claims.” But the Court also acknowledges that some subsidiary findings of fact will be nearly dispositive of claim construction. The Court also seems to assume that district courts will take note of claim construction rulings made by other courts, but not all such rulings will “be binding because of issue preclusion” or followed as “persuasive authority,” particularly if new evidence is presented in a subsequent proceeding. The Court also assumes that “it is always possible to consolidate for discovery different cases that involve construction of the same claims,” but that assumption presumes that all cases will be filed at about the same time, which often is not the case.

For an analysis of the potential impact of this case on litigation strategies, please see this article on Foley & Lardner LLP’s IP Litigation Current blog.

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