Patent Claim Construction Now Subject to Hybrid Review

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In a 7–2 decision penned by Justice Breyer, the Supreme Court of the United States overturned the de novo standard as the sole standard of review of issues arising in claim construction. Teva Pharmaceuticals USA v. Sandoz, Inc., U.S., No. 13-854 (Jan. 20, 2015) (Breyer, Justice) (Thomas, Justice, dissenting, joined by Alito, Justice). In doing so, the Supreme Court imposed a clear error standard of appellate review of a district court’s factual findings regarding extrinsic evidence relied on in rendering its claim construction.

In Depth

The De Novo Standard of Review

In 1998, the U.S. Court of Appeals for the Federal Circuit’s en banc decision in Cybor v. FAS Technology concluded that an earlier (1996) decision of the Supreme Court in Markman v. Westview Instruments required that it treat claim construction as a matter of law, thus ushering in an era of de novo review of district court claim construction decisions. Most recently (in February 2014) the Federal Circuit, in a 6–4 en banc decision in Lighting Ballast Control v. Philips Elect. No. America, affirmed its ruling in Cybor (IP Update, Vol. 17, No. 2). Until this Teva decision, debate has raged as to what deference, if any, the Federal Circuit should give when reviewing district court claim construction rulings.

The Teva Case

Against this backdrop, Teva sued several companies for patent infringement after it submitted Abbreviated New Drug Applications (ANDAs) to market generic versions of the multiple sclerosis drug Copaxone®. The active ingredient in Copaxone® is copolymer-1, or glatiramer acetate, which is a polypeptide product that consists of four different amino acids (alanine, glutamic acid, lysine and tyrosine). Copolymer-1, however, is a mixture of individual polymer molecules with different constituent ratios and different molecular weights (often expressed as “average molecular weight”).

After considering conflicting expert evidence regarding the claimed “molecular weight,” the district court found in favor of Teva, concluding that notwithstanding the competing possible models for molecular weight as testified by the experts in the case, the claim was sufficiently definite and the patent was thus valid. In doing so, the district court made a factual finding about how a skilled artisan would understand the way in which a curve created from chromatogram data reflects molecular weights. Based on the factual finding, the district court reached the legal conclusion that a figure from the patent at issue did not undermine Teva’s argument that molecular weight referred to one of the possible methods of calculation (peak average molecular weight).

On appeal, the Federal Circuit rejected Teva’s expert explanation as to how a person of skill in that art would expect the peaks of the molecular weight curves to shift. The Federal Circuit, applying a de novo review standard, then found the term “molecular weight” to be indefinite, overturned the district court’s claim construction and found the asserted claims indefinite.

The Federal Circuit concluded that because the claim term “molecular weight” could be calculated at least three different ways—peak average molecular weight (Mp), number average molecular weight (Mn) and weight average molecular weight (Mw)—resulting in three different values, it is not possible for a member of the public to determine whether potential infringing activity will fall within the scope of the claims, thus rendering asserted claims invalid for indefiniteness. In doing so, the Federal Circuit did not find that the district court’s contrary determination was “clearly erroneous.”

Teva filed a petition for certiorari, asking the Supreme Court to clarify the appropriate standard of review for claim construction decisions of federal district courts. The Supreme Court granted the petition (IP Update, Vol. 17, No. 4).

At the Supreme Court, Sandoz argued that claim construction consists mostly of construing a set of written documents that do not give rise to subsidiary factual disputes. Sandoz further argued that it is simpler for the appellate court to review the entirety of the district court’s claim construction de novo rather than to apply two separate standards.

The Supreme Court disagreed, noting that even if it was free to ignore the Federal Rules (Fed. R. of Civ. P. 54(a)(6)), it did not find the two separate standards argument convincing, noting the long history of courts of appeals routinely separating factual issues from legal issues.

Another argument presented related to a fear that “clear error” review would bring about less uniformity, an argument echoed in the dissent by Justice Thomas. According to the majority, neither the Federal Circuit nor Sandoz demonstrated, showed or explained why divergent claim construction stemming from divergent findings of fact (on subsidiary matters) should occur more than occasionally.

The Supreme Court thus held that to the extent a district court looks beyond the patent’s intrinsic evidence and consults extrinsic evidence in order to understand technical terminology or scientific background in the relevant art during the relevant time period, and makes a factual determination on those issues that it relies on in construing a claim term, its findings must be reviewed for clear error.

The Supreme Court provided an example wherein a district court resolved a dispute between experts and made a factual finding that, in general, a certain term of art had a particular meaning to a person of ordinary skill in the art at the time of the invention. In this example, the district court would then need to conduct a legal analysis: whether a skilled artisan would ascribe that same meaning to that term in the context of the specific patent claim under review. The appellate court can still review the district court’s ultimate construction of the claim de novo, but to overturn the judge’s resolution of an underlying factual dispute, the appellate court must find that the district court, in respect to those factual findings, has made a clear error in accordance with Fed. R. of Civ. P. 52(a)(6).

The Supreme Court also explained that in those cases where the district court reviews only intrinsic evidence (i.e., the patent claims, the specifications and the prosecution history), its determination will be characterized as a determination of law (consistent with Markman), and the Federal Circuit review of such a claim construction would be de novo.

The Way Forward

Going forward, when reviewing a district court’s resolution of subsidiary factual matters made in the course of its construction of a patent claim, the Federal Circuit must, with regard to a district court’s factual findings, apply a “clear error” standard of review. The clear error standard applies regardless of whether the factual finding played only a small role in a district court’s ultimate legal conclusion as to the meaning of a patent term, or was dispositive of the meaning of the term. In any event (i.e., regardless of whether the district court considered only intrinsic evidence or also extrinsic evidence), the ultimate question of claim construction will remain a legal question subject to de novo review.

The Dissent

Justice Thomas, joined by Justice Alito, wrote a lengthy dissent. The dissent argued that the majority’s references to factual findings generally involved an inquiry into the expert or person of skill in the art. That inquiry “more closely resembles determinations categorized as ‘conclusions of law’ than determinations categorized as ‘findings of fact.’” Thomas concluded his dissent noting his fear that “today’s decision will result in fewer claim construction decisions receiving precedential effect, thereby injecting uncertainty into the world of invention and innovation.”

Practice Note: To overturn a district court’s resolution of an underlying factual dispute relating to claim construction, the Federal Circuit must, with respect to those factual findings, find that the district court committed a clear error.