Locke Lord QuickStudy: The More Things Change, the More They Stay the Same - SCOTUS Weighs In on Standard of Review for Claim Construction

Locke Lord LLP
January 26, 2015
On Tuesday, January 20, 2015, the Supreme Court issued its much-anticipated decision in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., No. 13-854 (2015), finding that the Federal Circuit must give greater deference to factual determinations made by trial judges in the course of reviewing  patent claim constructions based, at least in part, on extrinsic evidence and expert testimony.  The opinion, however, concludes that when the trial court’s determination amounts solely to a determination of law based on intrinsic evidence, (i.e., the patent’s claim language, specification and prosecution file) the Court of Appeals should continue to review that construction de novo, without any increased deference.  As a result, parties and the Federal Circuit will have to alter their approach to reviewing claim construction evidence in situations where the district court considers and relies upon extrinsic evidence to make subsidiary factual determinations.  

Previously Established Standard Of Review For Claim Construction
In 1995, the Federal Circuit ruled that claim construction presents solely a question of law, and thus, on appeal, claim construction should be reviewed de novo.  See Markman v. Westview Instruments, 52 F.3d 967 (Fed. Cir. 1995) (en banc).  In a 1998 en banc decision reaffirming this standard, the Federal Circuit clarified that even factual findings relating to claim construction should be reviewed de novo because claim construction is a purely legal question.  See Cybor Corp. v. FAS Technologies Inc., 138 F.3d 1448, 1454-56 (Fed. Cir. 1998) (en banc). 

The Federal Circuit’s claim construction standard, however, created tension with Fed. R. Civ. P. 52(a)(6) which requires that “[f]indings 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.”

Teva v. Sandoz – Background On The Dispute
The Teva case centers on a patent infringement dispute over Sandoz and other defendants’ applications for Food and Drug Administration (FDA) permission to market a generic version of Teva’s multiple sclerosis drug Copaxone.  One of the patent claim terms contested in the district court was “average molecular weight.”  Three potential meanings were proposed: “peak average molecular weight,” “weight average molecular weight,” and “number average molecular weight.”  See, e.g., Teva Pharm. USA, Inc. v. Sandoz, Inc., 723 F.3d 1363, 1367 (Fed. Cir. 2013).  The district court considered expert testimony regarding the scientific background of the relevant technology in determining how a person of ordinary skill would understand “average molecular weight” in the context of the specification.  See Teva at 15-16.  The district court repeatedly credited factual testimony from Teva’s expert concerning the meaning of the term to a person of ordinary skill in the art, and construed the term to mean “peak average molecular weight,” despite arguments made by Sandoz that the claim term was so ambiguous as to render the claim indefinite.

In July of 2013, the Federal Circuit reviewed the district court’s claim construction ruling using the previously established de novo review standard, and overturned the decision, finding the term “average molecular weight” rendered the claims indefinite.  See Teva at 3.  No deference was afforded to the district court’s findings of fact regarding the meaning of the term as it would have been understood by a person of ordinary skill.

Teva appealed the Federal Circuit’s ruling, and in March of 2014, the Supreme Court granted certiorari to consider whether a district court’s factual finding in support of its claim construction should be reviewed de novo, as the Federal Circuit required, or for clear error as required by Fed. R. Civ. P. 52(a)(6).  The Supreme Court found in Teva’s favor and vacated the Federal Circuit’s judgment, remanding the case for findings in view of the new standard set forth in their opinion.  See Teva at 16.

The New Standard Of Review For Claim Construction
The Supreme Court held that when a district court resolves subsidiary factual matters during the course of claim construction, the appellate court must apply a “clear error” standard of review to those factual matters.  The opinion goes on to explain that when a district judge’s claim construction ruling only examines evidence in the intrinsic record – i.e. the patent claims, specification and prosecution history – the judge’s determination will amount to a determination of law, and the court of appeals will review that claim construction de novo in its entirety.

Essentially, the Supreme Court’s opinion confirms that the ultimate interpretation of the claims remains a legal conclusion that the Federal Circuit can continue to review using a de novo standard.  The changing standard of review applies only to situations in which the district court examines extrinsic evidence, such as dictionaries or expert testimony concerning the scientific background or the meaning of a particular term of art during a particular time frame.  In those instances, any factual determinations made by the district court judge about this extrinsic evidence during the course of claim construction must now be reviewed on appeal with the “clearly erroneous” level of deference required by Fed. R. Civ. P. 52(a)(6), while the overall claim construction remains a question of law to be reviewed de novo.

As a result of the Supreme Court’s Teva decision, claim construction rulings will likely face increased appellate scrutiny – if only to determine whether any subsidiary factual matters were decided in the course of the trial court’s claim construction.  Likewise, parties will likely alter their claim construction strategies in district court to place greater emphasis on extrinsic evidence and expert testimony, when permitted, increasing the role of experts in the claim construction process.  Yet, by leaving the Federal Circuit’s de novo standard with respect to claim construction rulings based on intrinsic evidence and authority governing the weight of intrinsic evidence in the claim construction process intact, it remains to be seen whether the Supreme Court’s Teva decision will affect many claim construction appeals. 

For more information on the matters discussed in this Locke Lord QuickStudy, please contact the authors.