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Federal Circuit Review | February 2015

| Irfan Lateef

More Deference to District Courts in Claim Construction

In TEVA PHARMACEUTICALS USA, INC. v. SANDOZ, INC., No. 13-854, the Supreme Court held that factual findings underpinning claim construction rulings are reviewed for clear error. This decision overrules the long-standing precedent allowing the Federal Circuit to review all aspects of claim construction de novo and gives more deference to district courts. The Court did not believe the new standard would apply to many patent cases, reasoning judges rarely make factual findings on extrinsic evidence during claim construction.

When reviewing a district court’s resolution of subsidiary factual disputes during claim construction, the Federal Circuit now must apply a “clear error,” not a de novo, standard of review. First, the Supreme Court reasoned Federal Rule of Civil Procedure 52(a)(6) sets out a “clear command” against setting aside a district court’s factual findings unless they are clearly erroneous. Next, the Court reasoned Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996), does not create an exception to the ordinary rule governing appellate review of factual findings. Rather, the Markman decision recognized courts sometimes have to resolve subsidiary factual disputes during patent construction, such as when a claim uses technical words or uncommon phrases. Third, the Court disagreed it would be too difficult for the Federal Circuit to separate factual findings from legal questions. The Court reasoned the complexity of treating them alike outweighs the minimal risk of inconsistent results.

Next, the Supreme Court clarified how to apply the clear-error standard. When the district court reviews only evidence intrinsic to the patent, the judge’s determination is solely one of law and the Federal Circuit will review that construction de novo. But where the district court consults extrinsic evidence to understand the claim, and where those subsidiary facts are in dispute, courts will need to make subsidiary findings about the extrinsic evidence. While the ultimate construction of the claim is a legal conclusion that can be reviewed de novo, the underlying factual disputes must be reviewed for clear error. Here, the Federal Circuit erred by rejecting Teva’s expert’s explanation of how a claim term would be understood by a skilled artisan without first reviewing this factual finding for clear error.


Willful Infringement Finding Affirmed in Light of No New Evidence

In BARD PERIPHERAL VASCULAR, INC. v. W.L. GORE & ASSOCIATES, INC., Appeal No. 2014-1114, the Federal Circuit affirmed the district court’s judgment that Gore willfully infringed BPV’s blood-vessel graft patent and the district court’s punitive damages award.

This case stems from a 1974 patent application that issued as a patent over 28 years later. In 2003, Bard Peripheral Vascular (BPV) sued Gore for infringing the patent, and a jury found the patent valid and willfully infringed. Gore appealed. In 2012, a Federal Circuit panel affirmed the district court’s judgment of willful infringement. The Federal Circuit denied review en banc, but granted rehearing to revise the parts of the opinion addressing willfulness. The panel then remanded the willfulness issue to the district court, which again found willful infringement. Gore again appealed.

The Federal Circuit affirmed the willfulness judgment, holding Gore had not asserted reasonable grounds for invalidity or unenforceability and therefore had acted objectively recklessly. The Federal Circuit reviewed willfulness de novo, as a question of law. The majority found that, in light of the 40-year history of proceedings prior to this litigation, Gore was left with an “exceptionally circumscribed scope of reasonable defense.” To have a reasonable chance to prevail, Gore needed new evidence or new theories as to unenforceability, which it did not present. The majority affirmed the district court’s judgment of willful infringement and punitive damages award.

Judge Hughes concurred in the decision, but asserted the Federal Circuit should review its willfulness jurisprudence in light of recent Supreme Court cases. Judge Newman, in a strongly worded dissent, asserted the majority was too deferential to the district court and failed to review the question of willfulness objectively. The dissent also argued punitive damages are discretionary, even when willful infringement is found, and the equities in this case did not support the district court’s punitive damages award.


Examiner’s Claim Interpretation Unreasonable

In IN RE IMES, Appeal No. 2014-1206, the Federal Circuit reversed claim rejections based on an erroneous claim construction, holding that the broadest reasonable interpretation cannot focus solely on a literal interpretation of claim terms.

Applicant’s patent application was directed toward a device for communicating digital image and video information over a network. Claim 1 included, among other features, first and second wireless communication modules. Claim 34 included, among other features, a module to wirelessly communicate streaming video. The examiner rejected claim 1 by finding a prior-art removable memory card was “wireless” because “no wire is utilized.” The examiner also rejected claim 34 based on prior art that disclosed emailing a series of images. The Board affirmed.

On appeal, the Federal Circuit reversed. The Federal Circuit held the examiner’s construction of “wireless” was inconsistent with the broadest reasonable interpretation, especially in view of the specification which expressly defined “wireless” to refer to methods and systems for carrying waves through atmospheric space. A removable memory card did not carry a signal through atmospheric space. The Federal Circuit rejected an additional theory of anticipation because it was advanced by the PTO for the first time on appeal and would have constituted a new ground for rejection had it been considered by the Board. The Federal Circuit also reversed the examiner’s rejection of claim 34, determining that a series of emails with images, or even with video, is not the same as “streaming video,” which was properly construed in light of the specification as “continuous video transmission.”