Supreme Court Decision: Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc.
Greater Deference for Review of Factual Findings Underpinning Claim Construction
Reversing a long line of Federal Circuit precedents, the Supreme Court held that claim construction in patent cases will sometimes involve findings of fact by the District Court, and these findings of fact may be reviewed by the Federal Circuit only for clear error. The ultimate legal construction of claim terms is still reviewed de novo, without deference on appeal.
Why This Is Important
Claim construction is a critical stage in almost every patent case. In the past, the Federal Circuit, which hears all appeals in patent cases, has given no deference to any aspect of a District Court’s claim construction ruling. Now, the Federal Circuit must defer to the District Court’s resolution of the conflicting opinions of expert witnesses and other factual findings made by the District Court based on evidence outside the four corners of the patent and its prosecution history. This may reduce the chances of a District Court’s claim construction being overturned on appeal and thus potentially increases the importance of claim construction proceedings in the District Court.
Summary of the Case
The basic dispute concerned the meaning of the words “molecular weight” in a patent owned by Teva Pharmaceuticals covering a manufacturing method for the multiple sclerosis drug COPAXONE. Sandoz argued that the claim was indefinite because it did not state which of three possible methods of calculation was used to determine that weight. Both sides presented expert testimony. The District Court accepted Teva’s expert’s explanation and concluded that the claim was sufficiently definite. On appeal, the Federal Circuit reviewed de novo all aspects of the District Court’s claim construction, including the District Court’s determination of subsidiary facts. The Federal Circuit did not accept Teva’s expert’s explanation and found the claim invalid.
The Supreme Court held that when reviewing a district court’s resolution of subsidiary factual matters made in the course of claim construction, the Federal Circuit must apply a “clear error,” not a de novo, standard of review. First, the Court reasoned that Federal Rule of Civil Procedure 52(a)(6) sets out a “clear command” that a court of appeals not set aside a district court’s “[f]indings of fact” unless they are “clearly erroneous.” Next, the Court reasoned that Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996), did not create an exception from the ordinary rule governing appellate review of factual matters. In particular, the Markman court recognized that courts sometimes must resolve subsidiary factual disputes during patent construction, such as where a claim uses technical words or phrases not commonly understood. Third, the Court disagreed with Sandoz’s policy argument that it would be too difficult for the Federal Circuit to separate “factual” from “legal” questions, thus leading to inconsistent findings of fact on subsidiary matters. The Court reasoned that the risk of inconsistent findings would be minimal. Moreover, treating factual findings and legal conclusions alike would also lead to difficulties.
Lastly, the Supreme Court set forth the application of the clear error standard. When the district court reviews only evidence intrinsic to the patent, the judge’s determination is solely a determination of law and the court of appeals will review that construction de novo. However, where the district court needs to consult extrinsic evidence in order 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 dispute must be reviewed for clear error. Here, the Federal Circuit erred by rejecting Teva’s expert’s explanation of how the term “molecular weight” would be understood by a skilled artisan without first reviewing this factual finding for clear error.