Today, in Teva Pharmaceutical USA, Inc., et al. v. Sandoz, Inc. et al., the Supreme Court issued a long-awaited opinion that changes the standard of appellate review for a trial court's decision regarding construction of a patent claim. Since at least 1996, the U.S. Court of Appeals for the Federal Circuit has reviewed such claim construction decisions de novo, giving no deference to the trial court's ruling. The Supreme Court today ruled that 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 apply a "clear error," rather than a de novo, standard of review.
The Court relied on Federal Rule of Civil Procedure 52(a)(6) for the clear error standard and held that its prior decision in Markman v. Westview Instruments, Inc. (1996), did not create an exception to the clear error rule. There, the Court held that the ultimate question of claim construction is for the judge, not the jury, but it did not thereby create an exception from the ordinary rule governing appellate review of factual matters. Instead, the Court pointed out that a judge, in construing a patent claim, is engaged in much the same task as the judge would be in construing other written instruments. Construction of written instruments typically presents a question of law when the words in those instruments are given their ordinary meaning. But when technical terms that are not commonly understood are used, a factual dispute may arise. And, in that case, extrinsic evidence may be used to determine the meanings of such terms.
The Court explained how trial courts should apply the new rule. When the district court reviews only evidence intrinsic to the patent, the court's determination is solely a determination of law and the court of appeals will review that construction de novo. But, when the district court consults extrinsic evidence in order to understand the science or the meaning of a term in the relevant art during the applicable time period, and when those subsidiary facts are in dispute, courts must make factual findings about the extrinsic evidence. After deciding the factual dispute, the trial court must then interpret the patent claim in light of the facts as the court has found them. The ultimate construction of the claim is a legal conclusion that the appellate court can review de novo. But to overturn the judge's resolution of an underlying factual dispute, the appellate court must find that the judge, in respect to those factual findings, has made a clear error.
The Supreme Court's decision has broad potential implications for claim construction decisions that have been issued by trial courts but that remain pending, either on appeal or awaiting further proceedings at the trial court level. There is a high likelihood that trial courts will be faced with motions to reconsider those prior rulings in light of the new standard. Additionally, the Court's ruling makes it substantially less likely that a district court's claim construction order will be reversed by the Federal Circuit when the district court has consulted extrinsic evidence to resolve a subsidiary factual issue. This will likely raise the stakes for the claim construction hearing, a process that is already critical in most patent cases, and encourage litigants to submit more extrinsic evidence to the trial court.
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The Intellectual Property Litigation practice at Polsinelli will continue to monitor this case and its ongoing legal implications. For how this ruling might impact your business or any other questions you may have, please contact the authors or your Polsinelli attorney.