January 29, 2015 Practice Points

Supreme Court Announces New Standard for Review of Claim Construction Rulings

On January 20, 2015, the Supreme Court rejected the federal circuit's long standing practice of applying a de novo standard to all aspects of its review of claim construction rulings.

By Kevin Bovard

On January 20, 2015, the Supreme Court rejected the federal circuit's long standing practice of applying a de novo standard to all aspects of its review of claim construction rulings. In its much anticipated decision in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., the seven-justice majority ruled that when reviewing a district court's determination of subsidiary factual issues in the course of claim construction the federal circuit must apply a "clear error" standard. Legal determinations made in the course of claim construction, however, remain subject to de novo review.

The patent at issue claimed a drug active ingredient with a molecular weight in a certain range, but it did not specify how the molecular weight should be calculated. Because there are three different methods of calculating molecular weight that could apply and result in different values, defendant argued that the claim is fatally indefinite. When the district court construed this claim, it heard conflicting testimony from experts, ultimately crediting the patent owner's expert and finding that a person of ordinary skill in the art would understand the term "molecular weight" to refer to molecular weight calculated by one particular method. Based on this claim construction, the district court ruled that the claim was not indefinite.

On appeal, the federal circuit had reversed, finding that the term "molecular weight" was indefinite. In reaching this conclusion, the federal circuit reviewed all aspects of the district court's claim construction de novo. The Supreme Court granted certiorari in order to clarify the standard that the federal circuit should use to review claim construction rulings.

The Court began its analysis with the requirement of Fed. Rule Civ. Proc. 52(a)(6) that facts found by the trial judge should not be set aside "unless clearly erroneous" and saw no reason to depart from this standard when reviewing subsidiary factual determinations made in the course of claim construction. The Court specifically dismissed the notion that its opinion in Markman v. Westview Instruments, Inc., required a different result, stating that "when we held in Markman that the ultimate question of claim construction is for the judge and not the jury, we did not create an exception from the ordinary rule governing appellate review of factual matters."

This ruling does not mean, however, that claim construction decisions are now to be reviewed entirely under a clear error standard. To the contrary, the Court specifically noted that when a district court reviews only intrinsic evidence (i.e., the patent claims, specification, and prosecution history), its claim construction decision will amount solely to a ruling of law and will therefore be subject to de novo review. In cases where the district court needs to review extrinsic evidence to resolve factual disputes, such as the background science or the meaning of a relevant term of art, those determinations must be reviewed under the clear error standard, but the court's ultimate interpretation of the claim in light of the facts as found remains a conclusion of law subject to de novo review.

According to the dissent, the majority rule merely pushes the dispute to "the vexing distinction between questions of fact and questions of law," and the dissent predicts that this rule will spawn costly and largely meritless collateral litigation over that distinction. Relying on its view that the construction of patent claims is more like the construction of a statute than a contract or deed, the dissent would apply the de novo standard that applies to subsidiary determinations made during statutory construction.

This decision will no doubt result in more deference to some trial court claim construction rulings, but it will not necessarily apply to or be meaningful in every case. As the dissent emphasizes, the impact of the ruling will depend on whether the determination at issue is seen as a determination of fact or law. It remains to be seen whether this new formulation of the standard of review for claim construction rulings will result in a more appropriate division of labor between the federal circuit and the district courts, or merely create a new cottage industry in arguments over whether disputed rulings should be considered rulings of fact or law.

Keywords: litigation, intellectual property, de novo, Teva Pharmaceuticals, patent

Michael P. Padden is with Pearne & Gordon LLP in Chicago, Illinois.

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Kevin Bovard – January 29, 2015