Supreme Court: Facts Underlying Claim Construction Must Be Reviewed for Clear Error | Practical Law

Supreme Court: Facts Underlying Claim Construction Must Be Reviewed for Clear Error | Practical Law

In Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., the US Supreme Court rejected the US Court of Appeals for the Federal Circuit's de novo standard of review for factual matters underlying claim construction. The Supreme Court held that when reviewing a district court's claim construction decision, the Federal Circuit must apply a clear error standard of review to any underlying factual findings.

Supreme Court: Facts Underlying Claim Construction Must Be Reviewed for Clear Error

Practical Law Legal Update 8-596-6105 (Approx. 4 pages)

Supreme Court: Facts Underlying Claim Construction Must Be Reviewed for Clear Error

by Practical Law Intellectual Property & Technology
Published on 20 Jan 2015 • USA (National/Federal)
In Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., the US Supreme Court rejected the US Court of Appeals for the Federal Circuit's de novo standard of review for factual matters underlying claim construction. The Supreme Court held that when reviewing a district court's claim construction decision, the Federal Circuit must apply a clear error standard of review to any underlying factual findings.
On January 20, 2015, in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., the US Supreme Court issued an opinion vacating the US Court of Appeals for the Federal Circuit's judgment that the asserted patent was invalid for indefiniteness (No. 13-854, (S. Ct. Jan. 20, 2015)). The Supreme Court held that when reviewing a district court's claim construction decision, the Federal Circuit must review any underlying factual findings for clear error.

Background

Teva Pharmaceuticals USA, Inc. (Teva) owns a patent covering a manufacturing method for a drug used to treat multiple sclerosis, which is sold under the name Copaxone. Copaxone's active ingredient is called copolymer-1 and the asserted claims require the copolymer-1 to have a molecular weight of 5 to 9 kilodaltons.
After Sandoz, Inc. attempted to market a generic version of Copaxone, Teva sued Sandoz for patent infringement. Sandoz argued that the patent was invalid because the claimed molecular weight of 5 to 9 kilodaltons was indefinite for failing to specify the method of calculating the claimed weight. The district court took evidence from the parties' experts and construed the disputed term, concluding that the claim was not indefinite.
On appeal, the Federal Circuit reversed the district court's decision, finding the claim indefinite and the patent invalid. In reaching its conclusion, the Federal Circuit reviewed de novo all aspects of the district court's claim construction opinion, including all of the underlying factual determinations. Teva filed a petition for certiorari to the Supreme Court.

Outcome

In a 7-2 opinion, the Supreme Court vacated the Federal Circuit's decision, holding that the Federal Circuit must apply a clear error standard of review when reviewing a district court's factual findings made during claim construction.

Majority Opinion

In reaching its holding, the Supreme Court explained that:
  • Federal Rule of Civil Procedure (FRCP) 52(a) provides a clear command that an appeals court must not set aside a district court's findings of fact unless they are clearly erroneous. The Supreme Court further explained that FRCP 52(a) applies to both subsidiary and ultimate facts and that an appeals court therefore must apply this same standard when reviewing a district court's resolution of subsidiary factual matters made during claim construction.
  • The Supreme Court's decision in Markman v. Westview Instruments, Inc. did not imply or create an exception to FRCP 52(a) for underlying factual disputes (517 U.S. 370 (1996)). The court emphasized that, in Markman, it held that the ultimate question of claim construction is a question of law for the court but recognized that claim construction involves evidentiary underpinnings that may require the court to resolve factual disputes.
  • Precedent supports the clear error standard of review. Specifically, the court:
    • cited to the US Court of Appeals for the Second Circuit's decision in Harries v. Air King Products, Co. prior to the creation of the Federal Circuit, which applied a clear error standard to facts underlying claim construction (183 F.2d 158, 164 (2d Cir. 1950)); and
    • compared factual determinations in claim construction to the subsidiary factual determinations in an obviousness analysis.
  • Practical considerations support the clear error standard of review. In particular, the court explained that a district court is better equipped than an appeals court to become familiar with and understand the specific scientific problems and principles that arise in patent cases, and particularly those that arise during claim construction.
The Supreme Court also clarified how the standard of review should be applied. Specifically, the court explained that:
  • When the district court reviews only intrinsic evidence, its claim construction determination will be solely a question of law that the Federal Circuit should review de novo.
  • When the district court resolves factual disputes during claim construction, the Federal Circuit may only overturn the district court's factual findings if there is a clear error. The Federal Circuit can still review the ultimate claim construction de novo.
The Supreme Court therefore vacated the Federal Circuit's judgment and remanded the case to allow the Federal Circuit to consider whether any of the district court's factual findings were clearly erroneous.

Dissenting Opinion (Thomas, Alito)

Justice Thomas, together with Justice Alito, issued a dissenting opinion, concluding that the Federal Circuit properly applied a de novo standard of review. The dissent argued that claim construction does not involve findings of fact and that, as a result, FRCP 52(a)(6) does not apply. The dissent also argued that the factual issues that arise in claim construction are similar to the fact-finding that underlies judicial interpretation of statutes.

Practical Implications

The Supreme Court's opinion requires the Federal Circuit to give more deference to a district court's factual determinations in the claim construction context. In cases where there are factual disputes that the district court must resolve before construing the claims, it may now be more difficult to overturn the decision on appeal. Although the Federal Circuit will still review a district court's ultimate claim construction under the de novo standard of review, it will be more difficult for a challenging party to establish that any underlying factual findings are clearly erroneous. Parties challenging claim construction should be prepared, therefore, to explain why a construction is incorrect as a matter of law in light of the court's factual findings.