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Supreme Court ends Fed Circuit’s lone reign over claim construction (some of the time at least)

Jason Schwent January 22, 2015

Just like an older sibling forced to share with a new younger brother or sister, we are all likely familiar with authority stepping in and forcing us to share our previously unchecked power or benefits with others. That’s effectively what happened to the Federal Circuit in a Jan. 20 decision from the U.S. Supreme Court.  

Ever since Markman v. Westview Instruments, Inc., no determination of what patent claim language means has been final until the Court of Appeals for the Federal Circuit weighed in. The 1996 Markman decision from the U.S. Supreme Court held that the interpretation of patent claim language was a matter of law. As such, trial court determinations on the matter were given no deference and were reviewed de novo. Thus, until the Federal Circuit approved of a claim construction, the parties could not really rely on that construction.

Markman’s de novo review rule, while definitive, was not without problems. First and foremost, because claim construction was never settled until it was determined by the Federal Circuit, trial proceedings were often filled with uncertainty. Not only were the parties unsure of whether a court’s construction would be upheld on appeal, but district court judges increasingly felt that their time and resources were wasted on claim construction — the Federal Circuit would make the ultimate determination anyway. As a result, more and more cases sought interlocutory appeal on claim construction questions so as not to waste a jury’s time and effort hearing a case premised on a faulty claim construction.

This may have just changed. With the Supreme Court’s decision in Teva Pharm. USA, Inc., et al. v. Sandoz, Inc., et al., the court has ended the Federal Circuit’s exclusive reign over claim interpretation in patent litigation. The Supreme Court held that when the Federal Circuit reviews a district court’s resolution of subsidiary factual matters made in the course of its claim construction, the Federal Circuit can overturn those resolutions only if there is “clear error.” And just like that, district court proceedings suddenly became relevant in patent cases again.

The ruling

In Teva, the patent holder’s claims required the ingredients in a pharmaceutical compound to have a particular molecular weight. The alleged infringer argued that this claim limitation was indefinite because there were three different ways to calculate molecular weight — none of which were specified by the patent. The District Court heard testimony from experts from each side and concluded that a skilled artisan would have understood that the term “molecular weight” as used in the patent referred to only one of the three possible weighs of measuring. The Federal Circuit, on appeal, disagreed. The Federal Circuit found the term “molecular weight” indefinite and held the patent invalid. In doing so, the Federal Circuit reviewed the findings of the District Court, including the evaluation of expert testimony, under a de novo standard.

The Supreme Court began its analysis by looking to Fed. R. Civ. P. 52(a)(6). The Court noted that Rule 52(a)(6) set forth a “clear command” that court of appeals “‘must not…set aside’ a district court’s ‘[f]indings of fact’ unless they are clearly erroneous’” and that this standard applies to both ultimate as well as subsidiary facts. The Supreme Court next concluded that claim construction was akin to interpreting other written instruments like deeds, contracts, and tariffs and that, while the construction of those documents is a “question of law,” sometimes when those instruments use “technical words or phrases not commonly understood” there may be disputes of fact as to the meaning of those words. And that these the factual determinations underpinning the construction of terms in those instruments, as in patents, are findings of fact due proper deference under Rule 52(a)(6).

The Court thus held that when the district court reviews only evidence intrinsic to the patent, the judge’s determination will amount solely to a determination of law and the Federal Circuit will review de novo. But where the district court must go beyond the intrinsic record and review extrinsic evidence to understand “the background science or the meaning of a term in the relevant art during the relevant time period,” for instance, courts will necessarily make subsidiary factual findings about the extrinsic evidence. The Supreme Court held that these subsidiary findings must be reviewed for clear error on appeal. Thus, while claim construction is still a legal conclusion subject to de novo review, if there were underlying factual issues that were resolved in reaching that construction, the Federal Circuit must find clear error to overrule those findings.

And perhaps most interestingly for future cases, the fact that the underlying subsidiary factual question may, in some circumstances, be nearly dispositive of the legal one does not change this analysis. For example, in the Teva case, the patent holder presented evidence that those skilled in the art knew what was meant by “molecular weight” while the alleged infringer presented evidence that those in the art could not understand the term without additional information. In resolving that factual dispute, the district court concluded that the patent holder’s evidence was more credible. In so doing, the district court essentially determined that the term “molecular weight” was not indefinite and was thus valid — the ultimate question at issue. Even though this factual determination essentially answered the ultimate question of whether the claim at issue was indefinite and invalid (a question of law reviewed de novo on appeal), the Supreme Court held that it could only be overturned if it was clear error.

It remains to be seen how this ruling will affect claim construction proceedings and arguments at both the District Court and Federal Circuit level going forward.  But it is clear that the Federal Circuit has had some of its power taken away. And it is clear that claim construction rulings by district courts, at least in some circumstances, have been made more reliable.

Jason Schwent is a partner in Thompson Coburn’s Intellectual Property group. He is the editorial director of the Patent Billy Goat. You can find Jason on Google+Twitter, and reach him at (314) 552-6291 or jschwent@thompsoncoburn.com.