By Kevin E. Noonan —

It has escaped almost no one's notice that the Supreme Court has spent the past decade or so being much more involved in patent law than in the preceding twenty years.  Evident but perhaps less discussed is the change in the nature of how U.S. patent law is now developed as a result.  With the institution of the Federal Circuit, the law developed gradually, relatively consistently and as an organic whole (insofar as an area of law subject to disputes between private parties can).  With the advent of more frequent Supreme Court scrutiny the law is now episodic, sporadic and much less predictable, with decisions reversing thirty years of established precedent being common and such decisions having a "gotcha!" effect on U.S. patent holders.  This is particularly true because of the manner with which the Court has exercised its supervisory authority over the Circuit Court, relying on its own precedents (even those from the pre-Industrial Age) to the denigration of the body of law that had flourished under the Federal Circuit in the intervening time since its establishment in 1982.

We are at another installment of this scenario when contemplating the Court's recent partial reversal of the Federal Circuit's precedent (most clearly enunciated in Cybor v. FAS Technologies) involving the standard of review of claim construction in the district courts.  The genesis of this jurisprudence is the Supreme Court itself, which decided in Markman v. Westview Instruments that claim construction was a question of law for a district court to decide, subject to de novo review by the Federal Circuit.  While not setting out detailed instructions on how this should be accomplished (a fact that permitted Justice Breyer in the majority opinion in Teva to disavow any complicity by the Court in the purported "error" by the Federal Circuit in how it reviewed the factual underpinnings of the legal questions involved), in that opinion and at that time the Court was content to permit the Circuit Court to apply its "special expertise" in determining the most jurisprudentially effective way of performing its appellate role.  As has been clear for some time, those days are over.

Now, in its Teva decision the Court has decided that appellate review of claim construction is limited by Federal Rule of Civil Procedure 52(a)(6), wherein Federal Circuit review of "subsidiary" facts "underpinning" claim construction must be reviewed with deference to the district court and overturned only where there is clear error in the court's decisions:

In cases where those subsidiary facts are in dispute, courts will need to make subsidiary factual findings about that ex­trinsic evidence.  These are the "evidentiary underpin­nings" of claim construction that we discussed in Markman, and this subsidiary factfinding must be reviewed for clear error on appeal.

This will arise when "the district court will need to look beyond the patent's intrinsic evidence and to consult extrinsic evidence in order to understand, for example, the background science or the meaning of a term in the rele­vant art during the relevant time period."  See, e.g., Seymour v. Osborne, 11 Wall. 516, 546 (1871).

Such deference is not absolute, however:  the opinion states that where the district court's construction is limited to the intrinsic evidence, i.e., the "plain meaning" of the claim language, the specification and ("when in evidence") the history of prosecution in the Patent and Trademark Office, then the appellate court's review can be plenary and give no deference to the district court's construction.  It is only when there is "extrinsic" evidence (which, up until now has been disfavored; Philips v. AWH) must the Federal Circuit tread lightly on what was decided below and adhere to the deferential standard of clear error.

To be sure there is a logic in the Court's opinion, because indeed when the district court hears expert testimony it engages its capabilities of assessing the credibility of the witnesses and its capacity to immerse itself in the technical minutiae attendant upon construing claims in the first place.  This capacity has been enhanced in some cases by some district courts with the practice of appointing "special masters," frequently academics in the appropriate technological field, to advise the court with regard to the frequently arcane subject matter before it in some patent cases.  This distinction may have been less pertinent in earlier iterations of the Federal Circuit, wherein some members have had (and in some instances still have) technical backgrounds, and even today seasoned members of the Court become comfortable with a wide swath of technology if only due to their constant immersion in it when deciding the cases that come before the Court.  But Justice Breyer is not wrong in recognizing that in some instances the exercise of the district court's experience at trial might make it more likely that its determination of the facts upon which it predicates its claim construction has a better provenance than can be had at the appellate level:

A district court judge who has presided over, and listened to, the entirety of a proceeding has a comparatively greater opportunity to gain that familiarity than an appeals court judge who must read a written transcript or perhaps just those portions to which the parties have referred.

Having drawn these judicial lines, the question for patent practitioners and judges, at all levels, is to decide how to implement them.  It is clear that the principal concern for those who advocated that de novo review was both necessary and appropriate was dismissed categorically in Justice Breyer's opinion:  that sometimes (and perhaps more often than that) the "factual" determination of what a claim term means will be dispositive of the legal question, the Court stating that "the ultimate question of construction will remain a legal question" and that "be­cause a factual finding may be nearly dispositive does not render the subsidiary question a legal one."  But there are other foreseeable consequences that implicate not only the frequency with which district court claim construction determinations will be overturned on appeal but the behavior of the parties (particularly accused infringers) as a result of the Court's Teva opinion.

For example, and particularly when considered in view of the Court's Nautilis v. Biosig decision last term, patentees can be expected to attempt to forestall the need for expert testimony regarding the meaning of claim terms by including express definitions of such terms, such as with glossaries.  Concerns about the meaning of claim terms (and that these could be manipulated by "bad actor" patentees) was embodied in the Court's Biosig decision and efforts by the White House to improve then quality of U.S. patents, and the Patent and Trademark Office instituted a pilot program last year to encourage patent applicants to include glossaries in applications submitted to Art Units in certain technological areas.  However, glossaries cannot be the entire answer (particularly for patents already in force) and they are also not panaceas even for applications filed after the Teva decision.  A good example of the limitations of setting out express definitions in a patent specification is the claim construction outcome in Promega v. Hoffman-LaRoche for the following claim:

Purified thermostable Thermus aquaticus DNA polymerase that migrates on a denaturing polyacrylamide gel faster than phosphorylase B and more slowly than does bovine serum albumin and has an estimated molecular weight of 86,000-90,000 daltons when compared with a phosphorylase B standard assigned a molecular weight of 92,500 daltons.  U.S. Patent No. 4,889,818

As might be imagined, the specification contained express definitions and examples for the terms "thermostable," "Thermus aquaticus,"  "DNA polymerase," "denaturing polyacrylamide gel," "phosphorylase B," "bovine serum albumin," and "molecular weight."  But what was not expressly defined was the term "purified" and upon construction of that term hinged the validity of the patent claim.  This is because there was a reference, a Ph.D. thesis (reminiscent of the factual situation in the In re Hall case) from the 1970's (half a decade before Kary Mullis invented the polymerase chain reaction that motivated Randi Saiki to isolate Taq polymerase for use in that method) wherein the DNA polymerase from Thermus aquaticus was studied in crude extracts which were, compared to their native state, "purified."  When the district court construed the term (not otherwise defined, expressly or inherently) to include preparations at this level of impurity as being "purified," the thesis was properly a reference and the validity of the claim fatally impacted.

The moral:  no patent practitioner can ever know what terms must be expressly defined, and the only alternative is to accept a "zone of uncertainty" regarding the scope or validity of patent claims or to burden every specification with every definition of every term that could possibly be relevant in future.  In short, both an impractical and impossible standard to hold either patents or patent practitioners to satisfy.

Additionally, the reality is that, expressly defined or not the claim terms will be construed by a district court judge generally without any scientific training or ability.  The lay judge will not be in any position to understand, from her own experience, the "ordinary and customary" meaning of claim terms in the claims she must construe, and even definitions may present a challenge if (the specification being directed to those of ordinary skill in the art) the very language used is foreign to her experience.  Dictionaries, treatises and expert witnesses may be appropriate and indeed should be encouraged under such circumstances as aids to the court in coming to a construction fair to both the patentee and the public.  (And perhaps sources such as dictionaries and treatises may be sufficiently outside the need for weighing of credibility as to be treated for evidentiary purposes as intrinsic evidence and thus fall outside the "clearly erroneous" standard of review, insofar as they can be understood as well by an appellate panel as by a district court judge.)  But a district court hearing from one or several experts will then engage in the activities that provided the Supreme Court with its rationale for invoking Rule 52(a)(6) as mandating deferential review before the Federal Circuit.  This circumstance is sure to provide motivation for at least one party to wish to avoid having the district court hear such testimony.

Another consequence of the Court's decision in the Teva case is that it will disproportionately affect different areas of technology.  Unlike the Federal Circuit practice of attempting to establish technology-independent legal principles, the Teva decision will disproportionately affect more technology-intensive arts, including biotechnology, pharmaceuticals and the high technology sector.  This is because in these arts it is even more likely that there will be "ordinary and customary" meaning of the terms that will be understood by the judge and the judge will need to rely more heavily on the type of extrinsic evidence the Supreme Court considers to be involved in determining the "subsidiary facts" entitled to deferential review by the Federal Circuit.

Finally, it is clear that the Teva decision will alter behavior of patentees and patent litigants, either by motivating applicants to attempt to immunize their claims from the effects of the decision with more extensive definitions or, in litigation, for the party that believes there is a technologically relevant term that can be defined to its benefit by expert testimony to make sure that the district court hears that testimony, whether proffered in an expert report or by live testimony.  Being litigants, once one party submits such a report or proffers such testimony the other party will be obligated to follow suit, again setting up precisely the situation where the district court's determination of "subsidiary facts" will raise the deference standard of appellate review mandated by Rule 52(a)(6).

The Court's decision in Teva is another example of the Supreme Court applying its view of patent law on the Federal Circuit, which is of course entirely within their purview in our Constitutional system.  The propriety of its wisdom in doing so, on the other hand, is much less certain, and once again introduces uncertainty in an area of the law that most (but not, seemingly, the Court itself) understand can least afford it.

By Kevin E. Noonan —

The recent history of Supreme Court patent cases has made the dissent a seemingly endangered species, the Court consistently deciding important patent cases by 9-0 votes and, at best, garnering concurring opinions for Justices to further set forth their views.  In the Teva v. Sandoz decision this trend came to an end, with a dissent by Justice Thomas joined by Justice Alito that challenged both the majority's decision regarding the standard of appellate review for claim construction and Justice Breyer's rationale for reaching this conclusion.

The majority had determined that claim construction was ultimately a question of law but one that could depend on "subsidiary" fact-finding by the district court.  According to Justice Breyer's majority opinion, Federal Rule of Civil Procedure 52(a)(6) mandates that an appellate court give substantial deference to district court fact finding and to contravene the lower court's factual determinations only if there was "clear error."  In addition, the Court majority asserted jurisprudential policy grounds for its decision, including that the district court was in the best position to assess (expert) witness credibility and to become familiar with the technology involved in the invention.

Justice Thomas disagreed, taking the position that while Justice Breyer and his brethren would have applied the law correctly if there were underlying facts to be determined, in the context of claim construction there are no "subsidiary facts" to be determined and that Teva and the Court misapplied the law in arriving at this conclusion.  Simply stated, in the Justice's opinion, Rule 52(a)(6) simply does not apply here.

Justice Thomas believes that the majority did not "engage the 'vexing . . . distinction between questions of fact and questions of law,'" citing Pullman-Standard v. Swint, 456 U. S. 273, 288 (1982), by going back to how the law made these distinctions when Rule 52 was adopted (1937).  He notes that the Rules are based on the common law (citing Justice Scalia's concurring and dissenting opinion in Tome v. United States, 513 U. S. 150, 168 (1995)) but finds the pre-1937 law is "inconclusive" with regard to the fact/law dichotomy in claim construction (considering of course only the Court's jurisprudence in the matter).  Citing Coupe v. Royer, 155 U. S. 565, 576 (1895); Loom Co. v. Higgins, 105 U. S. 580, 584–587 (1882); Tilghman v. Proctor, 102 U. S. 707, 729–731 (1881); and Winans v. Denmead, 15 How. 330, 339 (1854), the dissent notes that the Court gave "no apparent deference to the District Courts' findings" based on factual considerations but also did not find that any of these decisions were based on a disagreement over such "subsidiary [factual] evidence."

In the absence of determinative (or even illustrative) case law in his survey of the prior law, Justice Thomas discerns that the practice has been to treat district court determinations as "facts" when they are constrained by the issues between the parties, and for district court decisions to be more akin to legal conclusions "the more they define rules applicable beyond the parties' dispute," citing Miller v. Fenton, 474 U. S. 104, 116 (1985); Bose Corp. v. Consumers Union of United States, Inc., 466 U. S. 485 (1984); and Baumgartner v. United States, 322 U. S. 665, 671 (1944).  If we are to draw a line between these two categories of district court decisions, he believes that claim construction "fall[s] on the law side of the dividing line."

As the Court did in deciding Markman v Westview Instruments, 517 U. S. 370 (1996) two decades ago, Justice Thomas compared how patent claims are construed with how courts construe other written instruments (specifically, statutes, deeds and contracts), and notes that there is no disagreement on the Court that construing written instruments is a matter of law for courts.  In Justice Thomas's view, the closest analogy to patent claim construction is statutory construction, which while assessed for "legislative intent" remains a legal analysis (because the Court cannot be concerned about any particular Member's reasons or motivations to vote for the bill).  The Justice also sees similarities in federal land grants (property rights in Federal land) where courts are allowed to consider the historical facts in order to ascertain how to construe the statute without deference.

The reason that statutes are construed as a matter of law not dependent on legislative "facts," according to the dissent, is the scope of a statute, which extends to the public as a whole, and thus "subsidiary evidentiary findings shape legal rules that apply far beyond the boundaries of the dispute involved."  Citing The Binghamton Bridge, 3 Wall. 51, 75 (1866), Justice Thomas asserts that the public's interest has "consciously shaped" the Court's rules of statutory construction and that the public interest in patents (and the affect of claim construction on that public interest) is the decisive similarity that mandates de novo appellate review.

The dissent then contrasts review under the de novo statutory construction standard with how deeds and contracts are construed, being private matters where subsidiary facts can be at issue — based on the need to understand the "intention of the [private] parties," citing Reed v. Proprietors of Locks and Canals on Merrimac River, 8 How. 274, 288– 289 (1850).  In those circumstances intent is a factual matter because, according to the Justice, it depends on "real intentions [] embodied in an actual meeting of minds or an actual conveyance of a physical parcel of land — that have an existence outside the written instrument and that the instrument merely rec­ords" (and even these findings are not always factual).  Accordingly:

The question we must ask, then, is whether the subsidi­ary findings underlying claim construction more closely resemble the subsidiary findings underlying the construc­tion of statutes or those underlying the construction of contracts and deeds that are treated as findings of fact.  This, in turn, depends on whether patent claims are more like statutes or more like contracts and deeds.

In answering this question the dissent provides a brief history of patents as "an official document reflecting a grant by a sovereign that is made public, or 'patent,'" Marvin M. Brandt Revocable Trust v. United States, 572 U. S. ___, ___ (2014), and explains that originally patents were royal prerogatives, limited ultimately in England by the Statute of Monopolies in 1624.  While the patent grant is implemented much differently in the U.S. — being a power of Congress enumerated in Article I of the Constitution — a patent remains a grant from the sovereign and thus implicates concerns for the public interest inherent in any such grant.

Looking at patents another way, the dissent notes that patents are ultimately regulatory in nature, by restraining others from "manufacturing, using, selling, offering to sell or importing the patented article,' citing Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U. S. 502, 510 (1917).  Because the exclusionary patent right is defined by the claims, any "subsidiary findings" district courts make in construing claims "contribute to rules that limit conduct by the public at large."  And in this way patents resemble statutes, according to the dissent, being "governmental dispositions" that "provide rules that bind the public at large."  The patentees "intentions" (so relevant to construing deeds and contracts) regarding the scope of her invention are not relevant to this aspect of patenting at all, except "to the extent that they are expressed in the public record," citing Keystone Bridge Co. v. Phoenix Iron Co., 95 U. S. 274, 279 (1877), and Goodyear Dental Vulcanite Co. v. Davis, 102 U. S. 222, 227 (1880).  Because of this public effect, having a circuit court perform de novo review of a district court's claim construction "helps to ensure that the construction is not skewed by the specific evidence presented in a given case" and this consistency inures to the public benefit not counterbalanced by any private interest on the part of the patentee.

Continuing in this line of reasoning, Justice Thomas notes that contracts and deeds are less like patents and statutes due to their private nature that does not implicate the public interest in the same way.  Unlike a contract, for example, "[a] patent is perhaps better characterized as a reward for feats already accom­plished — that is, innovation and public disclosure — than as a mutual exchange of executory promises," citing Motion Picture Patents Co., supra, at 513; Seymour v. Osborne, 11 Wall. 516, 533–534 (1871); Grant v. Raymond, 6 Pet. 218, 242 (1832); and Markman v. Westview Instruments, Inc., 52 F. 3d 967, 985, n. 14 (CA Fed. 1995), aff 'd 517 U. S. 370 (1996).  And, insofar as patents resemble deeds ("describing rights that the owner holds against the world," citing Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U. S. 141, 162 (1989)), they should be analogized to land grants rather than private conveyances, as being "sovereign dispositions," citing Leo Sheep Co. v. United States, 440 U. S. 668, 680–682 (1979); Missouri, K. & T. R. Co. v. Kansas Pacific R. Co., 97 U. S. 491, 497 (1878); and Leavenworth, L. & G. R. Co. v. United States, 92 U. S. 733, 740–741 (1876).

The dissent also maintains that the nature of the "subsidiary facts" involved in patents versus contract and deeds "differ substantially."  With patents, any such "subsidiary facts" are not "historical facts" ("such as what the parties agreed to do or how a given parcel of land is situated"), illustrating this point by stating that how a skilled artisan would understand a term of art is a "legal fiction" used to construe claims and "[having] no existence independent of the claim construction process."  Unlike parties to a contract, according to the Justice, the difference between contracts and patent is that there is no "skilled artisan" — she is a hypothetical construct not an "omniscient factfinder":

Neither is the skilled artisan's understanding a proxy for some external fact that, could the court know it, would supply the meaning of a patent claim.  Whatever the scope of the inventor's right under the patent before the introduction of claims, the law has limited that right to the claims as written in the patent [citing Markman].

Accordingly:

Because the skilled artisan inquiry in claim construction more closely resembles determinations categorized as "conclusions of law" than determinations categorized as "findings of fact," I would hold that it falls outside the scope of Rule 52(a)(6) and is subject to de novo review.

Regarding the majority opinion, Justice Thomas cites the majority's reliance on Great Northern R. Co. v. Merchants Elevator Co., 259 U. S. 285, 292 (1922), which involved a determination on the scope of a railway tariff.  There, the factual question was referred to the Interstate Commerce Commission, the administrative agency that set the tariff.  This was not a case involving the proper judicial actor to best decide the "subsidiary facts" involved as between the district court and an appellate court; "the distinction the Court drew pertains more to an emerging rule of administrative deference than to a definitive classification of judicial determinations."

The dissent then summarizes the legal principle Justice Thomas would apply, that "the nature of the legal instrument dictates our treatment of subsidiary findings."  "[A]lthough terms in statutes and regulations frequently have technical meanings unknown outside the specialized community they are meant to regulate, we treat the inquiry into those meanings as involving only conclusions of law,' citing Norfolk & Western R. Co. v. Hiles, 516 U. S. 400, 401–407, 413–414 (1996), and Aluminum Co. of America v. Central Lincoln Peoples' Util. Dist., 467 U. S. 380, 390 (1984).  The dissent illustrates the implications (and limitations) of the majority's reasoning by stating that "[i]f claim construc­tion involves subsidiary questions of technical meaning or usage that are indistinguishable from those questions submitted to the jury in the contract context, [] then one might wonder why such issues are not submitted to the jury in the patent and statute con­texts, too."

Justice Thomas also addressed the majority's analogizing of the fact/law dichotomy in claim construction with how the Court has analyzed obviousness:  "[b]ut this analogy is even further off the mark because obviousness turns on historical facts about the circum­stances of the invention, rather than on the construction of a written instrument."

Having discussed the legal bases for his dissent, the Justice turned to policy considerations, the most germane of which is that appellate courts are better situated to promote uniformity in the law while district courts are better suited to assessing testimony and evidence (witness credibility, etc.):

To the extent that the construction of a patent claim turns on testimony of expert witnesses, especially live testimony, there is no denying that it falls within the bounds of a district court's special competence.   [But, t]he arguments favoring allocation to the district court, dimin­ished by the majority's own prediction [that this will rarely make a difference], are outweighed by the remaining rule-of-law and uniformity considerations that factored into our allocation in Markman.

These principles, for Justice Thomas, are at the root of what judicial review means:  "when a judge construes a patent, he is, in a very real sense, 'say[ing] what the law is,'" citing Marbury v. Madison, 1 Cranch 137, 177 (1803), "not just for the parties to the dispute, but for the public at large."  Deferring to factual determinations made by a district court in the context of a specific dispute between particular parties implicate the policy consideration that the specific facts of each case can influence the scope of the patent grant against the public.  And this can harm the uniformity (in patent law, and in the construction given to claims in particular patents) that de novo appellate review provides:

"Uniformity is a critical fea­ture of our patent system because '[t]he limits of a patent must be known for the protection of the patentee, the encouragement of the inventive genius of others and the assurance that the subject of the patent will be dedicated ultimately to the public.'" Markman, 517 U. S., at 390.

"If the boundaries of the patent right could shift from case to case, then the result would be "a 'zone of uncertainty which enterprise and experimentation may enter only at the risk of infringement,'" citing Markman and Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U. S. 722, 731 (2002). So damaging is this unpredictability that we identified uniformity as an 'independent ' justify­ing our allocation of claim construction to the court" in Markman, supra, at 390.

These considerations lead to the following predictions for the consequences of the majority's decision:

The majority's rule provides litigants who prevail in district court a significant opportunity and incentive to take advantage of this uncertainty by arguing on appeal that the district court's claim construction in­volved subsidiary findings of fact.  At best, today's holding will spawn costly — and, if the majority is correct about the frequency with which these evidentiary determinations make a difference, meritless — collateral litigation over the line between law and fact.

But I fear worse:  that today's decision will result in fewer claim construction decisions receiving precedential effect, thereby injecting uncertainty into the world of invention and innovation.

These and other predictions regarding likely consequences of the majority's opinion will appear in future posts.

Is Deference in Claim Construction Review a Good Thing for the Patent System?

By Andrew Williams —

As we reported earlier today, the Supreme Court held in a 7-2 decision authored by Justice Breyer that an "appellate court must apply a 'clear error,' not de novo, standard of review" to the evidentiary underpinnings of a district court's claim construction determination.  Teva Pharmaceuticals USA, Inc. v. Sandoz Inc., No. 13-854, slip op. at 1-2 (U.S. Jan. 20, 2015).  The Court grounded its decision in Federal Rule of Civil Procedure 52(a)(6), which provides that in matters tried to district court, the court's "[f]indings of fact . . . must not be set aside unless clearly erroneous."  But if the answer was that straightforward, why had the Federal Circuit been applying de novo review to all claim construction determinations since the Cybor Corp decision in 1998?  The answer, as Justice Thomas writing in dissent phrased it, lies in whether claim construction really involves findings of fact.

In arriving at the conclusion that the appropriate review standard should de novo, the Federal Circuit's Cybor Corp. opinion relied heavily on the Supreme Court's decision in Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996) (Markman II).  That opinion did repeatedly note the factual components involved in claim construction, referring to it as a "mongrel practice" and observing that the issues can often fall "between a pristine legal standard and a simple historical fact . . . ."  But, the Supreme Court in Markman II did find "sufficient reason to treat construction of terms of art like many other responsibilities that we cede to a judge in the normal course of trial, notwithstanding its evidentiary underpinnings."  Id. at 390.  In addition, the Markman II Court stressed the public policy of uniformity, because "treating interpretive issues as purely legal will promote (though it will not guarantee) interjurisdictional certainty through the application of stare decisis on those questions not yet subject to interjurisdictional uniformity under the authority of the single appeals court."  Id. at 391.  Finally, and perhaps most importantly, the Federal Circuit emphasized the fact that when the Supreme Court affirmed its Markman I decision, it affirmed a decision that used the de novo standard of review.

Nevertheless, the Court today made clear that Markman II did not create, nor argue for, "an exception to Rule 52(a)."  Instead, Markman II stood for the proposition that, much like the proper construction of a document is a question of law, the proper construction of patent should be a question of law, which is a task for the judge.  And, as the Court explained "sometimes, when a written instrument uses 'technical words or phrases not commonly understood,' those words may give rise to a factual dispute" (citations omitted).  Therefore, the Court continued, "Markman no more creates an exception to Rule 52(a) than would holding that judges, not juries, determine equitable claims, such as requests for injunctions."

However, for Rule 52(a) to apply, claim construction must involve findings of fact.  Justice Thomas, in dissent, concluded that it does not.  We will address the substance of the dissent's argument in a future post.

The Supreme Court also addressed the issue of uniformity, perhaps in response to a criticism raised by the dissent.  As Justice Thomas pointed out, "[t]he need for uniformity . . . weighs heavily in favor of de novo review of subsidiary evidentiary determinations."  This is because, with a deferential standard, there is a risk that different jurisdictions construing the same claim term might result in divergent constructions.  The majority dismissed this notion, however, because "[a]fter all, the Federal Circuit will continue to review de novo the district court's ultimate interpretation of the patent claims."  But the Court cannot be suggesting that if differing jurisdictions reach different claim constructions because of different findings of subsidiary fact, the appellate court can simply ignore those findings without identifying clear error.  Moreover, issue preclusion will only be available in limited circumstances.  Ultimately, in this case, the majority ducked the tough questions by concluding that "subsidiary factfinding is unlikely to loom large in the universe of litigated claim construction."

But is this conclusion true?  Or, more importantly, will this conclusion continue to be true?  First of all, as the dissent points out, the notion of issue preclusion as a safeguard was already rejected by this Court — in the Markman II decision.  More importantly, if litigants were not necessarily incentivized to raise every possible subsidiary factual issue before, they certainly are now.  The result is that the cost and complexity of claim construction is likely to increase, because all parties will now be encouraged to introduce extrinsic evidence, especially expert testimony, in an attempt to maximize deference to a favorable decision.  It is also easy to imagine that trial courts will end up relying on this "subsidiary factfinding" to insulate their decisions from deferential review.

Another unfortunate consequence of this decision is that it could embolden patent assertion entities seeking to abuse the patent system with overly broad and vaguely worded patent claims — the so-called "patent trolls."  District courts will be more likely to allow additional discovery related to claim construction, which will only serve to increase the cost of patent litigation.  Moreover, under deferential review, district courts may delay claim construction until the end of a case, virtually eliminating early informed settlement discussions.  As the dissent put it, "today's decision will result in few claim construction decisions receiving precedential effect, thereby injecting uncertainty into the world of invention and innovation."  It is this uncertainty that may encourage accused infringers to settle earlier, thereby playing right into the strategy of the prototypic patent troll.

Teva Pharmaceuticals USA, Inc. v. Sandoz Inc. (2015)
Opinion of the Court by Justice Breyer, joined by Chief Justice Roberts and Justices Scalia, Kennedy, Ginsburg, Sotomayor, and Kagan; dissenting opinion by Justice Thomas, joined by Justice Alito

By Andrew Williams —

In a 7-2 decision authored by Justice Breyer, the Supreme Court held today that an "appellate court must apply a 'clear error,' not de novo, standard of review" to the evidentiary underpinnings of a district court's claim construction determination.  Teva Pharmaceuticals USA, Inc. v. Sandoz Inc., No. 13-854, slip op. at 1-2 (U.S. Jan. 20, 2015).  But what are those evidentiary underpinnings?  Apparently everyone was in agreement that "when the district court reviews only evidence intrinsic to the patent (the patent claims and specification, along with the patent's prosecution history), the judge's determination will amount solely to a determination of law, and the Court of Appeals will review that construction de novo."  Id. at 11-12.  In contrast, when a district court consults extrinsic evidence, it "will need to make subsidiary factual findings about that extrinsic evidence."  Id. at 12.  It is this fact finding that is entitled to deference under Federal Rule of Civil Procedure 52(a)(6).  Nevertheless, the Court was clear that "the ultimate question of construction will remain a legal question."  Id. at 13.  Therefore, "[f]or example, if a district court resolves a dispute between experts and makes a factual finding that, in general, a certain term of art had a particular meaning to a person of ordinary skill in the art at the time of the invention, the district court must then conduct a legal analysis: whether a skilled artisan would ascribe that same meaning to that term in the context of the specific patent claim under review."  Id. at 12.  Using the present case as illustrative, when the District Court credited the explanation of Teva's expert regarding how a skilled artisan would use a patent figure to determine what a potentially ambiguous claim term meant ("molecular weight"), it resolved a subsidiary factual issue.  And because the Federal Circuit did not afford any deference to this finding on review, the appellate court's judgment was vacated, and the case was remanded for further processing consistent with the Supreme Court's opinion.

Justice Thomas, joined by Justice Alito, dissented.  He framed the question as "whether claim construction involves findings of fact," and would have held that it does not.  Teva Pharm., No. 13-854, slip op. at 1 (U.S. Jan. 20, 2015) (Thomas, J., dissenting).  Patent claim construction is most closely analogized to statutory interpretation, according to the dissent, "[b]ecause they are governmental dispositions and provide rules that bind the public at large . . . ."  Id. at 7.  The dissent warned that "today's decision will result in fewer claim construction decisions receiving precedential effect, thereby injecting uncertainty into the world of invention and innovation."  Id. at 15.  Interestingly, this was a concern expressed by several companies that will be directly impacted by this decision.  Only three amicus briefs were submitted by operating companies (representing 20 companies in total), but each of these urged maintaining the de novo standard of review because of the impact any change will have on their respective businesses.  See "Teva v. Sandoz — Is Deferential Review a Boon for Patent Trolls?"

Patent Docs will provide additional analysis of this opinion in subsequent posts.