By Austen Paulsen for BiolawToday.org
In a decision answering the long-vexing question of what standard of review appellate courts should apply when reviewing a lower court’s construction of patent claims, the United States Supreme Court held that appellate courts must apply a clear error standard of review to a lower court’s factual findings and a de novo standard of review to a lower court’s final determination of construction of the patent claims.
The decision in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc. is a marked change in the standard of review applied by appellate courts. In Markman v. Westview Instruments, the U.S. Supreme Court found claim construction to be a “mongrel practice” and is an “issue of mixed fact and law.” The Court found the history of claim construction and precedent to be unclear as to whether a judge or jury should define terms of art. Based on functional considerations, the Court found that judges are better suited than juries to define the terms of a patent’s claims. Following Markman, as evidenced by the Federal Circuit’s opinion in Teva v. Sandoz, the Federal Circuit has reviewed all facets of a lower court’s claim construction de novo, including the lower court’s factual findings.
Justice Breyer, writing for the majority of the U.S. Supreme Court in Teva, relied on three arguments in holding that a clearly erroneous standard of review should be applied to the factual issues underlying the construction of patent claims. First, according to Federal Rule of Civil Procedure 52(a)(6), appellate courts must not set aside the factual findings of a lower court, unless those factual findings are clearly erroneous. Breyer analogized patent claim construction to the construction of “other written instruments such as deeds, contracts, or tariffs” in which factual disputes as to the meanings of technical words or phrases must be made prior to construction and found that “this factual determination, like all other factual determinations, must be reviewed for clear error.” Second, prior to Markman, the Second Circuit held that determination of how a term is understood in the relevant field is a question of fact and the trial court’s interpretation of that term should be controlling unless it is clearly erroneous. Finally, district court judges are present for testimony regarding the meaning of terms of art rather than merely reading a written transcript and thus have a greater opportunity to become familiar with the facts of each case than do appellate judges.
On the other hand, Justice Thomas, writing for the dissent in Teva, found that patents are very similar to statutes; therefore like statutory construction, patent claim construction should be treated “as a wholly legal inquiry, not subject to subsidiary findings of fact.” Based on this finding, the dissent continued, de novo review should be the standard of review for all aspects of a lower court’s patent claim construction, including factual determinations based upon any extrinsic evidence.
The result of the decision in Teva is that more deference will be given to trial courts with regard to patent claim construction. Because the standard of review turns on whether a given aspect of patent claim construction is factual or legal, litigants will now be more concerned about drawing such distinctions. Accordingly, this decision will likely play a large role in patent litigation strategies. Litigants seeking finality in district court decisions following Teva are likely to focus on the facts underlying claim construction to ensure deferential review. Teva may result in additional time and resources being spent by both litigants and district court judges on claim construction as well as lower rates of reversal for appeals of patent claim constructions.