- De Novo Review of Claim Construction No Longer the De Facto Standard
- February 13, 2015 | Authors: Ann G. Fort; Robert R.L. Kohse; William L. Warren; David E. Wigley
- Law Firm: Sutherland Asbill & Brennan LLP - Atlanta Office
- On January 20, the U.S. Supreme Court, in Teva Pharmaceuticals USA, Inc. v. Sandoz, rejected the de novo review standard applied by the U.S. Court of Appeals for the Federal Circuit when reviewing all claim construction issues. The Supreme Court held that, when reviewing a District Court’s resolution of subsidiary factual findings made in the course of claim construction, the Federal Circuit must apply a “clear error” standard. The Supreme Court based its holding on Rule 56(a)(6) of the Federal Rules of Civil Procedure, which recites that an appellate court “must not . . . set aside” a lower court’s “findings of fact” unless those findings are “clearly erroneous.” The Federal Circuit may still review de novo a District Court’s claim construction based solely on an interpretation of the intrinsic patent record (specification, claims, and prosecution history).
Background and District Court Proceedings
Teva Pharmaceuticals owns the patent at issue in this case, U.S. Patent No. 5,800,808, which covers the manufacture of drugs to treat multiple sclerosis. Teva filed suit against Sandoz in the Southern District of New York. The pertinent claim construction issue involved a dispute over the phrase “a molecular weight of 5 to 9 kilodaltons.” Neither the claim nor the patent specified how to calculate “a molecular weight.”
As a result, Sandoz asserted that the claim was indefinite under 35 U.S.C. § 112 ¶ 2 for failing to “particularly point out and distinctly claimthe subject matter which the applicant regards as his invention.” Without clearly identifying how to calculate molecular weight, Sandoz argued, the claim was invalid as indefinite because one of skill in the art would not understand which of the three different known methods should be used to determine molecular weight: (1) the weight of the most prevalent molecule (referred to in the art as the “peak average molecular weight”); (2) the average weight of all the different-sized molecules in the mix making up the active drug ingredient (referred to in the art as the “number average molecular weight”); or (3) the average weight of all different-sized molecules in the active drug ingredient, but where heavier molecules are assigned a weight-related bonus (referred to in the art as the “weight average molecular weight”). Because the patent was not clear on which calculation method to use, Sandoz argued that the claim failed to satisfy the legal requirement and should be invalidated.
The District Court disagreed and held that the claim was sufficiently valid. To arrive at its holding, the court considered expert witness testimony from both parties, but sided with Teva’s expert on a subsidiary factual issue regarding the interpretation of Figure 1 in the patent. After considering the expert testimony, the District Court concluded the claim term “molecular weight” utilized the first calculation method, referred to as the “peak average molecular weight.”
Review at the Federal Circuit
On appeal, the Federal Circuit reversed and held that the claim term “molecular weight” was indefinite and the patent was invalid. Applying a de novo review of all issues, including the subsidiary facts, the Federal Circuit disagreed with the District Court’s decision to side with Teva’s expert witness on the interpretation of Figure 1 in the patent.
Thus, the issue for the Supreme Court became how much deference, if any; must a reviewing court afford a district court on claim construction issues involving subsidiary fact-finding?
Supreme Court’s Decision
The Supreme Court vacated the Federal Circuit’s decision, because it gave no deference to the lower court. As a starting point, the Court said that Rule 52(a)(6) of the Federal Rules sets forth a “clear command” that a reviewing court is to apply the “clearly erroneous” review standard to both subsidiary and ultimate facts. Citing Anderson v. Bessemer City, 470 U.S. 564, 574 (1985); Pullman-Standard v. Swint, 456 U.S. 273, 287 (1982). No exceptions to the Rule are permissible, and the Court cited to the Rules Advisory Committee who explained exceptions would “tend to undermine the legitimacy of the district courts.”
The Supreme Court also advised that its decision in Markman neither created, nor argued for, an exception to Rule 52(a). Instead, Markman explained that claim construction primarily involves the interpretation of written instruments, similar to deeds, contracts, or wills, which is better matched to a judge’s skills. Although the Court’s decision in Markman held that the ultimate issue of claim construction is a question of law, the Supreme Court also recognized that claim construction sometimes requires subsidiary fact-finding. The appellate court can still review the ultimate claim construction de novo, but only a finding of clear error can overturn the judge’s resolution of an underlying factual dispute.
Fortunately, the Supreme Court also provided guidance on how to apply its decision. When the District Court reviews only evidence intrinsic to the patent (claims, specification, and prosecution history), the Court explained that the judge’s determination is one of law and will be reviewed on appeal de novo. However, in some cases, the District Court may need to look beyond the intrinsic evidence, to so-called extrinsic evidence, in order to understand, e.g., the background technology, the meaning of a term in the art at the time of the invention, or even the credibility of witnesses. The Supreme Court deemed those to be “subsidiary” issues, which may require a court to make subsidiary factual findings about that extrinsic evidence. Subsidiary fact-finding is the “evidentiary underpinning” of claim construction, which must be reviewed on appeal for clear error.
The Supreme Court then applied its guidance to the facts of the case. During claim construction before the District Court, Teva argued that “molecular weight” meant calculation of the peak average molecular weight. Sandoz disagreed, arguing that Teva could not be correct because the graph in Figure 1 of the patent showed a curve that could not have been created using the molecular weight calculated by the first method. Therefore, Sandoz argued Figure 1 must mean calculation by some other method, which renders the claim invalid as indefinite. In response, Teva’s expert explained that Figure 1 confirmed the calculation of peak average molecular weight, but the figure included a data conversion that shifted the curve slightly, and one of skill in the art would recognize that a conversion would impose a shift on the displayed data. The District Court credited Teva’s expert’s account and rejected the explanation from Sandoz’s expert. The Supreme Court held that the Federal Circuit should have accepted the District
Court’s decision to side with Teva’s expert, unless it was “clearly erroneous.”