On October 15, 2014, the Supreme Court of the United States (SCOTUS) heard oral arguments in Teva Pharmaceuticals v. Sandoz. On 20 January 2015, SCOTUS issued its 7-2 decision as Teva Pharmaceuticals USA, Inc., et al. v. Sandoz, Inc., et al., 574 U.S. ___ (2015). The opinion was written by Justice Breyer and remanded the judgment with instructions that the appellate court must apply a “clear error” standard to review questions of fact. This opinion ends de novo review by the Federal Circuit when reviewing the meaning of claim terms. Here are some details about why this decision is important and returns some certainty to claim construction decisions by trial court judges.
Teva owned a patent that covers a manufacturing method for producing Copaxone®, a drug to treat the symptoms of multiple sclerosis. Sandoz attempted to market a generic version and was sued by Teva for patent infringement to prevent the generic from hitting the market earlier than the law allowed.During trial, Sandoz argued that the active ingredient that was described as an ingredient with a “molecular weight of 5 to 9 kilodaltons.” Sandoz asserted that the language in the patent was fatally flawed on the ground of indefiniteness under 35 U.S.C. 112 because the patent did not describe which of three methods was used to determine that weight. The three methods were provided but yield different results. At trial, the district court judge determined that the patent claim was sufficiently definite and that the patent was valid and infringed. The judge determined that only the first method made sense to a person having ordinary skill in the relevant art (a PHOSITA), and ruled that the patent claims were valid and infringed by Sandoz. Slip op. at *2-3.
On appeal, the Federal circuit reviewed de novo all aspects of the district court’s claim construction, including the district court’s determination of subsidiary facts.
On appeal to SCOTUS, Teva argued that claim construction is intertwined with fact finding, that Federal Rule of Civil Procedure (FRCP) 52(a) should apply to claim construction, and that a district court’s claim construction should only be set aside for clear error. In short, the Federal Circuit’s long-standing practice of de novo review of claim construction should be overruled even though de novo review was validated by the Supreme Court’s 1996 decision in Markman v. Westview Instruments and confirmed by the Federal Circuit (6-4) en banc decision in February 2014 in Lighting Ballast Control v. Philips Electronics. Sandoz and other generic drug makers countered that:
- Markman is good law, that Rule 52(a) applies to fact finding outside the context of claim construction,
- claim construction is a purely legal matter best left in the hands of a judge rather than a jury,
- the current law promotes uniformity and predictability because the Federal Circuit can uniformly review trial court decisions, and
- the Federal Circuit can and should review claim construction without deference to the lower court, or de novo.
FRCP 52(a)(6) states that a court of appeals “must not . . . set aside” a district court’s “[f]indings of fact” unless they are “clearly eroneous,” and “does not make exceptions or . . . exclude certain categories of factual findings” from the court of appeals.
In its decision, the SCOTUS states, “[P]ractical considerations favor clear error review. We have previously pointed out that clear error review is “particularly” important where patent law is at issue because patent law is “a field where so much depends upon familiarity with specific scientific problems and principles not usually contained in the general storehouse of knowledge and experience,” citing to Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U. S. 605, 610 (1950). Slip op. at *4. “We have made clear that the Rule sets forth a clear command . . . [and] applies to both subsidiary and ultimate facts.” Id. SCOTUS also states that, “Even if exceptions to the Rule (FRCP) were permissible, we cannot find any convincing ground for creating an exception to that Rule here.”
The Court also states, “[Parties] have already been forced to concentrate their energies and resources on persuading the trial judge that their account of the facts is the correct one; requiring them to persuade three more judges at the appellate level is requiring too much.” Slip op. at *9.
There are several immediate lessons from this decision:
- There should be more finality to claim interpretation at trial as long as the trial judge provides enough factual basis in the decision related to the meaning of patent claim terms.
- There is no more “do-over” in front of the Fed. Cir; appeals on the meaning of claim terms should drop off significantly.
- Patent application writers should take extra time to draft claims and applications that avoid ambiguity in claim construction. Writers should consider including a detailed glossary of terms in every patent application.
- New legislation could amend the FRCP to give back to the Federal Circuit de novo review of claim interpretation.