SCOTUS Goes Hybrid on Claim Construction; May Lead to Evidence Games Played at Trial

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By Tony Dutra

Jan. 20 — The Supreme Court overturned another Federal Circuit standard related to patents Jan. 20, this time changing the way the appeals court reviews district courts' claim construction judgments.

In an opinion by Justice Stephen G. Breyer, the 7-2 court knocked out the appeals court's no-deference review in favor of a two-part standard.

“As all parties agree, when the district court reviews only evidence intrinsic to the patent (the patent claims and specifications, 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,” the court said.

However, in some cases, “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,” the court said.

The court referred to such evidence alternatively as “evidentiary underpinnings” of claim construction and “subsidiary factual findings.” These findings “must be reviewed for clear error on appeal.”

Justice Clarence Thomas wrote a dissent, which was joined by Justice Samuel A. Alito.

Thomas expressed his fear that “today’s decision will result in fewer claim construction decisions receiving precedential effect, thereby injecting uncertainty into the world of invention and innovation.”

Stakeholders told Bloomberg BNA that Thomas's fear is probably overblown, because only a small number of cases turn on extrinsic evidence, such as a credibility determination of battling experts—the only example the high court gave.

However, most practitioners predicted changes in the way claim construction is litigated, with more calls for expert testimony—including live testimony—by parties confident of their position.

Cybor Sets Standard; Lighting Ballast Confirms

Federal Circuit deference to district court claim construction judgments effectively ended with Cybor Corp. v. FAS Techs. Inc., 138 F.3d 1448, 46 U.S.P.Q.2d 1169 (Fed. Cir. 1998) (en banc), which interpreted the Supreme Court's decision in Markman v. Westview Instruments, Inc., 116 S.Ct. 1384, 38 U.S.P.Q.2d 1461 (1996).

The Cybor court said that Markman “fully supports our conclusion that claim construction, as a purely legal issue, is subject to de novo review on appeal.”

Sitting en banc, the Federal Circuit affirmed that standard in a 6-4 decision in February (Lighting Ballast Control LLC v. Philips Elecs. N. Amer. Corp., 744 F.3d 1272, 109 U.S.P.Q.2d 1969 (Fed. Cir. 2014)).

Teva's Case

The instant case involves Teva Pharmaceuticals' patent underlying the multiple sclerosis drug Copaxone and its attempt to keep generic versions from Sandoz and Mylan Pharmaceuticals off the market.

Teva markets Copaxone with nine patents (including U.S. Patent Nos. 5,981,589; 6,054,430; and 6,620,847) claiming the composition and associated methods of making copolymer-1. When manufactured, individual polymer molecules have varying molecular weights.

Claim 1 of the '589 patent is representative of “Group I” claims “having a molecular weight of about 5 to 9 kilodaltons,” which conceivably implicated three different statistical distributions—peak average, number average or weight average molecular weight.

A district court found in favor of Teva, but the Federal Circuit overturned, holding the asserted claims invalid for indefiniteness because Teva did not make clear during prosecution which of the three statistical measures of average molecular weight governed the claims (Teva Pharm. USA, Inc. v. Sandoz, Inc., 723 F.3d 1363, 107 U.S.P.Q.2d 1655 (Fed. Cir. 2013)).

Teva's cert. petition pitted the Federal Circuit's de novo standard of review against Federal Rule of Civil Procedure 52(a)(6), which says: “Findings of fact, whether based on oral or other evidence, must not be set aside unless clearly erroneous, and the reviewing court must give due regard to the trial court's opportunity to judge the witnesses’ credibility.”

Court Rejects Three CAFC/Sandoz Arguments

The court first rejected arguments that Markman created an exception to Rule 52(a) for claim construction. Markman only held that claim construction was a matter for the judge, not the jury, the court said.

A second argument that separating factual from legal questions is often difficult and thus not worth changing the standard was also to no avail. Indeed, the high court said, “the Federal Circuit’s efforts to treat factual findings and legal conclusions similarly have brought with them their own complexities,” citing conflicting statements in Federal Circuit decisions since Cybor.

Finally, the appeals court in Lighting Ballast worried that uniformity in claim construction would be jeopardized by a clear error review standard, but that argument, too, fell before the Supreme Court.

“Neither the Circuit nor Sandoz, however, has shown that (or explained why) divergent claim construction stemming from divergent findings of fact (on subsidiary matters) should occur more than occasionally,” the court said. And other mechanisms—issue preclusion and case consolidation—could minimize conflicts, it said.

Battle of Experts

“Now that we have set forth why the Federal Circuit must apply clear error review when reviewing subsidiary factfinding in patent claim construction, it is necessary to explain how the rule must be applied in that context,” the court said.

First, the court said, the issue is solely a determination of law, allowing for de novo review when the patent claims and specifications, as well as its prosecution history, provide the only evidence available for review.

The court gave one and only one example of “subsidiary factfinding [that] must be reviewed for clear error on appeal”: “a dispute between experts” over “a certain term of art [that] had a particular meaning to a person of ordinary skill in the art at the time of the invention.”

Here, the court said, Teva and Sandoz disagreed on how to read Figure 1 in the patent specification, and the district court heard explanations from experts on both sides.

“The District Court credited Teva’s expert’s account, thereby rejecting Sandoz’s expert’s explanation,” it said. “The District Court’s finding about this matter was a factual finding—about how a skilled artisan would understand the way in which a curve created from chromatogram data reflects molecular weights.”

The Federal Circuit erred by making its own determination, without deference, and failing to accept Teva's expert's explanation, the court said.

Dissent: More Akin to Statute Than Contract

Justice Thomas's dissent did not dispute that “subsidiary factual determinations” come into play, but said that they are not “‘findings of fact' within the meaning of Rule 52(a)(6).”

The key disagreement between the majority and dissent revolved around whether construing a patent is more akin to interpreting a contract or a statute.

Thomas said it was the latter, and that represented “[t]he classic case of a written instrument whose construction does not involve subsidiary findings of fact.”

The Federal Circuit “properly reviewed the District Court's conclusions of law” in the instant case, even to the extent it relied on “expert testimony to understand the science,” the dissent said.

AIPLA Happy, but Is Rule ‘Clear'?

“The Supreme Court’s decision in Teva is entirely consistent with AIPLA’s position argued in its amicus brief filed in that case,” James D. Crowne, deputy executive director of legal affairs, said in an e-mail

“As we said there, the correct approach to claim construction falls in between the pure de novo or pure clear error approach,” he said. “We advocated, and the Court adopted, a hybrid approach. That is a simple and clear rule that complies with the requirements of Fed. R. Civ. P. 52(a)(6), and preserves the paramount role of the intrinsic evidence in providing public notice of the scope of the patent.”

Other stakeholders addressed whether the rule really was “simple and clear.”

“Cognizant of the need to provide clear guidance in the application of this new rule, the Court provided unusually robust prospective guidance to aid the Federal Circuit in distinguishing questions of fact from questions of law,” Paul W. Hughes of Mayer Brown LLP, Washington—more appreciative than any other commenter on the high court's discussion in this context—said in an e-mail.

“The delineation between the intrinsic and extrinsic world is pretty clear,” Sona De of Ropes & Gray LLP, New York, told Bloomberg BNA in agreement, suggesting that the high court did not need to give a list of examples.

“Intrinsic is whatever was in front of the Patent and Trademark Office.” She said that “courts have always understood the line between intrinsic and extrinsic evidence.”

C. Kyle Musgrove of Haynes & Boone LLP, Washington, identified one potentially tricky dividing line as follows: “The Court does indicate that the meaning of a term in the field could be subject to clear error review if from experts or other factual source, but whether that term in the patent is actually given the ordinary meaning is still a legal determination.”

Asked to identify on which side of the line “ordinary meaning” falls when the battling experts are consulting different technical—or even nontechnical—documents, such as manuals or dictionaries, De's colleague at Ropes & Gray, Bradford J. Badke, followed up on Musgrove's observation.

“When we’re doing claim construction, if we just throw in a dictionary definition, I don’t see that falling into the category of factfinding,” Badke, said. “A district court judge is no more qualified than the Federal Circuit [to read the definition],” he said.

However, the definition “usually is accompanied by the opinion of an expert,” he said. “A district court is [in a position] to listen to the experts.”

Brian H. Pandya of Wiley Rein LLC, Washington, agreed, telling Bloomberg BNA that the “credibility determination” at issue in that case would be why each party felt its document referenced was more relevant.

Pandya, though, saw more “middle ground” than the others, citing inventor testimony as another possible example. He said, “I'm sure people will try to push the boundaries of what constitutes extrinsic evidence” when presenting one's case to get claim construction overturned on appeal.

Impact on Litigation, Appeals

The second issue raised by stakeholders dealt with the impact the Supreme Court's decision will have on litigation conduct.

“Most patent claims are construed based solely on the intrinsic record and without resort to the extrinsic record,” Pandya said. “So many cases and many patents will not be impacted by today’s decision.”

Saina S. Shamilov of Fenwick & West LLP, Mountain View, Calif., agreed with Pandya. “To date, many district courts were not interested in live expert testimony at claim construction hearings and, in fact, submitting expert declarations along with claim construction briefs was not very popular,” she said.

But the question is, will that continue? Ropes & Gray's De contended that “district courts will undertake claim construction exactly the way they always have,” but others believed litigants will force changes.

“The Teva ruling encourages litigation over whether and when a claim construction is a factual or a legal issue because that drives the standard of review,” Daniel P. Albers of Barnes & Thornburg LLP, Chicago, said in an e-mail.

“Parties may try to submit extrinsic evidence on whether a term is ambiguous,” he said, on the one hand, and on the other, “They may try to argue that the construction within the entire claim and in view of the entire specification of a factual determination of a claim term meaning is a legal determination and thus review of that legal determination is de novo.”

“Today’s decision may push patent litigants to try to stuff the claim construction record with extrinsic evidence, so claim constructions cannot be overturned as easily on appeal,” Pandya said. “We may see more expert testimony, and perhaps other extrinsic sources such as scientific articles, used at the claim construction to describe how a person skilled in the art would understand patent claims.”

“I expect more courts will now offer parties opportunities to hold evidentiary hearings with live expert testimony,” Shamilov said. Pandya agreed, anticipating that “Markman hearings may become like mini-trials with live testimony and cross examinations.”

Musgrove agreed as well. “If ordinary meaning is subject to clear error review, there will be a rise in expert declarations and general factual submissions during claim construction, and perhaps live testimony for credibility determinations,” he said.

“While this may increase the cost and burden of Markman hearings,” Pandya said, “I expect that more claim construction rulings will be dispositive and may ultimately result in the settlement of more cases if litigants know claim constructions will be harder to overturn on appeal.”

“If a patentee believes that it can get a favorable construction in a particular district court, I expect that patentee to advance expert testimony and make the claim construction hearing a battle of the experts to be able to preserve the favorable claim construction on appeal,” Shamilov said. “The accused infringer in the same forum, however, may want to avoid relying on the extrinsic evidence in order to obtain a de novo review of the district court’s claim constructions on appeal and instead argue that the intrinsic evidence needs no interpretations and supports the accused infringer’s advanced claim constructions.”

But Badke said it depends on the parties' attitudes towards the strength of their cases before a particular district court or even the particular judge assigned, and the relative likelihood of success before a three-judge Federal Circuit panel with potentially more expertise in claim construction.

Badke ultimately agreed with those who saw little impact, though, particularly because “the Federal Circuit is still reviewing the ultimate decision de novo.”

“Add up the various limitations [imposed on the Federal Circuit by this decision], and the overall impact of this decision on patent cases will be small,” Badke said.

William M. Jay of Goodwin Procter LLP, Washington, represented Teva. Carter G. Phillips of Sidley Austin LLP, Washington, was counsel of record for Mylan and argued before the court. Deanne E. Maynard of Morrison & Foerster LLP, Washington, was counsel of record for Sandoz.

To contact the reporter on this story: Tony Dutra in Washington at

To contact the editor responsible for this story: Tom P. Taylor at

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