At last resolving an issue that's raged in patent circles for 16 years, the U.S. Supreme Court ruled Tuesday that district court claim construction decisions in patent cases are owed more deference than they've been receiving from the U.S. Court of Appeals for the Federal Circuit.
The high court ruled that the factual findings underpinning claim construction—typically the meaning of technical phrases to persons skilled in the art at the time of the patent application—may not be discarded on appeal unless they are clearly erroneous. A district judge's ultimate conclusion as to what the claims mean is still subject to de novo review, however.
Justice Stephen Breyer's 7-2 decision in Teva v. Sandoz is expected to lead to the introduction of more expert evidence at the district court level, particularly when litigants are confident they're on the same page as the trial judge and want to strengthen a ruling for appeal.
"There will still be a lot of room for de novo review" of what patent claims mean, said Weil Gotshal & Manges partner Edward Reines. But "you'll have a leg up if you have expert testimony supporting those meanings."
"Markman proceedings are going to be more expensive and fact-intensive going forward," Pillsbury Winthrop Shaw Pittman IP partner William Atkins said.
It's the latest in a string of high-profile reversals for the Federal Circuit at the Supreme Court. But Reines said the Supreme Court bears responsibility for the confusion by ducking the issue repeatedly since resetting the rules of claim construction in 1996's Markman v. Westview Instruments. "The Supreme Court should have been clearer in Markman," Reines said.
In that case the Supreme Court ruled that the meaning of a patent claim is exclusively for a judge to decide, not a jury. And legal decisions typically are reviewed de novo on appeal. But patent claims are read from the perspective of a person skilled in the art, and district judges often rely on expert testimony to better understand technical words and phrases.
In the case decided Tuesday, Teva sued generic drug makers Sandoz, Mylan and others for infringing its patent on a drug to treat multiple sclerosis. Teva's patent described an ingredient as having "a molecular weight of five to ten kilodaltons." Sandoz and Mylan argued that the patent didn't specify "peak average molecular weight," "number average molecular weight" or "weight average molecular weight," and therefore should be declared invalid. But Teva's expert testified, and U.S. District Judge Barbara Jones agreed, that a person skilled in the art would have understood in the context of the patent that the reference was to peak average molecular weight.
A Federal Circuit panel led by Judge Kimberly Moore, exercising de novo review, ruled that "molecular weight" was in fact indefinite and held the patent invalid.
Breyer's opinion repeated a common Supreme Court criticism of Federal Circuit patent jurisprudence: that the appellate court had drawn up a special rule for patent litigation. Federal Rule of Civil Procedure 52(a) requires deference to factual findings in all cases, including patent cases. "Even if exceptions to the rule were permissible, we cannot find any convincing ground for creating an exception to that rule here," Breyer wrote.
The Federal Circuit ruled en banc just last year that combining deference to factual findings with novo review for ultimate legal conclusions would be too confusing. But Breyer pointed to all the confusion created by the Federal Circuit's standard, quoting various Federal Circuit judges' comments in Cybor v. FAS Technologies and the other en banc decisions hashing over the issue.
Breyer explicitly agreed with a dissenting opinion from Federal Circuit Judge Kathleen O'Malley, who wrote that district judges are better equipped to resolve factual disputes, and an amicus curiae brief from Berkeley Law professor Peter Menell that said the current Federal Circuit standard leads to an unusually high rate of reversals.
Dissenting Supreme Court Justice Clarence Thomas analogized patent claims to statutes, in that they're governmental dispositions "that bind the public at large." Like statutes, patents ought to be interpreted by judges and reviewed without deference on appeal, wrote Thomas, who was joined by Justice Samuel Alito.
Goodwin Procter partner William Jay, who argued the case for Teva, said Breyer's analysis was straightforward. "Our argument was always a very simple one," he said. "The Federal Rules of Civil Procedure set out the standard of review for findings of fact, and the question was are these findings of fact?" The court "didn't have difficulty" in answering that question yes, he said.
Attorneys from Kirkland & Ellis, Kenyon & Kenyon and Alan Dershowitz assisted on Teva's briefs.
Mylan was not conceding defeat on Tuesday. "We continue to believe that [Teva's] patent is invalid as indefinite and we will address that issue with the Federal Circuit Court of Appeals" on remand, CEO Heather Bresch said in a press release.
The solicitor general's office had told the Supreme Court that applying the clear error standard of review would not likely change the outcome of the Federal Circuit's ruling.
Sidley Austin partner Carter Philips argued for Mylan while Morrison & Foester partner Deanne Maynard led Sandoz's team on the briefs.
At a practical level, Weil Gotshal's Reines wondered if litigants will now ask district judges to reissue claim construction rulings with explicit factual findings.
One attorney almost guaranteed a new hearing at the Federal Circuit is Berkeley solo Andrew Dhuey, who argued almost the same issue last year before the en banc court in Lighting Ballast Control v. Philips Electronics North America. The court had ruled 6-4 against Dhuey's client while exercising de novo review. "I expect the Supreme Court will grant our petition on Friday," he said, "and that the Federal Circuit will reconsider our case under the proper, deferential legal standard Teva requires."
(Published by The Recorder – January 20, 2015)