U.S. Supreme Court Modifies Federal Circuit's Standard Of Review For Claim Construction In Teva v. Sandoz

On January 20, 2015, resolving a long debated issue, the U.S. Supreme Court set aside the Federal Circuit's de novo review of every aspect of a lower court's claim construction decision, rejecting that form of review where the district court has resolved factual disputes and made factual findings about the extrinsic evidence. Teva Pharms. USA, Inc. v. Sandoz, Inc., No. 13-854 ("Op.") at 1-2. The U.S. Supreme Court held that the "clear error" standard of review applies in those circumstances. Id. However, it also confirmed that the "ultimate" construction of the claim, even where underlying factual disputes have been resolved, remains a legal conclusion that the Federal Circuit can review de novo. Op. at 13. The U.S. Supreme Court also confirmed that de novo review is appropriate in cases where the district court reviews only evidence intrinsic to the patent.

Differing Standards for De Novo Review of Claim Construction

Commentators have widely criticized the de novo review of claim construction, largely because of the uncertainty it injects into the litigation process. Since determinations of infringement often turn on claim constructions, a reversal on claim construction can mean a total "do-over" or turn a victory into a defeat. The rate of reversal at the Federal Circuit is perceived to be quite high. Thus, prevailing parties at the district court level are hesitant to celebrate a win, particularly where claim construction was pivotal, until they hear from the Federal Circuit.

There has also been significant concern about whether the Federal Circuit is giving proper deference to the lower court's factual findings in view of Federal Rule of Civil Procedure 52(a)(6), under which a court of appeals "must not . . . set aside" a district court's "[f]indings of fact" unless they are "clearly erroneous." District Court Judges often do a tremendous amount of work in connection with construing claims, including sitting through technology tutorials and conducting Markman hearings, as well as reading and analyzing numerous briefs and related filings from the parties. More than one district court judge has lamented that this work is all for naught with de novo review.

The U.S. Supreme Court previously held that a patent claim is the "portion of the patent document that defines the scope of the patentee's rights" and as such, its construction is "exclusively" for the court and not a jury to decide, even if there are "evidentiary underpinnings."...