By Andrew Williams --
Next week, the Supreme Court will hear oral arguments in the Teva Pharmaceuticals USA, Inc. v. Sandoz Inc. case to determine whether appellate courts should afford any deference to a trial court's claim construction determination. Specifically, the question presented was phrased as:
Rule 52(a) of the Federal Rules of Civil Procedure provides that in matters tried to district court, the court's "[f]indings of fact . . . must not be set aside unless clearly erroneous."
The question presented is as follows:
Whether a district court's factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires (and as the panel explicitly did in this case), or only for clear error, as Rule 52(a) requires.
The phrasing of the question appears to suggest the answer. Nevertheless, instead of arguing whether Rule 52(a) applies to findings of fact in claim construction hearings, the parties instead disagreed as to whether claim construction even involves factual issues that would implicate Rule 52(a). We have recently outlined the procedural background of this case, as well as reviewed the prior Supreme Court and Federal Circuit case law relevant to this issue (see "Supreme Court Preview -- Teva Pharmaceuticals USA, Inc. v. Sandoz Inc. -- The End of Cybor Corp.?"). This post will preview the position of the parties, as detailed in their briefings to the Court.
Teva, not surprising, portrays claim construction as an endeavor that requires a great amount of fact finding. "A court often cannot interpret a patent without first understanding what skilled people in the relevant art knew, and what words they used, when the patent application was filed." Teva's Brief at 15. As such, Teva argued, the Federal Circuit was incorrect to hold "that every aspect of claim construction, even 'allegedly fact-based questions' [are] reviewed de novo." Id. at 18 (citing Cybor Corp). In other words, "[t]he Federal Circuit cannot dodge [Rule 52(a)] by calling a factual question a legal one." Id.
In making this argument, Teva explained that patents are written for the intended audience of "persons skilled in the art." As such, they must be interpreted from that perspective. Therefore, Teva explained, Courts are required to consult evidence to determine if there is some specialized meaning in the art. Courts also must look to extrinsic evidence, especially "when the relevant term does not have a single, well-established meaning." Id. at 28. Teva also pointed out that expert testimony is often used to elucidate the prosecution history. Finally, as was the case here, when the validity of the patent is challenged under 35 U.S.C. § 112 ¶ 2, "the dominant inquiry will be a factual one turning on a skilled artisan's knowledge." Id. at 29.
The Federal Circuit's appellate review rules for claim construction as compared to other patent validity issues can result in the same evidence being reviewed under two different standards, Teva alleged. For example, for an obviousness inquiry, the "scope and content" of the prior art is a factual determination. Nevertheless, if the same prior art is reviewed in the claim construction context, it is treated as a legal matter. This is also true for the level of ordinary skill in the art. Teva pointed out that other validity issues are also reviewed deferentially, such as whether a specification enables a skilled artisan to practice an invention. This same review of the intrinsic evidence is reviewed de novo during claim construction.
Teva explained why the rationales provided by the Federal Circuit in Cybor Corp, and to a lesser extent Lighting Ballest, are unpersuasive. First, the conclusion in Cybor Corp did not flow directly from the Supreme Court's Markman decision, Teva argued. Markman allegedly only resolved who should be performing claim construction, the courts. However, in so doing, it referenced the factual nature of claim construction several times, whether as a "mongrel practice," a "mixed question of fact and law," or a determination with "evidentiary underpinnings." The excuse that patents are written instruments, and therefore their interpretation is not entitled to deference, was equally unpersuasive to Teva. Finally, Teva pointed out that facts cannot be turned into law for the mere sake of uniformity.
Instead, the brief continued, when the appellate court resorts to its own fact finding, the cost to the patent system is great. District court judges often provide little to no reasoning for their claim construction determinations, because with de novo review, the Federal Circuit is likely to ignore it anyway. Appellate courts also do not have the time for a deep review of the science and technology involved, the argument continued. More importantly, with de novo review, the parties are encouraged to keep litigating, because any adverse decision for claim construction could possibly be ultimately overturned. Teva was also not persuaded by the proclamation by some Federal Circuit judges of informal deference. Teva concluded by pointing out that if the Court adopted the "correct" standard, this present case would have come out differently -- it would have won.
Perhaps in response to the wording of the question presented, Sandoz took the position that Rule 52 does not apply to claim construction, which is a "purely legal" question. Citing Miller v. Fenton, 474 U.S. 104 (1985), Sandoz explained that the "law/fact inquiry turns on whether a judicial actor reviewing the legal standards and the record is more likely to arrive at the correct conclusion, or whether the initial factfinder is better positioned to do so because the credibility of witnesses is pivotal to the issue at hand." Sandoz Brief at 17. Because claim construction turns on the claims, specification, and prosecution history, and not the credibility of witnesses, Sandoz continued, any facts that are encountered are merely "legislative facts," and therefore no deference is owed.
Sandoz explained why de novo review followed directly from Markman. First, the question presented in that case was "whether claim construction 'is a matter of law reserved entirely for the court, or subject to a Seventh Amendment guarantee . . . .'" Id. at 19 (citing Markman). Sandoz did not explain, however, why this legal determination could not be based on underlying factual underpinnings. Nevertheless, Sandoz argued that the Supreme Court's observations regard the "evidentiary underpinnings" of claim construction actually bolsters the application of de novo review, because that Court concluded that the question is "purely legal".
The question of uniformity was also addressed. First, Sandoz explained that uniformity was not a "free-standing principle." Rather, because patents are federally granted rights, the claim terms should only have one meaning. Sandoz also responded to argument that issue preclusion could accomplish the same goals of uniformity. It explained that issue preclusion could not be applied against new alleged infringers. Instead, by applying stare decisis, the legal precedent of a claim construction decision could not be relitigated, which would promote the "public-notice function of patent claims." Id. at 40.
Finally, Sandoz argued that even if the Supreme Court concludes that some deference is required, the outcome of this case would be the same. It pointed out that Teva did not dispute that the claims are ambiguous on their face. It was also undisputed that "average molecular weight" has no ordinary and customary meaning, and that it is critical to know which measure is intended. Importantly, according to Sandoz, the Federal Circuit did not overturn any facts in finding that the claims were indefinite. Instead, that court determined as a matter of law that statements in the prosecution history were irreconcilable, which resulted in claims that were ambiguous. Thus, the outcome will be the same according to Sandoz, regardless of which standard this Court articulates.
We will continue our review of this case next week by highlighting some of the positions found in the amicus briefs. And, of course, we will provide an update of the oral hearing after the morning of October 15, depending of course on when the transcript is posted to the Supreme Court's web page.