Supreme Court Gives District Courts More Power in Patent Claim Construction

On January 20, 2015, in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., the Supreme Court reallocated power between federal district courts and the Federal Circuit in the patent claim construction process.  For many years, the Federal Circuit has reviewed all district court claim constructions de novo, without deference to the district court. Today, the Court held that the Federal Circuit must find clear error before overturning a district court’s resolution of an underlying factual dispute during claim construction.

After the Court’s decision in Markman v. Westview Instruments (1996), the Federal Circuit’s Cybor Corp. v. FAS Technologies, Inc. (1998) decision announced the de novo standard of review.  Under this standard, the Federal Circuit has often reversed district court claim construction orders.

Dissolving this longstanding precedent, the Court held that Rule 52(a)(6), Federal Rules of Civil Procedure, requires that claim construction decisions involving “evidentiary underpinnings,” “subsidiary factual findings,” or “underlying factual disputes,” not be set aside unless clearly erroneous.  The Federal Circuit still reviews “the ultimate construction of the claim de novo.”  And claim constructions that only analyze the intrinsic evidence—the patent, its specification, and the prosecution history—still will be reviewed de novo.  “But, to overturn the judge’s resolution of an underlying factual dispute, the [Federal Circuit] must find that the judge, in respect to those factual findings, has made a clear error.”

Recognizing the “need for uniformity in claim construction,” and recalling that Markman aimed to alleviate “damaging…unpredictability” in claim construction, by making it an issue for the court, Justice Thomas’s dissent raises the concern that Teva will “inject uncertainty into the world of invention and innovation.”  “At best,” Justice Thomas wrote, Teva will increase “collateral litigation over the line between law and fact.”  The majority, in contrast, viewed “subsidiary factfinding [as] unlikely to loom large in the universe of litigated claim construction.”  With such a significant change in claim construction, it’s at least certain that it will take some time to see who is right.

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