Today the U.S. Supreme Court handed down a significant decision impacting the appellate review of claim construction in patent infringement. In Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., the Court held that when reviewing a district court's claim construction that includes underlying findings of fact, the Federal Circuit must apply a "clear error" standard of review as opposed to the de novo standard it had been using. At district court, Sandoz argued that the asserted patent was invalid under 35 U.S.C. § 112(b) because the claim term "molecular weight" was indefinite. The district court ruled that the term was sufficiently definite, relying upon expert testimony that one skilled in the art would understand the term. On appeal, the Federal Circuit reversed the district court and held that the term was indefinite, relying on a de novo review standard for all aspects of district court claim construction including the findings of fact. The Court reversed the Federal Circuit, holding that the Federal Circuit must apply the “clearly erroneous” standard of review in accord with Fed. R. Civ. P. 52(a)(6) when reviewing a district court’s resolution of subsidiary factual matters made in the course of claim construction.
This change in the standard of review has a very significant impact on patent litigation strategy at both the trial court and appellate levels. At trial court, parties should endeavor to use expert testimony and extrinsic evidence to bolster their proposed claim construction, as opposed to arguing it as a pure matter of law. In doing so, the construction will get the stricter standard of clear error in order to overturn the lower court. In appeal of a claim construction, the parties will either argue that the construction relies on factual underpinnings to attempt to invoke the stricter standard and have the district court affirmed, or argue that the construction was done purely as a matter of law and seek de novo review by the Federal Circuit in hopes of getting the construction reversed. The overall calculus has also changed because claim construction is central to a finding of or against infringement, and most construction done by a district court does have some factual support, so it is likely that most appeals of patent infringement will get the stricter standard and are more likely to be affirmed. The major patent infringement battle will now be fought in the first instance at district court.
Those contemplating bringing an infringement suit should also weigh the greater use of experts and extrinsic evidence, and the associated costs in both expert retention and testimony and attorney time in supporting claim construction and motion practice related to evidence.
