Tuesday, March 17, 2015

A “Clearly Erroneous” Standard Applies to a Court of Appeals’ Review of Factual Issues Underlying a Patent Claim

By Don R. Sampen
Partner, Clausen Miller P.C.

The construction of a patent is typically a matter for a judge to determine as a matter of law. Accordingly, the standard of review for a Court of Appeals reviewing a district court’s decision upholding or striking down the validity of a patent is de novo. On occasion, however, the district court must make factual findings concerning evidence extrinsic to the patent itself. The question then arises what standard of review applies to those findings.

That question now is resolved by Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831 (Jan. 20, 2015). The case involves a drug patent holder, Teva, that sued a generic manufacturer of the drug, Sandoz, for patent infringement, in which Sandoz raised a defense attacking the validity of the patent. In deciding validity, the district court heard conflicting expert evidence concerning the meaning of a term used in defining one of the patent claims, “molecular weight,” and whether that term was sufficiently definite in the context of the claim. Id. at 835-36. The court found that it was sufficiently definite and held the patent valid. Id.

On appeal to the Federal Circuit, however, that court applied a de novo review standard to all aspects of the district court’s decision. The Federal Circuit then found the term “molecular weight” too indefinite, and it held the patent invalid. Id. at 836. Teva petitioned for certiorari, which the Supreme Court allowed.

In an opinion by Justice Stephen Breyer, the Supreme Court reversed. He initially pointed to Fed. R. Civ. P. 52(a)(6), which states that a court of appeals “must not ... set aside” a district court’s “[f]indings of fact” unless they are “clearly erroneous.” Id. at 836-37. That mandate, according to Breyer, applies both to subsidiary and ultimate facts. Id.

Rule 52(a)(6), moreover, is not inconsistent with statements by the Court in cases like Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996), that patent claim construction falls exclusively within the province of the court. Id. at 837. Construction of patents, said Breyer, is akin to the construction of contracts and other written instruments that present questions solely of law. Id. 837-38. Where extrinsic evidence is used to determine the meaning of terms in the instrument, any factual finding regarding such evidence “precedes” the actual construction of the instrument and is reviewed for clear error like other factual findings. Id. at 837-38.

Breyer observed that this approach is consistent with the district court’s role in presiding over the entirety of the patent proceeding and the opportunity the court has to gain familiarity with live witness testimony. Id. at 838-39. He also rejected the parallel that Sandoz sought to draw to statutory construction, which is decided as a matter of law but may include consideration of extrinsic matters such as legislative hearings. Breyer said that statutes typically involve only “general facts” and do not involve private parties and experts. Id. at 840. 

As for how the Federal Circuit must apply clear-error review of factual findings, Breyer observed that such review does not apply to evidence intrinsic to the patent. Rather it applies only to the “evidentiary underpinnings” of claim construction when extrinsic evidence is introduced, such as disputes between experts. Id. at 840-41. The Federal Circuit here, however, rejected the district court’s fact findings without determining that they were clearly erroneous. Id.

The Court therefore vacated the Federal Circuit’s judgment and remanded for further review.

Justice Clarence Thomas, joined by Justice Samuel Alito, dissented. They argued generally that Rule 52(a)(6) should not apply because the subsidiary findings underlying claim construction more closely resemble the subsidiary findings underlying the construction of statutes than those underlying the construction of contracts. See id. 847-48.

Recommended Citation: Don R. Sampen, A “Clearly Erroneous” Standard Applies to a Court of Appeals’ Review of Factual Issues Underlying a Patent Claim, The Brief(March 17, 2015), http://applawyers-thebrief.blogspot.com/2015/03/a-clearly-erroneous-standard-applies-to.html#more.

DISCLAIMER: The Appellate Lawyers Association does not provide legal services or legal advice. Discussions of legal principles and authority, including, but not limited to, constitutional provisions, statutes, legislative enactments, court rules, case law, and common-law doctrines are for informational purposes only and do not constitute legal advice.