This fall, the Supreme Court will hear argument in Teva Pharmaceuticals USA, Inc. v. Sandoz Inc. relating to generic versions of Teva’s multiple sclerosis drug, Copaxone®. This case deserves close attention for its potential to affect interpretation and enforcement of patent rights, patent litigation strategies, and ultimately, patent value.
Teva v. Sandoz involves a long-debated issue in patent law: whether the Federal Circuit is correct to review a district court’s claim construction without any deference to a district court’s findings of fact.
A patent is a property right that allows an owner to stop someone else from using an invention without permission. The claims at the end of a patent use words to define the scope of the invention — the exact boundaries of the owner’s right. Because language is inherently imprecise, the true scope of those claims is only finally defined through the process of claim construction in litigation, not when the claims issue from the Patent Office.
The Supreme Court has held (Markman v. Westview Instruments, Inc) that a patent is a legal instrument and required that in claim construction, the district court judge, not a jury, must evaluate the facts and law relating to the meaning of certain words and phrases in a patent claim. That task is most often performed in a separate Markman hearing that usually features extensive briefing, technical presentations and expert witness testimony to support the parties’ conflicting interpretations.
In 1998, in Cybor Corp. v. FAS Techs, Inc., the Federal Circuit interpreted Markman to define claim construction as a pure issue of law, not fact. On appeal, the Federal Circuit reviews a district court’s claim construction de novo without any deference to “allegedly fact-based questions relating to claim construction.” Claim construction is required for any conclusion relating to patent infringement and validity. Therefore, claim reinterpretation at the Federal Circuit often upends judgments obtained at the district court — one cause of that court’s “high reversal rate” for patent cases.
In Teva v. Sandoz, the Court will resolve whether the Federal Circuit can only set aside a district court’s factual findings for clear error, as required by the Federal Rules of Civil Procedure, or — as the Federal Circuit determined in Cybor — claim construction creates a special situation where no deference to the district court is appropriate.
Briefing is still underway on this relatively narrow question, but the broad contours of potential outcomes are visible. On the one hand, the Court may affirm the Federal Circuit’s current practice of de novo review without deference, as a narrow majority of Federal Circuit judges concluded a few months ago in Lighting Ballast Control LLC v. Philips Elecs. N. Am. Corp. Many observers would speculate this to be an unlikely outcome given the traditional role for district courts in factfinding, especially as it relates to issues of witness credibility, which the Court recognized in Markman.
On the other hand, the Court may announce a new rule granting even more deference to a district court’s claim construction findings. For example, the Court may define expert testimony about the patent’s specification or prosecution history as factfinding, rather than “legal interpretation” reviewable without deference. After all, the patent is written for those persons skilled in the art of the invention, not lawyers and judges. But this outcome is also somewhat unlikely given the need for some degree in consistency in construing claims of all patents, with the Federal Circuit serving as the normalizing force in developing patent claim construction doctrine.
Most likely, the Court’s decision will rest somewhere in the middle — the Court may issue a ruling that a district court’s factfinding in connection with claim construction should be set aside only for clear error. The Court may conclude that claim interpretation consistent with either the patent’s disclosure or its prosecution before the Patent Office may not be “factfinding” per se because the district court’s conclusions should be consistent with the evidence “intrinsic” to the patent.Under this possible outcome, facts found related to other “extrinsic” evidence, such as expert testimony, dictionaries or other materials, may be bona fide factfinding that justifies deference to the district court and a clear error standard of review.
Regardless of the outcome, claim construction in the district court will continue to be a key event in patent litigation — perhaps the most important one. Patent owners and accused infringers alike should take care to develop a strong factual record before the court in claim construction proceedings. It’s probably better to think of a Markman hearing as a trial than a preliminary hearing and allocate litigation resources accordingly.
Outside of a patent litigation, however, claim construction principles should guide any evaluation of a patent’s overall value. Understanding the true scope of granted claims requires specific and purposeful determination of those constructions a district court is likely to find. An issued patent is only the beginning.