Supreme Court Questions Standard for Appellate Review of Claim Construction
Last week, the Supreme Court held arguments in the closely watched case of Teva v. Sandoz. Teva won at the district court level based on claim construction arguments. The Federal Circuit reversed, affording no deference to the district courts factual findings underlying claim construction. In March, the Supreme Court granted certiorari to answer one lone question:
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 Federal Rule of Civil Procedure 52(a) requires.
The argument was lively from the start, with questions by all of the Justices except Justice Thomas.
Teva argued that the three specific findings here, like terms of art, were “exactly the kind of thing that trial judges need the input from experts to determine.” Justice Alito appeared skeptical of deference, noting that terms of art used in statutes are equally outside the understanding of a lay person and require specialized knowledge, yet are construed as a matter of law and reviewed without deference. Justice Sotomayor referred to claim construction as an “odd hybrid,” to which Teva argued it was certainly a hybrid question of law and fact, but one that should follow the “universal practice” for mixed questions of law and fact by according deference to factual findings.
Both Justice Kennedy and Scalia used the Markman case to try to tease out the difference between pure claim construction, which all agree is a matter of law, and claim constructions involving subsidiary fact finding.
Chief Justice Roberts asked the fundamental question directly: “Well, what’s your definition of a subsidiary fact.” The simple answer was quickly lost as Justices Alito and Kagan asked follow-up questions. Chief Justice Roberts and Justice Breyer asked repeated questions of the Government about the public notice function of patents and hypothesized situations where two District Courts could reach opposite conclusions based on expert testimony before them with neither decision being clear error. The Government’s primary response was that this was unlikely, with the secondary response being that preclusion only runs against the patentee.
When counsel for Sandoz finally got to speak, he argued that the Markman decision settled these issues, and they should remain settled. Justice Breyer disagreed, repeatedly. Justice Kagan joined in, focusing attention back on the actual text of Rule 52. Both Justices Breyer and Kagan seemed uncomfortable with a blanket rule that claim construction involves no facts. Justices Sotomayor and Kennedy questioned whether the presence of live testimony at a Markman hearing would involve factual findings requiring deference; counsel for Sandoz said it should not make any difference. This caused a barrage of questions from Justice Scalia. Justice Alito brought the hearing back to where it began: whether a patent was public law, such as a statute, or private law, such as a deed. In the former, Rule 52 would not apply; in the latter, it would.
It remains to be seen whether the Court will tackle head-on the difficult issue of how to tease out underlying factual findings from the legal issue of claim construction. At the argument, neither the Justices nor the lawyers for Teva or the Government had a clear way to draw that line. The only easy answer is that Markman should be read as making all aspects of claim construction a question of law entitled to no deference on appeal. But the questioning suggests that this answer, while easy, goes well beyond what the Court is willing to say.