Supreme Court Reverses Longstanding Federal Circuit Precedent, Orders Claim Construction Deference

The Federal Circuit has long reviewed all claim construction orders “de novo” – without any deference to factual issues underlying the district court’s decision.  Today, the Supreme Court overturned that longstanding precedent, ruling that findings of fact made as part of a claim construction order should be reviewed for clear error. Teva Pharmaceuticals USA Inc., et al. v. Sandoz, Inc. et al., 574 U.S. __ (2015).

This case came to the Supreme Court in the form of an ANDA lawsuit involving Teva’s blockbuster multiple sclerosis drug Copaxone.  The Southern District of New York found last year that generic defendants Mylan and Sandoz infringed Teva’s patents and that they had failed to prove the patents invalid.  On appeal, the Federal Circuit reviewed the Southern District’s claim construction de novo — including the district court’s factual findings — and found five of Teva’s patents invalid.  Teva then appealed to the Supreme Court.

The Supreme Court’s decision focused on Federal Rule of Civil Procedure 52(a)(6), which states that an appeals court must not set aside a district court’s “findings of fact” unless they are “clearly erroneous.”   Justice Steven Breyer, writing for the Court, explained that Rule 52(a)(6) does not contain an exception for claim construction: “when we held in Markman that the ultimate question of claim construction is for the judge and not the jury, we did not create an exception from the ordinary rule governing appellate review of factual matters.”  Rather, Rule 52(a)(6) sets forth a “clear command.”

Justice Breyer further noted that deference to the district court’s factual findings is particularly important in the field of patent law, “where so much depends upon familiarity with specific scientific problems and principles not usually contained in the general storehouse of knowledge and experience.”  A district court judge “has a comparatively greater opportunity to gain [the necessary familiarity with the facts]”; therefore, his or her factual findings should be given the deference required by Rule 52(a)(6).  The Supreme Court vacated the Federal Circuit’s decision and remanded for further proceedings consistent with the opinion.

Before today’s decision, the loser at the district court was often able to get a new claim construction on appeal to the Federal Circuit, thereby forcing the parties to start over at the district court.  The Supreme Court’s ruling today will likely reduce the frequency of such do-overs.  It should also add a measure of predictability to patent litigation, as the Federal Circuit’s reversal rate on claim construction issues should go down.  It remains to be seen, however, how marked the impact will be, as the ultimate issue of the proper claim construction remains an issue of law subject to de novo review.