by Dennis Crouch
In Teva v. Sandoz, the Supreme Court raised the standard of appellate review of a district court’s factual conclusions regarding extrinsic evidence relied upon during claim construction proceedings. Although the decision represents a relatively small change in procedural law, it is important, both because claim construction has become such a major element of patent litigation and because the Court of Appeals for the Federal Circuit has a history of reversing a high percentage of claim construction decisions.
I asked a handful of patent law experts for their instant thoughts on the decision (and gave them strict word limits). Douglas Kline, Chair of Goodwin Procter’s IP Litigation Group spells out the basic first-order result of the case:
From now on, when a district court resolves factual disputes concerning extrinsic evidence bearing on patent claim construction, the Federal Circuit will review those subsidiary factual findings for clear error. This should result in the Federal Circuit affirming some claim construction decisions it might have overturned under the old standard.
Thinking forward about how parties will react, MBHB Partners Joshua Rich and Andrew Williams suggest higher reliance on expert testimony and thus higher litigation costs:
Today’s decision is likely to increase the cost and complexity of claim construction because it encourages parties to introduce extrinsic evidence, especially expert testimony, in an attempt to maximize deference to a favorable decision. And some trial courts may end up relying on that extrinsic evidence to insulate their decisions.
Joshua Rich & Andrew Williams, partners at McDonnell Boehnen Hulbert & Berghoff. “At the district court level, the new standard of review will likely mean more reliance on experts in interpreting the claims.” Dominick Conde, partner at Fitzpatrick, Cella, Harper & Scinto LLP.
Providing Guidance: The decision itself does a nice job of detailing the level of review for each different aspect of a claim construction ruling. Paul Hughes from Mayer Brown LLP comments that “the Court provided unusually robust prospective guidance to aid the Federal Circuit in distinguishing questions of fact from questions of law.”
As usual, Professor Lefstin’s comments are both insightful and linked to historic evidence. Here, Lefstin disagrees slightly with Hughes in that some surprising aspects of claim construction should also be considered extrinsic evidence.
As Justice Traynor pointed out long ago, sources of meaning such as dictionaries and the judge’s personal linguistic experience are ‘extrinsic.’ Under Justice Breyer’s holding, the act of consulting a dictionary – which is how a court might determine “the meaning of a term in the relevant art during the relevant time period” – seems entitled to deference.
Jeffrey A. Lefstin, Professor of Law, UC Hastings College of Law. However, Lefstin – along with others – believes that the ultimate change in the law is too slight to make much difference. Or, perhaps more pointedly, Lefstin’s argument is that the Teva decision leaves the Federal Circuit with power to continue reviewing claim construction without deference.
Ultimately it will make no difference, since the CAFC can review without deference the district court’s assignment of that meaning “in the context of the specific patent claim under review.” The opportunities for the CAFC to frame construction as a contextual inquiry are so pervasive that Teva will serve only to generate pointless disputes over the extrinsic/intrinsic and isolated/contextual boundaries.
Lefstin. Recognizing this same point, Professor Liivak explains that a legal analysis is still required for claim construction which will be reviewed de novo.
There is still ample room for de facto de novo review. The district court “must” conduct a “legal analysis” on whether the factual determination is relevant in the “context of the specific patent claim under review.” This is where all the maneuvering will be.
Oskar Liivak, Professor of Law, Cornell Law School. With reference to the disputed “molecular weight” claim term in this case, Liivak foresees that the Federal Circuit could fairly easily modify its opinion to satisfy the Supreme Court without changing its ultimate determination.
On remand as to this claim term, a very few words have to change but the outcome need not: the factual determination about SEC is quite plausibly irrelevant to interpretation of the intrinsic evidence in Fig. 1.
Liivak. The question – in Professor David Berry’s mind is whether the CAFC will “flex its muscles” on the issue. If not, we can “look for more expert testimony, especially on the crucial question of what the claim meant to those in the art. That finding frequently will be dispositive, and may insulate the whole construction from de novo review.” Professor David C. Berry, Western Michigan University – Cooley Law School.
Fallacy of Predictability: One of the key policy goals of deference is to provide predictability – at least once the district court construes the claims. Professor Mark Janis sees the potential that this particular outcome will, unfortunately, not aid that goal. Still, Janis has some optimism. He writes:
A long-overdue ruling. But it’s one that leaves CAFC judges ample room to defer (or not) in any given case. The CAFC’s challenge is to demonstrate that it can implement Teva in the service of better predictability – which may require some CAFC judges to set aside cherished views about who really gets to call the shots in claim construction.
Mark D. Janis, Robert A. Lucas Chair of Law, Center for Intellectual Property Research, Indiana Univ. Maurer School of Law. I agree with the fallacy of predictability given by deference, but at an even deeper level. If I may quote myself:
My problem with the decision is that giving deference on review only masks the major problem that claim scope is not well understood until decided by a court. Claim scope should be clearly understood at the time of issuance.
Dennis Crouch, Professor at the University of Missouri School of Law.
Who Benefits?: Erich Spangenberg is the CEO of nXn Partners and founder and former CEO of IPNav. He has been on the patent-owner side of a very large number of patent lawsuits and he tends to provide insight that is spot on. In my prior article on Teva, I suggested that patentees will prefer the new rule and Spangenberg agrees, with caveats:
The appellate reversal rate was too high and created far too much uncertainty. If what Teva means is that we are going to have greater certainty, faster resolution as a result of fewer reversals and the occasional district court decision that gets it wrong—I am in favor. My enthusiasm is tempered by the likelihood that there are a few years of disputes as the new boundaries are defined—but longer term, this is a positive.
Professor Roger Ford recognizes that “who benefits” may well depend upon the case:
How [Teva] will play out is unclear, since litigants don’t always know, before construction, what review standard they’d prefer. Optimistic parties may prefer deferential review, assuming they’ll win; risk-averse ones may prefer having two chances to win.
Roger Ford is Assistant Professor of Law at the University of New Hampshire School of Law.
Evidentiary Hearings: Few courts conduct evidentiary hearings as part of claim construction. Going against the tide, Michael Risch doesn’t foresee any change in that reality:
A key question after Teva will be whether District Courts are more likely to hear extrinsic evidence just because findings get deference. Given likely reversal if the intrinsic evidence is clear, I don’t see why they would waste their time that way.
Michael Risch, Professor of Law, Villanova University School of Law. Implicit in Professor Risch’s remarks is the conclusion that the Phillips “intrinsic first” approach continues to reign. Dean Holbrook believes that conclusion is correct:
The Federal Circuit will continue to use the Phillips hierarchy, turning to extrinsic evidence only when the intrinsic evidence is ambiguous. I think, in the main, the Federal Circuit will view the intrinsic evidence as determinative, retaining de novo review in the vast majority of cases.
Timothy R. Holbrook, Associate Dean of Faculty and Professor of Law, Emory University School of Law.
Changing Claim Construction: Dean Holbrook’s conclusion is not universally supported. Professor Jason Rantanen argues instead that Teva may have more generally changed the nature of claim construction:
As I read Teva, the Court endorses a claim construction process where the judge begins with the extrinisic evidence about a claim term, decides what the extrinsic evidence establishes for that term and then determines whether the way the patent uses the term is inconsistent with the established ordinary meaning of the term. This approach is more consistent with Texas Digital than Phillips.
Jason Rantanen, Associate Professor of Law, University of Iowa College of Law. Rantanen does fully agree with others that significant power is now in the Federal Circuit’s hands — in particular, he “fully expects the Federal Circuit to disagree with [his] reading” of the case. Eileen M. Herlihy, a da Vinci Fellow at George Mason CPIP, recognizes a particular evidentiary focus here – the person having ordinary skill in the art. She notes that the court once again “reemphasizes the patent law specific importance of the PHOSITA, thereby adds to recent Supreme Court cases asserting this perspective.”
Although Rantanen in his claim-construction-shift compares precedent, Professor Shubha Ghosh encourages creative lawyering in suggesting alternative “styles of claim construction”
Teva teaches that patent claims consist of law, reviewed de novo, and evidence, reviewed for clear error. Unanswered is what mix of law and evidence forms the basis for claim construction. The Federal Circuit’s and rulings favored strict constuction. The Court’s decision here opens the floodgates for experimentation by advocates and judges in different styles of claim construction.
Shubha Ghosh, Vilas Research Fellow and George Young Bascom Professor
of Intellectual Property and Business Law, University of Wisconsin,
Madison, Law School.
Exceptionality: One theme of Supreme Court patent cases over the past decade is that patent law need not always be so exceptional – i.e., different from other areas of law. Rather, when traditional principles apply across doctrines, then they should apply to patent law as well. Referencing eBay, an early case in this trend, Professor Clifford writes:
Patent law is not unique when balancing must be done before granting equitable relief. Now, as is required for other legal documents such as contracts, we must separate interpretation of the words used (a matter of fact) from the meaning and effect they have (a matter of law).
Ralph D. Clifford, Prof., Univ. of Massachusetts School of Law. Similarly, Professor Landers writes that “Teva underscores the Supreme Court’s view that (like eBay and Holmes v. Vorando) the procedural aspects of patent cases are not exceptional.” Prof. Amy Landers, Drexel University Kline School of Law. “Teva has broad significance because it … conforms patent law to other areas of the law on a matter of proper appellate function.” Eileen M. Herlihy, da Vinci Fellow at George Mason CPIP.
Indefiniteness and ambiguity have been important topics in recent patent law cases. Profesor Laakmann reminds us that the setup for the Teva case is not so-much claim construction but instead the lower court determination that the claim was unduly ambiguous and therefore invalid as indefinite.
The case turns on whether there is cognizable distinction between a claim term being factually ambiguous (and thus amenable to extrinsic evidence under a “clearly erroneous” standard of review) and legally indefinite (and thus invalid under 112 under a de novo standard of review). This is the crux of the disagreement between the majority and the dissent – the majority says “yes” and the dissent says “no.”
Anna Laakmann is an Assistant Professor at Lewis and Clark Law School. On remand, an important feature of the case is that the lower courts will also now need to work-in the new standard of indefiniteness from Nautilus.
At the PTO: For the most part, we’re talking about patent litigation. However, Professor Joe Miller thinks that there may be a broader impact on USPTO practice as well:
Justice Breyer, speaking for a split Court’s majority, set aside a Federal Circuit patent validity determination. According to the Court, the Federal Circuit had not reviewed the lower tribunal’s key factual findings with the greater deference the controlling rule requires. Today’s decision in Teva v. Sandoz? Sure. But also 1999’s Dickinson v. Zurko, 527 U.S. 150 (1999). Teva’s main effects may well be felt at the PTO.
Joe Miller, Professor, University of Georgia Law School.
Although there are differing perspectives here, the overarching thought is that we’ll have to wait to see what the Federal Circuit does — which is exactly the result deference is supposed to avoid.
* Thanks to my colleagues for providing their interesting input on this article.