Guest Post by Prof. Shubha Ghosh: Are South African Yellow Canaries a Question of Law or Fact?

Guest Post by Professor Shubha Ghosh.  Prof. Ghosh is the Vilas Research Fellow & George Young Bascom Professor in Business Law at the University of Wisconsin Law School, where he is also the Associate Director of the Initiatives for Studies in Transformational Entrepreneurship (INSITE).  

I was fortunate to be able to attend oral argument in Teva v Sandoz before the Supreme Court on October 15. At issue was a highly technical issue at the intersection of civil procedure and patent law: Is the standard of appellate review for patent claim construction de novo or clearly erroneous? The Justices’ engagement with this dry, but fundamental, question extended from hypos about bus crashes and South African Yellow Canaries (don’t ask) to elusive distinctions between facts and law in construing scientific terms like “average molecular weight.”

While the discussion was lively, the big question of what is the appropriate methodology for claim construction was avoided. The Federal Circuit presumably answered that question in Phillips v. AWH, but the Supreme Court has never addressed that issue. Even a lively oral argument cannot cure the failure to address claim construction methodology. I will address that problem at the end of this post after setting forth these highlights.

(1) Justice Alito stated the issue as one of whether a patent is analogous to a statute (for which there is no deference to legislative facts) or to a private contract (for which there is deference on factfinding).  That may be just restating the question, but gives some indication on how some of the justices are approaching the matter. The question of right analogy is a bit of a red herring. Which analogy you choose depends on how you view the mix of law and fact in patent claims.

(2) Justice Roberts came out clearly, from my listening, on the side of patent as statute and emphasized the importance of uniformity (and implicitly the need to avoid forum shopping).  Go Federal Circuit!  Justice Scalia was hard to read although he did make a comparison between a patent and a deed. Also, given his opinion in Medimmune in 2007, he may come out on the side of a patent as a statute.

(3) Justice Breyer came out on the side of 52(a) and pushed back on Sandoz’ argument that the Court had already resolved the question of deference in Markman by concluding that claim construction is a matter of law. Justice Ginsburg pointed out the different context of the 7th Amendment in Markman. I think there were at least four Justices (Breyer, Ginsburg, Kagan and Kennedy) who seemed to be skeptical about special rules regarding fact finding for Markman hearings (which is one way of phrasing Sandoz’ argument). In addition, Justice Scalia’s strict constructionism would lead him to agree with Justice Breyer. Justice Sotomayor’s questions were more searching, but indicated some skepticism with Sandoz’ position.

(4) Even when there was sympathy for the Teva argument, there seemed to be some pushback on how to separate subsidiary facts from legislative facts (a big distinction for Teva and for the SG).  I did not find a completely great answer although the SG brief and argument came close to a methodology for parsing facts.

Based on this reading of the oral arguments, I would predict a victory for Teva on the 52(a) issue with Justices Breyer, Ginsburg, Kagan, Kennedy and possibly Scalia or Sotomayor voting for a reversal. The open question is how to distinguish facts and law in patent claims. This question may just be left for another day.

Looming in the background of this case is the issue of how claim construction should be done. Although Philips offers the accepted methodology (and one that seems to have reduced the reversal rate on claim construction by the Federal Circuit), the Supreme Court has neither endorsed the decision nor addressed how district courts should construe claims. But the law/fact question is intimately connected with the methodology of construction.

Treating claim construction as purely a question of law is consistent with the plain meaning approach to construing claims, as endorsed by the Philips decision. The more courts rely on sources other than the words of a claim, such as prosecution history or expert witnesses, the more fact-based claim construction becomes. It is no coincidence that Teva in its arguments emphasized the role of experts and prosecution history in construing the meaning of “average molecular weight.” A ruling in favor of Teva would suggest that claim construction relies more heavily on factors extrinsic to the language of the claims, a position different from the plain meaning approach of Philips.

Of course, the ruling in Teva will just be the start and perhaps the first step in the Supreme Court examining claim construction methodology head on.

 

66 thoughts on “Guest Post by Prof. Shubha Ghosh: Are South African Yellow Canaries a Question of Law or Fact?

  1. Nice write-up, Professor Ghosh.

    I thought I’d borrow from this write-up at Patent Docs to refresh everyone’s memory about how this case came to be:

    link to patentdocs.org

    The Appellants challenged the lower court’s determination that “molecular weight” could be defined, because one of skill in the art would not understand which measurement (Mp, Mw, Mn, or something else) should be used. The specification of the patents-in-suit was silent as to which measurement was appropriate, other than to describe the use of SEC (which can be used to obtain all three values). Statements made in the prosecution history compounded the problem. In response to an indefiniteness rejection in one of the patents, the patentees said that “[o]ne of ordinary skill in the art, upon reviewing the specification, would understand that ‘average molecular weight’ refers to the molecular weight at the peak of the molecular weight distribution curve,” or Mp. However, in response to an identical rejection in an earlier related application, the patentees said that “”[o]ne of ordinary skill in the art could understand that kilodalton units implies [sic] a weight average molecular weight,” or Mw.

    Teva argued that one skilled in the art would have understood that average molecular weight could only be Mp. Teva asserted that use of SEC without more suggests Mp because determining Mn and Mw required additional calculations. The Court appeared skeptical of this argument, because SEC can be used to calculate all three values. Teva also downplayed the prosecution history by explaining that a skilled artisan would recognize that the statement in the earlier application was false — because “kilodalton units” does not imply weight average. Teva appears to have alleged that the second statement rectified the earlier misstatement. However, there is no indication that the patentees in the later application retracted the earlier statement. Therefore, the Court was left with two contradictory statements that could not be rectified. As such, the claims in Group I were held to be indefinite.

    Unless I’m missing something, there seems little room to doubt that the Federal Circuit reached the correct result in this case (i.e., indefiniteness because of the contradictory statements made by Teva during prosecution). I think the Supreme Court understands that much. In that regard, this doesn’t seem like a principled battle being fought by Teva. Rather, it looks more like an instance of a bad actor (Teva) going to the mat with whatever argument it has to make (however weak) simply because there is a lot of money at stake.

    As the defendant pointed out in oral arguments, there doesn’t appear to be much dispute about the facts. The dispute is legal in nature: how do the facts inform the claim construction? That’s a question of law and it should be reviewed de novo.

    In every patent case where each side is presenting opposing experts to opine on how “one of ordinary skill” interprets a disputed claim term, those experts are going to disagree on the final answer. Determining who is “right” is a matter of following the law (i.e., Phillips and Nautilis). Now, if there is an underlying fact that is disputed and opined upon by each side’s experts, the district court judge should (must!) explain why he/she is choosing one version of that “fact” over the other. I think the Federal Circuit should give deference to such a finding unless it is clearly erroneous, in which case all the Federal Circuit needs to do is explain why it believes the error is clear.

    I should also note that, generally speaking, when there is a question about how one skilled in the art would interpret a claim term, the question is best answered by interviewing dozens of people skilled in the art. That’s something that a court-appointed expert should do. It makes little sense to have two compromised “experts”, paid for and trained by opposing counsel, to simply express their paid-for opinions and let judges or juries fight through the dust to try to figure out who’s telling the truth.

    Lastly, Phillips is a well-reasoned and well-written case as far as Federal Circuit decisions go. The problem is that the Federal Circuit needs to apply Phillips consistently (something they are certainly capable of doing) so that district court’s have a consistent body of case law to rely on. Until recently, the other glaring problem was the Federal Circuit’s extremely ill-considered pro-patentee jurisprudence regarding indefiniteness. That problem, as noted above, was recently fixed by the Supremes in Nautilis.

    1. Agree with the result. See, post 10.

      Teva argued to the Supreme Court the specification was clear to one of ordinary skill once SEC was named as the test. Perhaps in isolation, this might have been true, as an SEC chart directly yielded Mp, and only Mp.

      However, prosecution history trumped the otherwise clear specification.
      There, two different definitions of a particular claim term were given. They are binding on the applicant even if one was technically incorrect. They are inconsistent. Moreover, the second one, referencing Fig. 1’s peeks, was inconsistent with the expert testimony that Mp was the measure, as the peaks in Fig. 1 were not Mp.

      Thus there were two, not just one, statements in the record inconsistent with the theory that Mp was the proper measure.

      The claims are indefinite as a matter of law.

      As I have mentioned before, I had just such a case where I was defending against a patent that indiscriminately mixed peak and average roughness in the spec., and claimed a “roughness factor” in the claims where that term was used to refer to both measures. On their face, to me, such claims are invalid.

      Actually, that spec told me that either the inventor didn’t understand the alleged invention, or the patent attorney did not. After talking to both, it was abundantly clear that neither really understood what was going on even if the inventor had discovered something new.

    2. MM, prosecution is of less importance than the specification. It is hard for me to understand why a claim is indefinite if in view of the specification its scope is clear. Why is the prosecution history needed here? Does Phillips suggest that it should be of lesser importance?

      1. PiKa,

        I am not sure this is a matter of “less or more” importance so much as a matter of – you cannot ignore what is said in prosecution.

        One of the fundamentals of “patent profanity” is that attorneys and attorney scrivining – while constantly being denigrated by the court – has a very real effect – both upside AND downside.

        1. I agree with you that the drafting of application and responses to OA must be done carefully (or in other words, I think our jobs are useful).
          But here, I find some of Sandoz arguments far-fetched. Looking in the prosecution history of patents in the same family of the asserted patent to argue indefiniteness of the claims? That seems to be a very weak argument. It is not apparent that the district court got it wrong.

      2. PiKa, MM, prosecution is of less importance than the specification. It is hard for me to understand why a claim is indefinite if in view of the specification its scope is clear. Why is the prosecution history needed here? Does Phillips suggest that it should be of lesser importance?

        PiKa, when one actually states in the prosecution history what a claim term means in order to get the claims allowed, it is binding. One can do this either expressly by a positive statement, or by saying that the claim does not include X, Y, or Z subject matter. It operates almost like an amendment to the claim itself.

        I found the argument by Teva’s counsel that the prosecution history could not trump an otherwise clear specification to be an argument not in accordance with the law. I wonder how the Supreme Court is going to deal with that. I think Sotomayor understood that issue.

    1. I think she passed the test of being able to buffalo one of the congressional members on the oversight board with her non-answer to his question of “You are not eliminating software innovation, are you?”

      1. I watched that. I couldn’t believe that they let her off so easily. Well, Google has the reins now. Can’t wait for Obama to get out of office. Problem is that I think that Google bucks buy everyone these days.

        1. One thing about Google too is that it is not just patents. If those anti-patent people haven’t noticed, Google pretty much wants to end all IP because they think it will make their company worth more and make its mission easier of organizing the world’s information.

          They have attacked copyrights on computer programs, copyrights on books, etc. They have just gotten a lot smarter and gone to K Street with Google bucks.

        1. You should watch it. They let her off without saying really anything. She didn’t say anything regarding the ex parte backlog either. It seemed like the fix was in. No tough questions for her. One bloated money taking dope said blustered about software for about 10 seconds then just let the whole thing go.

          It felt like the fix was in.

          1. More than just “let her off,” several members of that congressional body would be prime candidates for Boss Tweed cartoons…

            …but such are not “proper” if we are to remain “polite” about things…

  2. The claims at issue were held indefinite because of inconsistent interpretation of average molecular weight given by the patentee’s counsel during prosecution in two related patents.

    Now that was on the record.

    Teva explained that one of ordinary skill would know that one of the statements was scientifically incorrect. But the other statement as well was inconsistent with its proffered interpretation that average molecular weight meant Mp, because the attorney said it was the peaks of Figure 1, which were not Mp. See the Feds opinion with the Fig. 1 markup.

    On its face, the meaning of the terms are indefinite due the inconsistent statements of the prosecuting attorneys both of which did not align with the spec.

    But, Teva goes on to argue that we can ignore these statements because the specification i definite given that it said to use SEC to make the determination, and the use of SEC directly results in Mp. I think not, Teva. Even if a specification would have otherwise been clear, what the attorneys said during prosecution cannot be discarded.

    This is a case where the expert opinion had to yield to the record. The expert opinion regarding the spec may have been correct, but what the applicant’s attorneys said is controlling.

    Win for Sandoz because even if some deference must be given to the fact finder, the failure to give appropriate weight to the attorney argument was legal error.

    Now how the Court gets to this result, we shall see.

    Sotomayor seemed to get it.

  3. It seems that for a Court that so often desires to use general principles, it wants to veer from that here. After all, judges make preliminary findings that serve as the basis for jury trial all the time. Pre-trial rulings on whether to exclude evidence in criminal trials appears to be a very fact-bound area that is reviewed on appeal all the time and can immensely affect a jury trial just as claim construction instructions would. It seems the Court did not spend enough time exploring such directly comparable analogies for insight.

    To the extent those could be examined for the use of documentary and expert evidence they could be very useful. Then, if perhaps there are different legal regimes that happens under you could ask yourself whether what legal model should be used for feeding facts into law.

    Maybe they DIG this one.

  4. Well, since former Justice Stevens talked about “red herrings” in Bilski, I guess Justice Breyer’s “South African yellow canaries” are fair game for Teva Pharm. What any utter embarrassment from the same Justice who wrote that embarrassing opinion in Mayo. Can Breyer not stay on topic when it’s a patent case?

    1. You have to wonder at the sheer gall of people like Breyer and Stevens to believe that they just know science and patent law better than anyone else when they have no background in science or patent law. I’ll bet they would both fail a very basic test in science (and worse yet, a very basic test in logic.)

      1. NWPA,

        Breyer was a philosophy major undergrad. Acts and talks like a philosophy “wonk” too: facts are irrelevant, all that matters is winning the argument. Frankly, philosophy majors give me “hay fever.”

        1. I completely disagree, as the notion of “winning the argument” means that you are applying objective debating rules, and no such rules are in place for the Royal Nine, who do whatever they want to do, and merely take the desired ends without laying the proper means to get there (the we’ll define that term later mentality).

          1. (btw, such directly compares with the noted difference between having a dialogue, wherein valid counterpoints must be accounted for and integrated into the ongoing discussion and the propensity to want a mere soapboxing “platform” for monologues)

          2. Hey anon,

            You miss my drift about “winning the argument” when it comes to philosophy folk who don’t care about objective debating rules. Philosophy folk argue for the sake of argument, whether the “real” facts support their position or not. In their eyes, you can never win arguing that the “real” facts don’t support their position.

            1. I did not miss your drift EG – I distinguished true argument in its pure form (something good) from what merely passes as “arguement” in that the soapboxing and the lack of integrating valid counterpoints can NEVER bring a discussion forward to the proper point that true arguments will bring BOTH sides to.

              One can be philosophical and still engage in proper argument – as I posted elsewhere on this thread, those with intellect actually welcome the counterpoints.

    2. He is like the Alan Alda of the Bench – where a short circuiting brain verbalization – is a poser for intellect.

  5. The CAFC is already the exemplary model of **the Legal Inconsistency** that advocates of keeping CAFC de novo review fear will suddenly **happen** to the Patent World if CAFC de novo power is removed.

    If anything, by giving difference back to the lower courts we actually remove the concentrated Legal Inconsistency power held by essentially un-reviewable 3-Judge Panels.

    Jeez, wake up and look around! Can it get any worse than I/P Engine, Inc. v. AOL, Inc.? Yup! Look what CAFC de novo review has done here! It is an excuse for a Judge to do anything he wants under what is essentially an concentrated unchecked power in the hands of the few. I/P Engine statistically has less than a 10% chance for getting an EnBanc!

    Because of the Legal Inconsistency of CAFC de novo, when at the CAFC, do you do the Prayer, before the names on your panel are released that morning? – ‘Please God, just let me have 1 or 2 smart ones of the 3-4 that are left at this hell-hole venue and I promise I will…(insert the deal you propose to God here) ’

    Here is some Patent certainty everyone can use: Because of the CAFC’ s consistent ‘Legal Inconsistency’ per its de novo review, a Plaintiff on Appeal is statistically better off (by 2X) in taking the Money budgeted for the Appeal to Las Vegas and putting it all on RED or Black at Roulette.

    1. I agree with this. Particularly in that Hughes and Taranto appear to have been appointed according to Google’s wishes of ending patent rights. Their opinions are horrendous.

      Your arguments are good ones for ending the Fed. Cir. It has been captured by corporate money. It is harder to capture patent rights if they are distributed. Rader jumped because he knew how bad it had gotten I wanted out.

        1. Re read the Rader opinion in Alice, and then realize that not only was Chief Judge Rader not required to step down for his lapse of judgement, but he was also not required to retire.

          While there is indeed some creativity involved here, it is not nearly as dramatic as you and 6 portray.

              1. I remember what was said there’s no need to read it again. Rader was but t hurt. I don’t know that he was so but t hurt to up and quit. If anything a man in his position should have sought redemption, not cut and run.

                1. “But he DID cut and run ”

                  Or maybe he did not. You’re speculation that he did is far from proven. I on the other hand prefer to think that a man of his caliber, given the choice, would not have voluntarily have done so.

                  “but it is very much in line with the available breadcrumbs that us mere mortals can piece together without being behind judge’s chambers.”

                  Except for the articles that came out prior to his deciding to leave that were saying he was being pressured to leave. Those are a pretty large “bread crumb” that the speculation is not consistent with.

                2. “I will simply ask that you provide a link or citation to this “rather large breadcrumb.””

                  Don’t care enough about it to do so. You and yours are the only ones out in the dark theorizing. As usual. Just check the PO threads if you care enough about it. Or, in the alternate, simply ask Rader the next time you see him.

      1. As I love to say, never assume conspiracy when incompetence is just as likely.

        He left the bench because he couldn’t follow one of the five cannons of judicial ethics. See the commentary in 2B.

    2. Your frustration is certainly warranted – but in fairness – you can get a jerk district court judge as well – and then you can appreciate de novo review.

      1. As I pointed out – there is no “sticking point” here – unless the Court fabricates a new sticking point.

        This is most definitely not to say that such is exactly what they may decide to do, but the focus (rightfully) will be will any such decision accord with the civil procedural rule setting apparatus already set in place (as, after all, one should ask how much of a procedural matter this really is). In comparison, would the Supreme Court de facto change civil procedure rules (think Iqbal- Twombly)…?

  6. It might lamzeedotes. In Canada a patent is considered interpreted as a statute (well a regulation passed under the statute), and file history is essentially prohibited from use. There is at least one case where the judge mentioned a similarity between the use of legislative history with the file wrapper (finding both next to useless, and thus no need to allow the file wrapper into patent cases).

    1. Canada and Australia as well. It can be very frustrating when the patentee makes clear and concrete statements during prosecution (about what the claims do not cover), yet the public is not permitted to rely on them.

  7. I think analogizing a “patentory” construction to statutory construction is an okay tool, but so long as the scope and extent of that analogy are understood. For example, given the strict liability of patent infringement, will courts apply the same sorts of rules when construing infringement as it applies when applying statutes? That is, it would be to apply the common law maxim of construing against the statute? If so, I’m on board. (i.e., benefit of the doubt goes to the accused).

  8. If they want to be consistent with Alice, then the SCOTUS needs to rule no deference otherwise they won’t be able to invalidate patents so easily based on the Alice test of the judge closing their eyes and sniffing the patent.

    1. Might also interest you to know that in the US (also still under examination), the claims are properly being 101’d by reason that isolating the (natural) virus does not make it patentable subject matter.

        1. Wait and see. The examiner’s going to wake up and notice the applicant made a mistake when it claimed, during the interview, that there was no rejection of claim 4. The basis for the applicant’s statement that claim 4 should now be allowed is based on nothing more than the examiner’s comment that, well, “with no rejections [then] claim 4 should have been indicated as allowed”.

          But claim 4 was rejected for WD/112.

          It depends on the AU, but in many even primaries have to show allowed claims to their SPE and get acceptance. If I were a betting person, I’d wager your left lugnut that either the examiner will catch on, or her SPE won’t let it pass through.

            1. One would hope so, but unfortunately there are a number of cases indicating otherwise. About situations where it appears from the record that the examiner misunderstood what was going on, I mean. IIRC the standard meme is, “we presume the examiner knew what s/he was doing”…

              1. I think you go too far – there is a clear difference between according “proper weight” to administrative actions and the law as written (the presumption of validity) and the point here of an obvious mistake – on the record – that anyone can easily see at a glance which would make enforcing the particular item affected a dead letter.

                You need to go back and reclaim the baby from the bathwater you just tossed.

                1. (the answer to the problem of examiners not doing their jobs is NOT to simply say “oh well, let’s just posit that examiners never do – and never have to do – their jobs by removing the presumption that their jobs are being done)

                2. …if you want to go that route, we IMMEDIATELY should fire ALL examiners and merely have a registration system – that would be a multi-BILLION dollar immediate infusion to the innovation community, who are the ones paying the multi-BILLION dollar patent office budget.

                3. “You need to go back and reclaim the baby from the bathwater you just tossed.”

                  And I suggest you need to go read some case law. For example, on where applicant filed an amendment explicitly stating on the record that it had entered claim limitation XYZ into all independent claims. XYZ was important to patentability on the record up to then. As it turns out, though, one independent claim was not amended to include XYZ.

                  The examiner allowed the case without comment except “What Applicant said”, including all independent claims. When the patent was litigated, the defendant argued the independent claim not containing element XYZ was invalid based on the history described above, and that it was clearly allowed only by result of an obvious mistake.

                  The court didn’t bite – instead, it treated the PTO as the expert body it is (/is supposed to be) and said that the defendant had no proof that the examiner had not, for example, carefully considered that claim itself in isolation without element XYZ and found it to be separately patentable on its own merits.

                  Assuming you’re also the “anon” at 8:20 and 8:21 am, serially replying to your own posts, I think those comments are adequately covered with the above so I won’t spam up the thread further.

  9. It seems that the “patent as statute” analogy may be problematic in light of the view a certain portion of the Court takes of legislative history. Would this open the door to the Court revisiting the weight of the file history?

    1. lame, neither Congress nor the patent bar intended to change anything about the patent law in the codification that took place in ’52, except in two or three places: 103, 112(f), 271(d) come to mind.

      But what happened to patent law in the hands of the CCPA and the Federal Circuit was to rip patent law entirely from its foundations and to rewrite it in the views of Rich and his colleagues who systematically did not follow prior case law to the extent they did not like it under the rubric that what was not codified, did not exist. There are quite a few en banc cases that Rich overturned in his time, include some only as a writer for a panel. State Street Bank was one of those panels.

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