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Revisiting claim construction after the Supreme Court's decision in Teva v. Sandoz.

Summary: In Teva Pharm. U.S.A. Inc. v. Sandoz, Inc., the Supreme Court ruled that the Court of Appeals for the Federal Circuit should review a district ...

In Teva Pharm. U.S.A. Inc. v. Sandoz, Inc., the Supreme Court ruled that the Court of Appeals for the Federal Circuit should review a district court's factual conclusions regarding extrinsic evidence relied upon during claim construction proceedings under the clear error standard, not the de novo standard. This clear error standard is a standard of appellate review that is more deferential to the district court. This article explores the impact of this change in the law.

At the district court level in the Teva case, defendants relied upon expert testimony to argue that certain claims were indefinite because the claim term "average molecular weight" could have different meanings in the relevant field. In response, plaintiff Teva relied upon its expert, who testified that a person of ordinary skill in the art would understand that the term "average molecular weight" had a specific meaning in view of the intrinsic evidence. Crediting and accepting Teva's expert's testimony, the district court ruled that the claims were not indefinite.

Defendants then appealed the district court's decision. On appeal, the Federal Circuit followed its long line of precedent, extending from the en banc decision in Cybor Corp. v. Fas Technologies, Inc., which held that the Federal Circuit reviews "claim construction de novo on appeal including any allegedly fact-based questions relating to claim construction." Based on its de novo review of the district court's claim construction, the Federal Circuit reversed the district court's decision and found the claims indefinite.

The case then went to the Supreme Court for resolution. In a 7-to-2 decision, the Supreme Court's majority explained that when the district court reviewed only evidence intrinsic to the patent, the judge's determination would amount solely to a determination of law, and the appeals court should review that construction de novo. However, the Court further explained that in cases where the district court consulted extrinsic evidence and made subsidiary factual findings about that extrinsic evidence during claim construction, those fact findings must be reviewed for clear error on appeal.

Unfortunately, the Teva decision has left us some open questions. For example, the Supreme Court held in Graham v. John Deere Co. of Kansas City that the level of ordinary skill in the art is a question of fact. Accordingly, how a person of ordinary skill in the art understood a claim term at the time of the invention may also be considered a question of fact, or may arguably have factual underpinnings. Indeed, the Supreme Court in Teva cited a 2nd Circuit decision which held that the "question ... of how the art understood the term ... was plainly a question of fact; and unless the [district court's] finding was 'clearly erroneous,' we are to take it as controlling."

Thus, when a party invokes "plain and ordinary meaning" for a claim term, the party may be injecting a factual issue, especially when the party also relies upon an expert's opinion on how a person of ordinary skill in the art would understand what the plain and ordinary meaning is. Notably, in Philips v. AWH Corp., the Federal Circuit said that "the words of a claim are generally given their ordinary and customary meaning" and such meaning "is the meaning that the term would have to a person of ordinary skill in the art in question at the time of the invention." Accordingly, a district court's finding on this question may very well be dispositive on the construction of the claim at issue. And under the majority's reasoning in Teva, this finding is a question of fact, subject to a higher (more deferential) standard of appellate review.



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But what if the expert only relies upon intrinsic evidence to reach his conclusion of how a person of ordinary skill in the art would understand what the plain and ordinary meaning is? In that case, can the Federal Circuit ignore the expert testimony relied upon by a district court and decide that intrinsic evidence alone is enough for construing the claim term under de novo review? And more generally, can the Federal Circuit ignore any extrinsic evidence relied upon by a district court in its claim construction decision if the Federal Circuit believes the intrinsic record alone is unambiguous?

It appears that at least one Federal Circuit panel has answered some of these questions in a very recent case. In Enzo Biochem Inc., v. Applera Corp., the Federal Circuit reversed a district court's claim construction decision that the claims should cover both indirect and direct detection of signaling moiety. In reaching its decision, the district court made a factual finding based on expert testimony that the specification discloses the direct detection scenario. However, in the majority's opinion by Chief Judge Prost, the Federal Circuit downplayed the importance of that finding and concluded that "this sole factual finding does not override [its] analysis of the totality of the specification, which clearly indicates that the purpose of this invention was directed towards indirect detection, not direct detection." In doing so, the Federal Circuit determined that it need not consider the district court's factual finding and the supporting expert testimony because the intrinsic evidence is clear enough. Indeed, in her dissenting opinion, Judge Newman criticized the majority for "ignoring the testimony and the district court's findings and the jury verdict based on the evidence at trial." Future cases will continue to examine the extent to which Teva envisioned weighing intrinsic evidence against the district court's factual findings before determining whether a de novo review or a review for clear error should be applied.

Another open question is whether the Teva decision will increase the use of extrinsic evidence, such as expert testimony, in district court Markman proceedings. On the one hand, the Teva decision may encourage litigators to introduce extrinsic evidence in an attempt to maximize deference to a favorable decision. For example, litigators may be incentivized to introduce more extrinsic evidence on the crucial question of what a claim term meant to those in the art. That finding frequently will be dispositive, and may insulate the whole construction from de novo review. And some trial courts may be more willing to rely on that extrinsic evidence to insulate their decisions from de novo review by the Federal Circuit.

On the other hand, if a party relies on expert testimony, regarding how a person of ordinary skill in the art would understand a term, to support its proposed construction of the term, and if the district court judge rules against the party's proposed construction and discredits the party's expert testimony, the Federal Circuit may need to review those decisions under clear error standard. That may make it more difficult for the Federal Circuit to reverse the district court's ruling. Thus, whether a litigant should seek to rely on extrinsic evidence may depend on that litigant's view of the strength of his or her claim construction case and whether he or she will want a district court decision that is more difficult to overturn on appeal.

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Publication:Inside Counsel
Date:May 11, 2015
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