Teva Pharmaceuticals USA, Inc, et al v Sandoz, Inc, et al, 574 US __ (2015)

The Supreme Court of the United States overturned a decision of the Court of Appeals of the Federal Circuit (CAFC) to clarify that although claim construction is ultimately a question of law to be reviewed de novo, it is a practice with evidentiary underpinnings which may require resolving subsidiary factual disputes which are to be reviewed on a standard of clear error. [6-7] In the context of a patent infringement suit brought by Teva Pharmaceuticals against Sandoz, a District Court made a factual determination about the meaning of “molecular weight” in the patent claim at issue by favouring the opinion of one expert witness over another. [3] The CAFC reversed the decision, and reviewed this factual determination de novo. [3] However, the CAFC erred in doing so, as it did not make the finding that the District Court made its determination in clear error. [16] The Supreme Court clarified that this was a factual matter subject to Federal Rule of Civil Procedure 52(a)(6) and thus should have been reviewed on a standard of clear error. [4]

Factual Background and Judicial History

The infringement suit brought by Teva against Sandoz was regarding Teva’s patent on a method of manufacturing Copaxone. [2]Copaxone, which the patent describes as having an active ingredient “copolymer-1”, consists of a range of molecules of varying molecular weights. [2] Sandoz argued that a claim describing the active ingredient as having “a molecular weight of 5 to 9 kilodaltons” was indefinite, thus rendering the claim invalid. [2-3] Teva argued that in the context a skilled artisan would know that “molecular weight” meant the molecular weight of the most prevalent molecule in the mix, [15] but Sandoz argued that the term could be taken to mean two other interpretations, [2-3] and pointed to a figure in the patent which seemed to use the term “molecular weight” in some way other than to mean the molecular weight of the most prevalent molecule. [15]

The District Court weighed the opinion of two competing experts and ultimately found in favour of Teva, holding that the claim was sufficiently definite since a skilled artisan in the context would understand that “molecular weight” referred to the weight of the most prevalent molecule, thus holding the patent to be valid. [3] The CAFC reversed, finding the term to be indefinite, and reviewed all aspects of the District Court’s claim construction de novo, including its determination of subsidiary facts. [3] In doing so, the CAFC did not explicitly find that the District Court made a clear error. [16]

Supreme Court Clarifies that Claim Construction can Involve Subsidiary Factual Disputes that are Reviewed on a Clear Error Standard

The Supreme Court heard the case because it believed that it was important to clarify the standard of review that must apply when the CAFC reviews claim construction decisions of federal district courts, and held that the CAFC should have applied the “clear error” standard of review when reviewing the District Court’s resolution of the underlying factual dispute regarding the meaning of molecular weight in the context. The conclusion flows from Federal Rule of Civil Procedure 52(a)(6) which states that “a court of appeals ‘must not . . . set aside’ a district court’s ‘[f]indings of fact’ unless they are ‘clearly erroneous’”, which the Supreme Court thought should apply to appellate review of a district court’s resolution of subsidiary factual matters in claim construction. [4]

The Supreme Court reasoned that although construing a patent claim is much like construing other written instruments, which often present questions of law where the words in those instruments are used in their ordinary meaning, if a written instrument uses “technical words or phrases not commonly understood”, those words may give rise to a factual dispute. [5-6] There, extrinsic evidence going towards a “usage of trade or locality” could help resolve a matter of fact, which must be reviewed on a standard of clear error. [6] Thus, while ultimate claim construction is a question of law, [6] claim construction is a practice with “evidentiary underpinnings” which may require resolving subsidiary factual disputes which are reviewed on a clearly erroneous standard. [7]

The Supreme Court also thought it to be practically important in patent law that the clear error standard be applied, since patent law is “a field where so much depends upon familiarity with specific scientific problems and principles”, which a trial judge would have a comparatively greater ability to gain a familiarity with than an appellate court. [7]

The Supreme Court then explained in more detail how the rule must be applied when reviewing subsidiary factfinding in patent claim construction. [11] Firstly, where the district court reviews only evidence intrinsic to the patent, the judge’s determination is solely a determination of law, and the court of appeals will review that construction de novo. [11-12] However, where the district court needs to consult extrinsic evidence in order to understand, for example, the background science or the meaning of a term in the relevant art during the relevant time period, and where those subsidiary facts are in dispute, the district court will need to make subsidiary factual findings about that extrinsic evidence. [12] This subsidiary factfinding must be reviewed for clear error on appeal. [12] To overturn the judge’s resolution of an underlying factual dispute, the appellate court must find that the judge, in respect to those factual findings, has made a clear error. [13] The ultimate construction of the claim, however, is a legal conclusion that the appellate court must review de novo. [13]

Application to the Case

In this case, the District Court judge made a factual finding when he chose the expert evidence of Teva over that of Sandoz to come to a conclusion as to how a skilled artisan would understand the term “molecular weight” in relation to the particular figure in the patent that showed the varying molecular weights of the molecules in the Copaxone mix. [15] Based on that factual finding, the District Court made a legal conclusion that the figure did not undermine Teva’s understanding of the term “molecular weight”. [16] When the CAFC reversed and came to the opposite conclusion on that factual finding, it failed to find that the District Court’s contrary determination was clearly erroneous. [16] In failing to do so, the CAFC erred. [16]

The Dissent’s View that Claim Construction does not Involve Questions of Fact

Justice Thomas and Justice Alito dissented on the view that claim construction does not involve findings of fact. [1, Dissent] More specifically, their view is that the skilled artisan inquiry in claim construction more closely resembles determinations categorized as “conclusions of law” than “findings of fact”, thus falling outside the scope of Federal Rule of Civil Procedure 52(a)(6) and therefore subject to de novo review. [10]

The majority responds by stating that this view is contrary to the Supreme Court’s recognition that claim construction involves evidentiary underpinnings that are more akin to questions of fact. [10] The Supreme Court recognized that in some instances a factual finding may be close to being dispositive of the ultimate legal construction, but nevertheless maintained the distinction between the factual finding being reviewed on a clear error standard and the ultimate construction being reviewed de novo. [13] In this case, it is the District Court’s decision to favour the expert opinion of one expert over another which was the evidentiary underpinning that was overturned by the CAFC and should have been subject to the clear error standard. [10]

A second line argument in the dissent framed the issue in terms of whether patents are more like statutes or more like contracts. [5-6, Dissent] Since patents bind the public at large from performing an invention, they more closely resemble statutes. [7, Dissent] A de novo standard of review on claim construction would help uniformity in how the boundaries of the claim bind the public at large. [14, Dissent] Thus, it is important that patent claim construction is subject to de novo review where construction is not skewed by specific evidence provided in a given case. [7, Dissent]

The majority dismisses the comparison of patents to statutes for the reason that statutes are typically publicly debated with consideration of general facts related to broad social circumstances, whereas patents are typically considered only by private parties with consideration of much more narrowly prescribed facts related to specific technical matters. [11]

Commentary

In this case we see the Supreme Court framing how appellate courts must review claim construction as a two-step process where construction requires a resolution of subsidiary factual matters: First, the underlying factual determinations are reviewed on a clear error standard; Secondly, the ultimate question of claim construction is reviewed de novo.

The dissent would rather do away with the distinction and instead treat patent claims as we treat other instruments that impact the public at large – like statutes. The dissent’s opinion disagrees that claim construction can involve factual findings. It simply says that it cannot, for the simple reason that construing a patent is closer to statutory construction in that it binds the public at large, than construction of a contract or deed which can involve subsidiary determinations about the actual intentions of parties. Conversely, the majority’s response to the dissent’s statutory argument misses the point that patent claims impact the public at large much in the way statutes do. While the majority does argue that patents are unlike statutes in more normative ways, its strongest counterargument to the dissent would seem to be simply the recognition that claim construction involves factual determinations as well as legal determinations, and that courts should treat the two differently. The competing arguments essentially come down to (1) applying the classical dichotomy between questions of law and questions of fact to claim construction on one hand, versus (2) proposing a way in which claim construction should be treated (like statutes) on the other.

The dissent’s argument may resonate well with Canadian law which recognizes that patent construction is similar to statutory interpretation. The Canadian Federal Interpretation Act, RSC 1985, c I-21, includes letters patent under its definition of “regulation”. On the other hand, Canadian courts have nevertheless recognized that extrinsic evidence as a means to educate judges so that they can assume the role of a person skilled in the art by undertaking a “crash course” in the relevant technology is admissible since the trier-of-law is required to interpret the patent from the perspective of a reader skilled in the art to which the invention relates (Whirlpool Corp v Camco Inc, [2000] SCJ No 68 at para 53).