In its January 2015 decision, Teva Pharms. USA, Inc. v. Sandoz, Inc., the Supreme Court held that the ultimate construction of a patent claim term is a question of law, subject to de novo appellate review, but that the underlying findings of fact (based, for example, on expert testimony) are subject to deferential clear error review. In doing so, the Supreme Court reversed the Federal Circuit's holding in Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc), which had been recently reaffirmed in Lighting Ballast Control v. Philips Electronics, 744 F.3d 1272 (Fed. Cir. 2014) (en banc) vac. and remanded 135 S. Ct. 1173 (2015), that all claim construction questions are subject to de novo review.
Given that claim construction is disputed in most patent cases, Teva has the potential to have a far-reaching impact on patent litigation. The Court's holding that factual findings are given deference on appeal would appear to give parties and factfinders alike an incentive to infuse claim construction proceedings with extrinsic evidence in order to shelter lower court claim constructions from reversal on appeal. How much impact that incentive has in practice, however, will depend on the extent the Federal Circuit actually defers to district court claim construction in light of subsidiary findings of fact.
Three recent Federal Circuit decisions, all on remand from the Supreme Court in light of Teva, send mixed signals.
In two of the cases, the Teva standard did not change the outcome. In Teva itself, the Federal Circuit had initially invalidated the patents-at-issue for indefiniteness, based in part on its de novo reversal of the district court's claim construction, which was in turn based in part on expert testimony. The Supreme Court vacated and remanded with instructions to review the district court's factual findings for clear error. On remand, in a decision issued on June 18, 2015, the Federal Circuit reaffirmed its previous claim construction and concluded that the patents were invalid for indefiniteness. The court acknowledged that there had been no clear error in the district court's factual findings based on expert testimony, but held that the district court's claim construction, and therefore its indefiniteness conclusion, were incorrect in light of the specification and the prosecution history, which the Federal Circuit reviewed de novo .
Similarly, in a June 3, 2015 decision in Shire Dev., LLC v. Watson Pharms., Inc., the Federal Circuit had been instructed by the Supreme Court to revisit its reversal of a district court's construction in light of Teva. On remand, the Federal Circuit reaffirmed its conclusion that the district court's construction was erroneous. It reviewed the construction de novo because the "intrinsic evidence fully determines the proper construction" and explained that a court should discount any expert testimony that is clearly at odds with a claim construction mandated by the intrinsic evidence. Indeed, although the district court had heard testimony from various expert witnesses, the Federal Circuit concluded there was no evidence it made any factual findings at all. According to the Federal Circuit in Shire, Teva "did not hold that a deferential standard of review is triggered any time a district court hears or receives extrinsic evidence."
The Federal Circuit's decisions on remand in Teva and Shire suggested that the effect of the Supreme Court's Teva decision on claim construction may not be as profound as some might have expected (or feared). But then, on June 23, 2015 the Federal Circuit issued its remand decision in Lighting Ballast and concluded that the Teva standard did change the outcome. While the Federal Circuit had initially disagreed with the district court's claim construction of the term "voltage source means," it concluded on remand, in a relatively terse, fact-bound discussion, that the district court's construction was supported by expert testimony in the record and didn't contradict an unambiguous claim meaning as determined by intrinsic evidence. The court therefore affirmed the district court's claim construction, rather than reversed it as it had done before Teva.
While the post-Teva case law will continue to develop, the Federal Circuit's recent decisions on remand suggest that Teva will have a significant, but circumscribed, effect on claim construction jurisprudence. When claim construction can be decided based on intrinsic evidence, the Federal Circuit will not shy away from deciding it de novo, even where the parties have presented expert testimony to the district court. But where the intrinsic evidence is truly insufficient to construe the terms, making expert testimony legitimately relevant, the Federal Circuit does seem prepared to heed the Supreme Court's call to defer to lower court fact-finding.
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