TEVA PHARMACEUTICALS: IS IT TIME TO RETHINK HOW YOU WILL
ARGUE CLAIM CONSTRUCTION?
H. Jonathan Redway, Washington, D.C. Office
The United States Supreme Court decided in Teva
Pharmaceuticals USA Inc. v. Sandoz Inc. that the Federal
Circuit must review all subsidiary factual findings in patent
litigation claim construction proceedings that are on appeal for
clear error. The January 20, 2015 decision overturned two
long-standing Federal Circuit en banc decisions that previously
held that all aspects of claim construction were to be reviewed
de novo. See Cybor Corp. v. FAS Techs. Inc., 138
F.3d 1448 (Fed. Cir. 1998) and Lighting Ballast Control LLC v.
Phillips Elecs. N. Am. Corp., 744 F.3d 1272 (Fed. Cir. 2014).
The Court found that while the district court's ultimate ruling
should continue to be reviewed on appeal de novo, the resolution of
any subsidiary factual disputes must be reviewed for clear
error.
Claim construction (interpretation of the meaning of the words in
a patent claim) is the most important analysis in any patent
dispute because it is the first step toward determining (1) whether
the patent is invalid for failing to meet the conditions and
requirements of patentability and (2) whether the patent is
infringed. In 1996, the Supreme Court decreed that claim
construction is to be carried out by judges -- not juries --
because the interpretation of patent claims is a legal exercise.
See generally Markman v. Westview Instruments, Inc., 517
U.S. 370 (1996). Following Markman, the Federal Circuit
consistently reviewed all claim construction determinations de
novo because they are legal exercises.
In claim construction, the district court first looks to intrinsic
legal evidence (the claims, specification, and prosecution history)
to construe the meaning of the claim. The district court may resort
to extrinsic factual evidence, but only when the intrinsic evidence
is insufficiently clear to construe the meaning of the claim to
determine if the conditions and requirements of patentability have
been satisfied or the claim is infringed. Extrinsic factual
evidence often plays an important role in claim construction --
whether received informally through a tutorial at the start of the
claim construction proceeding or as formal evidence -- because it
can shed light on the true meaning of the intrinsic evidence.
The dispute in Teva Pharmaceuticals concerned the meaning
of the words "molecular weight". The petitioners, Teva
Pharmaceuticals, asserted a patent that claimed a manufacturing
method for a drug used to treat multiple sclerosis. The claim
language at issue described the active ingredient in the drug as
having "a molecular weight of 5 to 9
kilodaltons" (emphasis added). When the respondents, Sandoz,
Inc., tried to market a generic version of the drug, it was sued by
Teva for patent infringement. Sandoz argued the claim was invalid
because it failed to meet a condition of patentability in that it
failed to "particularly poin[t] out and distinctly clai[m] the
subject matter ... regard[ed] as [the] invention. 35 U.S.C. §
112, ¶ 2.
Sandoz argued that the term "molecular weight" as used
in the patent claim might mean any one of three different things.
Sandoz argued that because the term might mean any one of three
different things the claim failed to state the exact method of
calculation to be used. According to Sandoz, the term
"molecular weight" was therefore indefinite and the claim
invalid.
The district court accepted extrinsic evidence from experts at the
claim construction hearing as to the meaning of the term to one of
ordinary skill in the art and concluded that the claim was
sufficiently definite. It found an artisan would have understood
the term "molecular weight" to be calculated one way (not
one of three), namely by the weight of the most prevalent molecule.
It further found that this common understanding was the same
meaning of the term as used in the disputed claim. On appeal, the
Federal Circuit reviewed de novo every aspect of the
district court's claim construction determination including its
finding as to the ordinary meaning of the term "molecular
weight" and overturned the district court finding the term
"molecular weight" could have meant any of three
different calculations.
The Supreme Court took the case to decide whether the Federal
Circuit applied the correct legal standard in reviewing the
decision of the district court. The Supreme Court relied heavily on
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" and distinguished the ultimate
construction by the district court (based on the intrinsic legal
evidence) from the subsidiary factual findings and held that the
subsidiary fact finding must be reviewed for clear error. The
Court's decision upheld the underpinnings of the
Markman decision -- allowing judges to perform claim
construction -- by clarifying that the ultimate issue of proper
construction within the context of an asserted patent remains a
question of law to be reviewed de novo, while at the same
time providing greater deference to the findings of district court
judges by ruling that pre-requisite questions relating to the
customary meaning of claim terms are to be reviewed under the
"clearly erroneous" standard. The Court favored a
"clear error" review of subsidiary factual determinations
on the basis that district court judges who preside over and
listened to the entirety of a proceeding are presumed to have
comparatively greater opportunity to gain familiarity with
subsidiary factual findings than appellate judges.
The decision elevates the importance of building strong factual
records to support artisan relied-upon constructions to insulate
such findings on appeal. In contrast, advocates of constructions
supported by the lexography or clear teachings of the application
-- as opposed to artisan relied-upon meanings -- may wish to forgo
the building of strong factual records to save expense and avoid
potential confusion that could be difficult to overturn.
Today, many district courts prefer to receive off-the-record
informal tutorials instead of time consuming record evidence, but
advocates of strong extrinsic evidence supported constructions will
need to push past such judicial tendencies and demand formal
evidentiary submissions. Factually supported subsidiary findings
will now be harder to overturn on appeal increasing their value in
litigation and settlement. The submission of proposed findings of
fact, if adopted by the district court, could help insulate
patentability and infringement determinations grounded in
constructions supported by subsidiary factual determinations.
DID TEVA ALTER THE STANDARD FOR INVALIDATING A PATENT FOR
INDEFINITENESS?
Joan Ellis, Ph.D., Washington, D.C. office
As discussed in the concurrent article, prior to the Supreme
Court's decision in Teva Pharmaceuticals v. Sandoz,
Inc., 574 U.S. ___ , No. 13-854, slip op. (2015), the Court of
Appeals for the Federal Circuit ("Federal Circuit")
declined to give deference to district court judges' findings
of subsidiary facts made during claim construction, as required by
Federal Rule of Civil Procedure § 52(a)(6). Although the
parties' dispute in Teva was whether the claims in
Teva's patent were indefinite under 35 U.S.C. § 112,
second paragraph,1 the question before the Court was
whether the Federal Circuit employed the proper standard of review
of a district court's factual findings during claim
construction.2 The Court did not consider the underlying
issue of indefiniteness, but rather it vacated the Federal
Circuit's decision and remanded with explicit instructions on
how to apply the appropriate standard of review.
In its last term, however, the Supreme Court specifically
addressed the issue of indefiniteness. Nautilus, Inc. v. Biosig
Instruments, Inc., 134 S. Ct. 2120, 572 U.S. __, 189 L. Ed. 2d
37(2014). In Nautilus, the parties disagreed over the
meaning of the claim term "spaced relationship" used to
describe the location of electrodes employed in an exercise
apparatus. The accused infringer, Nautilus, argued that the term
was indefinite when read in light of the specification and its
accompanying drawings. The District Court agreed with Nautilus and
concluded that the claim terms failed to inform one skilled in the
art what the appropriate spacing was or how it should be
determined. Nautilus, slip op. at 6-7.
On appeal, the Federal Circuit reviewed the district court's
claim construction de novo.3 The panel majority
considered the intrinsic evidence and found that there were
"certain inherent parameters of the claimed apparatus, which
to a skilled artisan may be sufficient to understand the metes and
bounds of 'spaced relationship.'" Biosig
Instruments, Inc. v. Nautilus, Inc., 715 F.3d 891, 897 (Fed.
Cir. 2013). The majority also considered the extrinsic evidence of
record and found that it supported the intrinsic
evidence.4 Accordingly, the Federal Circuit reversed and
remanded with instruction that the claims were not indefinite if
they were "amenable to construction" and not
"insolubly ambiguous." Nautilus petitioned for
certiorari.
The Supreme Court agreed to review the case and found that the
Federal Circuit's aforementioned standards were imprecise and
diminished "the definiteness requirement's public-notice
function and foster[ed] the innovation-discouraging 'zone of
uncertainty.'" Nautilus, 572 U.S. slip op. at 12.
The Court unanimously held that "[a] patent is invalid for
indefiniteness if the patent's specification and prosecution
history, fail to inform, with reasonable
certainty, those skilled in the art about the scope of the
invention [emphasis added]." Nautilus, 572 slip op.
at 1. In reaching its conclusion, the Court acknowledged that the
limitations of claim language must be balanced with the need to
provide incentives for innovation and the ability of applicants to
claim the full scope of their inventions. However, the Court also
recognized that a check on indefiniteness was needed to counter any
temptation a patent applicant might have "to inject ambiguity
into their claims" and later impermissibly broaden their
claims," Nautilus, slip op. at 10. Specifically, the
Court stated that "[e]liminating that temptation is in order,
and 'the patent drafter is in the best position to resolve the
ambiguity in . . . patent claims." Nautilus, slip op.
at 10-11, quoting Halliburton Energy Servs., Inc. v. M-I
LLC, 524 F.3d 1244, 1255 (Fed. Cir. 2008).
The Court vacated the Federal Circuit's decision and remanded
for determination of the claims indefiniteness under the new
standard.
The Supreme Court's holding that the claims, in combination
with the intrinsic evidence, must inform the artisan of the scope
of the invention with "reasonably certainty," lowered the
bar for invalidating a patent for indefiniteness. Thus, after
Nautilus, it seemed as though patent practitioners were
well advised to take care to draft both applications and claims
with clear and precise language in order to preserve their
patents' validity.
In Nautilus, the Court emphasized the crucial role of
intrinsic evidence; i.e., the words of the claims, the
specification, and the prosecution history, in determining whether
claims satisfy the requirements of § 112, second paragraph,
and focused on the need to reduce the temptation of patent drafters
to inject ambiguity into the claims.5 The Court made no
mention of the role extrinsic evidence plays in determining whether
claims are indefinite.
In Teva however, the Court appears to sanction the
introduction of extrinsic evidence to resolve ambiguous claim
language. That is, rather than finding conflicting expert testimony
on the meaning of the terms in the claims at issue to be indicative
of indefiniteness, the Court held that a district court judge's
use of extrinsic evidence during claim construction is to be given
deference on appeal and only reviewed for clear error (Fed. R. Civ.
Proc. 52(a)(6)). Thus, under Teva, it is not imperative
that all claim terms be defined in the specification. Instead,
experts can be employed to define terms in a manner that supports a
party's prosecution or litigation strategy.
Granted, the Supreme Court stated that "subsidiary fact
finding is unlikely to loom large in the universe of litigated
claim construction." Teva, slip op. at 10. To that
end, the Court envisions the use of extrinsic evidence to be
limited to background scientific information and the explanation of
technical terms. Teva, slip op. at 12. However, the Teva
opinion invites courtroom behavior to the contrary. That is, after
Teva, litigants are more likely to use expert testimony to
challenge the definiteness of even the simplest claim terms if they
can obtain a claim construction that is favorable to their client.
And, district court judges wanting to ensure that their claim
construction is not reversed on appeal, will now be motivated to
permit entry of such testimony during Markman (claim construction)
hearings. However, the more a district court finds it necessary to
rely on extrinsic evidence to construe claims, the less likely it
is that a patent's specification and prosecution history
inform, with reasonable certainty, those skilled in the art about
the scope of the invention. See Nautilus, slip op. at 1.
Should the Teva decision lead district courts to permit
the entry of more extrinsic evidence in claim construction, then
perhaps the Federal Circuit's original test of indefiniteness
(i.e., "amenable to construction" or not
"insolubly ambiguous") was more judicious than the
Supreme Court recognized.
Footnotes
1 35 U.S.C. § 112, second paragraph, requires that the claims particularly point out and distinctly claim the subject matter which the applicant regards as the invention.
2 The issue before the Supreme Court in
Teva was:
Whether a district court's factual finding in support of its
construction of a patent claim term may be reviewed de novo as the
Federal Circuit requires (and as the panel explicitly did in this
case) or only for clear error, as Rule 52(a) requires?
3 The District Court held a Markman hearing and construed the Biosig patent claims. Following the claim construction, Nautilus filed a motion for summary judgment arguing that based on the district court's construction of "spaced relationship," the claims were indefinite. The District Court agreed and granted the motion. Biosig appealed. The issue before the Federal Circuit was whether the District Court erred in holding the patent invalid for indefiniteness and, consequently, in granting the motion for summary judgment. Biosig Instruments, Inc. v. Nautilus, Inc., 715 F.3d 891, 897 (Fed. Cir. 2013).
4 The extrinsic evidence of record included a declaration (1) submitted by the inventor (Mr. Lekhtman) during a reexamination proceeding before the USPTO describing some or his own tests as well as tests performed by another laboratory (Dr. Galiana) and; (2) to support the opposition to the motion for summary judgment (Dr. Yanulis) which supported Mr. Lekhtman's and Dr. Galiana's test results and reports.
5 The Supreme Court also acknowledged that another relevant inquiry was the perspective or understanding of the claims by one skilled in the art at the time the patent application was filed.
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