Depending on the Circumstances, Claim Construction May Be Subject to Clear Error Review on Appeal

Traditionally, claim construction, which can be an important phase in patent litigation for setting the metes and bounds of a patent, has been viewed as a pure question of law and subject to de novo review by the Federal Circuit on appeal. This was considered problematic by some because the district court’s findings on claim construction, which the parties had been relying on throughout the litigation, were not given any deference on appeal.

The Supreme Court, in its January 20, 2015 decision in Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015), has reined in this practice and held that a clear error standard may apply when the district court made subsidiary factual findings during claim construction. In Teva, the parties disputed the meaning of the term “molecular weight.” Sandoz argued that the term was susceptible to three different meanings based on the specification and therefore the claim was indefinite. In considering whether the claim was indefinite, the district court heard testimony of experts on what the claim term would mean to one skilled in the art, and eventually determined that the term was sufficiently definite and construed its meaning. The Federal Circuit, applying the de novo standard, reversed this ruling and found that the claim was indefinite, despite the district court’s findings relating to the experts’ testimony. The Supreme Court held that the Federal Circuit erred. The Supreme Court pointed out that Fed. R. Civ. P. 52(a)(6) required the Federal Circuit to review the district court’s findings of fact under a clearly erroneous standard and that the Federal Circuit was required to apply this standard of review because the district court made subsidiary findings of fact. The Supreme Court remanded the case to the Federal Circuit for reconsideration.

Recently, the Federal Circuit had its first opportunity to apply the Supreme Court’s guidance in Teva in determining the standard of review it would apply to a district court’s claim construction ruling. In In re Papst Licensing Digital Camera Patent Litigation, No. 2014-1110, 8 (Fed. Cir. Feb. 2, 2015) the Federal Circuit found that “the district court relied only on the intrinsic record, not on any testimony about skilled artisans’ understandings of claim terms in the relevant field.” As a result, the Federal Circuit held that it would review the district court’s claim construction de novo under these circumstances.

In re Papst establishes a new consideration for practitioners in the appeal process; the parties and the Federal Circuit must first determine whether a district court resolved any subsidiary factual matters in the course of rendering its claim construction ruling. That determination may dictate which of two standards of review the Federal Circuit will apply. With two different review standards available to the Federal Circuit, district courts’ decisions on whether to permit or rely on expert testimony or other extrinsic evidence during the claim construction process has the potential to become critically important.

Gibbons will continue to monitor developments on this matter.