In a 7-2 decision, the United States Supreme Court has rejected the U.S. Court of Appeals for the Federal Circuit’s practice of reviewing all instances of district court patent claim construction using a de novo standard. In Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., No. 13-854 (January 20, 2015), a pharmaceutical company, Teva, held the patent for the manufacturing method used to create a drug called Copaxone. After another drug manufacturer, Sandoz, sought to market a generic form of Copaxone, Teva filed a patent infringement lawsuit against the company. In response to Teva’s allegations, Sandoz argued that the patent was invalid under the Patent Act because it failed to sufficiently define an active drug ingredient described as having “a molecular weight of 5 to 9 kilodaltons.”
A district court heard conflicting expert evidence regarding the issue and ultimately held that the patent at issue was sufficiently definite and valid. On appeal, the Federal Circuit reviewed the district court’s decision de novo before holding that the patent was invalid. Teva then filed a petition for certiorari with the U.S. Supreme Court. The nation’s high court agreed to review the case and oral argument was heard on October 15, 2014.
The issue presented to the Supreme Court 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 Federal Rule of Civil Procedure 52(a) requires.
Yesterday, Justice Breyer delivered the majority opinion in the case. According to the U.S. Supreme Court:
Federal Rule of Civil Procedure 52(a)(6) states that a court of appeals “must not . . . set aside” a district court’s “[f]indings of fact” unless they are “clearly erroneous.” In our view, this rule and the standard it sets forth must apply when a court of appeals reviews a district court’s resolution of subsidiary factual matters made in the course of its construction of a patent claim. We have made clear that the Rule sets forth a “clear command.” Anderson v. Bessemer City, 470 U. S. 564, 574 (1985). “It does not make exceptions or purport to exclude certain categories of factual findings from the obligation of a court of appeals to accept a district court’s findings unless clearly erroneous.” Pullman-Standard v. Swint, 456 U. S. 273, 287 (1982). Accordingly, the Rule applies to both subsidiary and ultimate facts. Ibid. And we have said that, when reviewing the findings of a “‘district court sitting without a jury, appellate courts must constantly have in mind that their function is not to decide factual issues de novo.’” Anderson, supra, at 573 (quoting Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U. S. 100, 123 (1969)).
Even if exceptions to the Rule were permissible, we cannot find any convincing ground for creating an exception to that Rule here. The Rules Advisory Committee pointed out that, in general, exceptions “would tend to undermine the legitimacy of the district courts . . . , multiply appeals . . . , and needlessly reallocate judicial authority.” Advisory Committee’s 1985 Note on subd. (a) of Fed. Rule Civ. Proc. 52, 28 U. S. C. App., pp. 908–909; see also Anderson, supra, at 574–575 (de novo review of factual findings “would very likely contribute only negligibly” to accuracy “at a huge cost in diversion of judicial resources”).
The nation’s high court continued by clarifying its prior holding in Markman:
Accordingly, when we held in Markman that the ultimate question of claim construction is for the judge and not the jury, we did not create an exception from the ordinary rule governing appellate review of factual matters. Markman no more creates an exception to Rule 52(a) than would a holding that judges, not juries, determine equitable claims, such as requests for injunctions. A conclusion that an issue is for the judge does not indicate that Rule 52(a) is inapplicable. See Fed. Rule Civ. Proc. 52 (setting the standard of review for “[Factual] Findings and Conclusions by the Court” (emphasis added)).
While we held in Markman that the ultimate issue of the proper construction of a claim should be treated as a question of law, we also recognized that in patent construction, subsidiary fact finding is sometimes necessary.
The Supreme Court added that “practical considerations favor clear error review” in patent cases:
We have previously pointed out that clear error review is “particularly” important where patent law is at issue because patent law is “a field where so much depends upon familiarity with specific scientific problems and principles not usually contained in the general storehouse of knowledge and experience.” Graver Tank & Mfg. Co.v. Linde Air Products Co., 339 U. S. 605, 610 (1950). A district court judge who has presided over, and listened to, the entirety of a proceeding has a comparatively greater opportunity to gain that familiarity than an appeals court judge who must read a written transcript or perhaps just those portions to which the parties have referred. Cf. Lighting Ballast, 744 F. 3d, at 1311 (O’Malley, J., dissenting) (Federal Circuit judges “lack the tools that district courts have available to resolve factual disputes fairly and accurately,” such as questioning the experts, examining the invention in operation, or appointing a court-appointed expert); Anderson, 470 U. S., at 574 (“The trial judge’s major role is the determination of fact, and with experience in fulfilling that role comes expertise”).
The high court then dismissed the Federal Circuit’s assertion “that it is simpler for” the “appellate court to review the entirety of the district court’s claim construction de novo rather than to apply two separate standards,” by stating “even were we free to ignore the Federal Rule (which we are not), we would not find this argument convincing. Courts of appeals have long found it possible to separate factual from legal matters.”
The Supreme Court of the United States next addressed the dissent’s argument “that claim construction does not involve any ‘factfinding,’ or, if it does, claim construction factfinding is akin to the factfinding that underlies our interpretation of statutes,” by stating:
… Statutes, in general, address themselves to the general public; patent claims concern a small portion of that public. Statutes typically (though not always) rest upon congressional consideration of general facts related to a reasonably broad set of social circumstances; patents typically (though not always) rest upon consideration by a few private parties, experts, and administrators of more narrowly circumscribed facts related to specific technical matters. The public, and often an adversarial public, typically considers and discusses the relevant general facts before Congress enacts a statute; only private parties, experts, and administrators likely consider the relevant technical facts before the award of a patent. Given these differences, it is not surprising that this Court has never previously compared patent claim construction in any here relevant way to statutory construction. As discussed supra, at 5, however, the Court has repeatedly compared patent claim construction to the construction of other written instruments such as deeds and contracts.
After that, the court held:
When the Federal Circuit reviewed the District Court’s decision, it recognized that the peak of the curve did not match the 7.7 kilodaltons listed in the legend of figure 1. 723 F. 3d, at 1369. But the Federal Circuit did not accept Teva’s expert’s explanation as to how a skilled artisan would expect the peaks of the curves to shift. And it failed to accept that explanation without finding that the District Court’s contrary determination was “clearly erroneous.” See ibid. The Federal Circuit should have accepted the District Court’s finding unless it was “clearly erroneous.” Our holding today makes clear that, in failing to do so, the Federal Circuit was wrong.
Because the U.S. Court of Appeals for the Federal Circuit applied the wrong standard of review, the Supreme Court vacated the lower court’s order and remanded the case for further consideration.