The Supreme Court is currently considering how a lower court’s interpretation of patent terms should be handled on appeal.  The decision ultimately reached on that issue may have a significant impact on patent litigation.

A lot rides on the interpretation of patent claims in patent litigation.  Called “claim construction,” this has long been exclusively a matter of law for a judge to decide without a jury.  This results in what are known as Markman hearings (after the Supreme Court case which decided claim construction was a matter of law) prior to full-blown trial where the meanings of disputed claim terms are decided.

The outcome of a Markman hearing often leads to settlement or other resolution of the case.  For example, the parties may agree that if a claim means one thing it is infringed, but that it is not infringed if the defendant’s interpretation is correct.  Thus, the result of a Markman hearing may be the central issue if the case is appealed.

The Federal Circuit, which hears all patent appeals, reviews Markman decisions from scratch, i.e., it does not rely on the lower court’s decision at all.  This is consistent with general appellate procedure on pure issues of law, but the Federal Circuit also applies this standard to factual findings in support of the legal conclusion reached by the lower court.  With respect to factual findings (as opposed to legal conclusions), this Federal Circuit practice is contrary to the general rule that the appeals court should defer to the lower court as to the facts of the case.

In Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., the Supreme Court agreed to consider this very issue, i.e., whether the Federal Circuit could independently review the Markman decision on appeal or must defer to the lower court’s factual findings.  Oral arguments have yet to be held, and a decision will follow after the arguments.