In TEVA PHARMACEUTICALS USA, INC. v. SANDOZ, INC., No. 13-854, the Supreme Court held that factual findings underpinning claim construction rulings are reviewed for clear error. This decision overrules the long-standing precedent allowing the Federal Circuit to review all aspects of claim construction de novo and gives more deference to district courts. The Court did not believe the new standard would apply to many patent cases, reasoning judges rarely make factual findings on extrinsic evidence during claim construction.
When reviewing a district court’s resolution of subsidiary factual disputes during claim construction, the Federal Circuit now must apply a “clear error,” not a de novo, standard of review. First, the Supreme Court reasoned Federal Rule of Civil Procedure 52(a)(6) sets out a “clear command” against setting aside a district court’s factual findings unless they are clearly erroneous. Next, the Court reasoned Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996), does not create an exception to the ordinary rule governing appellate review of factual findings. Rather, the Markman decision recognized courts sometimes have to resolve subsidiary factual disputes during patent construction, such as when a claim uses technical words or uncommon phrases. Third, the Court disagreed it would be too difficult for the Federal Circuit to separate factual findings from legal questions. The Court reasoned the complexity of treating them alike outweighs the minimal risk of inconsistent results.
Next, the Supreme Court clarified how to apply the clear-error standard. When the district court reviews only evidence intrinsic to the patent, the judge’s determination is solely one of law and the Federal Circuit will review that construction de novo. But where the district court consults extrinsic evidence to understand the claim, and where those subsidiary facts are in dispute, courts will need to make subsidiary findings about the extrinsic evidence. While the ultimate construction of the claim is a legal conclusion that can be reviewed de novo, the underlying factual disputes must be reviewed for clear error. Here, the Federal Circuit erred by rejecting Teva’s expert’s explanation of how a claim term would be understood by a skilled artisan without first reviewing this factual finding for clear error.