Alert: Supreme Court Modifies Appeals in Patent Litigation

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January 23, 2015

In a major decision affecting patent litigation, the United States Supreme Court has modified the longstanding standard of review applicable to patent claim construction. (Teva Pharmaceuticals USA v. Sandoz, Inc. [Jan. 20, 2015]). The practical result will be fewer reversals of patent infringement cases on appeal, thereby providing litigants more predictability, finality and lower costs.

The Federal Circuit began universally applying a de novo standard of review to patent claim construction shortly following the Supreme Court’s 1996 landmark decision in Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996). Under a de novo standard of review, reviewing courts give no deference to the lower court's findings, and will rule on the evidence and matters of law as if considering them for the first time. Applying de novo review, more than 50% of patent cases are regularly reversed and remanded on appeal. As a result, patent cases tend to be lengthy, unpredictable, inefficient and costly.

The Supreme Court’s decision to abandon the longstanding universal application of de novo review was based on an acknowledgment that claim construction routinely involves “subsidiary factual matters.” According to the Court, whenever a district court is forced to consider extrinsic evidence (the vast majority of cases), and makes a factual determination thereon, the resulting claim construction must be reviewed under the clearly erroneous standard imposed by Federal Rule of Civil Procedure 52(a).

In Teva, the lower court expressly relied on expert testimony concerning the knowledge of a person of ordinary skill in the art to support its claim construction. This constituted a “subsidiary factual matter” entitling the resulting claim construction to deference under the clearly erroneous standard of review. Under the clearly erroneous standard of review, appellate courts will not overturn a decision unless definitely and firmly convinced the lower court made a mistake. The anticipated lower reversal rate resulting from Teva should make patent litigation more predictable and affordable.