new article thanks to 2BB on the Rambus board
High Court Orders Claim Construction Deference
By Ryan Davis
Law360, New York (January 20, 2015, 10:27 AM ET) -- The U.S. Supreme Court Tuesday cast aside the Federal Circuit's longstanding rule that all district court claim construction rulings must be reviewed afresh on appeal, ruling that some such decisions involve factual findings that are entitled to deference, in a win for drugmaker Teva Pharmaceuticals USA Inc.
The high court vacated a July 2013 decision by the Federal Circuit that invalidated several patents covering Teva's multiple sclerosis drug Copaxone in a dispute with generics makers Sandoz Inc. and Mylan Inc. The case was remanded for further proceedings under the new standard.
In a 7-2 decision written by Justice Stephen Breyer, the Supreme Court held that district court claim construction rulings involving factual findings should be reviewed on appeal for clear error, rather than de novo, because they depend so much on familiarity with specific scientific principles.
"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," the court wrote.
The court heard oral arguments in October and several justices suggested that claim construction rulings that involve factual findings should be entitled to deference.
They noted that the Federal Circuit's standard, set in a 1998 en banc decision, appears to run counter to Rule 52(a) of the Federal Rules of Civil Procedure, which states that findings of fact must not be set aside on appeal unless they are clearly erroneous.
At the arguments, Justice Elena Kagan questioned why factual findings during claim construction are not given deference since "Rule 52(a) sets out the very blanket rule."
"It just says what it says, that these are matters for the trial court," she said.
Likewise, Justice Stephen Breyer said that trial judges are in a better position to address factual issues since they have been closer to the case and have personally observed expert witnesses, while the appeals court hasn't seen the witnesses and just reads the trial record.
He called that "a very powerful reason" why factual findings in claim construction should not be reversed on appeal unless they are clearly erroneous, and pointed out that factual findings in most other types of cases are reviewed with deference on appeal.
"Why should you treat fact matters here any different than any other case?" Justice Breyer said.
Teva filed separate suits against Mylan and Sandoz after they filed abbreviated new drug applications for generic version of Copaxone. It claimed that Sandoz had infringed four patents and Mylan had infringed seven.
Judge Barbara S. Jones of the Southern District of New York consolidated the cases and held a bench trial last year. She ruled that the generics makers infringed all nine Teva patents and that they had failed to prove that the patents were invalid.
The Federal Circuit reviewed Judge Jones' claim construction de novo and concluded that Sandoz and Mylan had in fact proven that five of the patents were invalid as indefinite because a person skilled in the art could not discern the boundaries of the claims.
The Teva patents-in-suit that the Federal Circuit declared invalid are U.S. Patent Numbers 5,800,808; 5,981,589; 6,048,898;6,620,847; and 6,939,539. The patents-in-suit that were ruled valid are U.S. Patent Numbers 6,054,430; 6,342,476; 6,362,161; and 7,199,098.
Teva is represented by William M. Jay, William G. James II, David M. Hashmall, Elizabeth J. Holland, Steven J. Bernstein, Daryl L. Wiesen, Henry C. Dinger, John C. Englander, Nicholas K. Mitrokostas, Todd Marabella and Jaime A. Santos of Goodwin Procter LLP, Jay P. Lefkowitz, John C. O'Quinn and Jason M. Wilcox of Kirkland & Ellis LLP and Harvard Law School professor Alan M. Dershowitz.
Sandoz is represented by Deanne E. Maynard, Brian R. Matsui, Marc A. Hearron, David C. Doyle, Anders T. Aannestad, Brian M. Kramer, Elizabeth Cary Miller and James J. Cekola of Morrison & Foerster LLP. Mylan is represented by Carter G. Phillips, Ryan C. Morris, Adam Hallowell and Steven Horowitz of Sidley Austin LLP, Eric D. Miller, Shannon M. Bloodworth, David L. Anstaett and Brandon White of Perkins Coie LLP and Evan Chesler and Richard Stark of Cravath Swaine & Moore LLP.
The case is Teva Pharmaceuticals USA Inc. et al. v. Sandoz Inc. et al., case number 13-854, in the U.S. Supreme Court.