Patent Claim Construction Questions In the Wake of the Supreme Court’s Decision In Teva v. Sandoz

Client Advisory

March 24, 2015

The Court of Appeals for the Federal Circuit recently issued its first precedential decision applying the standard of review for patent claim construction articulated by the Supreme Court in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., 135 S.Ct. 831 (2015). That decision, In re Papst Licensing Digital Camera Patent Litigation, 2015 WL 408127 (Fed. Cir. Feb. 2, 2015), suggests that the proper application of Teva will take some time to work out.

Teva mandates that the Federal Circuit apply a “clear error,” not a de novo, standard of review to a district court’s resolution of factual disputes related to claim construction arising from “extrinsic evidence” – that is, any evidence other than the patent’s claims, written description, and record of prosecution with the U.S. Patent & Trademark Office. Teva at 836-37. Appellate review of claim construction based entirely on evidence “intrinsic” to the patent and its prosecution history should be performed de novo, as a matter of law. Teva at 840-41. The Supreme Court’s decision partially overruled the Federal Circuit’s prior en banc decision in Lighting Ballast Controls LLC v. Philips Electronics North America Corporation, 744 F.3d 1272 (Fed. Cir. 2014), in which the Federal Circuit affirmed a de novo standard of review for all claim construction decisions, no matter what type of evidence was considered by the district court. Writing for the majority in Lighting Ballast, Judge Newman relied primarily on stare decisis to affirm the de novo claim construction review rule, first announced 15 years earlier in Cybor v. Fas Technologies, 138 F.3d 1448 (Fed. Cir. 1998) (en banc). Lighting Ballast Controls LLC, 744 F.3d 1281-84.

In re Papst Licensing Digital Camera Patent Litigation concerns two patents, each of which discloses a device that facilitates the transfer of data between a host computer and another device. In construing the claims at issue, the district court said that it relied only on “intrinsic evidence – the claims, the specification, and the prosecution history”, which “provide the full record necessary for claims construction.” 670 F.Supp.2d 16, 30 (D.D.C. 2009). Although the district court in Papst stated that it relied only on intrinsic evidence, it clearly referred in its decision to an industry dictionary – the New IEEE Standard Dictionary of Electrical & Electronics Terms – in several parts of its analysis and, with respect to one claim term, “adopt[ed] the definition from the New IEEE Dictionary as the most clear and pertinent.” 670 F.Supp.2d at 60. That claim term was at issue on appeal, so one might think that Teva’s new “clear error” standard would be applied, notwithstanding the lower court’s characterization of the evidence on which it relied. 

On appeal, however, the Federal Circuit cited Teva in passing and relied on the district court’s characterization of the evidence it considered (i.e., only intrinsic evidence), before proceeding to review the claim constructions de novo. Relying on the de novo review standard, the Court of Appeals reversed the constructions at issue and vacated the lower court’s grant of summary judgment in favor of the alleged infringers.

The Federal Circuit’s decision in Papst is notable more for the questions it raises about the application of Teva than its actual result. For example, the decision glosses over the question of how the Federal Circuit should determine whether or not to apply Teva’s more limited de novo standard of review. Should it defer to the lower court’s own characterization of its analysis or, conversely, should it scrutinize the evidence relied on by the lower court to determine the proper standard of review to apply? Will the resolution of this question be affected by the Federal Circuit’s view of the district court’s claim construction?

In the wake of Teva, many commentators expect that district courts will attempt to guard their claim construction analyses against de novo appellate review by relying expressly on extrinsic evidence. Whether that approach will have the intended shielding effect remains to be seen. One can, for example, envision a scenario in which the Federal Circuit decides that a lower court’s apparent reliance on extrinsic evidence was unnecessary and consequently not entitled to deference. That was the apparent result in Enzo Biochem Inc. v. Applera Corp., Case No. 2014-1321 (Fed. Cir. Mar. 16, 2015), in which the court applied a de novo standard of review and relied solely on intrinsic evidence to reverse the district court’s claim construction, notwithstanding that the district court’s analysis relied in part on extrinsic evidence. The court noted that the district court’s finding based on extrinsic evidence, had the court considered it, “would be subject to review under Teva,” but concluded that the finding “did not override [the court’s] analysis of the totality of the” intrinsic evidence.

It will take time for the Federal Circuit to develop fully how Teva should be applied in that and other circumstances, and to see whether the Supreme Court agrees with the Federal Circuit’s approach. Carter Ledyard & Milburn continues to review this and other emerging patent issues and will report on notable developments. 

Carter Ledyard & Milburn LLP uses Client Advisories to inform clients and other interested parties of noteworthy issues, decisions and legislation which may affect them or their businesses. A Client Advisory does not constitute legal advice or an opinion. This document was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. © 2020 Carter Ledyard & Milburn LLP.
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