January 20, 2015

Supreme Court Orders Claim Construction Deference in Seminal Patent Case Argued by Goodwin Procter

On Jan. 20, 2015, the U.S. Supreme Court decided an issue with widespread importance in the interpretation of patents: whether a district court’s factual findings in support of its construction of a patent claim term may be reviewed de novo or only for “clear error.” In a 7-2 decision authored by Justice Stephen Breyer, the Supreme Court held that, when reviewing a district court’s factual findings made in the course of its claim construction, the Federal Circuit must apply the clear-error standard of review.

That holding reverses nearly two decades of practice before the appellate court. The decision, Teva Pharms. USA, Inc. v. Sandoz, Inc., No. 13-854, vacates a Federal Circuit decision that had invalidated a patent covering Teva’s blockbuster multiple sclerosis drug Copaxone®. A team of Goodwin Procter lawyers, led at the Supreme Court by appellate co-chair William M. Jay, has represented the victor Teva in all stages of the patent litigation.

Since at least 1995, claim construction decisions have been reviewed by the Federal Circuit de novo, giving no deference to any fact findings made by the district court in reaching its construction. That meant the Federal Circuit construed patent claim terms independent of the trial judge’s opinion and factual determinations. Respondents Sandoz and Mylan had argued that the Federal Circuit should continue to apply a de novo standard because, among other things, separating “factual” from “legal” questions may be difficult, and “clear error” review may lead to divergent findings of fact and, thus, divergent claim constructions from different district court.

Today the Supreme Court rejected those arguments and agreed with Teva that Federal Rule of Civil Procedure 52(a)(6) requires appellate courts to review factual disputes under the “clearly erroneous” standard, and that the application of this standard in the claim construction context is supported by both precedent and practical considerations.

Applying its holding, the Supreme Court explained that the Federal Circuit erred in not giving deference to at least one critical factual finding that the district court made, based on competing expert testimony, in ruling for Teva. The Supreme Court therefore vacated the Federal Circuit’s judgment, and remanded the case in view of the new standard governing the review of claim construction.

The Supreme Court’s ruling will likely have a significant impact on how parties approach claim construction in the district court. Amicus briefs submitted in this case contend that deference to trial courts’ factual findings may raise the quality of claim construction opinions from district courts, encourage settlements following claim construction and trial, and expedite resolution of patent disputes.

In addition to Mr. Jay, other Goodwin Procter attorneys who represented Teva at the U.S. Supreme Court included David M. Hashmall, Daryl L. Wiesen, Henry C. DingerSteven J. BernsteinTodd Marabella and Jaime A. Santos.