Teva Pharm. USA, Inc. v. Sandoz, Inc.:  In-Line or Out of Sync?

By: Claire Wagner 

The Supreme Court issued its opinion in the case of Teva Pharmaceuticals v. Sandoz on January 20, 2015.[1]  To an outsider to patent proceedings, the decision in Teva is simply an affirmation by the Supreme Court that findings of fact are to be left to the lower courts, which cannot be overturned on appeal unless they are clearly erroneous.[2] The decision is one rendered consistently with the balance continuously observed by the courts: allowing appellate courts to decide questions of law, and giving lower courts deference on questions of fact.   The decision in Teva corrected an anomaly that existed in patent litigation that was not prevalent elsewhere and thus increased the consistency of the judicial system as a whole.[3]

Background and Immediate Effect

Many patent cases hinge on the claim construction hearing, or Markman hearing, during which the judge determines the relative definiteness and clarity of the claim in question.[4]  On its face, Markman hearings appear to blend questions of law and evidentiary fact.  The judge determines the contents and clarity of the patent claim in question, which the Supreme Court has identified as a question of law.[5]  However, this question of law is inherently comprised of a fact-intensive inquiry, evaluated and decided by “the Court” rather than a jury.[6]

Prior to Teva, the result of a district court’s Markman hearing could be overturned on appeal: the Federal Circuit employed a de novo standard of review for the entire hearing, including questions of evidentiary facts.[7]  The theory supporting this was that the question in dispute during a Markman hearing is essentially one of law, not fact.[8]  Therefore, the results of the hearing, including evidentiary fact supporting the claim construction, could be overturned during an appeal.  However, in the Teva decision, the Federal Circuit must exercise deference to the district court on questions of evidentiary fact: a question that can only be overturned if it is clearly wrong, thereby aligning to the Federal Rules of Civil Procedure 52(a)(6).[9]

The Ramifications: Benefits

This decision by the Supreme Court returns the duty of interpreting claim construction to district court judges.  These judges are closest to the claims in question, and have the greatest ability to discover information that will lead to the most accurate representation of a patent claim.[10]  However, because these decisions may not be appealed unless they are clearly erroneous, there is a risk that patents may be construed or interpreted differently, depending on the district court in which they are interpreted.[11]  This may lead to a perception that the exercise of forum selection is being used in order to obtain a favorable verdict.[12]

The Ramifications: Consequences

Teva also undermines the ability of the Federal Circuit to serve as a national body, which consistently sets the direction for patent construction.[13]  The Federal Circuit has a reputation for overturning a great number of construction claims.[14]  While the Teva decision may reduce the overturn rate, the Federal Circuit will also lose its place as the singular standard for claim construction by allowing the law of claim construction to develop organically and discretely at a district level.

Teva may also place a greater emphasis on original claim construction during the patent filing phase, encouraging patents to be filed with increased specificity and clarity.[15]  This may make the patents less susceptible to litigation, but also limits the scope and breadth of the patent’s grant.[16]  Alternatively, Teva may increase the scope and intensity of traditional Markman hearings, turning them into protracted “battles of the experts,” and placing a higher cost on the initial litigation hearings than previously experienced.[17]

 


 

[1] Teva Pharm. Inc. v. Sandoz Inc., 135 S. Ct. 831 (2015).

[2] Supreme Court Holds That Certain Aspects of Claim Construction Decisions Merit Deference on Appeal, IPcopy, (February 27, 2015), https://ipcopy.wordpress.com/2015/01/22/supreme-court-holds-that-certain-aspects-of-claim-construction-decisions-merit-deference-on-appeal/ .

[3] Mann, Ronald, Opinion Analysis: Court moves to reign in Federal Circuit control over district court claim construction, SCOTUSblog, (March 11, 2015), http://www.scotusblog.com/2015/01/opinion-analysis-court-moves-to-rein-in-federal-circuit-control-over-district-court-claim-construction/ .

[4] Markman v. Westview Instruments Inc., 517 U.S. 370, 372 (1996).

[5] Id. at 390.

[6] Id. at 390.

[7] Supra 3.

[8] Markman, 517 U.S. at 390.

[9] Teva, 135 S. Ct. at 835.

[10] Supra 2;  Paredes, J. Peter, Teva v. Sandoz: the new standard of review in claim construction, Lexology, (March 11, 2015) http://www.lexology.com/library/detail.aspx?g=685688d7-50f4-447e-9095-4b917923cc9f .

[11] Supra 2.

[12] Supra 2.

[13] Supra 11.

[14] Supra 2.

[15] Yonan, Daniel E. and Jon E. Boljesic, Practice considerations post Teva v. Sandoz, Lexology, (March 11, 2015), http://www.lexology.com/library/detail.aspx?g=786728a4-9436-4925-9045-8f33fa7be451

[16] Supra 15.

[17] Supra 15.