Supreme Court changes appellate standard of review

On January 20 2015 the Supreme Court changed the appellate standard of review for the facts underlying a district court's claim construction determination. The court held that while the ultimate construction of a patent claim is a matter of law that the Federal Circuit reviews de novo on appeal, a district court's subsidiary factual findings underlying its claim construction ruling must be accepted on appeal in the absence of "clear error".

Facts
The dispute concerned the meaning of the term 'molecular weight' in an asserted patent claim. The defendant contended that the claim was indefinite, but after hearing expert testimony, the district court held the claim term to be definite. On appeal, the Federal Circuit reversed and held the claim to be indefinite. In doing so, the Federal Circuit did not make a determination that the district court's finding, based on the patentee's expert's opinion, was "clearly erroneous".

Decision
Federal Rule of Civil Procedure 52(a)(6) provides that a court of appeals "must not... set aside" a district court's "[f]indings of fact" unless they are "clearly erroneous". The court held that this rule applies to appellate review of a district court's resolution of subsidiary factual matters made in the course of its construction of a patent claim. The court reasoned that its opinion in Markman did not create an exception to Rule 52(a) since the question presented in that case related to the Seventh Amendment and whether a judge or a jury should construe patent claims. Markman concluded that the ultimate question of the proper construction of a patent is a question of law, but did not create an exception to the standard of appellate review for underlying factual disputes.

The court further reasoned that precedent supported its holding, because:

• before the creation of the Federal Circuit, the Second Circuit had applied a "clearly erroneous" standard in claim construction review; and
• in the context of obviousness, subsidiary factual findings are subject to Rule 52(a).

Finally, the court reasoned that practical considerations favour clear error review, since a district court judge is better positioned to decide complicated scientific problems and resolve credibility disputes.

The court rejected Sandoz's arguments that claim construction does not give rise to subsidiary factual disputes and that separating factual from legal questions is often difficult. The court reasoned that it was not free to ignore Rule 52(a) and that even if it were, courts of appeals have long found it possible to separate factual from legal matters.

After explaining its holding, the court provided guidance on how the claim construction standard of review must be applied in practice. Specifically, when the district court reviews only evidence intrinsic to the patent, the judge's determination will amount solely to a determination of law that will be reviewed de novo. However, when extrinsic evidence is consulted in order to understand, for example, the background science or the meaning of a term in the relevant art, district courts will need to make subsidiary factual findings that must be reviewed for clear error on appeal. For example, if a district court resolves an expert dispute about the general meaning of a term to a skilled artisan, that is a subsidiary factual finding reviewable for clear error. However, the district court must still conduct a legal analysis (ie, whether a skilled artisan would ascribe the same general meaning in the context of the specific patent) that is reviewable de novo.

With respect to the case at hand, the court held that the Federal Circuit erred by failing to accept the patentee's expert's opinion without first finding that the district court's contrary determination was clear error.

The dissent agreed with the court's conclusion that there is no special exception to Rule 52(a), but opined that claim construction does not involve findings of fact and therefore does not implicate that rule.

Comment
Following this decision, expert testimony on claim construction issues will become more important. Where the district court accepts an expert's opinion on the general meaning of a term to one of ordinary skill, that determination will effectively be controlling in the absence of some different meaning provided in the patent.

Further, the Federal Circuit may place renewed emphasis on primacy of intrinsic evidence, which is still reviewable de novo.