Chapter §15.07 Federal Circuit Review of Claim Interpretation Decisions

• Jurisdiction: United States

§15.07 Federal Circuit Review of Claim Interpretation Decisions

[A] Question of Law, Fact, or Mixed

What standard of review should the Federal Circuit apply to a district court's interpretation of disputed language in patent claims? Given the centrality of claim interpretation to virtually all patent disputes, the answer significantly impacts the balance of power in patent cases as between the federal district courts, which try the cases, and the Federal Circuit, which hears them on appeal.

Until 2015, the controlling authority was the Federal Circuit's controversial 1998 en banc decision, Cybor Corp. v. FAS Techs., Inc.³⁷⁸ As detailed below, the Cybor court maintained that the task of patent claim interpretation did not involve making any findings of fact. Hence, the Circuit's standard of review for district court interpretations was plenary or de novo—no deference was given to district courts.

After years of disagreement inside and out of the Federal Circuit, the Supreme Court issued a course correction. In January 2015, the Court announced its decision in Teva Pharms. USA, Inc. v. Sandoz, Inc.,³⁷⁹ its most significant patent claim construction case since the 1996 blockbuster Markman v. Westview.³⁸⁰ For the first time, the Court made crystal clear that claim interpretation may have "evidentiary underpinnings." It recognized in Teva that claim interpretation can involve underlying questions of fact. In some cases, district courts may find it helpful to consult the extrinsic evidence (such as an expert's testimony concerning what a term of art meant to a skilled artisan as of the invention's effective filing date). The Teva Court held that when district court findings of fact result in such cases, the Federal Circuit must review the findings under the "clearly erroneous" standard of Fed. R. Civ. P. 52. In other words, the Federal Circuit must now accord deference to those subsidiary fact findings made by district courts in the patent claim construction process.

The following subsections track the critical case law development.

[B] De Novo Review Under Cybor (en banc) (1998)

In its watershed Markman decision,³⁸¹ the Supreme Court clearly established that patent claim interpretation is for the court rather than the jury. But by referring to claim interpretation as a "mongrel practice,"³⁸² the Court left some question as to whether a district court in carrying out its interpretational responsibilities is making an entirely legal determination or instead needs to find facts. This was the question addressed by the Federal Circuit in Cybor.

Because of continued disagreement among Federal Circuit judges over the fact-versus-law question for patent claim interpretation,³⁸³ the appellate court went en banc to resolve the issue. In Cybor Corp. v. FAS Techs., Inc.,³⁸⁴ a majority of Federal Circuit judges³⁸⁵ agreed that claim interpretation was entirely a legal determination.³⁸⁶ That is, district courts did not make any findings of fact when they are construing patent claims. The Cybor majority reached this conclusion based on its reading of the Supreme Court's Markman decision:

When it answered th[e] question [i.e., "whether the interpretation of a so-called patent claim . . . is a matter of law reserved entirely for the court, or subject to a Seventh Amendment guarantee that a jury will determine the meaning of any disputed term of art about which expert testimony is offered," Markman II, 517 U.S. at 372 (emphasis added by Federal Circuit)] by stating that "[w]e hold that the construction of a patent, including terms of art within its claim, is exclusively within the province of the court," id. [ Markman II, 517 U.S. at 372], the Court held that the totality of claim construction is a legal question to be decided by the judge. Nothing in the Supreme Court's opinion supports the view that the Court endorsed a silent, third option—that claim construction may involve subsidiary or underlying questions of fact. . . . To the contrary, the Court expressly stated that "treating interpretive issues as purely legal will promote (though not guarantee) intrajurisdictional certainty through the application of stare decisis on those questions not yet subject to interjurisdictional uniformity under the authority of the single appeals court." Id. at 391, 116 S.Ct. at 1396 (emphasis added); see also id. at 387, 116 S.Ct. at 1394 (" 'Questions of construction are questions of law for the judge, not questions of fact for the jury' " (quoting A. Walker, Patent Laws §75 at 173 (3d ed. 1895))). Indeed, the sentence demonstrates that the Supreme Court endorsed this court's role in providing national uniformity to the construction of a patent claim, a role that would be impeded if we were bound to give deference to a trial judge's asserted factual determinations incident to claim construction. ³⁸⁷

Because it did not view claim interpretation as requiring any factfinding, and because it considered "national uniformity" in the construction of claims to be part of its appellate mandate, the Federal Circuit in Cybor thus reviewed a district court's patent claim interpretation under the de novo (i.e., no deference) standard of review.³⁸⁸

Supporters of the Cybor decision contended that it promoted greater uniformity in the treatment of a given patent. For example, consider a scenario in which two different federal district courts construed the same patent claim, with one court interpreting the disputed language broadly in a manner that rendered the patent invalid and the other court reaching a contrary, narrower interpretation that resulted in the patent's validity being sustained. If the Federal Circuit were required to defer to each of these opposing interpretations as factual findings, the supporters of Cybor contended that the result would be an unacceptable level of inconsistency.

[C] Criticism of De Novo Standard of Review

Detractors of Cybor pointed to the dissent of Circuit Judge Rader, who cited a study indicating that approximately 40 percent of the claim interpretation decisions reviewed on appeal by the Federal Circuit were reversed.³⁸⁹ In Judge Rader's view, shared by many patent litigators, this level of uncertainty rendered the patent litigation process little better than a coin toss in terms of predictability of outcome.

More recent studies indicated the reversal rate had lowered but the problems inherent in de novo review remained.³⁹⁰ Former Federal Circuit Chief Judge Mayer charged that the Federal Circuit's continued treatment of claim interpretation as lacking any factual component had resulted in "mayhem," which "seriously undermine[s] the legitimacy of the process, if not the integrity of the institution."³⁹¹ District court judges sitting by designation with the Federal Circuit wrote that the de novo standard of review could "result in the unintended consequences of discouraging settlement, encouraging appeals, and, in some cases, multiplying the proceedings."³⁹²

Despite the strident tone of the Cybor majority opinion that district courts deserved no deference in their claim interpretations because these determinations were entirely legal rather than factual, some members of the Federal Circuit adopted a more pragmatic, common-sense position. These judges suggested that, despite the "no deference" absolutism of the Cybor majority, in practice the Federal Circuit would give weight to a district court's claim interpretation commensurate with the degree of care taken by the district court in its analysis and the informational value of the record that the district court considered.³⁹³

This pragmatic approach could be taken only so far, however. As of 2013, Federal Circuit judges continued to sharply disagree on the proper appellate standard of review for district court claim interpretation decisions. A significant number of Federal Circuit judges repeatedly called for reevaluation of the 1998 en banc decision in Cybor.

For example, in her 2011 dissent from denial of rehearing en banc in Retractable Techs., Inc. v. Becton, Dickinson and Co.,³⁹⁴ Circuit Judge Moore observed that the Federal Circuit has "waited five years (since Amgen Inc. v. Hoechst Marion Roussel, Inc., 469 F.3d 1039 (Fed. Cir. 2006), where six judges claimed a willingness to review Cybor) for that ever-elusive perfect vehicle to review the issue of deference to the district court's claim construction." She urged that it "is time to rethink the deference we give to district court claim constructions and the fallacy that the entire process is one of law."³⁹⁵

Also dissenting from denial of rehearing en banc in Retractable Techs., Circuit Judge O'Malley stated flatly that "[i]t is time to revisit and reverse our decision in Cybor. . . . That decision was ill considered thirteen years ago and has not proven 'beneficial' to patent jurisprudence 'in the long run.' "³⁹⁶ Judge O'Malley (the only former federal district court judge serving on the Federal Circuit as of 2013) noted that since the Supreme Court's 1996 Markman decision that assigned them the task of patent claim construction,

district judges have been trained to—and do—engage in detailed and thoughtful analysis of the claim construction issues presented to them. They conduct live hearings with argument and testimony, sometimes covering several days, and certainly always extending beyond the mere minutes that courts of appeals have to devote to live exchanges with counsel. Simply, "the trial court has tools to acquire and evaluate evidence that this court lacks." Cybor, 138 F.3d at 1477 (Rader, J., dissenting). ³⁹⁷

The continued legitimacy of the Cybor de novo standard of review for claim interpretation was challenged by a 2012 petition for Supreme Court review in Retractable Techs., which presented the following two questions (the second question addressing Cybor):

1. Whether a court, in construing a disputed term in a patent claim, may draw inferences from the patentee's use of the same term elsewhere in

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