The Court relies primarily on the clear language of Rule 52(a). Markman's holding that claim construction is a ultimately a question of law for the court, not the jury, "does not imply an exception to Rule 52(a) for underlying factual disputes." As in contract disputes, construction "often presents a question solely of law" when words "are used in their ordinary meaning," but when extrinsic evidence is helpful, review of these factual determinations must be for clear error. In addition to Rule 52(a), the Court also stated that clear error review was supported by precedent (citing a 1950 Learned Hand opinion on claim construction and the Supreme Court's 1986 Dennison opinion on obviousness) and by "practical considerations": Patent law "depends on familiarity with specific scientific problems and principles," and district judges have "a comparatively greater opportunity to gain that familiarity."
The Court rejects Sandoz's argument that separating factual and legal issues will simply lead to more confusion, noting that even if it could ignore Rule 52(a), "[c]ourts of appeals have long found it possible to separate factual from legal matters," and that "the Federal Circuit's efforts to treat factual findings and legal conclusions similarly have brought with them their own complexities." The Court also dismissed concerns over decreased uniformity, noting that there is no reason "divergent claim construction … should occur more than occasionally." And the Court rejected the dissent's argument that any factfinding involved in claim construction is more analogous to that underlying the interpretation of statutes, concluding that patents differ from public-focused statutes because they "typically (though not always) rest upon consideration by a few private parties, experts, and administrators of more narrowly circumscribed facts related to specific technical matters."
So how will this new rule be applied in practice? The Court notes that "[a]s all parties agree, when the district court reviews only evidence intrinsic to the patent," review is de novo. But when the district court "consult[s] extrinsic evidence in order to understand, for example, the background science or the meaning of a term in the relevant art during the relevant time period," the resulting "subsidiary factual findings" are reviewed for clear error. Interpretation of the patent claim in light of these facts remains a legal conclusion reviewed de novo, although "in some instances, a factual finding may be close to dispositive of the ultimate legal question."
Will the Teva decision create an incentive for parties to submit more extrinsic evidence in claim construction disputes, and for district courts to hold more evidentiary hearings and couch decisions in factual terms in order to decrease their likelihood of reversal? Will it reduce claim construction litigation at the appellate level, or will it simply increase appeals over whether conclusions are "factual"? As I noted in my argument preview, the parties and amici on both sides claimed that the opposing approach would decrease litigation costs, though the lawyers and the operating companies lined up on opposite sides of this question. As this new rule plays out in the lower courts over the coming months, we'll begin to get some answers to these questions.
Update: Here are some early reactions from the Twitterverse:
Despite splashy headlines, de novo review of claim construction isn't going anywhere. Court limited deference http://t.co/sPxsGwnknL— Michael Risch (@ProfRisch) January 20, 2015
Teva likely not to change very much unless district courts start holding evidentiary hearings just to insulate themselves from review.— Mark Lemley (@marklemley) January 20, 2015
SCOTUS in Teva: "subsidiary factfinding is unlikely to loom large in the universe of litigated claim construction." Henceforth I doubt it!— Janice Mueller (@patent_maven) January 20, 2015
@PolkWagner Yes if unambiguous but as a practical matter I can't believe any decent litigator won't be able to inject extrinsic fact issues— Janice Mueller (@patent_maven) January 20, 2015
SCOTUS adopts "intrinsic=legal" and "extrinsic=factual" way of construing claims. For a presumption-based approach: http://t.co/wDtR5q2QYg— Timothy Holbrook (@HolbrookPatents) January 20, 2015
@HolbrookPatents I guess a district judge is still free to start with the intrinsic evidence, but would any rational judge do so given SOR?— Jason Rantanen (@IowaPatentLaw) January 20, 2015
Teva: "the meaning of a term in the relevant art during the relevant time period" may now be a "subsidiary fact" reviewed for clear error?— Maggie (@maggiewittlin) January 20, 2015
Per Phillips, constr'n is gen "the meaning that the term would have to a person of ordinary skill in the art...at the time of the invention"— Maggie (@maggiewittlin) January 20, 2015
Fine(ish) distinctions!— Maggie (@maggiewittlin) January 20, 2015
Institutional Competence Watch: SCOTUS Dings CAFC, questions raison d'être of a specialist patent court. http://t.co/bSeVIlqvBN— Jeremy Sheff (@jnsheff) January 20, 2015