Wednesday, October 15, 2014

Teva v. Sandoz Argument Recap

This morning I attended the Supreme Court argument in Teva v. Sandoz, the case on the standard of review for patent claim construction, which I previewed on this blog. Based on the questions today (transcript here), I think that Chief Justice Roberts, Justice Alito, Justice Sotomayor, and perhaps Justice Ginsburg were inclined to affirm the current de novo approach, and that Justices Scalia, Kennedy, Breyer, and Kagan thought that claim construction involves subsidiary factual issues that must be reviewed under the clearly erroneous standard of rule 52(a). Justice Thomas, as usual, was silent. If I had to guess, I still suspect that the Court will ultimately reject the de novo approach, but I don't think the answer is at all obvious from argument. So we'll have to wait for the opinion to get a definitive (and hopefully clear!) answer. Below are my thoughts about the leaning of each Justice.

Favoring De Novo Review?

Justice Alito noted that no deference is due in statutory interpretation, even though statutes, like patents, sometimes contain technical terms of art that have little meaning to ordinary people (like "Tier 1 capital" in Dodd-Frank), and statutes may similarly require inquiry into factual matters (like "the original understanding of the Second Amendment" or "[w]hat did Congress intend"). He noted that "it all turns on" what patents are analogized to: "If a patent is like public law ... then factual findings regarding the meaning of that patent are not entitled to clear error review." But "if a patent is private law, if it's like a deed or if it's like a contract, then Rule 52(a) comes into play." Justice Alito also cited an article by PTO Deputy Solicitor Tom Krause and Heather Auyang, saying that "they couldn't find any case in which this fascinating legal debate had a practical significance," and wondering why it is "worthwhile as a practical matter" "to introduce a level of complication to this."

Justice Sotomayor began by asking about the difference between Teva's and the government's approaches to determining which issues in this case require Rule 52(a) deference: "If [Teva] and the government can't agree, why should we defer to a district court? Why don't we defer, as has been done now forever, to the Federal Circuit and let them review things de novo?" She agreed with Sandoz that the "inconsistent positions in patent prosecution" about the meaning of "average molecular weight" made the patent seem indefinite, and wondered why the Federal Circuit "just didn't make that holding" and suggested that this is really "an issue of law." (William Jay noted on rebuttal that the conflicting statements were made after the relevant patent issued, and thus should not affect whether it is definite.)

Chief Justice Roberts seemed concerned that greater deference would lead to conflicting claim meanings, noting that "two different district courts construing the same patent could come out to opposite results based on a subsidiary factual finding, and neither of those would be clearly erroneous, and yet on a public patent that is going to bind a lot of other people, people won't know what to do." He also noted that "the difference between questions of law and fact has not always been an easy one for the Court to draw."

Justice Ginsburg was the most difficult for me to read (besides Thomas), but her questions seemed more on the "de novo" side. She asked a couple of times about the Seventh Amendment in a way that suggested that she views the judge/jury question of Markman as identical to the law/fact question here. And when Carter Phillips was explaining for Sandoz that claim construction is different from every other issue in patent law, she said, "[t]he same way it's different from obviousness" (as a statement, not a question).

Favoring Greater Deference?

Justice Breyer would apply Rule 52(a) to this case, and I wouldn't be surprised if he ends up with the opinion. He thought "Markman just dealt with judge/jury," not law/fact. "I'd say why should you treat fact matters here different than any other case." He was unconcerned about the potential for inconsistent patent rulings, noting that "you can think of a thousand cases" where judges "could reach different factual conclusions" about the same underlying facts, even where "the different factual things have enormous public implications." He was skeptical that "patents are somehow different" and was concerned that "if we start carving out one aspect of the patent litigation .... I don't know where I'm going with that .... But do you see that I'm nervous about it?" And he saw little benefit to the status quo: "it's, like, 30 percent or 40 percent of all the cases get reversed."

Justice Scalia noted that even if sometimes "fact-finding will be dispositive of the legal question," that does not mean "that it is the same as the legal question." He said district courts would have little incentive to listen to witnesses if "what it finds is not going to be given any deference," and that "the mere fact that ... this binds the public is ... not conclusive" because a patent is like a deed that could similarly be construed different ways in different courts.

Justice Kagan probed whether the argument for de novo review was really that there are "a zillion [factual determinations], but it's not worth the candle to figure out which is which." Carter Phillips responded that it's not worth the candle, and Justice Kagan noted that he thus has "to deal with Rule 52(a) because Rule 52(a) sets out [a] very blanket rule. It doesn't say except where it's not worth the candle." She seemed concerned that expert testimony about how a skilled artisan would understand a term isn't "different from the ultimate legal question that the court has to answer," but then paraphrased the answer as "that in certain cases the factual finding truly is the legal determination, but that in other cases, other matters can come in to drive a wedge between the two." She rejected Justice Alito's analogy to statutes, noting that "there might be very different kinds of factual determinations that are relevant to patentability than are relevant to interpretation of a statute," and that "different people's view of what facts on the ground are" might matter.

Justice Kennedy noted that "Markman hearings certainly have expert testimony" and seemed incredulous that such testimony might not "involve any findings of fact to which the court of appeals must defer." He wondered why district courts should be told to forego findings of fact and instead just write conclusions of law. (Though he did also wonder how the deference due in claim construction was different from a finding that "a reasonable police officer would think this is probable cause.")

For other takes on the argument, see Dennis Crouch at Patently-O, Lyle Denniston at SCOTUSblog, Ed Lee at Chicago-Kent's ISCOTUS, and Lawrence Hurley for Reuters.

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