Less than a month ago, the Supreme Court reversed the Federal Circuit’s en banc decision in Teva v. Sandoz, holding that the Court of Appeals must apply a “clear error” standard of review to all factual findings made in patent claim construction. The proper standard of review has been hotly debated for sometime, but the Federal Circuit has consistently applied de novo review to all aspects of patent claim construction since it decision in Cybor Corp. v. FAS Technologies, Inc. The Supreme Court’s decision distinguishes between evidence “intrinsic to the patent,” which is still reviewed de novo and extrinsic evidence–most often expert testimony–which is reviewed for clear error.

So what does this change in the law mean for the IP community? This decision raising the standard of review will have a more significant impact than some of its other guidance to the Federal Circuit, because claim construction is an integral element of virtually every patent infringement suit. As a preliminary matter, it will move the focus of patent litigants back to the district court; one of the strongest practical arguments against de novo review is the near 30% reversal rate on appeal. The likelihood of reversal has incentivized appeals to the Federal Circuit, increasing expense and complicating issue preservation. Applying a clear error standard of review is sure to decrease these problems somewhat.

However, shifting greater weight to the district court’s claim construction may carry its own problems. In his excellent Patently-O blog, Dennis Crouch asked patent litigators how it could change their patent litigation strategy. Most significantly, respondents stated that they would emphasize extrinsic evidence, especially expert testimony, in Markman hearings going forward. This will likely drive litigation costs ever higher and put a greater burden on district court judges to articulate their reasons for crediting one expert over another. To avoid clear error, judges may need to memorialize the aspects of expert testimony that are not included in a court transcript–tone of voice, facial expressions, and overall demeanor.

It is still unclear what changes will materialize, but the reactions of district courts and the Federal Circuit will be interesting to watch!

Emily Gabranski

 

 

 

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