The Supreme Court today issued a 7-2 decision which should go a long way to reduce almost automatic appeals in patent cases. The Federal Circuit appeals court was created to handle all patent appeals. The Roberts Court has been telling the Federal Circuit again and again that most of the moving parts in a patent lawsuit are just like what federal trial court judges decide in non-patent cases. They did it again today in Teva Pharmaceuticals USA v. Sandoz.
Patents must be written in words, and a major hurdle in patent disputes is deciding what they mean. The parties tell the court what they think the words mean, and they usually have strong disagreements on a few key terms. This stage of the lawsuit is called claim construction, and experts often testify about how the words are understood in the specialized area where the patent is useful, or art. It might be electrical systems for cars, medications for animals, or a machine tool.
Teva sued Sandoz for making a generic version of the multiple sclerosis drug Copaxone. Sandoz argued Teva’s patent was invalid because it failed to spell out which of three possible methods is used to determine a molecular weight, and their expert supported the argument. Teva’s expert testified that a person in the field, a hypothetical “skilled artisan,” knew exactly the one method the patent was talking about.
So there was a fact dispute. The method of determining molecular weight either would or would not be understood as only one correct way when a skilled artisan reads the patent. The trial court decided Teva’s expert was right and interpreted key words in the patent based on that fact. Teva won.
Then Sandoz appealed and the Federal Circuit decided the fact issue from scratch, “de novo.” They thought Sandoz’s expert was right and reversed the trial court. This has been going on most of the time the Federal Circuit has existed, and is widely regarded as a reason there are so many appeals of patent decisions. If you didn’t like the result based on the trial court’s findings of facts, go to the Federal Circuit and fight the issue all over again.
Most patent trials are hugely expensive. Appeals aren’t cheap, but they cost a fraction of the trial so the downside of appealing was relatively small and you get a completely fresh trial, in effect, from the appeals court.
The Supreme Court stressed today that the federal rules for all civil cases say a court of appeals “must not . . . set aside” a district court’s “[f]indings of fact” unless they are “clearly erroneous.” There are no exceptions that authorize the Federal Circuit to make its own findings of fact “de novo.”
Having to prove to the appeals court that the trial judge made clear errors in finding facts is a tall hurdle compared to asking the appeals court to ignore the trial judge and start all over from the beginning.
Justice Breyer has been an important figure on intellectual property decisions and he delivered the court’s opinion today. The case is about what happens when a trial judge decides, not a jury. It will make a major difference in patent lawsuits. It brings patent cases in line with the common sense recognition that the judge who observes the witnesses considers all the vital but non-verbal communication that a transcript lying on a clerk’s desk at the appeals court cannot convey.
Whether it is contract interpretation, putting a value on real estate, or a criminal defense, federal judges have vast experience deciding facts. Some of the power to do that in patent cases today was restored to them, and it will “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”