Teva v. Sandoz: The New Standard Could Greatly Impact Patent Litigation Strategy

The recent Supreme Court ruling in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc. makes it clear that if the Federal Circuit wishes to reconsider a district court’s decision on factual matters underlying a patent claim construction dispute, it may do so only if the district court’s ruling on that matter was clearly erroneous. This holding has the potential to significantly change the patent litigation game, as it makes it much more difficult for the losing party of a claim construction dispute to overturn an unfavorable district court decision.

Plaintiff Teva Pharmaceuticals, an international pharmaceutical company headquartered　in Israel, developed and patented the manufacturing method for the drug Copaxone, which is used to treat multiple sclerosis. The patent was set to expire in September 2015, but defendant Sandoz (and several other firms), the generic pharmaceuticals division of Swiss multinational pharmaceutical company Novartis, had already started advertising a generic version of the multi-billion dollar drug months before the patent expired. On its face, this would definitely constitute patent infringement. However, one cannot infringe upon a patent unless said patent is valid.

Indeed that was Sandoz’s defense, as it argued that Teva’s patent was invalid based on 35　U.S.C.　§112, which requires Teva’s patent claims to specify in a written description the manner and process of making the drug in "full, clear, concise, and exact terms as to enable any person skilled in the art . . . to make and use [the drug]." According to Sandoz, one of the claims in the patent was fatally indefinite due to the allegedly ambiguous use of the term molecular weight within the context of the patent claim. After hearing expert testimony from both sides, the district court determined that the word molecular weight was sufficiently definite and that the patent was therefore valid. However, the U.S. Court of Appeals for the Federal Circuit reversed the district court’s decision after reviewing the case, including any factual determinations made by the lower court, on a de novo basis.

In the past, the Federal Circuit has had a wide range of latitude and was given complete deference in determining patent claim construction cases based on precedence established in Markman v. Westview Instruments. In Markman, the Supreme Court held that the ultimate question of claim construction is for the judge, not the jury. However, in its January 20, 2015 ruling, the Court made it clear that Markman "neither created, nor argued for an exception to Federal Rule of Civil Procedure 52(a)(6)" by stating that a court of appeals must not set aside a district court’s findings of fact unless they are clearly erroneous. Therefore, the Court held that while the general issue of claim construction is a matter of law, subject to de novo review, the Federal Circuit must give deference to any factual findings made in the course of construing those claims. Thus, factual findings, such as the molecular weight finding in the Teva case, can only be reviewed on a clearly erroneous basis.

After all is said and done, Teva v. Sandoz boils down to a simple proposition: first impressions are hard to overcome.

Source: Globes