Federal Circuit Review - Issue 40
Supreme Court Applies “Clear Error” to Subsidiary Factual Findings in Federal Circuit’s De Novo Claim Construction.
Teva Pharm. USA, Inc. v. Sandoz, Inc., No. 13-854, 2015 U.S. LEXIS 628 (Sup. Ct. Jan. 20, 2015) (Breyer, J.) (Thomas, J., dissenting).
Teva sued Sandoz for infringing a patent that covers a method for manufacturing Copaxone, a drug for treating multiple sclerosis. Sandoz argued that the patent is invalid because the claim language, specifying “a molecular weight of 5 to 9 kilodaltons” for the active ingredient, was indefinite under 35 U. S. C. §112 ¶2. According to Sandoz, The patent did not state which of three different methods was used to calculate molecular weight. The district court credited Teva’s expert, rejected the indefiniteness defense, and held that the patent is valid. It concluded that “molecular weight” referred to the most prevalent molecule in the composition (and was neither an average molecular weight nor a weighted average favoring heavier molecules). On appeal, the Federal Circuit reviewed the district court’s claim construction de novo and reversed. Teva petitioned for certiorari, which was granted.
In the context of interpreting a patent claim, the Supreme Court considered “what standard the Court of Appeals should use when it reviews a trial judge’s resolution of an underlying factual dispute.” The Majority concluded that FRCP 52(a)(6) applies to any subsidiary factual findings by the lower court. This requires “appellate courts to review all such subsidiary factual findings under the ‘clearly erroneous’ standard.”
More specifically: “When the district court reviews only evidence intrinsic to the patent, the judge’s determination is solely a determination of law, and the court of appeals will review that construction de novo. However, where the district court needs to consult 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, and where those subsidiary facts are in dispute, courts will need to make subsidiary factual findings about the extrinsic evidence. The district judge, after deciding the factual dispute, will then interpret the patent claim in light of the facts as he has found them. The ultimate construction of the claim is a legal conclusion that the appellate court can review de novo. But to overturn the judge’s resolution of an underlying factual dispute, the appellate court must find that the judge, in respect to those factual findings, has made a clear error.” The Court also instructed that “[a]n issue does not lose its factual character merely because its resolution is dispositive of the ultimate legal question.”
The Supreme Court rejected Sandoz’s argument that factual and legal questions are often difficult to separate, because “Courts of appeals have long found it possible to separate factual from legal matters.” The Court also was not convinced that “’clear error review would bring about less uniformity” since “[a]fter all, the Federal Circuit will continue to review de novo the district court’s ultimate interpretation of the patent claims.” Contrary to the dissent, the Court found that claim interpretation is comparable to the construction of private written instruments such as contracts and deeds, and is not akin to the interpretation of a statute.
Here, the district court evaluated factual evidence, embodied in expert testimony, to determine how a skilled artisan would use certain chromatogram data, plotted on a curve, to reflect molecular weights. Based on that factual finding, the court made a legal conclusion that “molecular weight” was not indefinite claim language. When the Federal Circuit reviewed this decision de novo, it rejected the expert ’s explanation “without finding that the District Court’s contrary determination was ‘clearly erroneous.’ Thus, the Federal Circuit erred in failing to review this factual finding only for clear error.”
For these reasons, the Supreme Court vacated the judgment and remanded the appeal.
In his dissent, Justice Thomas concluded that the “evidentiary underpinnings” of claim construction are a legal matter and not a factual question. He argued that “the nature of the legal instrument dictates [the Court’s] treatment of subsidiary findings…” By analogy, a patent resembles a statute, not a private contract, because patents are governmental dispositions and are regulatory in nature. Since “the ultimate meaning of a patent claim, like the ultimate meaning of a statute, binds the public at large, it should not depend on the specific evidence presented in a particular infringement case.” The meanings of technical terms in a statute involve only conclusions of law, and the same treatment for claim terms in a patent is warranted. According to Justice Thomas, the Court has been unwilling to interpret sovereign dispositions in the same way it interprets analogous private conveyances. Further, “the need for uniformity in claim construction” favors de novo review of subsidiary evidentiary determinations. The dissent also was concerned that fewer claim construction decisions would be precedential, “thereby injecting uncertainty into the world of invention and innovation.”
Court Remands Patent Prosecution Malpractice Case to State Court.
NeuroRepair, Inc. v. The Nath Law Group et al., No. 2013-1073, 2015 U.S. App. LEXIS 616 (Fed. Cir. Jan. 15, 2015) (Wallach, J.). Click Here for a copy of the opinion.
In 2005, NeuroRepair retained Robert Cogan and The Nath Law Group (collectively, “Nath”), to prosecute certain patent applications. By 2007 NeuroRepair had become dissatisfied and transferred its cases to another firm. NeuroRepair’s allegations included lack of communication, ineffective pursuit of the patent applications, and failure to accurately bill and record time. In 2009, NeuroRepair brought several state-based malpractice claims against Nath in San Diego Superior Court. Nath removed the lawsuit to federal district court on the ground that it was a “civil action relating to patents.” The district court ultimately entered a judgment in favor of Nath. NeuroRepair appealed and argued that the district court lacked subject matter jurisdiction over the case.
The Federal Circuit vacated and remanded the case to the district court with instructions that it transfer the case to California state court. The district court lacked subject matter jurisdiction over the lawsuit because the malpractice claims did not arise under patent law. Specifically, the Court echoed the Supreme Court’s recent decision in Gunn v. Minton, which made it clear that state-based legal malpractice claims will “rarely, if ever, arise under federal patent law,” even if they require resolution of a substantive question of federal patent law. 133 S. Ct. 1059, 1065 (2013). The Court rejected the Defendants’ arguments distinguishing the present malpractice case, which was based on patent prosecution, with that of Gunn, which was based on patent litigation. Instead, the Court concluded that there is no carve out that provides federal subject matter jurisdiction to patent prosecution related malpractice claims. Further, the Court found only one patent law issue necessary for decision in this case – whether the patent could have issued earlier and with broader claims. The Court concluded that, as in Gunn, this question was not of substantial importance to the patent system and that trying these cases in federal court would “disrupt the federal-state balance.” As a result, NeuroRepair will have a second shot of proving malpractice in California state court.
Federal Circuit Reverses Rejection of Trademark Utilizing Geographically Descriptive Term.
In re Newbridge Cutlery Co., No. 2013-1535, 2015 U.S. App. LEXIS 615 (Fed. Cir. Jan. 15, 2015) (Linn, J.). Click Here for a copy of the opinion.
On January 15, 2015, the Federal Circuit reversed a United States Patent and Trademark Office (“USPTO”) decision rejecting a trademark for the name “Newbridge Home.” Appellant, The Newbridge Cutlery Company, designs and sells homeware and giftware products using the mark “Newbridge Home,” for which it filed an international registration with the World Intellectual Property Organization, and for which it later sought protection in the United States.
The Examiner of the U.S. application found that the mark could not be registered because it is geographically descriptive, given that the company is headquartered in Newbridge Ireland. Newbridge appealed to the Trademark Trial and Appeal Board (“TTAB”), which affirmed the Examiner’s decision, finding that American consumers would associate with Newbridge’s goods with Newbridge Ireland.
The Federal Circuit noted that geographical names have long been refused trademark protection, however, the Trademark Examiner must show that: (1) the mark sought to be registered is the name of a place known generally to the public, (2) the public would make a goods/place association, i.e., believe that the goods for which the mark is sought to be registered originate in that place, and (3) that the source of the goods is the geographic region named in the mark.
The Court found that the relevant public in this case was the American public that purchases the particular type of goods sold by Newbridge. To these consumers, Newbridge is not the name of a place that is generally known, because the geographic meaning is minor, obscure, or remote to the relevant public. The Court specifically rejected the USPTO’s argument that mentions of Newbridge Ireland on Internet websites such as Wikipedia constituted sufficient evidence of the public’s general knowledge, given the enormous amount of information available online. The Court further noted a lack of evidence that relevant consumers have meaningful knowledge of particular portions of Internet information, and that “it is simply untenable that any information available on the internet should be considered known to the relevant public.” (emphasis added).
Accordingly, the Federal Circuit determined that Newbridge Ireland was not well-known enough to American consumers for the trademark to be ineligible for registration as a geographically descriptive term.
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