TEVA v. SANDOZ – THE DISSENT AND THE ZONE OF UNCERTAINTY

In Teva v. Sandoz, decided yesterday by a 7-2 decision of the S. Ct., the lengthy dissent by Justices Alito and Thomas invoked the dreaded “zone of uncertainty” – a dangerous bar of shifting legal sands that defendants should not have to cross. This legal quicksand was recently invoked in Nautilus v. Biosig to justify raising the requirements of s. 112(2) from insolubly ambiguous to reasonably certainty, and has its roots in Markman and Festo, 535 U.S. 722, 731 (2002). Justice Thomas writes:

“So damaging is this unpredictability that we identified uniformity as an ‘independent’ reason justifying our allocation of claim construction to the court… The majority’s rule provides litigants who prevail in district court to take advantage of this uncertainly by arguing on appeal that the district court’s claim construction involved subsidiary findings of fact. At best, today’s holding will spawn costly [and meritless] – collateral litigation over the line between law and fact.” Slip. op. at 16 [dissent].

It is hard not to agree with the dissent. Many decisions that come before the Fed. Cir. are based on arguments that a district court’s claim construction — which remains a question of law — is based on erroneous fact-finding. After all, the majority has ruled that “[a]n appellate court similarly should review for clear error those factual finding that underlie a district court’s claim construction.” These are subsidiary factual questions, and the fact that they are to be reviewed with deference does not mean that they will not be reviewed at all.

And will it really be that difficult to argue clear error regarding such fact-finding? In Vederi, LLC v. Google, 744 F.3d 1276 (Fed. Cir. 2014), the court held that the district court had erred in its construction of a key claim element “substantially elevations.” Vederi had sued Google for infringement of four of its patents directed to “street views” that it alleged encompassed providing perspective or panorama views of passing buildings, as opposed to simply providing flat, or four-square views of the buildings along the route.  The district court found non-infringement on the basis that Vederi had amended its claims to remove the element “non-aerial view’ and add “substantially elevations” to its claim. The district court had relied on extrinsic evidence, a “technical dictionary,” to define the architectural term “elevation.” But the district court did not consider the scope imparted by “substantially.” The Fed. Cir. went straight to the intrinsic evidence and found that the use of “substantially” to modify “elevations” did not estopp Vederi from arguing that its claims could encompass the Google product. The Federal Circuit avoided evaluating the extrinsic evidence entirely.

So the Fed. Cir. could at once give “deference” to the technical definition arrived at by the district court, while finding that the claim construction was erroneous. To use Justice Thomas’ framework, since Google lost, it needs to be able to argue on appeal that the Fed. Cir. did not give proper deference to the extrinsic technical definition applied by the district court. But the Fed. Cir. reminded us that the intrinsic evidence often trumps the extrinsic evidence. (“However extrinsic evidence may be less reliable than intrinsic evidence.”) While the “point” of the holding in Teva is to reduce the “zone of uncertainty” involved in claim construction, the Fed. Cir. will always be free to access the specification and the prosecution history of the patent in suit, and to review whether or not the district court’s legal analysis of the intrinsic evidence was facially deficient, no matter what facts were “found”. In Vederi, the outcome turned on the definition — or lack thereof — of a single word. I don’t think that the Fed. Cir. will find it overly difficult to sidestep the necessarily extrinsic “evidentiary underpinnings” of claim construction.

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