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Supreme Court’s Decision in Teva Does Not Require Federal Circuit to Review Immaterial or Improper Fact-Finding under a Clear Error Standard

After an appeal to the Federal Circuit, Defendant Arthrex, Inc. (“Arthrex”) filed a motion to reopen the judgment under FRCP 60(b). Arthrex premised its motion on the argument that the judgment should be reopened in light of the Supreme Court’s recent holding in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., 135 S.Ct. 831 (2015).

Plaintiffs Smith & Nephew, Inc. and John Hayhurst (collectively “S&N”) had appealed the district court’s decision to grant Arthrex’s motion for judgment as a matter of law. As set forth by the district court, under the case law in effect at the time of the appellate decision, the Federal Circuit reviewed all aspects of the district court’s claim construction de novo. The Federal Circuit ultimately reversed the decision granting Arthrex’s motion for judgment as a matter of law.

In addressing Arthrex’s argument, the district court explained that Arthrex argued that Teva invalidated the standard of review used by the Federal Circuit in its 2013 review of this case. In Teva, the Supreme Court held that when reviewing a district court’s resolution of subsidiary factual matters during patent construction, the Federal Circuit must apply a clear error standard. 135 S.Ct. at 841. Arthrex argued that under Teva’s new approach, the claim construction of “lodging the member” issued by the Federal Circuit on appeal is not valid, but rather the construction previously issued by the district court should be reinstated. Arthrex argues that the district court engaged in fact-finding to arrive at its construction and the Federal Circuit therefore should have honored that construction unless it found clear error in the district court’s fact-finding.

The district court then found that Teva only applied to the extent the court engaged in fact-finding regarding extrinsic evidence. The Supreme Court stated in Teva, “when the district court reviews only evidence intrinsic to the patent (the patent claims and specifications, along with the patent’s prosecution history), the judge’s determination will amount solely to a determination of law, and the Court of Appeals will review that construction de novo.” 135 S.Ct. at 841. Where a claim term is capable of being construed based on the intrinsic evidence alone, it is actually improper for a court to rely on extrinsic evidence. Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1583 (Fed. Cir. 1996).

Referring to the Federal Circuit’s ruling on appeal, the district court noted that “[i]n its review of the claim construction for ‘lodging,’ the Federal Circuit held that the intrinsic evidence alone was sufficient to construe the claim. Smith & Nephew, Inc. v. Arthrex, Inc., 502 F. App’x. 945, 948-949 (Fed. Cir. 2013).” In a post-Teva case, the Federal Circuit held, “[B]ecasue the meaning of the claim at issue is clear in view of the intrinsic record and undisputed facts, we also review de novo . . . . To the extent the district court considered extrinsic evidence in its claim construction order . . . that evidence is ultimately immaterial to the outcome because the intrinsic record is clear.” Eidos Display, LLC v. AU Optronics Corp., 779 F.3d 1360, 1364-65 (Fed. Cir. 2015).

Accordingly, the district court found that “[t]o the extent this Court engaged in any fact-finding regarding the term ‘lodging,’ that fact-finding was at best immaterial under Eidos and at worst improper under Vitronics. Nothing in Teva suggests that the Federal Circuit must review immaterial or improper fact-finding under a clear error standard. Rather it appears rather clearly that such fact-finding is to be disregarded and a de novo standard applied. See Teva, 135 S.Ct. at 841. Therefore this Court finds that Arthrex’s argument that the Federal Circuit used the wrong standard of review is unavailing and Arthrex has failed to show that judgment should be reopened under FRCP 60(b).”

As a result, the district court denied Arthrex’s motion to reopen the judgment.

Smith & Nephew, Inc. v. Arthrex, Inc., Case No. 3:04-cv-00029-MO (D. Or. May 19, 2015)

The authors of are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or