In Teva v. Sandoz, 574 U.S. __, No. 13-854 (slip op. Jan. 20, 2015), the Supreme Court held that “evidentiary underpinnings” such as expert testimony considered by a trial court in construing patent claims can be reversed on appeal only upon a showing of “clear error,” even while the intrinsic record and the ultimate legal question of claim construction are reviewed “de novo.”

Patent owner Teva will gain billions in sales and profits from its newly restored patents. Of broader impact, this shift in procedure will alter the course of future patent litigation, trials and appeals.

Patent owner Teva will gain billions in sales and profits

In the trial court, there will be greater reliance on extrinsic evidence such as expert testimony. Claim construction has taken on a life of its own since Markman v. Westview, 517 U.S. 370 (1996), often with briefing and a “Markman hearing.” These hearings may become more evidentiary in nature, as compared to being limited to the written, intrinsic record of the patent and its prosecution history.

On appeal, there will be fewer reversals on issues of claim construction. This translates into greater confidence that trial court judgments will stand.

Lessons for patent owners and counsel

Patent owners and their counsel can make better investments and minimize litigation risks and expenses by:

  • Investing now in higher quality patent applications; and
  • Preparing to present expert testimony in the trial court on claim construction.

In Teva v. Sandoz, Teva asserted a family of patents on the blockbuster drug Copaxone, which generated over $3 billion in sales for Teva in the first nine months of last year. See “Court Sides with Teva in Patent Case,” Wall St. J. at p. B2 (Jan. 21, 2015). This translates into revenues of $10 million per day, which at this point in the drug’s life cycle is mostly profit.

Copaxone is a polymer used for treatment of multiple sclerosis (MS). One might think from the sales figures that it is a pioneer invention, but the drug has been known since 1971 to be effective for treatment of MS. The improvement claimed in the asserted patents is a range of “molecular weight of about 5 to 9 kilodaltons” said to be less toxic to patients. Teva’s U.S. Patent 8,500,808 is said to be representative.

Teva’s patents fail to provide a clear explanation of the term “molecular weight” as recited in its claims, and, it turns out, there are at least three different ways to determine molecular weight. Moreover, while Teva’s attorneys were prosecuting the applications that led to the issuance of the patents, they were challenged by the examiner on the meaning of the term, and in response, they took inconsistent positions.

Expert testimony attacking the Teva patent failed at trial

At trial, accused infringer Sandoz argued, through expert testimony, that Teva’s patent claims are indefinite and therefore invalid.

Teva responded, through its own expert testimony, that those in the field would understand the term to mean “peak average” molecular weight.

The trial court agreed with Teva and sustained the patent. Now, here’s a point that has been missed by many commentators: Expert testimony attacking the Teva patent failed at trial and ultimately failed in the Supreme Court. It isn’t enough merely to present expert testimony. The expert testimony must be simple and credible enough to be understood and accepted by the trial court.

Expert testimony must be simple and credible enough to be understood and accepted

On appeal, the Federal Circuit reviewed the issue de novo and reversed the trial court, holding the patent invalid.

Now the Supreme Court has vacated the Federal Circuit’s judgment of invalidity, overruling nearly 20 years of Federal Circuit precedent in doing so.

Establishing a persuasive evidentiary basis in the trial court, along with expert witness testimony to back it up, is now critical both for winning at trial and for sustaining victory on appeal. That’s why it’s even more important to frontload the evidence into the patent application itself; any effort to backfill later will be expensive, and, in many cases, well-nigh impossible.

Invest in high quality patent applications

In drafting a patent application, the skillful, thorough attorney will consider:

  • How to prove infringement;
  • What will be involved in claim construction; and
  • What kind of challenges will be thrown at the patent.

Based on these considerations, the patent attorney will want to flesh out the invention disclosure and the patent application to provide the support that may be needed during prosecution, post-grant review, enforcement proceedings in the trial court, and on appeal. This takes experience and judgment. See my recent blog, 7 Tips for General Counsel. Better to invest thousands on the front end than to spend millions later in litigation.

Better to invest thousands on the front end than to spend millions later in litigation

On remand, the Federal Circuit probably will sustain the validity of Teva’s patent, in view of the Supreme Court’s indication of deference to the trial court.

Based on the new deference to experts, in some cases there will be efforts to present expert testimony that would contradict the intrinsic evidence. Such efforts will fail, I predict, because as the Supreme Court has observed, the trial court is skilled in weighing testimony and reaching a correct, unstrained result, and in any event the ultimate question remains subject to de novo review by the Federal Circuit. Consequently, in the event of any contradiction, the intrinsic written record will trump expert testimony.

Here’s a practice tip: When enforcement is necessary, prepare to win your patent case at trial, and aim for affirmance on appeal, by marshalling the facts including simple expert testimony. See my recent blog on Winning by Preparing for Trial.

Win your patent case at trial by marshalling the facts including simple expert testimony

In Teva, when the Supreme Court overturned the Federal Circuit’s holding of invalidity, it by definition made a pro-patent ruling. Attacks on patents based on alleged indefiniteness have never been favored, and now they are even less likely to succeed.

My recommendations to patent owners and counsel are as follows:

  1. Invest in quality patent applications that can stand on their own; and
  2. Prepare to win your patent case at trial, with evidence including simple expert testimony.

Smart companies will invest in quality patents and, when necessary, enforce them at trial.