Back in My Arms Again: The Supremes take on patent law in the era of synthetic biology

July 18, 2014 |

supreme-courtKey ruling in Gevo, Butamax case links it to the upcoming Teva case, going before the Supreme Court this fall.

In Colorado, Gevo filed a fascinating 8-K this week, relating that a United States District Court judge granted a motion to stay the patent litigation action brought by Butamax. The District Court’s decision postpones the trial in this action, which was scheduled to begin on July 21, 2014.

As Gevo relates it, “the decision by the District Court was based on the status of the Company’s petition for a writ of certiorari in the United States Supreme Court. The Supreme Court has neither granted nor denied the Company’s petition, but appears to be holding the petition pending its decision in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc.”

Now, unless you have SCOTUS FOREVER tattooed somewhere on your abdomen, you probably haven’t heard about the “Teva case”.  And most of the material above is probably already putting you to sleep. I’m sleeping already.

So, here’s a reason to wake up. The case might well determine the fate of Gevo, as a company. It’ll have an impact on Butamax too — and to a lesser extent DuPont and BP, Butamax’s parents. And it might just alter the way we look at risk and innovation — and the threat that defending patents or in patent infringement cases, becomes so expensive and risky in the increasingly complex world of synthetic biology, that innovation itself screeches to a halt.

The stakes

A global energy solution, the next cure for a critical disease, the future of climate change — held up because of the way some judge likes to review patent claims? Well, that’s putting it a little broadly. But only a little.

The cases

The Teva and the Gevo cases — perhaps we should just call it the Geva case, or Tevo  — concern patent infringement. In each case, after laborious argument, a District Court makes what is known as a “claim construction” to construe a patent. Then it rules, based on that construction, as to whether infringement has occurred.

In both the Gevo and Teva cases, however, something unexpected happened. After getting a favorable ruling on claim construction and winning at the first level, both companies saw their victories overturned in the Court of Appeals.

The controversy in the law

Now, what’s unusual about that?

In both the Gevo and Teva cases, the Courts of Appeal employed a controversial practice — what is known as a “de novo” review of the claim construction, and reversed the claim construction on appeal.

As venable.com reports: “Claim construction is a critical issue in almost every patent case.  The Federal Circuit’s de novo review of claim construction may add a level of uncertainty to patent litigation, as a change in the way the court construes asserted patent claims can completely reverse the outcome of infringement and validity analyses. “

Hence the controversy. To form its judgement, the District Court process takes in reams of paper, oral argument, and testimony from expert witnesses with serious expertise. The appellate court, by contrast, sees the briefs submitted by counsel, and as little as 15 minutes of oral argument by each side.

So the question becomes — why would an appeal court give little or no deference to a district court’s findings?

Again Venable.com explains:

Typically, an appeals court will review the lower court’s factual findings for clear error, under Federal Rule of Civil Procedure 52(a).  Under the “clearly erroneous” standard, an appeals court will not overturn the lower court decision unless definitely and firmly convinced that the lower court made a mistake.

“Under de novo review, the appeals court gives no deference to the lower court’s findings, and will rule on the evidence and matters of law as if considering them for the first time.  In the 1998 Cybor Corp case, the Federal Circuit held that “as a purely legal question, we review claim construction de novo on appeal including any allegedly fact-based questions relating to claim construction.”

Here come the Supremes

And that’s the heart of the Supreme Court’s interest. As Patentdocs.com explains: “The sole issue on appeal is encapsulated by the question presented [in the Supreme Court]:

Rule 52(a) of the Federal Rules of Civil Procedure provides that in matters tried to district court, the court’s “[f]indings of fact . . . must not be set aside unless clearly erroneous.”

The question presented is as follows:

Whether a district court’s factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires (and as the panel explicitly did in this case), or only for clear error, as Rule 52(a) requires.

Possible outcomes?

University of Missouri law professor Dennis Crouch writes in Patentlyo.com: “I’ll speculate here that the result will be a unanimous rejection of the Federal Circuit’s no deference policy.”

If that’s the case, the District Court’s claim construction would be restored, and there’s a good likelihood that both Gevo’s will too. More about Gevo and Butamax, the Montagues and Capulets of advanced biofuels, here.

In a wider sense, its an opportunity for the SCOTUS to establish a clear uniform standard for this aspect of patent law.

As synthetic biology and industrial biotech continue to converge, the uncertainty and cost of patent litigation, say some proponents of the “clear error” standard, will provide a chilling effect on invention if the “de novo” standard is not limited or proscribed.

We’ll know soon enough. In the Teva case, oral argument is scheduled for October 15th before the Supreme Court and a decision is expected to be handed down by next spring.

 

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