This week, the Court rendered two IP opinions in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., No. 13-854 (argued October 15, 2014) and Hana Financial, Inc. v. Hana Bank, No. 13-1211 (argued December 3, 2014) both of which this blog previously discussed here and here.
Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., decided January 20, 2015.
In Teva, the Court ruled in a 7 to 2 decision (Justice Breyer writing the majority opinion) that appellate review of a district court’s claim construction determination that resolves a factual issue must be governed by the “clear error” rule of Rule 52(a)(6) of the Federal Rules of Civil Procedure. In so doing, the Court rejected the Federal Circuit’s use of a de novo standard of review to factual determinations made during claim construction. This issue arises in the context of Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996), in which the Court held that “the construction of a patent, including terms of art within its claim,” is not for a jury but “exclusively” for the court to determine. In other words, claim determinations are matters of law subject to de novo review. But what happens when claim construction also involves “evidentiary underpinnings,” i.e., a determination of fact as to what words or phrases mean when there is a factual conflict?
Until Teva, the Federal Circuit was of the view that the entirety of the claims determination process was subject to de novo review, including necessary factual determinations. Now, with Teva, the Federal Circuit must give deferential review (reversal appropriate only for clear error) to district court factual determinations involving claim construction, while preserving review of the ultimate claim determination via a de novo standard. Supporting its holding, the Court observed that courts of appeals “have long found it possible to separate factual from legal matters.” The Court also rejected the argument that its holding would bring about less uniformity in decisions involving the same or similar patents. According to the Court, counsel will no doubt bring to the attention of the trial court prior rulings involving related factual determinations in order to ensure consistency.
Teva, and cases from last term, reflect a “clipping of the wings” of the Federal Circuit, with the Supreme Court imposing its IP jurisprudence upon that circuit.
Hana Financial, Inc. v. Hana Bank, No. 13-1211, decided January 21, 2015.
Hana involved “trademark tacking.” Tacking allows a company to create a revised, or slightly modified, mark while maintaining the priority date of its original mark. What this means is that the original trademark owner can stop an intervening user from using its mark if the intervening mark would confuse consumers when compared to either the original mark or the revised mark.
The particular issue before the Court in Hana was whether the determination that two trademarks were in fact “tacked” was a jury issue or one for the court to determine. In a unanimous decision (Justice Sotomayer writing), the court ruled (affirming the Ninth Circuit) that it was a jury decision because “the tacking inquiry operates from the perspective of an ordinary purchaser or consumer.” “Application of a test that relies upon an ordinary consumer’s understanding of the impression that a mark conveys falls comfortably within the ken of a jury.”
The Court rejected four reasons which the petitioner proffered in favor of the argument that tacking was an issue for court resolution. First, the Court rejected petitioner’s assertion that the issue involved solely the application of a legal standard. Rather, according to the Court, it involved a mixed question of law and fact. Such determinations have “typically been resolved by juries.” Second, the Court disagreed with the petitioner’s claim that jury tacking determinations will “create new law” such that a court should make the determination. In the Court’s view, jury determinations will no more make “new law” than jury decisions in a tort cases. Third, contrary to petitioner’s argument, predictability for a functioning trademark system will not be adversely affected any more than jury determinations affect tort, contract and criminal justice systems. Lastly, the petitioner argued that historically judges decided tacking disputes and thus should continue to do so. In response, the court noted that the resolutions which the petitioner cited occurred in bench trials or in the context of summary judgment where it was entirely appropriate for the court to resolve the dispute. However, outside these contexts, it is for the jury to make the determination.
What remains for another day is the Court’s resolution of whether a determination of likelihood of confusion in trademark infringement cases is a matter for the jury or the court. The circuits are currently split on this issue. Is the result in Hana Financial a harbinger of the Court’s resolution of this issue. One suspects that it is.
