District Court Must Make Factual Finding on Extrinsic Evidence to Trigger Clear Error Teva Deference

In CardSoft v. VeriFone Inc., No. 2014-1135 (Fed. Cir. Dec. 2, 2015), the Federal Circuit reversed the district court’s claim construction and granted VeriFone a finding of no infringement, finding that CardSoft waived any argument that VeriFone infringed under the proper construction.

The Supreme Court remanded this appeal for the Federal Circuit to consider the effect of its decision in Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015), which held that factual findings about extrinsic evidence are reviewed for clear error. On remand, the Federal Circuit determined that, although the district court heard extrinsic evidence, Teva’s deferential review was not triggered because the district court “did not make any factual findings based on extrinsic evidence that underlie its constructions of the disputed claim term.” As a result, the Court could review the district court’s construction de novo. After examining the specification and the prosecution history and finding that nothing in the intrinsic evidence “cast[ ] doubt on the plain and ordinary meaning of the term ‘virtual machine,’” the Court reversed the district court’s construction and held that the term should be given its ordinary and customary meaning.

The Court then held that CardSoft had waived any arguments that VeriFone infringed under the correct construction and granted a finding of no infringement to VeriFone as a matter of law.