Federal Circuit Lacked Jurisdiction Over a Patent Royalty Dispute

Written by:Justin J. Gillett and Arash Pia

ACORDA THERAPEUTICS, INC. V. ALKERMES PLC

Before Taranto, Hughes, and Stark.  Appeal from the United States District Court for the Southern District of New York.

Summary: The Federal Circuit held that it lacked jurisdiction over an appeal of an arbitral award regarding patent royalties because the appeal did not necessarily raise an issue of federal patent law.

Acorda licensed a patent owned by Alkermes. After the patent expired, Acorda continued paying royalties. Acorda sought a declaration from the American Arbitration Association (the “tribunal”) that the royalty provision in the license was unenforceable after the patent expired. Acorda further sought a return of royalties Acorda had paid after expiration. The tribunal agreed the royalty provision became unenforceable upon patent expiration but concluded that Acorda was entitled to recover only those post-expiration payments it made under formal protest.

Acorda filed a petition in district court under the Federal Arbitration Act. The petition sought to confirm the tribunal’s award except to modify its denial of the request to recoup unprotested payments. The district court affirmed the tribunal’s ruling. Acorda appealed to the Federal Circuit.

The Federal Circuit held that it lacked jurisdiction over the appeal. First, it found there was no patent-law cause of action in the case, as it was brought solely under provisions of the Federal Arbitration Act after arbitration. Second, the court found Acorda’s right to relief did not necessarily raise a patent-law issue. In doing so, it looked not to the underlying claims made in the arbitration but only to the petition that initiated the district-court action. The court found that, to obtain confirmation of the tribunal’s award, Acorda was not required to plead and prove the correctness of the tribunal’s rulings. The court also found that, to modify the tribunal’s award, the district court had no need to address federal patent law because Acorda presented an alternative basis for recoupment that did not rest on federal patent law. Finding it lacked jurisdiction, the court transferred the case to the Second Circuit Court of Appeals.

Editor: Sean Murray