The Federal Circuit Denies Interlocutory Appeal in Licensing Dispute
Jang v. Boston Scientific Corp.
Addressing a petition to take an interlocutory appeal stemming from a contract dispute, the U.S. Court of Appeals for the Federal Circuit exercised jurisdiction over the case, finding that it involved the issue of whether products infringed, but declined to grant interlocutory appeal. Jang v. Boston Scientific Corp., Case No. 14-134 (Fed. Cir., Sept. 16, 2014) (Linn, J.).
The plaintiff, Dr. G. David Jang, sued Boston Scientific in federal court for breach of a license agreement. The agreement required payment for every stent that practices a valid claim of the licensed patents. During the pendency of the district court case, the U.S. Patent and Trademark Office invalidated the asserted claims in reexamination. Boston Scientific moved for summary judgment, arguing that the Supreme Court’s Lear decision precludes damages in a licensing dispute when the licensed patents are invalidated. The court denied the motion, applying an exception that carves out royalties accrued up to the licensee’s first invalidity challenge. Boston Scientific successfully moved the court to certify the case for appeal and petitioned the Federal Circuit to consider an interlocutory appeal.
The Federal Circuit addressed whether jurisdiction is proper over this breach of contract action in view of the Supreme Court’s Gunn decision (IP Update, Vol. 16, No. 2). The Supreme Court in Gunn analyzed state court jurisdiction over a patent litigation malpractice claim. The plaintiff’s attorneys failed to timely raise an exception to the on-sale bar, and the patent was invalidated. The Supreme Court approved of the state court’s exercise of jurisdiction because the patent law issues were not substantial to the malpractice claim. The issues, limited to the specific facts and parties of that case, were backward-looking and hypothetical.
In contrast, the Federal Circuit found that, here, the patent issues were not “entirely” backward-looking or hypothetical. Infringement issues are forward-looking because they impact subsequently filed infringement actions. Multiple infringement suits create the potential for conflicting invalidity rulings. Inconsistent judgments from appeals of these cases between a regional circuit and the Federal Circuit would result in “serious uncertainty” for parties who later face the same patent in the regional circuit. Preventing this harmful result is important to the federal system as a whole. Accordingly, the Court distinguished Gunn and found that it had jurisdiction.
However, the Federal Circuit rejected Boston Scientific’s argument that the PTO’s cancelling of the claims precludes any forward-looking harm. Jurisdiction is measured at the time the complaint was filed, a time when the claims were presumed valid.
The Federal Circuit considered the request for an interlocutory appeal. The Court denied the petition for the rarely granted relief because a decision on the legal issues would not necessarily be controlling and because the decision hinges on factual issues not yet addressed below.