Docket No. 2017-1689
PROST, DYK, CHEN
February 5, 2018
Brief summary: DC dismissal of AbbVie’s DJ action affirmed since its requested “declaration would not actually resolve the parties’ contractual dispute” (Medimmune, US 2007).
Summary: AbbVie appealed DC grant of Medimmune’s motion to dismiss for lack of jurisdiction regarding a development and licensing agreement between the parties (governed by British law) relating to AbbVie’s US 6,248,516 and Humira® (adilumumab). Under the agreement, AbbVie is licensed “to practice the ‘516 patent among others, although the parties agree AbbVie does not presently practice it” and “to pay royalties on the sales of certain antibodies ‘until the last to expire of [certain] Patents or the expiry of fifteen years from the date of First Commercial Sale of a Product by [AbbVie’s predecessor]…(whichever is later)’.” The ‘516 patent is the last to expire patent (June 19, 2018) and the first commercial sale occurred in January 2003 (royalties therefore cease in January 2018 or June 2018. AbbVie brought a DJ action seeking invalidation of the ‘516 patent “to hasten the end of its royalty obligations” but it “did not seek a declaration as to the contract’s interpretation.” Medimmune argued the DC lacked DJ jurisdiction or “should decline to exercise it” and “contend[ed] that the royalty obligations are pegged to the patent’s expiration date without regard to the patent’s validity”. The DC dismissed the complaint because “AbbVie does not practice the ‘516 patent and therefore is not at risk of an infringement suit” and “the interpretation of the 1995 agreement was governed by British contract law and would implicate the rights of the British government, which jointly owns the patent through one of its research councils” (AbbVie argued Medimmune “possesses all substantial rights in the ‘516 patent”). The FC panel disagreed with the DC’s first reason because “AbbVie’s claim…never rested on the possibility of infringement, but rather the parties’ contractual obligations” that “turn on the expiration and, perhaps, the validity of the ‘516 patent” but not “on whether AbbVie engaged in infringement.” But the FC panel also explained that DJ “jurisdiction extends to contractual disputes that turn on issues of patent infringement and invalidity” (Medimmune, US 2007 (“All we need determine is whether petitioner has alleged a contractual dispute.”); Powertech Tech., FC 2011 (“whether the license agreement require[d] royalty payments to be tied to valid patent coverage [was] sufficient to support [DJ] jurisdiction”)). The FC panel concluded, however, that “AbbVie’s problem is that it did not seek a declaration of its contractual obligations” and “only…a declaration of invalidity”. Medimmune argued “such a declaration would not actually resolve the parties’ contractual dispute” (Medimmune, US 2007 (“a litigant may not use a [DJ] action to obtain piecemeal adjudication of defenses that would not finally and conclusively resolve the underlying controversy”)). And, here, “[i]t is an open question whether British courts would consider the invalidation of the patent to be tantamount to its expiration for purposes of this agreement” and “[w]ithout a resolution to this question, the parties’ contractual dispute would persist” (acknowledging exceptions to this in, e.g., Dey (FC 2012), but only because the patentee did not sue on all the patents to a pharmaceutical drug). The DC decision was therefore affirmed (without reaching the joint ownership issue).