Federal Circuit Transfers Case to Second Circuit for Lack of Jurisdiction to Review Decision Stemming from Arbitration

By Editorial Team

The U.S. Court of Appeals for the Federal Circuit (CAFC) recently transferred an appeal regarding an international arbitration award to the U.S. Court of Appeals for the Second Circuit, citing a lack of jurisdiction. The case involved Acorda Therapeutics, Inc.'s petition to modify an arbitral award of $16,554,267, which the CAFC ruled did not fall within its jurisdiction.

Acorda initiated an international arbitration against Alkermes PLC, seeking a judgment that it was no longer obligated to pay royalty payments to Alkermes after the expiration of its patent covering the active ingredient in Acorda’s multiple sclerosis drug. While Acorda continued making royalty payments through 2020, it only contested the payments as of July 2020. The arbitral tribunal awarded Acorda for the payments made under formal protest but not for the payments made between 2018 and 2020.

Acorda then petitioned the U.S. District Court for the Southern District of New York to confirm the award and modify the judgment’s denial of recoupment of the 2018–2020 payments, alleging that the tribunal had acted in 'manifest disregard' of federal patent law. The district court rejected the modification request but upheld the award.

On appeal, the CAFC clarified that its jurisdiction covers appeals from final decisions of district courts in civil actions related to patents. However, in this case, since there was no patent law cause of action, the appeal did not meet the criteria for falling under federal patent law jurisdiction.

The CAFC's analysis found that Acorda’s petition did not necessarily raise a patent law issue, as parties in arbitration seeking confirmation of an award are not required to establish the correctness of the rulings in the arbitral award. Therefore, the CAFC concluded that Acorda’s petition did not need to establish or obtain a judicial determination on any federal patent law proposition.

While Acorda presented arguments for a modification based on 'manifest error,' the CAFC determined that the case did not 'necessarily raise' a patent law issue, as Acorda's assertion for the recoupment remedy did not solely rely on federal patent law.

The CAFC's opinion highlighted questions regarding the assessment of other facts related to the case but did not address these in the current ruling.