arbitration award Archives

Federal Circuit lacks jurisdiction over award that doesn’t raise issue of patent law

The US Court of Appeals for the Federal Circuit determined that it lacked appellate jurisdiction over a district court judgment confirming an arbitration award stemming from a dispute over royalties paid under patent license and supply agreements. The Court concluded that the petition did not “necessarily raise” a substantial issue of patent law. Acorda Therapeutics Inc. v. Alkermes PLC, Case No. 2023-2374 (Fed. Cir. July 25, 2025) (Taranto, Hughes, Stark, JJ.)

Acorda Therapeutics, the developer of Ampyra®, a treatment for multiple sclerosis, licensed a patent from Alkermes covering Ampyra’s active ingredient. In exchange, Acorda paid running royalties and sourced the active ingredient directly from Alkermes. Although the patent expired in July 2018, Acorda continued making royalty payments for two years without formal protest.

In July 2020, Acorda challenged the ongoing payments and initiated arbitration. Acorda sought a declaration that the licensing royalty provision was unenforceable after the patent’s expiration and sought recovery of royalties paid after July 2018, invoking unjust enrichment. The arbitration tribunal agreed that the royalty provision was unenforceable after the patent’s expiration. However, it limited Acorda’s recovery to payments made under formal written protest, which only started in July 2020. This ruling relied on a state law principle that payments made with full knowledge of the facts, even if under a mistake of law, are not recoverable unless accompanied by written protest.

Acorda filed suit in federal district court under the Federal Arbitration Act, invoking diversity jurisdiction. It sought confirmation of the tribunal’s findings, except for the denial of recoupment of more than $65 million in unprotested payments made between 2018 and 2020. Acorda argued that the tribunal’s refusal to allow full recoupment constituted “manifest disregard” of the law and offered two alternative theories: the tribunal improperly applied state law in derogation of federal patent law, and the award effectively enforced an illegal licensing agreement. The district court upheld the tribunal’s award. Acorda appealed.

The Federal Circuit declined to reach the merits and instead examined its jurisdiction. Under the “well-pleaded complaint” rule, the Federal Circuit’s jurisdiction applies only if patent law creates the cause of action or the plaintiff’s right to relief necessarily depends on resolving a substantial question of patent law.In its 1988 decision in Christianson v. Colt Industries and 2013 decision in Gunn v. Minton, the Supreme Court made clear that situations falling within the “special and small” second category (where right to relief necessarily depends on resolution of a substantial question of patent law) are “extremely rare.”

Here, Acorda’s complaint did not assert a patent cause of action. The request to confirm the arbitration award could be resolved without judicial interpretation of patent law. The Federal Circuit also noted that even the modification request, although it was premised on the award’s finding of unenforceability, presented two alternative arguments, only one of which involved patent law. Because the district court could have ruled for Acorda without addressing patent law, the Federal Circuit concluded that patent law was not “necessarily raised.” As a result, the Federal [...]

Continue Reading

Over My Dead Body: Defendant Can’t “Wait Until He Dies” to Pay Arbitration Award

The US Court of Appeals for the Seventh Circuit reversed the district court’s interpretation of an arbitration award, finding that the defendant could not “wait until he dies” to pay a portion of the damages award. Nano Gas Techs., Inc. v. Roe, Case Nos. 21-1809; -1822 (7th Cir. Apr. 25, 2022) (Rovner, St. Eve, Jackson-Akiwumi, JJ.)

Clifton Roe invented a nozzle that disperses gases into liquids. Roe assigned the invention to Nano Gas as part of a collaboration agreement under which Roe received 20% equity and a board seat. The agreement also provided for a salary that was subject to Nano Gas’s ability to raise capital and Roe’s success in developing the invention at Nano Gas’s facility. The parties’ relationship deteriorated after the collaboration failed to produce the desired results. Roe ultimately took the machine and related intellectual property created by another Nano Gas employee and continued developing the product on his own. Arbitration ensued.

The arbitrator concluded that Roe did not have the right to remove the machine and related intellectual property from Nano Gas’s facility. The arbitrator determined that Roe should pay Nano Gas for the financial harm it suffered but also found that Roe deserved compensation for his work on the technology. In his award, the arbitrator indicated that he had initially considered giving Roe a royalty on future profits but declined to do so because Roe was a shareholder in Nano Gas and could benefit financially from the invention’s future success. The arbitrator offset Nano Gas’s $1.5 million damages award with an award to Roe of $1 million and ordered Roe to pay the $500,000 offset “in such manner as Roe chooses.” Roe was also required to return the related intellectual property or pay Nano Gas $150,000.

Nano Gas sued to enforce the award, and the district court entered judgment for $650,000 ($500,000 for the offset and $150,000 for the intellectual property). Nano Gas then filed a turnover motion for Roe’s Nano Gas stock, valued at $117,000. Roe argued that the arbitration award protected his status as a shareholder and allowed him to pay the damages “in such manner as [he] chooses.” Roe planned to pay the award with dividends from his stock and maintained that he could “wait until he die[s]” to satisfy the debt. The district court denied Nano Gas’s turnover motion, finding that Roe was entitled to remain a shareholder and could pay both awards “in such a manner as Roe chooses.” Nano Gas filed a motion to reconsider, and the court amended its order to require Roe to either turn over the stock or identify other assets to satisfy the $150,000 award. As to the remaining $500,000, the district court found that Roe could still choose how and when to pay that portion of the award. Both parties appealed.

The Seventh Circuit first addressed Roe’s argument that the arbitration award entitled him to remain a shareholder. The Court observed that the award did not stipulate that Roe would remain a shareholder indefinitely [...]

Continue Reading