Federal Circuit Transfers $66 Million Patent Dispute Between Alkermes and Acorda Therapeutics
Key Insights
The Federal Circuit (search) ruled that Acorda Therapeutics' appeal of a patent arbitration award belongs in the Second Circuit (search), not under Federal Circuit jurisdiction.
Alkermes PLC (search) was allowed to retain $65.6 million in royalty payments from an $82 million licensing dispute over an expired patent.
The case involves U.S. Patent No. 5,540,938, where Acorda paid royalties for two years after the patent had expired.
The US Court of Appeals for the Federal Circuit (search) has transferred a high-stakes patent licensing dispute to the Second Circuit (search), allowing Alkermes PLC (search) to retain $65.6 million in contested royalty payments from Acorda Therapeutics Inc. (search)
Judge Richard G. Taranto issued a precedential opinion Friday ruling that Acorda's appeal of an arbitration award "is not within our jurisdiction," despite the Federal Circuit (search)'s exclusive appellate jurisdiction over patent infringement cases. The decision represents a significant jurisdictional determination in pharmaceutical patent disputes.
Patent Licensing Dispute Details
The case centers on U.S. Patent No. 5,540,938, for which Acorda paid Alkermes almost $82 million in royalties over two years for exclusive licensing rights. The dispute arose when it was discovered that the patent had already expired during the period when royalty payments were being made.
Acorda sought to recoup the full $82 million in payments, arguing they were made in violation of US Supreme Court precedent regarding expired patents. However, the arbitration award allowed the company to claw back only a fraction of the total payments, permitting Alkermes to retain $65.6 million.
Jurisdictional Implications
The Federal Circuit (search)'s decision to transfer the case highlights the complex jurisdictional boundaries in patent-related disputes. While the Federal Circuit typically handles patent infringement appeals, the court determined that this particular arbitration appeal falls outside its purview.
The transfer to the New York-based Second Circuit (search) suggests that the nature of the dispute—focusing on contractual and arbitration issues rather than direct patent infringement—places it within regional circuit court jurisdiction rather than the specialized patent court system.
Financial Impact
The ruling has significant financial implications for both pharmaceutical companies. Alkermes retains the substantial majority of the disputed royalty payments, while Acorda's recovery remains limited to the smaller portion awarded through arbitration. The case underscores the importance of careful patent monitoring and licensing agreement structures in pharmaceutical partnerships.