IP Law Daily, PATENT—Fed. Cir.: Federal Circuit lacked jurisdiction over pharma patent royalty dispute , (Jul 25, 2025)

By Saurabh Kashyap, B.A., M.A., LL.B., LL.M.

The appeal did not necessarily raise a substantial question of federal patent law, and the asserted grounds for relief included non-patent-based legal theories.

The U.S. Court of Appeals for the Federal Circuit held that it lacked subject matter jurisdiction over Acorda Therapeutics, Inc.'s appeal seeking restitution of more than $65 million in post-expiration royalty payments made to Alkermes PLC under a pharmaceutical licensing agreement. While an arbitral tribunal had agreed with Acorda that the royalty provisions became unenforceable upon the licensed patent's expiration, it awarded restitution only for payments made under formal protest. Acorda sought to modify that ruling in federal court, but after the district court confirmed the arbitral award in full, the Federal Circuit concluded that the appeal did not arise under patent law and therefore ordered the case transferred to the Second Circuit (Acorda Therapeutics, Inc. v. Alkermes PLC, No. 23-2374 (Fed. Cir. July 25, 2025)).

Background. The petitioner/appellant, Acorda Therapeutics, Inc., is a U.S.-based biopharmaceutical company that developed Ampyra® (dalfampridine)—a treatment to improve walking in patients with multiple sclerosis. The respondent/appellee, Alkermes PLC, is a global biopharmaceutical company headquartered in Ireland.

The parties had a longstanding commercial relationship dating back to 1998, when they entered into a joint venture agreement. Under that agreement, Alkermes licensed its U.S. Patent No. 5,540,938 (the '938 patent) to Acorda and agreed to supply the active pharmaceutical ingredient for an 18 percent royalty on net sales. In 2003, due to regulatory concerns, the parties dissolved the joint venture and restructured their arrangement into two standalone contracts: a License Agreement providing for a 10 percent royalty and a Supply Agreement providing for an 8 percent royalty, both tied to Ampyra's net sales.

The ’938 patent covered a sustained-release composition of dalfampridine and expired on July 30, 2018. The expiration permitted generic competition to enter the market, significantly altering Ampyra’s commercial landscape. Despite the expiration, Acorda continued to remit royalties under both agreements—without formal protest.

In July 2020, Acorda filed for arbitration under the American Arbitration Association’s International Centre for Dispute Resolution, arguing that post-expiration royalties violated federal patent policy per Brulotte v. Thys Co., 379 U.S. 29 (1964) and Kimble v. Marvel Ent., LLC, 576 U.S. 446 (2015). Acorda sought declaratory relief and restitution of royalties paid since July 2018. The arbitration tribunal found the royalty provisions unenforceable post-expiration under Brulotte and applied this conclusion to both the License and Supply Agreements, treating them as a unified contractual scheme. However, it limited Acorda’s recovery to only those royalty payments made under formal protest starting in July 2020—denying recoupment of earlier unprotested payments under New York’s Voluntary Payment Doctrine (NYVPD), citing Dillon v. U-A Columbia Cablevision of Westchester, Inc., 740 N.Y.S.2d 396 (App. Div. 2002), aff’d, 100 N.Y.2d 525 (2003).

Acorda filed a petition in the U.S. District Court for the Southern District of New York to confirm the favorable portions of the arbitral award and modify the unfavorable parts. The petition sought recoupment of all post-expiration royalties, asserting that the tribunal acted in "manifest disregard of the law" by allowing Alkermes to retain illegal payments. Alkermes opposed the modification but not the confirmation. The district court fully confirmed the award, rejecting Acorda's claims under both patent law and general principles of illegality. Acorda appealed.

Manifest disregard and Brulotte. Acorda’s principal argument relied on federal patent policy under Brulotte. The company asserted that the tribunal’s refusal to order complete restitution allowed Alkermes to benefit from a patent monopoly beyond its term, undermining the Supreme Court’s holding that post-expiration royalties are per se unenforceable. The district court rejected this claim, distinguishing between contract enforceability (which Brulotte addresses) and the restitution remedy. The court found no clearly established rule in federal patent law requiring refund of such payments, especially in the context of voluntary and unprotested payments. Moreover, the tribunal had also relied on a non-refund clause in the agreement, further justifying the denial of retrospective relief.

Illegality. Acorda also cited Kaiser Steel Corp. v. Mullins, 455 U.S. 72 (1982), and McMullen v. Hoffman, 174 U.S. 639 (1899), contending that courts cannot permit parties to retain the fruits of illegal contracts. The district court rejected this line of reasoning, noting that the tribunal had already declared the agreements unenforceable, and merely limiting restitution did not equate to affirming or enforcing an illegal agreement.

Federal Circuit jurisdiction. On appeal, Acorda invoked the Federal Circuit’s jurisdiction under 28 U.S.C. § 1295(a)(1), arguing that the dispute arose under patent law due to its reliance on Brulotte. Alkermes countered that the appeal should lie with the Second Circuit because the petition did not assert a federal cause of action and the patent-law issue was not “necessarily raised” under the Christianson v. Colt Industries Operating Corp., 486 U.S. 800 (1988), framework.

The Federal Circuit agreed with Alkermes, holding that jurisdiction was lacking. Citing Gunn v. Minton, 568 U.S. 251 (2013), the court emphasized that a patent-law issue must be (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance. The court found that Acorda’s petition failed the first prong, as it offered both patent and non-patent grounds for relief. As the recoupment could have been awarded solely on the illegality theory without reaching Brulotte, the patent-law issue was not essential to the claim.

Alternative theories bar jurisdiction. The court drew on its prior decisions in NeuroRepair, Inc. v. Nath Law Group, 781 F.3d 1340 (Fed. Cir. 2015), and Inspired Development Group, LLC v. Inspired Products Group, LLC, 938 F.3d 1355 (Fed. Cir. 2019), to reiterate that federal jurisdiction does not exist where relief may be granted on alternative, non-patent grounds. It also applied the Supreme Court’s reasoning in Badgerow v. Walters, 596 U.S. 1 (2022), which limits federal jurisdiction in FAA proceedings to the face of the petition and not the underlying arbitration merits.

Conclusion. Holding that the case did not arise under the patent laws and thus fell outside its jurisdiction, the Federal Circuit transferred the appeal to the Second Circuit. It declined to address other jurisdictional concerns, such as whether the federal patent issue was substantial enough or whether the deferential "manifest disregard" standard diluted its relevance.

The Case is No. 23-2374.

Judge: Taranto, R.

Attorneys: Garrard R. Beeney (Sullivan & Cromwell LLP) for Acorda Therapeutics, Inc. Brian Timothy Burgess (Goodwin Procter LLP) for Alkermes PLC.

Companies: Acorda Therapeutics, Inc.; Alkermes PLC

Cases: Patent FedCirNews NewYorkNews