On September 16, 2014, a Federal Circuit panel consisting of Circuit Judges Dyk, Plager and Linn denied petitioners Boston Scientific Corporation and Scimed Life Systems (“petitioners”) petition for interlocutory review of the denial of its summary judgment motion by the Central District of California District Court. The respondent Dr. Yang (Yang), who assigned his rights to certain patents in exchange for upfront and possible royalty payments, filed a breach of contract action in federal court on the basis of diversity of citizenship alleging petitioners failed to compensate him for the sale of its stent products. During the pendency of the action, the petitioners initiated reexamination of the assigned patents, which were rejected and canceled when the petitioners failed to respond to an Office Action. The petitioners moved for summary judgment arguing that pursuant to Lear, Inc. v. Adkins, 395 U.S. 653 (1969), they are not required to pay for practice of claims that were later held to be invalid. The district court denied the motion and concluded that Jang could seek royalties prior to the challenge of validity of the patents.
The majority of the opinion focused on whether the Federal Circuit had jurisdiction to decide this petition because the underlying cause of action is a breach of contract dispute. The Federal Circuit ultimately found that it has exclusive jurisdiction because the case raises a patent issue that is “(1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.” Id. at *4 (quoting Gunn v. Minton, 133 S. Ct. 1059, 1065 (2013)). In contrast to Gunn, the current federal patent law dispute is “substantial and neither entirely backward-looking nor hypothetical” because the court may need to ascertain both infringement and validity of the patents to resolve the breach of contract dispute. Moreover, allowing regional circuit courts to decide issues of validity may result in inconsistent judgments across the regions. Therefore, the Federal Circuit has jurisdiction to hear such claims. On the issue of interlocutory appeal, the Federal Circuit stated that it rarely grants such appeals and denied the request without taking any position on the merits.
Jang v. Boston Scientific Corp., No. 2014-134 (Fed. Cir. Sep. 16, 2014).