Federal Circuit Summaries

Before Prost, Dyk and Chen. Appeal from the United States District Court for the Eastern District of Virginia.

Summary: A party may not seek a declaratory judgment to obtain piecemeal adjudication of an issue that would not resolve the entire case or controversy.

AbbVie was contractually obligated to pay royalties for sales of certain antibodies “until the last to expire of [certain] patents or the expiry of fifteen years from the date of first commercial sale of a product…” Believing it would hasten the end of its royalty obligations, AbbVie brought a declaratory-judgment action to invalidate the last of those patents to expire. However, AbbVie did not seek a declaration of its rights under the royalty agreement. In particular, AbbVie did not seek a declaration that the invalidation of the last patent would constitute the “expiration” of that patent under the royalty agreement and thus terminate all royalty obligations.

The district court dismissed without prejudice on two grounds. First, it held that AbbVie lacked standing. It reasoned that because AbbVie does not practice the patent-at-issue, it could not be subject to a patent infringement action. Alternatively, even assuming AbbVie had standing, the court decided it would not exercise jurisdiction as a matter of discretion, because the licensing agreement was governed by British law and would implicate the rights of the British government, which jointly owns the patent-at-issue.

The Federal Circuit affirmed, but on different grounds. The Federal Circuit first explained that even without the possibility of infringement, AbbVie could have standing to bring a declaratory judgment action on the parties’ contractual obligations. But AbbVie’s claim for a declaration of patent invalidity would not resolve the parties’ underlying contract dispute. Even if AbbVie successfully proved patent invalidity, it was still an open question whether British Courts would conclude that invalidation of the last patent terminates AbbVie’s royalty obligation. This question would not be resolved by the litigation as framed by AbbVie. Because a litigant may not bring a piecemeal declaratory-judgment action that would not finally resolve the underlying controversy, the Court affirmed the dismissal.