Foreign Patent Disputes Are Off-Limits For U.S. Courts

The U.S. Court of Appeals for the Federal Circuit ('the Federal Circuit' or 'the court') recently addressed the jurisdictional reach of U.S. courts to adjudicate patent disputes involving foreign patents. In Voda v. Cordis, 476 F.3d 887 (Fed. Cir. 2007), a split panel held that even if the district court had the authority to exercise supplemental jurisdiction over the foreign patent claims, the district court abused its discretion by exercising that authority. The court's opinion rests largely on comity and judicial economy considerations.

Background

Dr. Jan Voda holds U.S. and foreign counterpart patents related to catheters for use in interventional cardiology. In 2003, Voda sued Cordis, a medical device company owned by Johnson & Johnson, in the U.S. District Court for the Western District of Oklahoma, alleging infringement of three U.S. patents by Cordis' XB catheters. Subsequently, Voda moved to amend his complaint to include claims that Cordis also infringed Voda's European, British, Canadian, French, and German patents by selling the same XB catheters in those foreign jurisdictions.

In his motion to amend his complaint, Voda argued that the district court had supplemental jurisdiction over his foreign patent claims. The district court agreed that it had supplemental jurisdiction, granted Voda's motion to amend, and certified its ruling for interlocutory appeal. Because of 'the paucity of law surrounding the issue,' the Federal Circuit granted the petition for interlocutory appeal to address 'whether the district court has supplemental subject matter jurisdiction over Dr. Voda's five foreign patents.' Voda v. Cordis Corp., 122 Fed. Appx. 515 (Fed. Cir. 2005).

Supplemental Jurisdiction Statute

The parties did not dispute that the Constitution permits district courts to hear infringement claims based on foreign patents. See U.S. Const. art. III, '2. Instead, the dispute was whether 28 U.S.C. '1367 provides a statutory basis to exercise supplemental jurisdiction over those claims. Section 1367(a) provides, in pertinent part:

Except as provided in subsection [ ] (c) ' in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy '

Section 1367(c) provides that district courts may decline to exercise supplemental jurisdiction under enumerated circumstances, including if 'in exceptional circumstances, there are other compelling reasons for declining jurisdiction.' 28 U.S.C. '1367(c)(4). Accordingly, under '1367(a), a district court has jurisdiction over 'all other claims,' including foreign law claims, that 'form part of the same case or controversy' as the claims within its original jurisdiction, and are not within one of the enumerated exceptions.

Applying the statute, the district court held that Voda's foreign patent claims were part of the same case or controversy under '1367(a), but did not expressly address Cordis' argument that jurisdiction should be declined under the '1367(c) exceptions. On appeal, the Federal Circuit did not address whether Voda's foreign claims satisfy the threshold 'same case or controversy' requirement of '1367(a). Instead, the Federal Circuit held that even if the foreign claims were part of the same case or controversy, 'considerations of comity, judicial economy, convenience, fairness, and other exceptional circumstances constitute compelling reasons to decline jurisdiction.' Voda, 476 F.3d at 898.

The District Court Abused Its Discretion

The Supreme Court has noted that '1367 requires federal courts to 'consider and weigh in each case, and at every stage of the litigation, the values of judicial economy, convenience, fairness, and comity.' City of Chicago v. Int'l Coll. of Surgeons, 522 U.S. 156, 173 (1997) (internal quotations and citations omitted). Based on these and other considerations, the Federal Circuit held that the district court abused its discretion under '1367(c) by exercising supplemental jurisdiction over Voda's foreign patent infringement claims.

The Federal Circuit first noted that the international treaties joined and ratified by the United States do not contemplate adjudicating the infringement or validity of foreign patents. The court conceded that the treaties do not expressly prohibit foreign courts from adjudicating foreign patent claims. However, the court opined that adjudicating foreign patent claims would 'require us to define the legal boundaries of a property right granted by another sovereign and then determine whether there has been a trespass to that right,' and 'could undermine the obligations of the United States under such treatises, which therefore constitute an exceptional circumstance to decline jurisdiction under '1367(c)(4).' Voda, 476 F.3d at 900.

The court in Voda also determined that comity counsels against exercising supplemental jurisdicton over Voda's foreign claims. Comity refers to the courtesies extended to other nations, particularly by recognizing the validity and effect of their executive, legislative, and judicial acts. The Federal Circuit reasoned that comity counsels against supplemental jurisdiction because: 1) there is no international duty to adjudicate the claims; 2) convenience is not enhanced by domestic courts adjudicating foreign patent claims; 3) foreign courts will adequately protect Voda's foreign patent rights; and 4) exercising jurisdiction could prejudice the rights of foreign governments.

Additionally, the court concluded that exercising jurisdiction risks unreasonable interference with the authority of other countries. The Court reasoned that the countries involved in Voda's foreign patent claims have established specialized judges, courts, and/or procedures to assure integrity and consistency in the application of their patent laws, and exercising jurisdiction over foreign patent claims risks upsetting those procedures.

The Federal Circuit determined that judicial economy also counsels against exercising supplemental jurisdiction because: 1) a lack of knowledge and experience with foreign patent laws means more resources would be consumed by a domestic court than a foreign court; and 2) the likelihood of jury confusion could require separate trials on patents from different countries. The court conceded that consolidated multinational litigation could be more efficient than separate trials in different countries, but cited to the uncertainty of foreign countries' enforcing judgments of U.S. courts to countervail that efficiency.

Lastly, the court opined that fairness may require declining supplemental jurisdiction. The 'act of state' doctrine requires courts to accept acts of foreign sovereigns as valid. The Federal Circuit assumed, without deciding, that the grant of a patent was an act of state. Under that assumption, the district court could not address validity defenses, which would be unfair to Cordis, as the alleged infringer.

For the above reasons, the court concluded that several factors compelled the district court to decline supplemental jurisdiction over Voda's foreign claims. Further, the Federal Circuit found that the district court failed to consider these relevant factors or analyze whether it should decline jurisdiction, and thus the district court abused its discretion.

The Dissent

In dissent, Judge Pauline Newman opined that the district court did not abuse its discretion by exercising jurisdiction over the foreign patent claims. The dissent asserted that U.S. courts routinely apply foreign law, such as commercial, property, inheritance, citizenship, copyright, trademark, and negligence law. The dissent also pointed out that courts from other countries have applied U.S. patent law, as exemplified in K.K. Coral Corp. v. Marine Bio K.K., Case No. 1943(wa)/2002 (Tokyo District Court, Oct. 16, 2003).

The dissent argued that the majority opinion carves out a broad exception to the authority of U.S. courts that is unique to patent cases, and that applies to all patent cases involving foreign patents. This latter argument warrants examination.

The majority was careful to couch its holdings in terms of the foreign patent claims brought by Voda. However, many of the considerations supporting the majority's holding are generic to all foreign patent cases rather than specific to Voda's claims. For example, the majority refers to specialized judges, courts, and procedures established for patent cases in other countries, but does not analyze or reference the specific judges, courts, or procedures of any of the subject countries. Similarly, the majority relies on differences in patent law and the likelihood of jury confusion in assessing judicial economy, but does not analyze the specific patent laws and the resulting potential for confusion from the patent laws of any of the subject countries. Under the majority opinion, it would be difficult to imagine a case in which it would not be an abuse of discretion for a district court to exercise supplemental jurisdiction over a foreign patent claim. Thus, the dissent's characterization of the breadth of the holding may not be overstated.

Amici Curiae

Amicus curiae briefs were filed by the American Intellectual Property Association, the Federal Circuit Bar Association, the Intellectual Property Owners Association, the United States, and a group of law professors. With the exception of the law professors, the amici curiae favored not granting supplemental jurisdiction. Of particular note is the amicus curiae brief of the United States, which argued that even if foreign patent infringement claims are not cognizable under supplemental jurisdiction principles, diversity jurisdiction will often provide the courts with the authority to adjudicate those claims. However, the United States further argued that 'consideration of public or private convenience and international comity should ordinarily lead a district court to exercise its discretion not to entertain foreign patent infringement claims, even if the court has [supplemental or diversity] jurisdiction over such claims.'

Conclusion

The Federal Circuit rightly took a conservative approach to the jurisdictional reach of the U.S. courts. Aside from concerns about adding another layer of complexity to an already complex area of law, adjudication of foreign patent claims risks upsetting policy decisions of foreign countries and increases the prospects for forum shopping.

As discussed by the majority, many jurisdictions have created specialized courts and procedures for adjudicating patent claims. For example, in Germany the validity of a patent can be challenged through opposition proceedings in the German Patent Office or nullity actions before a Federal Patent Court. The Federal Patent Court sits in panels of five judges, including three judges trained in the technological area of the patent. Thus, Germany has determined that the validity of its patents should be determined by specialized agencies and courts with technological training in the area of those patents. Subjecting German patents to adjudication by generalist jurists or juries without technological training in the United States risks upsetting Germany's policy decisions.

Looking at the other side of the prism, to promote consistency and discourage forum shopping, the United States has dictated that all patent appeals will be heard by the Federal Circuit. Adjudication of U.S. patent claims by foreign courts risks circumventing those policy goals. Forum shopping is a legitimate concern within the United States. The prospect of foreign adjudication of U.S. patents exponentially compounds that concern. The dissent in Voda pointed out that foreign courts already have adjudicated U.S. patents, but the occurrences of that practice to date seem to be fairly limited. Perhaps it is wise to permit other countries to fire the first salvo in the rush to adjudicate the patent claims of foreign countries.

The U.S. Court of Appeals for the Federal Circuit ('the Federal Circuit' or 'the court') recently addressed the jurisdictional reach of U.S. courts to adjudicate patent disputes involving foreign patents. In Voda v. Cordis , 476 F.3d 887 (Fed. Cir. 2007), a split panel held that even if the district court had the authority to exercise supplemental jurisdiction over the foreign patent claims, the district court abused its discretion by exercising that authority. The court's opinion rests largely on comity and judicial economy considerations.

Background

Dr. Jan Voda holds U.S. and foreign counterpart patents related to catheters for use in interventional cardiology. In 2003, Voda sued Cordis, a medical device company owned by Johnson & Johnson, in the U.S. District Court for the Western District of Oklahoma, alleging infringement of three U.S. patents by Cordis' XB catheters. Subsequently, Voda moved to amend his complaint to include claims that Cordis also infringed Voda's European, British, Canadian, French, and German patents by selling the same XB catheters in those foreign jurisdictions.

In his motion to amend his complaint, Voda argued that the district court had supplemental jurisdiction over his foreign patent claims. The district court agreed that it had supplemental jurisdiction, granted Voda's motion to amend, and certified its ruling for interlocutory appeal. Because of 'the paucity of law surrounding the issue,' the Federal Circuit granted the petition for interlocutory appeal to address 'whether the district court has supplemental subject matter jurisdiction over Dr. Voda's five foreign patents.' Voda v. Cordis Corp. , 122 Fed. Appx. 515 (Fed. Cir. 2005).

Supplemental Jurisdiction Statute

The parties did not dispute that the Constitution permits district courts to hear infringement claims based on foreign patents. See U.S. Const. art. III, '2. Instead, the dispute was whether 28 U.S.C. '1367 provides a statutory basis to exercise supplemental jurisdiction over those claims. Section 1367(a) provides, in pertinent part:

Except as provided in subsection [ ] (c) ' in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy '

Section 1367(c) provides that district courts may decline to exercise supplemental jurisdiction under enumerated circumstances, including if 'in exceptional circumstances, there are other compelling reasons for declining jurisdiction.' 28 U.S.C. '1367(c)(4). Accordingly, under '1367(a), a district court has jurisdiction over 'all other claims,' including foreign law claims, that 'form part of the same case or controversy' as the claims within its original jurisdiction, and are not within one of the enumerated exceptions.

Applying the statute, the district court held that Voda's foreign patent claims were part of the same case or controversy under '1367(a), but did not expressly address Cordis' argument that jurisdiction should be declined under the '1367(c) exceptions. On appeal, the Federal Circuit did not address whether Voda's foreign claims satisfy the threshold 'same case or controversy' requirement of '1367(a). Instead, the Federal Circuit held that even if the foreign claims were part of the same case or controversy, 'considerations of comity, judicial economy, convenience, fairness, and other exceptional circumstances constitute compelling reasons to decline jurisdiction.' Voda, 476 F.3d at 898.

The District Court Abused Its Discretion

The Supreme Court has noted that '1367 requires federal courts to 'consider and weigh in each case, and at every stage of the litigation, the values of judicial economy, convenience, fairness, and comity.' City of Chicago v. Int'l Coll. of Surgeons , 522 U.S. 156, 173 (1997) (internal quotations and citations omitted). Based on these and other considerations, the Federal Circuit held that the district court abused its discretion under '1367(c) by exercising supplemental jurisdiction over Voda's foreign patent infringement claims.

The Federal Circuit first noted that the international treaties joined and ratified by the United States do not contemplate adjudicating the infringement or validity of foreign patents. The court conceded that the treaties do not expressly prohibit foreign courts from adjudicating foreign patent claims. However, the court opined that adjudicating foreign patent claims would 'require us to define the legal boundaries of a property right granted by another sovereign and then determine whether there has been a trespass to that right,' and 'could undermine the obligations of the United States under such treatises, which therefore constitute an exceptional circumstance to decline jurisdiction under '1367(c)(4).' Voda, 476 F.3d at 900.

The court in Voda also determined that comity counsels against exercising supplemental jurisdicton over Voda's foreign claims. Comity refers to the courtesies extended to other nations, particularly by recognizing the validity and effect of their executive, legislative, and judicial acts. The Federal Circuit reasoned that comity counsels against supplemental jurisdiction because: 1) there is no international duty to adjudicate the claims; 2) convenience is not enhanced by domestic courts adjudicating foreign patent claims; 3) foreign courts will adequately protect Voda's foreign patent rights; and 4) exercising jurisdiction could prejudice the rights of foreign governments.

Additionally, the court concluded that exercising jurisdiction risks unreasonable interference with the authority of other countries. The Court reasoned that the countries involved in Voda's foreign patent claims have established specialized judges, courts, and/or procedures to assure integrity and consistency in the application of their patent laws, and exercising jurisdiction over foreign patent claims risks upsetting those procedures.

The Federal Circuit determined that judicial economy also counsels against exercising supplemental jurisdiction because: 1) a lack of knowledge and experience with foreign patent laws means more resources would be consumed by a domestic court than a foreign court; and 2) the likelihood of jury confusion could require separate trials on patents from different countries. The court conceded that consolidated multinational litigation could be more efficient than separate trials in different countries, but cited to the uncertainty of foreign countries' enforcing judgments of U.S. courts to countervail that efficiency.

Lastly, the court opined that fairness may require declining supplemental jurisdiction. The 'act of state' doctrine requires courts to accept acts of foreign sovereigns as valid. The Federal Circuit assumed, without deciding, that the grant of a patent was an act of state. Under that assumption, the district court could not address validity defenses, which would be unfair to Cordis, as the alleged infringer.

For the above reasons, the court concluded that several factors compelled the district court to decline supplemental jurisdiction over Voda's foreign claims. Further, the Federal Circuit found that the district court failed to consider these relevant factors or analyze whether it should decline jurisdiction, and thus the district court abused its discretion.

The Dissent

In dissent, Judge Pauline Newman opined that the district court did not abuse its discretion by exercising jurisdiction over the foreign patent claims. The dissent asserted that U.S. courts routinely apply foreign law, such as commercial, property, inheritance, citizenship, copyright, trademark, and negligence law. The dissent also pointed out that courts from other countries have applied U.S. patent law, as exemplified in K.K. Coral Corp. v. Marine Bio K.K., Case No. 1943(wa)/2002 (Tokyo District Court, Oct. 16, 2003).

The dissent argued that the majority opinion carves out a broad exception to the authority of U.S. courts that is unique to patent cases, and that applies to all patent cases involving foreign patents. This latter argument warrants examination.

The majority was careful to couch its holdings in terms of the foreign patent claims brought by Voda. However, many of the considerations supporting the majority's holding are generic to all foreign patent cases rather than specific to Voda's claims. For example, the majority refers to specialized judges, courts, and procedures established for patent cases in other countries, but does not analyze or reference the specific judges, courts, or procedures of any of the subject countries. Similarly, the majority relies on differences in patent law and the likelihood of jury confusion in assessing judicial economy, but does not analyze the specific patent laws and the resulting potential for confusion from the patent laws of any of the subject countries. Under the majority opinion, it would be difficult to imagine a case in which it would not be an abuse of discretion for a district court to exercise supplemental jurisdiction over a foreign patent claim. Thus, the dissent's characterization of the breadth of the holding may not be overstated.

Amici Curiae

Amicus curiae briefs were filed by the American Intellectual Property Association, the Federal Circuit Bar Association, the Intellectual Property Owners Association, the United States, and a group of law professors. With the exception of the law professors, the amici curiae favored not granting supplemental jurisdiction. Of particular note is the amicus curiae brief of the United States, which argued that even if foreign patent infringement claims are not cognizable under supplemental jurisdiction principles, diversity jurisdiction will often provide the courts with the authority to adjudicate those claims. However, the United States further argued that 'consideration of public or private convenience and international comity should ordinarily lead a district court to exercise its discretion not to entertain foreign patent infringement claims, even if the court has [supplemental or diversity] jurisdiction over such claims.'

Conclusion

The Federal Circuit rightly took a conservative approach to the jurisdictional reach of the U.S. courts. Aside from concerns about adding another layer of complexity to an already complex area of law, adjudication of foreign patent claims risks upsetting policy decisions of foreign countries and increases the prospects for forum shopping.

As discussed by the majority, many jurisdictions have created specialized courts and procedures for adjudicating patent claims. For example, in Germany the validity of a patent can be challenged through opposition proceedings in the German Patent Office or nullity actions before a Federal Patent Court. The Federal Patent Court sits in panels of five judges, including three judges trained in the technological area of the patent. Thus, Germany has determined that the validity of its patents should be determined by specialized agencies and courts with technological training in the area of those patents. Subjecting German patents to adjudication by generalist jurists or juries without technological training in the United States risks upsetting Germany's policy decisions.

Looking at the other side of the prism, to promote consistency and discourage forum shopping, the United States has dictated that all patent appeals will be heard by the Federal Circuit. Adjudication of U.S. patent claims by foreign courts risks circumventing those policy goals. Forum shopping is a legitimate concern within the United States. The prospect of foreign adjudication of U.S. patents exponentially compounds that concern. The dissent in Voda pointed out that foreign courts already have adjudicated U.S. patents, but the occurrences of that practice to date seem to be fairly limited. Perhaps it is wise to permit other countries to fire the first salvo in the rush to adjudicate the patent claims of foreign countries.