Federal Circuit Has Jurisdiction Over Diversity Suit for Breach of Contract That Depended on Patent Infringement and Validity

Jang v. Boston Scientific Corp., __ F.3d ___ (Fed. Cir. Sept. 16, 2014) (Dyk, Plager, LINN) (C.D. Cal.: Phillips)

Federal Circuit denies transfer to the regional circuit and refuses interlocutory review over a ruling that the plaintiff could proceed with a breach of contract claim for patent royalties accrued before the defendant challenged the patent's validity.

The Federal Circuit had appellate jurisdiction because the contract claim "depends on an issue of federal patent law—whether the stents sold by [petitioners] would have infringed." Slip op. at 4. Unlike Minton v. Gunn, 133 S. Ct. 1059 (2013), which dealt with a malpractice claim where the question posed were hypothetical and backward-looking, the patent issue here was "substantial and neither entirely backward-looking nor hypothetical" because it raises "the real-world potential for subsequently arising infringement suits affecting other parties." Id. at 5-6. "These suits have the potential of conflicting rulings particularly as to validity." Id. at 7. "Permitting regional circuits to adjudicate questions of patent validity, for example, could result in inconsistent judgments between a regional circuit and the Federal Circuit, resulting in serious uncertainty for parties facing similar infringement charges before district courts within that regional circuit." Id. It did not matter that the Patent Office has since cancelled the patent at issue here (thus removing any future validity issues) because jurisdiction is assessed at the time of the complaint, which was before the PTO's cancellation.

Despite having jurisdiction, Federal Circuit declined review, noting that "our court grants interlocutory review in these multi-faceted patent cases only rarely." Id. at 9. Review was inappropriate here because the questions might not be controlling and unresolved factual disputes remained.