Abbvie Inc. v. Medimmune Limited

United States Court of Appeals
for the Federal Circuit
______________________
ABBVIE INC., ABBVIE BIOTECHNOLOGY, LTD.,
Plaintiffs-Appellants
v.
MEDIMMUNE LIMITED,
Defendant-Appellee
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2017-1689
______________________
Appeal from the United States District Court for the
Eastern District of Virginia in No. 2:16-cv-00322-AWA-
DEM, Judge Arenda L. Wright Allen.
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Decided: February 5, 2018
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JEFFREY I. WEINBERGER, Munger, Tolles & Olson LLP,
Los Angeles, CA, argued for plaintiffs-appellants. Also
represented by HEATHER E. TAKAHASHI; GINGER ANDERS,
Washington, DC; DAVID PENN FRAZIER, MICHAEL A.
MORIN, Latham & Watkins LLP, Washington, DC.
DAVID I. BERL, Williams & Connolly LLP, Washing-
ton, DC, argued for defendant-appellee. Also represented
by THOMAS S. FLETCHER, SHAUN PATRICK MAHAFFY.
______________________
2 ABBVIE INC. v. MEDIMMUNE LIMITED
Before PROST, Chief Judge, DYK, and CHEN, Circuit
Judges.
DYK, Circuit Judge.
AbbVie, Inc., and AbbVie Biotechnology Ltd.
(“AbbVie”) filed suit in the Eastern District of Virginia
against MedImmune Limited (“MedImmune”), seeking a
declaratory judgment that U.S. Patent No. 6,248,516 (“the
’516 patent”) is invalid. The district court determined
that it lacked jurisdiction under the Declaratory Judg-
ment Act, 28 U.S.C. §§ 2201–02, and alternatively that it
would not exercise jurisdiction if it existed, and it granted
MedImmune’s motion to dismiss. We affirm.
BACKGROUND
This declaratory-judgment action concerns a devel-
opment and licensing agreement entered into by prede-
cessors to AbbVie and MedImmune in 1995. The
agreement stemmed from a research collaboration be-
tween those predecessors that resulted in the antibody
adalimumab, the active ingredient in the well-known
pharmaceutical drug Humira. The contract is governed
by British law. 1 The 1995 agreement licensed AbbVie to
practice the ’516 patent among others, although the
parties agree that AbbVie does not presently practice it.
The agreement also required AbbVie to pay royalties on
the 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 by [AbbVie’s
predecessor] . . . (whichever is later).” J.A. 62. The last of
those patents to expire is the ’516 patent, with an expira-
tion date of June 19, 2018. The first commercial sale
occurred in January 2003. Accordingly, AbbVie’s obliga-
1 The 1995 agreement itself is not in the record, but
the parties agree––as did the district court––that British
law governs.
ABBVIE INC. v. MEDIMMUNE LIMITED 3
tion to pay royalties to MedImmune either ceased in
January 2018 (if the period is measured from the first
commercial sale) or will cease in June 2018 (if measured
from the expiration date of the ’516 patent).
Seeking to hasten the end of its royalty obligations,
AbbVie brought this declaratory-judgment action in June
2016 seeking a declaration that the ’516 patent is invalid.
AbbVie argued that a declaration of the ’516 patent’s
invalidity would constitute its expiration for purposes of
the 1995 agreement (making the royalty obligations
expire in January 2018). However, AbbVie did not seek a
declaration as to the contract’s interpretation.
MedImmune argued that the district court lacked de-
claratory-judgment jurisdiction or, if it had jurisdiction,
should decline to exercise it. On the merits, MedImmune
rejected AbbVie’s interpretation of the contract, contend-
ing that the royalty obligations are pegged to the patent’s
expiration date without regard to the patent’s validity. 2
The district court dismissed the complaint on two al-
ternate grounds. First, the court observed that AbbVie
does not practice the ’516 patent and therefore is not at
risk of an infringement suit. The district court held that
2 MedImmune also argued that three other enti-
ties––namely, a research arm of the British government,
an American research institute, and an American corpo-
ration––own interests in the ’516 patent and are neces-
sary and indispensable parties to this action under
Federal Rule of Civil Procedure 19. AbbVie contends that
it properly sued only MedImmune, which AbbVie argues
“possesses all substantial rights in the ’516 patent rele-
vant to this case.” Appellant Br. 44. The district court
found this issue moot given its dismissal of the complaint
on other grounds. In light of our disposition of this case,
we also need not decide the issue.
4 ABBVIE INC. v. MEDIMMUNE LIMITED
AbbVie “could not be subject to a patent [infringement]
action, and therefore lack[s] standing to bring this action.”
J.A. 6.
Second, assuming AbbVie had standing, the district
court noted that the interpretation of the 1995 agreement
was governed by British contract law and would implicate
the rights of the British government, which jointly owns
the patent through one of its research councils. Deciding
the invalidity question, the district court observed, would
not resolve the parties’ ultimate dispute and would raise
these additional concerns about foreign law and sovereign
immunity. The district court concluded, therefore, that it
would not exercise its declaratory-judgment jurisdiction
as a matter of discretion. The district court dismissed the
case.
AbbVie timely appealed, and we have jurisdiction un-
der 28 U.S.C. § 1295(a)(1).
DISCUSSION
The district court erred in holding that it lacked de-
claratory-judgment jurisdiction on the basis that there is
no controversy as to infringement of the ’516 patent. As a
general principle, “federal courts, when determining
declaratory judgment jurisdiction, often look to the ‘char-
acter of the threatened action’” that the declaratory-
judgment defendant “might have brought.” Medtronic,
Inc. v. Mirowski Family Ventures, LLC, 134 S. Ct. 843,
848 (2014) (quoting Pub. Serv. Comm’n v. Wycoff Co., 344
U.S. 237, 248 (1952)). In other words, courts examine
declaratory actions, at least in part, by looking to the
“mirror image” suit the declaratory defendant might bring
if and when it seeks coercive relief.
In conducting this analysis, the district court charac-
terized AbbVie’s declaratory claim as the mirror image of
an infringement suit. It then applied our cases from the
infringement context, concluding that AbbVie had failed
ABBVIE INC. v. MEDIMMUNE LIMITED 5
to present an actual case or controversy sufficient to
trigger Article III jurisdiction in light of “the lack of
evidence of infringement, the lack of evidence of any
intent to infringe the patent, and the absence of any
threat to sue [AbbVie] for infringement.” J.A. 5. It con-
cluded that AbbVie “could not be subject to a patent
action, and therefore lack[s] standing to bring this [de-
claratory] action.” J.A. 6.
This was a mischaracterization of AbbVie’s claim,
which has never rested on the possibility of infringement
but rather concerns the parties’ contractual obligations
under the 1995 agreement. Those contractual obligations
turn on the expiration and, perhaps, the validity of the
’516 patent, but there is no contention that they turn on
whether AbbVie engaged in infringement.
If properly presented, such a contractual dispute
could confer declaratory-judgment jurisdiction. The
Supreme Court has held repeatedly that contractual
disputes can be the subject of a declaratory action. E.g.,
MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 125
(2007) (“All we need determine is whether petitioner has
alleged a contractual dispute.”); Freeport-McMoRan, Inc.
v. K N Energy, Inc., 498 U.S. 426, 426–29 (1991) (per
curiam) (finding federal diversity jurisdiction in declara-
tory action concerning breach of contract); Skelly Oil Co.
v. Phillips Petroleum Co., 339 U.S. 667, 674 (1950) (same);
Aetna Life Ins. of Hartford, Conn. v. Haworth, 300 U.S.
227, 242 (1937) (“The dispute relates to legal rights and
obligations arising from the contracts of insurance.”). And
it has held that declaratory-judgment jurisdiction extends
to contractual disputes that turn on issues of patent
infringement and invalidity. MedImmune, 549 U.S. at
123–26.
So too has this court. In Powertech Technology Inc. v.
Tessera, Inc., the parties disputed whether royalty obliga-
tions under a contract were contingent on the validity and
6 ABBVIE INC. v. MEDIMMUNE LIMITED
infringement of a patent. 660 F.3d 1301, 1308–10 (Fed.
Cir. 2011). We held that the parties’ dispute “as to
whether the license agreement require[d] royalty pay-
ments to be tied to valid patent coverage [was] sufficient
to support declaratory judgment jurisdiction.” Id. at 1310
(citing MedImmune, 549 U.S. at 135–36); see also Kimble
v. Marvel Enters. Inc., 727 F.3d 856, 859–60, 864, 867 (9th
Cir. 2013) (affirming declaratory judgment that royalty
obligations ceased upon patent expiration even though
the parties agreed there was no infringement), aff’d sub
nom. Kimble v. Marvel Entm’t, LLC, 135 S. Ct. 2401
(2015); ABB Inc. v. Cooper Indus., LLC, 635 F.3d 1345,
1349 (Fed. Cir. 2011) (finding declaratory-judgment
jurisdiction on the ground, among others, that an indem-
nitor has an interest in determining its potential contrac-
tual liability, where liability turned not on its own
infringement but on the indemnitee’s).
AbbVie’s problem is that it did not seek a declaration
of its contractual obligations. Rather, AbbVie’s complaint
only sought a declaration of invalidity with respect to the
’516 patent. And as MedImmune argues and the district
court held, such a declaration would not actually resolve
the parties’ contractual dispute.
The Supreme Court has long held that in general “a
litigant may not use a declaratory-judgment action to
obtain piecemeal adjudication of defenses that would not
finally and conclusively resolve the underlying controver-
sy.” MedImmune, 549 U.S. at 127 n.7 (citing Calderon v.
Ashmus, 523 U.S. 740, 749 (1998)). This principle is an
application of Article III’s case-or-controversy require-
ment in the declaratory-judgment context. See Calderon,
523 U.S. at 745–47. In Calderon, for example, the incar-
cerated plaintiffs sought a declaration that they would be
entitled to certain procedural benefits conferred by stat-
ute should they bring a habeas action. Id. at 742. Rather
than resolve the matter in the normal course of their
habeas proceedings, the plaintiffs “s[ought] to have that
ABBVIE INC. v. MEDIMMUNE LIMITED 7
question determined in anticipation of seeking habeas so
that [they] w[ould] be better able to know, for example,
the time limits that govern the habeas action.” Id. at 746.
The Supreme Court found this use of the Declaratory
Judgment Act impermissible under Article III because it
“would not resolve the entire case or controversy . . . but
would merely determine a collateral legal issue governing
certain aspects of their pending or future suits.” Id. at
747 (citing Coffman v. Breeze Corps., 323 U.S. 316, 322–
24 (1945)). In other words, in general, parties may not
“seek[] by declaratory judgment to litigate a single issue
in a dispute that must await another lawsuit for complete
resolution.” Id. at 748; see also McLeod v. Gen. Mills, Inc.,
856 F.3d 1160, 1166–67 (8th Cir. 2017) (finding no juris-
diction over declaratory claim concerning waiver of em-
ployees’ age-discrimination rights where relief could not
resolve the actual controversy––the underlying discrimi-
nation claims); Williams v. BASF Catalysts LLC, 765 F.3d
306, 327–28 (3d Cir. 2014) (finding no jurisdiction to
“determin[e] rights and defenses available . . . in future
proceedings,” such as preclusion issues that might arise in
later personal-injury suits).
This case suffers from the same defect. The 1995
agreement, which is governed by British law, pegs the end
of AbbVie’s payments to the expiration of the ’516 patent.
It is an open question whether British courts would
consider the invalidation of a patent to be tantamount to
its expiration for purposes of this agreement. Without a
resolution to this question, the parties’ contractual dis-
pute would persist. Contrary to AbbVie’s argument, the
Supreme Court in MedImmune did not hold that a patent-
invalidity question could be brought as an action separat-
ed from the underlying dispute as to contract interpreta-
tion. See 549 U.S. at 123–25, 127 n.7 (explaining that the
plaintiff there sought a conclusive declaration as to its
contractual obligations, rather than piecemeal adjudica-
tion of the subsidiary patent issues).
8 ABBVIE INC. v. MEDIMMUNE LIMITED
We have occasionally permitted an exception to the
rule against piecemeal adjudication in circumstances
where litigation is also pending that would resolve the
remaining questions. For example, in Dey Pharma, LP v.
Sunovion Pharmaceuticals Inc., we approved of declarato-
ry-judgment jurisdiction in a Hatch-Waxman Act suit that
would not entirely resolve the parties’ dispute. 677 F.3d
1158, 1163–64 (Fed. Cir. 2012). The patentee in Dey had
brought an infringement action against a generic drug
manufacturer on two of three patents related to the
pharmaceutical drug at issue. Id. at 1161. The generic
company then filed a separate declaratory-judgment
action asserting the invalidity and noninfringement of the
third patent. Id. The patentee asserted the rule against
piecemeal adjudication, but we observed that “the only
reason there are two cases here is that [the patentee]
declined to sue [the generic company] on all the [three]
patents.” Id. at 1164. We concluded that “simply elimi-
nating one barrier [to resolving the dispute] is sufficient
for declaratory jurisdiction, so long as litigation is also
pending that could eliminate the other barriers.” Id.;
accord Caraco Pharm. Labs., Ltd. v. Forest Labs., Inc.,
527 F.3d 1278, 1288, 1293 (Fed. Cir. 2008).
Here, AbbVie has no other pending litigation that
would conclusively resolve its contractual dispute with
MedImmune. Without taking at least that step, in either
the American or British courts, it cannot establish declar-
atory-judgment jurisdiction over the question of invalidi-
ty. Accordingly, the judgment of the district court
dismissing the action without prejudice is affirmed.
AFFIRMED