Acorda Therapeutics, Inc. v. Alkermes Plc

At a glance

Parties

Acorda Therapeutics, Inc. (petitioner-appellant) v. Alkermes PLC (respondent-appellee)

Case no.

No. 2023-2374 (Fed. Cir.); appeal from S.D.N.Y. No. 1:23-cv-00223-NRB; underlying arbitration AAA-ICDR No. 01-20-0010-8421

Court

United States Court of Appeals for the Federal Circuit: Circuit Judges Taranto (author of the opinion), Hughes and Stark

Forum and rules

US federal courts; Federal Arbitration Act, chapters 1 and 2 (9 U.S.C. §§ 9–11, 201–208); New York Convention. The arbitration was held before the AAA International Centre for Dispute Resolution, under New York law.

Underlying award(s)

Amended Findings of Fact, Conclusions of Law, and Final Reasoned Award (described as issued on 7 November 2022; the opinion's citation gives 11 April 2022), and Order #23 on summary judgment (11 April 2022)

Sector

Pharmaceuticals; patent licensing

Outcome

The Federal Circuit held that it lacked appellate jurisdiction and transferred the appeal to the Second Circuit (25 July 2025).

Amount

Arbitral award: USD 16,554,267 for royalties paid under protest from July 2020. Acorda sought modification to recover unprotested post-expiration payments exceeding USD 65 million. Costs on appeal: each party bears its own.

The dispute

Alkermes licensed U.S. Patent No. 5,540,938, covering a sustained-release formulation of dalfampridine (the active ingredient of Acorda's multiple-sclerosis drug Ampyra), to Acorda and supplied the ingredient. In return Acorda paid an 18% royalty, split into 10% under a License Agreement and 8% under a Supply Agreement. The patent expired on 30 July 2018, but Acorda kept paying: without protest until July 2020, and under protest afterwards for License Agreement payments only. In arbitration the Tribunal held the royalty provisions unenforceable after expiry under Brulotte v. Thys Co. It allowed recovery only of payments made under protest, applying the New York voluntary payment doctrine and a no-refund clause. Acorda petitioned the Southern District of New York to confirm the award but to modify the denial of recoupment for manifest disregard of the law. The district court confirmed the award in full, and Acorda appealed to the Federal Circuit.

Key holdings

1. Federal Circuit jurisdiction under 28 U.S.C. § 1295(a)(1) turns on whether the case-initiating filing arose under patent law. For a petition to confirm, vacate or modify an award, the court looks only to that petition, not to the claims in the underlying arbitration, following Badgerow v. Walters. pp. 10–11 and n. 2
2. No patent-law cause of action existed because the case was brought solely under the Federal Arbitration Act. Jurisdiction therefore required a patent-law issue that was necessarily raised, actually disputed, substantial, and capable of federal resolution without disrupting the federal-state balance (Gunn v. Minton). p. 11
3. The request to confirm the award did not necessarily raise patent law. Confirmation under 9 U.S.C. §§ 9 and 207 does not require a party to prove that the award's rulings are correct. p. 12
4. The request to modify the award did not necessarily raise patent law either. Acorda offered an alternative, non-patent ground for manifest disregard: the rule against enforcing illegal contracts (Kaiser Steel, McMullen). The district court could therefore have ruled for Acorda without deciding the Brulotte question, so the first Gunn requirement was not met. pp. 12–13
5. The court did not decide whether the patent issue was substantial. That question was raised by Brulotte's silence on backward-looking remedies, by the deferential manifest-disregard standard, and by the Fourth Circuit's decision in Friedler v. Stifel, Nicolaus & Co. pp. 13–14
6. The appeal was transferred to the United States Court of Appeals for the Second Circuit. The parties bear their own costs. The published documents do not show the outcome before the Second Circuit. p. 14

Procedural history

1. 30 July 2018The '938 patent expires; Acorda continues to pay royalties without protest.
2. July 2020Acorda begins to protest each payment made under the License Agreement.
3. 28 July 2020Acorda files a Demand for Arbitration with the AAA International Centre for Dispute Resolution.
4. 11 April 2022Tribunal's Order #23 on summary judgment relies on the no-refund clause to bar recovery of unprotested payments.
5. 7 November 2022Arbitral award: royalty provisions unenforceable after patent expiry; Acorda awarded USD 16,554,267 for payments made under protest.
6. 10 January 2023Acorda petitions the S.D.N.Y. to confirm the award in part and modify it in part.
7. 4 August 2023District court (Judge Naomi Reice Buchwald) rejects the manifest-disregard arguments; judgment confirming the award in full is entered on 7 August 2023.
8. 25 July 2025Federal Circuit holds that it lacks jurisdiction and transfers the appeal to the Second Circuit.

Tribunal, counsel and experts

For the claimant

Sullivan & Cromwell LLP

For the respondent

Goodwin Procter LLP

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Keywords

• manifest disregard of the law
• Brulotte v. Thys
• post-expiration royalties
• patent licence
• Federal Circuit jurisdiction
• arising under patent law
• Gunn v. Minton
• Badgerow v. Walters
• modification of arbitral award
• confirmation of award
• New York Convention
• Federal Arbitration Act
• New York voluntary payment doctrine
• illegal contract
• Ampyra
• dalfampridine
• pharmaceuticals
• transfer to Second Circuit

Summary generated with AI from the published documents — refer to the award for the authoritative text.