Monday, February 05, 2007

Federal Circuit Says No to International Law

In a decision that is likely to be heard en banc, a divided panel of the Federal Circuit vacated a district court's order permitting plaintiff to amend his complaint to allege infringement of foreign patents. The panel majority (per Gajarsa, joined by Prost), held that the trial court erred in exercising discetionary power to hear such claims pursuant to the supplementary jurisdiction granted in 28 USC 1367. Judge Newman dissented. This is a very significant opinion. The case is Voda v. Cordis Corp., 2007 WL 269431 (Fed. Cir. Feb. 1, 2007).

This is not a case where the issue was whether to look to foreign law as a source of U.S. law; rather, the question was whether, given jurisdiction over the parties in an action for infringement of a U.S. patent, could plaintiff amend his complaint to include separate claims for infringement of foreign patents, for which the district court would apply foreign law for the foreign claims? The majority seems to have held no, never. The dissent seems to say yes in this case, but each case will have to be decided on its own facts to see whether there a common nucleus of operative facts under United Mine Workers v. Gibbs, 383 U.S. 715 (1966).

In copyright cases, courts have followed the dissent's approach of analyzing the issue on a case by case basis. No case I am aware of has taken the across-the-board approach of the panel majority, nor did the majority base its decision on a failure to find a common nucleus of operative fact. I appreciate the majority's concern about offending the possible interests of other nations and there is also the concern about whether asserting jurisdiction over foreign claims makes sense from an efficiency standpoint. For example, what if a U.S. declares a foreign patent invalid under foreign law? If one replies that a foreign court does not have to give such a ruling any weight, what is the value of having parties litigate the matter initially in the United States? On the other hand, as the dissent points out, U.S. courts routinely apply foreign law in a broad array of commercial contexts, although it is unclear if such decisions are the result of a forum selection clause or other consent of the parties.

3 comments:

Doug H said...

Its not a new issue, and when faced with it before the Fed Cir still used the Gibbs test. See Mars, Inc. v. Kabushiki-Kaisha
Nippon Conlux, 24 F.3d 1368 (Fed. Cir. 1994).

I don't know if the analogy between copyright and patent works that well for foreign comity issues. Whereas the standards for copyright infringement vary in language but are close enough given common international obligations that a district court can reasonably understand and come to a conclusion on foreign law issues (which happens from time to time in non-IP federal cases), patent infringement law (from claim construction, to infringement analysis, to damages) is much more diverse and complex and varies much more from jurisdiction to jurisdiction. Given how difficult it is for non-technical district courts to even follow US patent law, I can only imagine them trying to understand japanese patent law at the same time and fulfilling the requirements necessary to achieve comity with the japanese court.

I also think this would cause a "floodgate" of foreign patent litigation in the U.S. for one simple reason: discovery. The level of discovery available in U.S. courts exceeds pretty much every other foreign jurisdiction, and coupled with the patent-friendly federal circuit, it would be an invitation to use our courts for extraterritorial battles that we may not (or, perhaps may) want in our courts.

Anonymous said...

doug -
Frankly, I don't see accepting supplemental jurisdiction as opening a floodgate of foreign litigation in the US. First off, it's entirely discretionary. Second, the foreign infringement must also have some component of US infringement even to get in the door.

In some jurisdictions, courts in infringement cases are routinely asked to look to world-wide revenue to measure damages anyway (I'm not sure how successful that strategy really is, but...).

What I think that this ruling does is solidifies the current strategy of small patent owners with international protection: seek damages in the most favorable (or easiest) jurisdiction. Then, at settlement time, the patent owner will waive foreign enforcement rights for a larger settlement upfront.

Anonymous said...

It's spelled "Prost" not "Probst" (like the host of Survivor).