Laboratory Corp of America (LabCorp) v. Metabolite Labs., Appeal No. 2008-1597 (Fed. Cir. 2010).
In an interesting exposition on Federal Circuit appellate jurisdiction, the court has ruled that LabCorp's appeal should be heard by the Tenth Circuit -- concluding that the declaratory judgment action between these parties is merely a state-law contract dispute (patent & know-how license) that does not require determination of a substantial question of patent law. In particular, there were no patent law questions at issue here because those issues were decided in an earlier action, and those results are cemented under res judicata.
Federal Circuit Jurisdiction: 28 USC 1295(a)(1) provides the Federal Circuit with exclusive jurisdiction over the appeal of any final judgment of a district court if the jurisdiction of the district court arose "under any act of Congress relating to patents." In Christianson (1988) and Holmes Group (2002), the Supreme Court outlined the scope of this arising-under jurisdiction to include cases where the "well-pled complaint establishes either that federal patent law creates the cause of action or that the plaintiff's right to relief necessarily depends on the resolution of a substantial question of federal patent law." When the case also includes a state-law claim, there must also be a consideration of the "congressionally approved balance of federal and state judicial responsibilities." Grable (2005).
Federal Circuit Jurisdiction over Declaratory Judgment Actions: For declaratory judgment actions, the Federal Circuit has historically looked at the "hypothetical claim" "that the declaratory defendant would have brought." Speedco (Fed. Cir. 1988). This hypothetical claim analysis does not mesh-well with the Supreme Court's MedImmune (2007) decision. I would argue even more strongly that the Speedco precedent was overruled. MedImmune announced that a court may have declaratory judgment jurisdiction even if the declaratory defendant could not have brought suit at that time. Thus, under MedImmune, the court may still possess arising-under jurisdiction in a patent case even if no hypothetical patent claim could be described for the declaratory defendant. In its decision here, the Federal Circuit did not cite MedImmune, but rather followed its old Speedco reference without questioning that decision's ongoing precedential value.
The Federal Circuit can have jurisdiction over cases only involving breach-of-contract and legal-malpractice claims, but only if the well-pled complaint they raises a substantial question of patent law. Here, LabCorp argued that the prior patent license did not cover certain of its activities. On appeal, the Federal Circuit noted that such a claim could ordinarily raise a substantial question of patent law, but that no patent law question was at issue here because the court had already determined ` the scope of the "licensed patents." Because those issues are res judicata, their presence does not create any questions of patent law to be judged.
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[F]or jurisdiction to exist in our court, the substantial question of patent law must be disputed and require resolution on the merits. . . . The issue of infringement . . . has been resolved and is no longer disputed. Accordingly, Metabolite's hypothetical breach of contract claim presents this court with no disputed issue of patent law. . . . Because the issue of patent law is not disputed and substantial, we do not have jurisdiction over this appeal. |
Thus, the court "transfer[red] the appeal to the United States Court of Appeals for the Tenth Circuit."
Writing in dissent, Judge Dyk suggested that the Federal Circuit should have jurisdiction over a suit that determines the res judicata effect of a prior judgment that arose under the federal patent laws. Additionally, Judge Dyk disputed the majority's conclusion that the complaint raised no questions of patent law to be decided. "At oral argument, counsel for LabCorp conceded that 'it is possible that the court could have had to decide [the question of whether the outsourced homocysteine assays fell within the claims of the '658 patent] in this case.'"
