"Acorda underscores a sharp reality: if you want federal courts to hear a licensing dispute involving patent misconduct, the legal strategy must make patent law indispensable to the outcome."
In a recent ruling with significant implications for patent licensing disputes, the U.S. Court of Appeals for the Federal Circuit's decision in Acorda Therapeutics, Inc. v. Alkermes Pharma Ireland Ltd., No. 2023-2374 (Fed. Cir. July 25, 2025), demonstrates just how critical proper jurisdictional framing is when contesting patent-related arbitration awards. The case reminds practitioners and stakeholders that even when patents sit at the heart of a dispute, the way a claim is framed can determine whether the matter will be heard by a federal court -- or deflected into purely state law territory.
But as seen in Acorda, even when the facts suggest a bad-faith licensing of a patent known or suspected to be invalid, federal jurisdiction may be defeated if the complaint doesn't frame the issue correctly.
In Acorda, the issue was whether the Federal Circuit had jurisdiction to review a challenge to an arbitration award concerning a patent license agreement. Acorda argued that the arbitrator exceeded authority by awarding damages based on an invalid patent. However, the court held that because the claim did not "necessarily raise" a substantial question of patent law (as required under Gunn v. Minton), it lacked jurisdiction. The Federal Circuit opinion explained:
"Acorda thus presented a way for the district court to rule in its favor on the requested recoupment remedy without agreeing with Acorda's assertion that federal patent law entitled it to that remedy. In that circumstance, as we have held, the asserted patent-law issue was not 'necessarily raised.'"
The court also noted that "Regarding the Supply Agreement, the Tribunal concluded that Acorda could not recover any royalty payments because Acorda had never protested those royalties in its letters to Alkermes."
Had Acorda raised its objections the moment the patent expired - or efficiently raised the issue to the Federal Circuit as a matter of patent law - it would have had a much better chance of recovering all the royalty payments post the patent's expiration.
In short: even if the underlying dispute touches on patent validity, if the challenge is grounded solely in general arbitration law or contract procedure, then the patent issue is not "substantial enough" to trigger federal jurisdiction.
Despite its refusal to address the matter due to lack of jurisdiction, the Federal Circuit gave a clear indication of what its decision could have been:
"Second, by allowing Alkermes to keep the tens of millions of dollars in royalty payments it demanded and collected after the expiration of its patent, the Award also gives effect to licensing agreements that the Tribunal (and Supreme Court) determined were illegal. The Tribunal's ruling therefore violates the fundamental rule that 'no court will lend its assistance in any way towards carrying out the terms of an illegal contract.'"
This created a precedence that would encourage licensees to bring into question licensing contracts on invalid or expired patents on a Federal level and question their legality and validity. Clauses that allow a licensee to stop royalty payments once the patent(s) in question are no longer enforceable commonly exist in license agreements. This case, however, has highlighted that -even in absence of such clauses - a plausible argument regarding the legality and validity of such contracts can be made after a patent's validity and enforceability comes into question.
What if a licensee discovers that the patentee actively concealed matters that could affect patent validity, such as known prior art, inventorship disputes and defects in patent litigation, likely rendering the patent invalid? Could this be the basis of a claim in federal court? It depends on how the claim is constructed.
A licensee's claim of fraudulent inducement may remain in state court unless it is framed such that patent law is a necessary element. But where allegations hinge on specific invalidity grounds -- e.g., known prior art, lack of enablement, or improper inventorship -- these facts can pull the claim back into federal court. See Jang v. Boston Scientific Corp., 767 F.3d 1334 (Fed. Cir. 2014)
If framed as a traditional fraud or contract dispute -- e.g., "you misled me into signing this license" -- then Acorda suggests the matter could be relegated to state court. But if the complaint hinges on the premise that the patent is invalid and that its invalidity is central to the harm alleged, the case may cross into federal jurisdiction. See Gunn v. Minton, 568 U.S. 251 (2013) , Christianson v. Colt Indus. Operating Corp., 486 U.S. 800 (1988) .
Claims like fraudulent inducement, breach of the duty of good faith and fair dealing, or even unjust enrichment may not suffice unless:
Courts have increasingly emphasized that a patentee's belief in a patent's validity must evolve alongside changing legal standards. Cases like Finnavations v. Payoneer and Genentech v. Eli Lilly highlight that reliance on outdated or overly optimistic views of patent strength -- especially in light of judicial trends -- can give rise to serious legal exposure. The licensing party must not only be aware of prior art or enablement issues, but also understand how shifting doctrines under § 101, § 102, § 103 or § 112 affect enforceability. These cases reinforce that the obligation to assess validity is ongoing -- not frozen in time at filing or licensing. In other words, legal review cannot stop once a lawsuit is filed or a license is signed; it must be continuously updated to reflect evolving patent law.
To bring such a case to federal court or potentially before the Federal Circuit, plaintiffs must be surgical:
Otherwise, as in Acorda, the court may conclude the dispute does not "arise under" patent law and decline jurisdiction -- regardless of the underlying patent context.
In ChromaDex v. Elysium, the court squarely addressed patent validity because the licensee raised invalidity as a defense, and the outcome of the case (including royalty obligations) depended directly on that determination. The key difference? The patent law issue was litigated and unavoidable.
Acorda underscores a sharp reality: if you want federal courts to hear a licensing dispute involving patent misconduct, the legal strategy must make patent law indispensable to the outcome. Merely gesturing at invalidity, concealment, or licensing deception isn't enough.
For patentees and licensees alike, the lesson is clear: your forum depends not just on your facts, but on your framing.
In today's licensing climate -- especially as litigation funding and patent scrutiny grow -- understanding the procedural terrain is as important as knowing the substantive law. Acorda and ChromaDex offer a dual warning: one about jurisdiction, the other about candor and clarity. Missteps in either can turn a patent from a revenue source into a litigation sinkhole. In this post-Acorda landscape, plaintiffs must ask not just whether their claims involve patents, but whether they depend on patent law.