[00:00:00] Speaker 05: Our next case for argument is 171689, AbbVie v. Metamune. [00:00:44] Speaker 04: Ready? [00:00:49] Speaker 04: May I please the court? [00:00:51] Speaker 04: The district court's determination that there was no jurisdiction. [00:00:53] Speaker 02: Mr. Weinberger, this patent expires in June, right? [00:00:57] Speaker 02: Correct, Your Honor. [00:00:59] Speaker 02: How could you possibly get a decision, a final decision on the patent validity between now and the expiration in June? [00:01:09] Speaker 02: And if this case is going to become moot in June, why [00:01:13] Speaker 02: should we spend a lot of time addressing these difficult issues when it's going to become moot anyway? [00:01:20] Speaker 04: Two points, Your Honor. [00:01:21] Speaker 04: First of all, the actual payment is not due until the end of September 2018. [00:01:26] Speaker 04: And we pointed that out in the various motions that were filed regarding the scheduling of the case and motions to expedite. [00:01:37] Speaker 04: So there is more time than January. [00:01:40] Speaker 04: And I think there is some dispute. [00:01:42] Speaker 02: But even so, you've got a district court proceeding. [00:01:45] Speaker 02: You've got probably an appeal from that. [00:01:48] Speaker 02: You're talking about a proceeding which wouldn't become final for at least a year or two. [00:01:54] Speaker 04: Well, I think the district court determination would be final for purposes of the contract. [00:01:59] Speaker 04: It may be subject to appeal. [00:02:00] Speaker 04: But it's a final decision. [00:02:02] Speaker 04: And I think there's a discrete legal issue of obvious double-type patenting here that can be resolved by the district court. [00:02:09] Speaker 04: We believe on summary judgment with no fact discovery, perhaps some expert reports, and it can be decided. [00:02:17] Speaker 04: The other point I'd make, Your Honor, is that if there's a proceeding underway where the court is determining the issue of validity, it may be possible, if MedImmune brings an action in the English courts, to tell the courts there to wait, if it's a reasonable amount of time, because the issue of validity is actually being determined by the U.S. [00:02:37] Speaker 04: court. [00:02:38] Speaker 04: I don't think that the record here is such that this action would be moot so that the court should not decide this. [00:02:44] Speaker 05: They would bring an action because you didn't pay. [00:02:47] Speaker 05: I mean, why would they? [00:02:48] Speaker 05: That would be the basis for an action. [00:02:51] Speaker 04: Either that or a declaratory relief action that we are not going to pay, yes. [00:02:56] Speaker 04: But my point is that A, we believe we can get a determination by the end of September. [00:03:02] Speaker 04: B, that the district court decision would be a final judgment. [00:03:06] Speaker 02: So would you not pay if you got a favorable district court decision? [00:03:12] Speaker 04: I would say that our analysis would be that we would not have to pay, and that we would not, yes. [00:03:21] Speaker 01: Wouldn't that get appealed up to the Federal Circuit, though? [00:03:24] Speaker 01: Any adverse district court judgment? [00:03:28] Speaker 01: It may. [00:03:29] Speaker 04: It may, but I don't think that affects the finality of district court judgment as a final judgment. [00:03:35] Speaker 04: that would invalidate the patent for purposes of the contract. [00:03:38] Speaker 04: Now, obviously, if the Federal Circuit reverses on the merits, then we'd have to reverse course. [00:03:47] Speaker 05: Well, if you didn't pay, and then we reverse based on some hypothetical district court opinion, and you refuse to pay, and then it gets reversed on appeal, then I think you end up [00:03:59] Speaker 05: I mean, there's relief for the other side, which is you end up having to pay. [00:04:03] Speaker 05: I don't know if there's interest or penalties. [00:04:05] Speaker 04: Yeah. [00:04:06] Speaker 04: And I can't quarrel with that, Your Honor. [00:04:07] Speaker 04: If that all happens, then we would live up to our obligations under the contract. [00:04:12] Speaker 04: We're not talking about not paying if there is no judgment of invalidity. [00:04:18] Speaker 04: But I think a district court determination of invalidity would allow us not to pay, would excuse us. [00:04:24] Speaker 04: And if that gets reversed, and I hope it would not, if that got reversed, then we would [00:04:30] Speaker 04: have to re-examine our options, and I would admit we probably have to pay at that point. [00:04:35] Speaker 01: Is there some reason why you didn't file this DJ action sooner? [00:04:39] Speaker 04: Yes, Your Honor. [00:04:40] Speaker 04: I think that this is a double patenting case involving an earlier filed patent, a later filed patent being used to potentially invalidate an earlier filed patent, involves a pre-gap patent or a post-gap patent. [00:04:55] Speaker 04: And I think the decisions of this court were not [00:04:59] Speaker 04: particularly clear as to whether or not we were able to assert, obviously, double-type patenting in that circumstance. [00:05:05] Speaker 04: Beginning with the Gilead versus Natco case, I think in 2014, and then later subsequent decisions of some district courts, it became clear that we would have a case to argue that the 516 patent is invalid. [00:05:21] Speaker 04: And then we acted reasonably promptly as that law developed to go ahead and file the case. [00:05:28] Speaker 04: And we did file it. [00:05:29] Speaker 04: quite a while ago. [00:05:30] Speaker 04: Unfortunately, this court took a while to make this ruling, and we find ourselves here. [00:05:36] Speaker 04: But as I said to Judge Dyke, this case is not moot. [00:05:40] Speaker 05: You seem to gloss over in your comments, and that's fine, that a validity determination would resolve all of this. [00:05:50] Speaker 05: And that's the rub, right? [00:05:51] Speaker 05: I mean, you didn't seek a declaratory judgment with respect to contractual rights. [00:05:57] Speaker 05: And that's what led the district court to say, we're not going to do this piecemeal. [00:06:03] Speaker 05: Even a judgment with respect to validity is not going to resolve the contractual issue. [00:06:09] Speaker 05: And that's a problem for you, isn't it? [00:06:11] Speaker 04: I don't think so, Your Honor. [00:06:12] Speaker 04: And let me explain why. [00:06:13] Speaker 04: First of all, the Supreme Court and then this court in power to make clear that if you are alleging invalidity and then the licensor [00:06:26] Speaker 04: argues that the contract does not require you to make payments regardless of validity, that that's a merits issue, and that the court can decide that issue as part of the merits and does not go to jurisdiction. [00:06:39] Speaker 02: It may not go to jurisdiction, but it goes to whether a declaratory judgment is appropriate. [00:06:45] Speaker 02: In this contract, unfortunately we don't have the contract in full in the appendix, is there a form selection clause in the contract? [00:06:53] Speaker 04: There's a form, and there's no form selection clauses. [00:06:58] Speaker 02: And as I understand what you say in your reply brief, you agree that you could have asked for declaratory judgment of contract interpretation in the district court here, along with the validity argument, right? [00:07:15] Speaker 04: I think the power to cases... Wait, wait, wait. [00:07:17] Speaker 02: Answer my question. [00:07:18] Speaker 02: Do you agree that you could have done that? [00:07:19] Speaker 02: I would say there was no necessity to under this course precedent. [00:07:23] Speaker 02: That was not my question. [00:07:25] Speaker 02: My question is, do you agree that you could have done that? [00:07:29] Speaker 02: Sure, we could have done that. [00:07:32] Speaker 02: And you didn't do it, right? [00:07:34] Speaker 02: Wait, you did not do it, right? [00:07:36] Speaker 02: There's no separate prayer. [00:07:38] Speaker 04: Did you do it? [00:07:40] Speaker 04: No separate prayer. [00:07:41] Speaker 04: That's correct. [00:07:42] Speaker 04: But we did say in the complaint that we did provide our interpretation of the contract, which was then disputed. [00:07:49] Speaker 04: And in the PowerTech case, which I think is right on point here, the declaratory relief that was sought was only for invalidity and non-infringement. [00:07:59] Speaker 04: There was no separate prayer for a declaration of rights under the contract. [00:08:03] Speaker 04: Nevertheless, the court held that the district court, that the contract was a question of merits, the contract issue, and the district court had the full authority to decide that contract question [00:08:15] Speaker 04: on the merits as part of the merits, and it would not go to jurisdiction. [00:08:19] Speaker 04: So I would ask the court to look at that case. [00:08:23] Speaker 04: I think it's right on point. [00:08:24] Speaker 04: There was no separate prayer for relief in terms of the declaration of rights under the contract. [00:08:30] Speaker 04: And there's no need to do that. [00:08:32] Speaker 04: And there are also a host of cases that say that whether or not a particular item of relief is in the prayer, [00:08:38] Speaker 04: A court has authority to give whatever relief is appropriate. [00:08:41] Speaker 04: We put the issue of confessing. [00:08:43] Speaker 04: Well, that's true. [00:08:43] Speaker 05: I mean, I guess I agree with Judge Dyke. [00:08:45] Speaker 05: It's not a matter of whether the district court had the authority to do that. [00:08:49] Speaker 05: Well, let's concede that she could have done it if she wanted to. [00:08:52] Speaker 05: That doesn't obviate what the requirement is in terms of pleading in order to establish jurisdiction. [00:08:59] Speaker 04: Yes, and as I said, Your Honor. [00:09:00] Speaker 05: I mean, how would, based on what you pled, you were seeking a determination that the patent is invalid. [00:09:07] Speaker 05: That doesn't necessarily have anything to do with the contract rights. [00:09:13] Speaker 04: But it's then the defendant, we'd have no way of knowing that the defendant was going to argue that the contract would require the payment of royalties that were in spite of the invalidation of the patent. [00:09:25] Speaker 02: That came as a big surprise to you? [00:09:27] Speaker 04: Well, there's no way to know. [00:09:29] Speaker 04: There was no discussion of this. [00:09:31] Speaker 02: Why didn't you ask for a declaration about the contract rights? [00:09:34] Speaker 01: You could have moved to amend. [00:09:36] Speaker 01: Why didn't you move to amend the complaint? [00:09:38] Speaker 04: Again, Your Honor, because under the controlling Federal Circuit authority, it was not required. [00:09:42] Speaker 04: I think the law is quite clear. [00:09:44] Speaker 01: Is there some other? [00:09:46] Speaker 01: I mean, I'm just trying to relieve my curiosity. [00:09:48] Speaker 01: Is there some other reason aside from the fact that you didn't feel like you needed to? [00:09:57] Speaker 01: That is why you declined to file a motion to amend the complaint with a second count for a declaration of what your obligations were under the contract if you successfully prove the patent to be invalid? [00:10:09] Speaker 04: No, I would stand on that, that there was no reason to. [00:10:11] Speaker 05: The cases made clear that the court... But it would have made it a lot more complicated, right? [00:10:16] Speaker 05: I mean, there are other parties to the contract that weren't a party to this proceeding. [00:10:20] Speaker 05: If you were to allege [00:10:22] Speaker 05: that the invalidity therefore requires an application of whatever obligation you have under the contract, there are other parties involved. [00:10:30] Speaker 05: Those parties are in England. [00:10:32] Speaker 05: I mean, this is what the district court said in exercising her discretion. [00:10:38] Speaker 05: You've got other parties. [00:10:39] Speaker 05: You've got English law that would have to be applied. [00:10:42] Speaker 05: It's not just an easy result. [00:10:45] Speaker 04: Yes, and this is, again, the same thing that happened in the MedImmune versus Genentech case that the Supreme Court decided and in the power to take... Well, at MedImmune, they also allege... I mean, MedImmune had it all. [00:10:57] Speaker 05: It dealt with contractual rights, right? [00:10:59] Speaker 04: It dealt with contractual rights. [00:11:02] Speaker 05: I mean, that was alleged. [00:11:03] Speaker 05: That was a piece of what they were alleging here. [00:11:06] Speaker 05: And we're talking about your failure to allege or ask for a DJ on the contractual rights. [00:11:13] Speaker 05: But as I said, [00:11:14] Speaker 05: You don't think it would have made things more complicated? [00:11:16] Speaker 05: No, I think the issue is the same, Your Honor, and that is... Would you have had to bring in the English parties, the other parties to the agreement? [00:11:22] Speaker 05: No, I don't believe so, because... So you could seek a declaration as to the contract doesn't include this, yadada, and that would be done without the joiner of the other parties to the agreement? [00:11:33] Speaker 04: Well, to be clear, the contract between AbbVie and MedImmune does not involve any other parties. [00:11:38] Speaker 04: It's solely involved Abbey and MedImmune. [00:11:41] Speaker 02: But wait, on the patent and validity question, the British entity is interested because it's the owner of the patent. [00:11:48] Speaker 02: And if we reject your argument that MedImmune had all substantial rights in the patent, then the British entity was a necessary party, right? [00:12:01] Speaker 04: If you reject that argument, yes. [00:12:03] Speaker 04: Although, as we argue in the brief, even if that's the case, [00:12:06] Speaker 04: under the indispensability test, there would be no requirement to join MRC because they have already conveyed the entire right to defend a validity challenge and to bring infringement actions to Metamia. [00:12:24] Speaker 05: But that's not the same right as to enforce the contractual obligation to pay the royalty amounts at a certain date. [00:12:31] Speaker 05: Isn't that different? [00:12:33] Speaker 05: than the obligation of the right to defend a patent, the validity of a patent? [00:12:37] Speaker 04: I want to be clear on this, Your Honor. [00:12:39] Speaker 04: There are no other parties to that contract besides the ones in this court. [00:12:43] Speaker 04: MedImmune and ABVI are the parties that have signed that contract. [00:12:48] Speaker 04: I think, Your Honor, it's thinking of the grant to MedImmune from MRC of license rights, which would determine what rights they have, MedImmune does, to bring suit or to defend the patent with respect to [00:13:04] Speaker 04: validity claim, but with respect to any contract claim, the parties are here before the court. [00:13:09] Speaker 05: Well, the district court judge says that A7, the property rights of MRC, an arm of the British government, an entity outside of this case, would also be implicated. [00:13:20] Speaker 05: And what she's talking about implicated the contract rights. [00:13:25] Speaker 05: Is that wrong? [00:13:26] Speaker 04: She's talking, I'm quite sure, about the license agreement between MRC and MedImmune or CAT. [00:13:32] Speaker 04: They are not a party to the license between Kat and Abby. [00:13:38] Speaker 04: So, and when she says their rights are implicated, she gave no rationale for that, no explanation for why they would be, no reasoning as to, since they've already contracted to give all rights to enforce the patent and to defend against challenges to metamune and made it even outside the field of use. [00:13:57] Speaker 02: Well, if you were right about that, perhaps, [00:14:00] Speaker 02: seems to me that's highly questionable whether there was a transfer of all substantial rights or the Med Immune had the obligation and sole right to defend. [00:14:10] Speaker 02: I mean, I've read that part of the agreement. [00:14:12] Speaker 02: I don't necessarily see that you're right about that. [00:14:16] Speaker 02: And if you're not right about that, then the British entity wouldn't be a necessary party here. [00:14:22] Speaker 02: And you didn't even try to join them, huh? [00:14:27] Speaker 04: No, because [00:14:28] Speaker 04: We made the judgment, A, that they were not susceptible to suit, and B, more importantly, that it was not required on their consent. [00:14:35] Speaker 02: But they're susceptible to suit unless they assert that they're a sovereign unit, right? [00:14:41] Speaker 04: Yeah. [00:14:41] Speaker 04: But we made that judgment that they were not required. [00:14:45] Speaker 04: They were not necessary, and they're not indispensable for the reasons we set out. [00:14:49] Speaker 04: And I'd also say, Your Honor, that MedImmune brought the motion to dismiss for failure to join a party. [00:14:56] Speaker 04: So it was really their burden to show [00:14:59] Speaker 04: that MRC was necessary or indispensable. [00:15:03] Speaker 04: We asserted that they had all rights. [00:15:06] Speaker 04: And so it then became their burden. [00:15:08] Speaker 04: And they didn't even put the agreement before the district court. [00:15:11] Speaker 04: And the district court made no finding whatsoever as to how MRC would be prejudiced, why MRC would be prejudiced, why they hadn't already given up any ability to make that argument by transferring all the rights. [00:15:27] Speaker 04: And I think the agreement is clear. [00:15:29] Speaker 04: It clearly states that they have the right to, that MedImmune has the right to bring all infringement actions, whether or not in the field of use that they are practicing. [00:15:41] Speaker 04: So any infringement action, they get to keep all the proceeds. [00:15:46] Speaker 04: MRC has no right to participate. [00:15:49] Speaker 05: play this out, how from your side this was going to play out, you were going to get a determination by the district court exclusively on the validity question. [00:15:58] Speaker 05: And let's assume it went your way and the judge concluded that the patent is invalid. [00:16:03] Speaker 05: You would then refuse to pay whatever amounts come due for that last six months period. [00:16:11] Speaker 05: then presumably if they have a difference with you in terms of what you're obligated to do under the contract, whether expiration is equivalent to validity or whatever, you would envision that they would then go in and sue you in the English courts for a violation of the contract? [00:16:31] Speaker 05: Is that the way? [00:16:32] Speaker 05: I'm just trying to hypothesize how this is going to play out. [00:16:35] Speaker 04: So not quite, Your Honor. [00:16:37] Speaker 04: I think the way it would work is that if they raise [00:16:40] Speaker 04: in the district court, which they already have, the issue that the agreement requires payment regardless of the validity of the patent. [00:16:49] Speaker 04: That under the PowerTech case, and regardless of any specific request for prayer for relief, becomes an issue, a merits issue, not a jurisdictional issue that the district court... But PowerTech didn't address the question. [00:17:04] Speaker 02: of whether a district court in the exercise its discretion can decline to entertain a declaratory judgment action which isn't going to resolve the whole controversy. [00:17:14] Speaker 02: And in Dave Farma, which apparently you're not familiar with, we said that where there are two issues that would need to be resolved for the declaratory judgment plaintiff to prevail, that if you bring a suit to resolve only one of them, [00:17:33] Speaker 02: suggests that you need to show that the other issue is being adjudicated in another case, which is not the situation here. [00:17:42] Speaker 02: So perhaps you could avoid the problem of not bringing the contract issue into this case by simultaneously maintaining a suit in the British courts for a declaration of whether you'd have to pay if the patent were invalid, but you haven't done that either. [00:18:00] Speaker 02: So you're asking to do this piecemeal. [00:18:03] Speaker 02: And there are plenty of cases suggesting that declaratory judgments are not appropriate where it would result in piecemeal litigation. [00:18:13] Speaker 04: Again, Your Honor, my responsibility, first of all, I don't think that bringing an action in the British courts, the telecourts, just in case the US court decides this patent invalid, but haven't done that, haven't done so, [00:18:26] Speaker 04: you should decide that we don't have an obligation. [00:18:29] Speaker 04: I don't think that that kind of theoretical advisory action would really have been productive at all. [00:18:35] Speaker 05: That's right. [00:18:35] Speaker 05: Yes. [00:18:36] Speaker 05: And therefore you should have brought it here and you only answered us about why you didn't bring it as part of your DJ is that, well, if that was the case, [00:18:45] Speaker 05: if they felt that way, they could have raised it as a defense. [00:18:49] Speaker 05: What if they didn't raise it as a defense? [00:18:50] Speaker 05: So the judge exclusively adjudicates only the validity issue, and we've still got this contractual dispute out there that's not resolved by this litigation, which is exactly what we're not supposed to be doing here in D.J. [00:19:04] Speaker 04: So first of all, Your Honor, they did raise it as a defense. [00:19:07] Speaker 04: They raised that in the lower court, and they've raised that here. [00:19:11] Speaker 04: And when that happens, [00:19:14] Speaker 04: The authority that we cited says that that issue is properly before the district court and can be decided. [00:19:20] Speaker 04: Now, if they hadn't raised it, I don't know. [00:19:22] Speaker 04: I don't know what would have happened. [00:19:23] Speaker 04: If they hadn't raised it, maybe it would have been a compulsory counterclaim. [00:19:27] Speaker 04: And by not raising it, they've waived it. [00:19:29] Speaker 04: That's possible. [00:19:30] Speaker 04: But they did raise it. [00:19:32] Speaker 04: And so it was probably before the district court. [00:19:36] Speaker 04: The district court clearly had the authority to decide it. [00:19:39] Speaker 04: And it's properly before the court now. [00:19:41] Speaker 02: What was their defense? [00:19:43] Speaker 02: What was the defense? [00:19:44] Speaker 04: They argued that under the contract, we'd have to pay royalties regardless of the patent's validity. [00:19:53] Speaker 02: As a defense? [00:19:54] Speaker 02: Where do I find that? [00:19:56] Speaker 04: That was in their motion to dismiss. [00:20:00] Speaker 04: It was in their motion to dismiss. [00:20:02] Speaker 02: And it's in this brief as well. [00:20:03] Speaker 02: They said there's a motion to dismiss because this wouldn't resolve the whole controversy, presumably, right? [00:20:09] Speaker 04: They argued, they very clearly argued, [00:20:12] Speaker 04: in the motion to dismiss and on this appeal, that under the proper interpretation of the contract, that we would have to pay the royalty. [00:20:21] Speaker 05: And that's their argument as to why there's no DJ jurisdiction, because it doesn't resolve the entire controversy. [00:20:27] Speaker 05: That doesn't mean they brought that issue into the case for square for the district court to adjudicate. [00:20:32] Speaker 05: They were using that, right? [00:20:34] Speaker 05: I mean, that's what you're telling me. [00:20:35] Speaker 05: I'm not exactly sure what. [00:20:38] Speaker 05: OK, so they brought it in. [00:20:41] Speaker 05: for purposes of establishing that there was no jurisdiction, not for purposes of bringing it in to an issue that needs to be resolved in this case. [00:20:49] Speaker 04: Well, no. [00:20:50] Speaker 04: We alleged in the complaint that our obligation to pay royalties would not, if the patent was invalidated, would not continue after January. [00:21:00] Speaker 04: And they didn't answer the complaint. [00:21:02] Speaker 04: Obviously, they filed a motion to dismiss. [00:21:04] Speaker 02: Did they ask the district court to determine that there was no obligation under the contract? [00:21:10] Speaker 02: even if the patent was invalid. [00:21:12] Speaker 04: No, they asserted it. [00:21:12] Speaker 04: They moved to dismiss the case. [00:21:14] Speaker 02: They didn't ask the district court to resolve the question. [00:21:17] Speaker 04: No, they moved to dismiss it, Your Honor. [00:21:19] Speaker 04: They didn't ask the court to resolve it. [00:21:20] Speaker 04: They moved to dismiss. [00:21:22] Speaker 04: And it was just exactly what happened in PowerTech. [00:21:25] Speaker 04: And Your Honor said the difference between this case and PowerTech was the fact that here the court used its discretion to decline as opposed to that case where it was a question of whether there was jurisdiction [00:21:39] Speaker 02: And my response to that is that the Capo versus Diotech... Well, my recollection, and I have some familiarity with PowerTech, since I wrote the opinion, is that this issue that we're talking about now did not come up there. [00:21:54] Speaker 02: And also that in PowerTech, the contract said you don't have to pay if the patent's invalid or expires. [00:22:01] Speaker 04: I understand your honor wrote the opinion, and I'm pretty confident of this, that this exact argument was raised by the [00:22:08] Speaker 04: defendant in PowerTech. [00:22:10] Speaker 04: They said that the contract doesn't require us to pay royalties. [00:22:16] Speaker 04: It requires payment of royalties even if the patent isn't validated. [00:22:20] Speaker 04: And therefore, there's no jurisdiction. [00:22:23] Speaker 04: And the court rejected that argument, said that is a merits argument. [00:22:27] Speaker 02: And the district court- We didn't address the question of whether the failure to ask for a declaratory judgment on that issue made it [00:22:36] Speaker 02: inappropriate to render a declaratory judgment on the invalidity? [00:22:40] Speaker 04: I think if the court looks at the opinion, you'll see that the declaratory relief sought in that case was solely limited to a declaration of the prayer, to a declaration of non-infringement in invalidity. [00:22:51] Speaker 02: But where did we address the issue that we're talking about this morning in power text? [00:22:56] Speaker 04: I think the issue was addressed in the court's finding, holding, that the district court had the ability to decide [00:23:05] Speaker 04: That issue that was raised by the defendant, that the district court had that authority to decide that as part of the underlying merits of the dispute, despite the absence of a specific prayer for relief, asking by the plaintiff, asking for a declaration of rights. [00:23:24] Speaker 04: I believe the case is thoroughly on point with respect to that issue. [00:23:29] Speaker 04: And that's in part what we relied upon in fashioning our complaint in this case. [00:23:34] Speaker 05: OK, we're way beyond our time. [00:23:37] Speaker 05: Thank you. [00:23:38] Speaker 05: Let's hear from the other side. [00:23:45] Speaker 03: Good morning, Your Honors. [00:23:47] Speaker 03: David Burrell from MedImmune. [00:23:49] Speaker 03: Obviously, far be it from me to tell you what PowerTech says, having not written the opinion or participated in it. [00:23:55] Speaker 01: It's not as fresh in my mind. [00:23:57] Speaker 03: OK, here. [00:23:59] Speaker 03: Let me read from page 1308 of the PowerTech decision. [00:24:03] Speaker 03: Like the petitioner in MedImmune, PTI, PowerTech, is seeking to define its rights and obligations under its contracts with Tessera. [00:24:12] Speaker 03: So the court assumed in PowerTech that the DJ plaintiff was asking for a declaration of its rights and obligations under the contract. [00:24:22] Speaker 03: That was explicitly done in the MedImmune case, as Judge Prost observed. [00:24:25] Speaker 03: Count one of the Genentech MedImmune complaint, which Justice Scalia looked at. [00:24:30] Speaker 05: Let's stick with PowerTech. [00:24:32] Speaker 05: Sure. [00:24:32] Speaker 05: Fine. [00:24:33] Speaker 03: Sorry, it's at 1308. [00:24:34] Speaker 03: In the right hand column, about 3 quarters of the way down. [00:24:38] Speaker 03: OK, I've got a different version. [00:24:39] Speaker 03: I'm sorry. [00:24:41] Speaker 03: It's right after this. [00:24:42] Speaker 05: Under which section is that? [00:24:43] Speaker 03: Sure, it's B. It's labeled B. And then there's a three. [00:24:47] Speaker 03: And then it's right after the citation of the Altvator case from the Supreme Court. [00:24:54] Speaker 03: And there follows the sentence that I read into the record, which reflects the understanding of the court. [00:25:01] Speaker 03: in that case and the presumption of the court in that case, that the D.J. [00:25:05] Speaker 03: plaintiff was seeking to define its rights and obligations under the contract. [00:25:10] Speaker 03: That's plainly not done here, as the court has observed, and even a perfunctory review of the record reflects at A63. [00:25:17] Speaker 03: There's no count for a declaration of contractual rights. [00:25:21] Speaker 03: There's not even a count for [00:25:23] Speaker 03: revocation of the patent or cancellation of the patent. [00:25:26] Speaker 03: There's no prayer for relief. [00:25:28] Speaker 05: Okay, let me move you off to a different line, which is there's some things that trouble me about what's going down in this case. [00:25:35] Speaker 05: One of them is that your principal argument is that they're not practicing the patent. [00:25:40] Speaker 05: Let's assume we reject that as being a basis. [00:25:43] Speaker 05: It seems to me, and what do we do with the fact that the [00:25:47] Speaker 05: district court agreed with that, if we disagree with her, that that should be a factor or a determinative factor here. [00:25:53] Speaker 03: So let me just leave that aside and assume that you disagree with us for that purpose. [00:25:58] Speaker 03: You still have the piecemeal litigation problem that is identified throughout the Supreme Court's jurisprudence on the D.J. [00:26:04] Speaker 03: Act, starting with the Kauffman v. Breeze case and the Calderon case and even the MedImmune Genentech case. [00:26:10] Speaker 05: But would that be considered under an abuse of discretion? [00:26:16] Speaker 05: under her discretion that she had discretion given the piecemeal nature of the litigation to say no. [00:26:21] Speaker 05: Yes. [00:26:22] Speaker 05: Okay. [00:26:22] Speaker 05: The problem I have is if you look at A7, which there's two paragraphs, unless I'm missing something, this is the district court opinion, I'm sorry. [00:26:32] Speaker 05: It seems to me this is the sum and substance of her analysis on dismissal on exercising her discretion. [00:26:40] Speaker 05: Is it a she? [00:26:41] Speaker 05: I don't remember. [00:26:42] Speaker 05: And you've got these two paragraphs. [00:26:45] Speaker 05: And except for one sentence that does talk about piecemeal, the requested invalidation of the patent would not end the dispute between the parties. [00:26:55] Speaker 05: It seems almost like she thought she didn't have the authority to apply English law. [00:27:05] Speaker 05: I mean, look at what she said here and tell me what your reading is, what her exercise of discretion consisted of. [00:27:13] Speaker 03: I'd be happy to. [00:27:13] Speaker 03: I don't read anywhere in the district court's opinion the view that it is unable or not allowed to interpret a contract under UK law. [00:27:23] Speaker 03: It clearly is permitted to do that. [00:27:25] Speaker 03: But the question is whether it is required to do that in order to exercise its discretion [00:27:31] Speaker 03: whether to entertain DJ jurisdiction. [00:27:33] Speaker 03: The Supreme Court has been clear all along that it's not obligatory and the courts should be circumspect in asserting DJ jurisdiction. [00:27:41] Speaker 02: So you're suggesting that even if they had actually sought a declaratory judgment on both the invalidity issue and the contract issue, that there would have been no declaratory judgment? [00:27:54] Speaker 02: jurisdiction? [00:27:56] Speaker 03: Yes, I think that for two reasons. [00:27:59] Speaker 03: First, you still have the problem of piecemeal litigation. [00:28:02] Speaker 03: Even if they had asked for a declaration of contractual rights, there's no basis to believe that that declaration of contractual rights would have been enforceable in the United Kingdom, which governs the analysis of this contract. [00:28:15] Speaker 03: So we still [00:28:16] Speaker 03: would have brought another lawsuit in the United Kingdom. [00:28:19] Speaker 02: Do you count they don't follow collateral estoppel principles based on adjudication in a foreign court? [00:28:25] Speaker 03: The crane case that we cite at page 37 of our brief out of the Second Circuit from 2009 makes this clear, where the DJ plaintiff sought a declaration of its rights under foreign law. [00:28:35] Speaker 03: And citing the restatement of foreign law, section 481, the Second Circuit observed that unlike [00:28:41] Speaker 03: a typical U.S. [00:28:42] Speaker 03: case where we have full faith and credit, a declaration of rights under foreign law is not entitled necessarily to enforcement in a foreign court, especially where it involves a subject of foreign law, here UK contractual law. [00:28:55] Speaker 03: So there's no basis. [00:28:57] Speaker 03: ABVI has provided no basis whatsoever to suggest that even if it had sought and obtained that declaration from a US court about what the UK contract means, that that would have been relevant or enforceable where this contract is governed in the United Kingdom. [00:29:10] Speaker 03: So the idea of piecemeal litigation would not have been extinguished. [00:29:14] Speaker 02: It seems to me to be not helpful to you, but helpful to them. [00:29:17] Speaker 02: In other words, they're saying they could say, well, of course we didn't seek a declaration here because the British courts wouldn't give it full faith and credit. [00:29:26] Speaker 02: we had to wait to file the contract issue in the British courts. [00:29:31] Speaker 02: And so it's appropriate for us not to have sought that here. [00:29:34] Speaker 03: As Your Honor observed, first of all, they wouldn't have to wait in order to file that action in the United Kingdom. [00:29:40] Speaker 03: There's again no basis to say that they couldn't have filed an action in the United Kingdom years ago declaring their rights as to when their obligation to pay royalties is extinguished. [00:29:49] Speaker 03: But I think more fundamentally [00:29:51] Speaker 05: The point under all of the Supreme Court cases is whether there is piecemeal litigation and piecemeal litigation is disfavored, but not having any avenue in which to pursue your claims is also a principle that's disfavored. [00:30:04] Speaker 05: So you keep saying they could have gone to the British court. [00:30:08] Speaker 05: How could they have gone to the British court? [00:30:10] Speaker 05: The British court doesn't have the authority of the jurisdiction to determine whether or not a patent is valid or invalid. [00:30:17] Speaker 05: So they, [00:30:18] Speaker 05: going to the British court would have been useless. [00:30:20] Speaker 05: The court would say, well, what do you mean? [00:30:22] Speaker 05: You know, the patent hasn't expired. [00:30:25] Speaker 05: And they couldn't make arguments, well, the patent isn't valid anyway in the British court. [00:30:29] Speaker 05: So they couldn't bring this issue in the British court, right? [00:30:32] Speaker 03: I disagree. [00:30:32] Speaker 03: I think they could have sought a declaration in the British court about what their contractual rights and obligations are so that they could have asked for a declaration. [00:30:39] Speaker 05: Hypothetically, is it advisory opinion? [00:30:41] Speaker 05: We've got a valid patent here and you want to [00:30:44] Speaker 03: What what what would the question be the question would be if we get a judgment of invalidity? [00:30:50] Speaker 03: are our rights under this contract. [00:30:54] Speaker 05: They're going to go to court and say, hypothetically, if we manage to get into a district court in the United States, get that district court to agree we have jurisdiction, prevail before the district court that the patent is invalid. [00:31:07] Speaker 05: If all of that happens, British court, you tell me what the contract means. [00:31:11] Speaker 05: You think that's a live case in controversy? [00:31:14] Speaker 03: There is no live case or controversy requirement in the United Kingdom in the first instance. [00:31:18] Speaker 03: The second answer is they didn't even try. [00:31:20] Speaker 03: So we don't really know the answer to that question. [00:31:22] Speaker 03: This is a contractual dispute governed by UK law. [00:31:25] Speaker 05: Well, let's assume that we think that that's more likely than not the outcome. [00:31:30] Speaker 05: i.e. [00:31:31] Speaker 05: that the British court would not have entertained that dispute. [00:31:35] Speaker 05: Just humor me. [00:31:36] Speaker 05: Say we conclude, you realize it's a possibility. [00:31:39] Speaker 05: So let's conclude that it's at least likely. [00:31:42] Speaker 05: So where are they left in terms of where their rights exist? [00:31:46] Speaker 05: Where is the proper venue? [00:31:48] Speaker 05: If they can't bring it in the British court, because the British court is going to say, well, we don't even know if the patent's invalid or not invalid. [00:31:54] Speaker 05: That hasn't been adjudicated yet. [00:31:56] Speaker 05: We don't have anything before us. [00:31:58] Speaker 05: What do they do that? [00:31:59] Speaker 03: Well, one thing they could do is do what Judge Dyke suggested a few minutes ago, which is file the two cases concurrently. [00:32:05] Speaker 03: That they haven't done either. [00:32:07] Speaker 05: File a case in Britain and a case here concurrently. [00:32:11] Speaker 05: Sure. [00:32:12] Speaker 05: But how does that defeat? [00:32:13] Speaker 05: You're saying this is all driven by piecemeal litigation and you're saying [00:32:18] Speaker 05: invite piecemeal litigation. [00:32:20] Speaker 05: How does that obviate the problem of piecemeal litigation? [00:32:23] Speaker 05: The district court is then going to say the same thing she did here, which is, this is piecemeal. [00:32:26] Speaker 05: I'm not going to do it. [00:32:27] Speaker 03: Well, they do have a pending dispute in that case, albeit before a different court. [00:32:31] Speaker 05: uh... and the district court could exercise its jurisdiction to reject it the district court you're right could reject it as a matter of discretion and if she does that they've got no place to go to seek relief under this contract well i think as if we can as if we assume that the british court is not going to entertain a hypothetical argument where the patent is not has not been declared invalid well [00:32:55] Speaker 03: Again, I don't think there's any basis in the record to conclude that. [00:32:58] Speaker 03: The only case they cite for that proposition is the Thomas Brown case. [00:33:01] Speaker 03: And if you look at that case, it's at A830 of the appendix. [00:33:05] Speaker 03: The court in the United Kingdom declines to provide a declaration because the parties have no dispute. [00:33:12] Speaker 03: And the parties are in agreement. [00:33:13] Speaker 03: So it says, I'm not going to provide a declaration since there's no dispute. [00:33:16] Speaker 05: So if they go into Great Britain next week and file a suit for a declaration that if hypothetically the patent were to be declared invalid, they would or would not have an obligation under the contract to pay the last six months, you would not argue in the dispute that there's no jurisdiction or that that's not properly before the court. [00:33:39] Speaker 03: Again, they haven't filed that suit. [00:33:41] Speaker 03: I don't know what it would look like. [00:33:42] Speaker 03: But that would be up to the UK court to decide whether it would entertain that dispute. [00:33:47] Speaker 03: And if it would, we would, of course, argue our contractual interpretation before the proper court, before the UK court, about what this contract means and whether a declaration of invalidity would end up extinguishing their obligation to pay royalties or not and what the timing of that would be. [00:34:02] Speaker 02: But all of those things- Would you oppose if they had brought or did bring in action the UK courts [00:34:09] Speaker 02: for a declaration as to what the contract means, did you say that that was not appropriate for the British courts to pass on that? [00:34:18] Speaker 03: If they had done that in a timely way, I don't see that we would have disputed the ability of the UK court to provide an interpretation of a contract under UK law. [00:34:31] Speaker 03: That's the proper venue for this contract to be interpreted. [00:34:36] Speaker 03: And the idea that a district court here in the United States can interpret a UK contract does not mean that it must interpret a UK contract. [00:34:44] Speaker 03: They cite not a shred of case law in support of that authority. [00:34:48] Speaker 03: And we can't forget the second basis for the district court's discretionary decision not to entertain jurisdiction in this case. [00:34:56] Speaker 03: And that is the rights of a party that was not before the court. [00:35:02] Speaker 03: observed that MRC was not a party to this case. [00:35:04] Speaker 03: They were never asked to join this case. [00:35:06] Speaker 05: But your friend says they're not a party to this agreement. [00:35:08] Speaker 05: Is that correct or incorrect? [00:35:10] Speaker 03: Right. [00:35:10] Speaker 03: It's not a matter of them being party to the agreement between AbbVie and Medimune. [00:35:13] Speaker 03: It's a matter of them being a party to the case in which a declaration of invalidity of their patent is being asserted and potentially adjudicated. [00:35:22] Speaker 03: And under this court's case law, that simply can't be done. [00:35:25] Speaker 03: They haven't transferred all substantial rights by way of a field of use license to the exclusive licensee. [00:35:32] Speaker 03: and under the Supreme Court's case law. [00:35:33] Speaker 01: Well, the Kister Court didn't really do any of that analysis, right? [00:35:37] Speaker 01: Correct. [00:35:37] Speaker 01: Whether all substantial rights were transferred and in addition never did any Rule 19 analysis. [00:35:43] Speaker 01: So this observation by the judge below that MRC and other patent owners were not joined to this complaint, it feels incomplete because neither a Rule 19 or a substantial [00:35:57] Speaker 01: transfer of rights inquiry was ever made by the judge when she made the observation that MRC didn't happen to be there. [00:36:03] Speaker 03: And that was the precise argument advanced by AbbVie in order to say that there was a legal error below, that there was no Rule 19 analysis conducted by the district court. [00:36:12] Speaker 03: The Supreme Court has said otherwise. [00:36:14] Speaker 03: The Supreme Court in the Abbott case indicates that a Rule 19 analysis is not required. [00:36:20] Speaker 03: It's not necessary in order to dismiss discretionarily [00:36:24] Speaker 03: for lack of subject matter jurisdiction in the declaratory judgment context. [00:36:28] Speaker 03: And this court in BP Chemicals said the same thing. [00:36:31] Speaker 03: A party need not be necessary and indispensable in order for a district court not to invoke DJ jurisdiction. [00:36:37] Speaker 03: They just have to be interested. [00:36:38] Speaker 03: They have to be desirable. [00:36:40] Speaker 03: And on this record, there can be no doubt. [00:36:42] Speaker 02: I'm not sure about that. [00:36:43] Speaker 02: I've read Abbott. [00:36:44] Speaker 02: I've read these guys. [00:36:45] Speaker 02: I'm not sure that's right. [00:36:46] Speaker 03: Well, I don't read Abbott in their reply brief even to contest that proposition. [00:36:51] Speaker 03: I think they basically retreat and argue that even if the district court wasn't required to conduct a Rule 19 analysis, there still must be some concern about the missing party. [00:37:02] Speaker 03: And I think that standard is easily satisfied given that the MRC party that's missing has rights to the patent that remain. [00:37:10] Speaker 03: It can practice the patent. [00:37:12] Speaker 03: It has full rights to single chain variable regions that are within the scope of the claims of this patent and is a foreign sovereign entitled [00:37:20] Speaker 03: to deference from this court. [00:37:22] Speaker 03: So the standard of concerns easily is met. [00:37:27] Speaker 03: The idea of whether Rule 19 formal analysis needs to be undertaken, you can read Abbott. [00:37:34] Speaker 03: And if you disagree with the reading of Abbott, obviously, that's the court's prerogative. [00:37:39] Speaker 03: One casual sentence in Abbott. [00:37:42] Speaker 03: But followed, again, in BP, where no Rule 19 analysis was undertaken and the discretionary dismissal was appropriate. [00:37:50] Speaker 03: That seems to be the law as understood by this court. [00:37:55] Speaker 03: But even were a Rule 19 analysis somehow required, this court has articulated repeatedly what it's called a clear rule that a field of use licensee does not have all substantial rights to the patent. [00:38:07] Speaker 03: And it's no answer. [00:38:09] Speaker 02: Yeah, but we don't have a clear rule that if the British company is a necessary party, that if it can't be joined, [00:38:18] Speaker 02: it's indispensable. [00:38:21] Speaker 03: Well, that is similar to what happens in the A123 case. [00:38:26] Speaker 03: And also in Alfred Mann, this court held that a patent owner that has not conveyed all substantial rights is necessarily both a necessary and indispensable party, so that there's no separate analysis required with respect to the indispensability of MRC, rather [00:38:44] Speaker 03: They haven't conveyed all rights. [00:38:45] Speaker 03: They've simply conveyed a field of use license. [00:38:47] Speaker 03: And I think more important, ABVI's response to this is to say, well, they just conveyed a field of use license, but they've given all the litigation rights to metamines. [00:38:57] Speaker 03: So you can ignore what you've called the clear rule in the Alex South case about a field of use licensee not having all substantial rights. [00:39:05] Speaker 03: In the A123 case, this court held that a field of use licensee in almost identical circumstances to the case at bar [00:39:13] Speaker 03: did not have all substantial rights without even knowing what litigation rights it had because it was irrelevant. [00:39:18] Speaker 03: The contract was requested potentially in discovery and the district court and federal circuit had no interest in the contract because a field of use licensee does not have all rights and must be joined with the patent owner, in this case MRC, and they didn't even try in this case to join MRC. [00:39:35] Speaker 03: We don't know whether they would have waived sovereign immunity. [00:39:38] Speaker 03: We don't know whether they would have waived personal jurisdiction. [00:39:40] Speaker 03: ABVI never even tried. [00:39:43] Speaker 03: Unless the court has further questions, I'll rest. [00:39:46] Speaker 03: Thank you. [00:39:59] Speaker 04: Very briefly, Your Honor, there's a lot of talk about abusive discretion, and I want to address that briefly. [00:40:04] Speaker 04: This court made clear in the Capo versus Diaptics case that there are substantial limits on the discretion that can be exercised by the [00:40:11] Speaker 04: district court in declining to exercise declaratory relief. [00:40:15] Speaker 04: There must be a sound basis. [00:40:17] Speaker 04: It must be well-founded, explained, and reasoned, and it must be consistent with the purposes of the Declaratory Relief Act. [00:40:24] Speaker 04: Now here, the court's basis for declining were not well-founded. [00:40:29] Speaker 04: The court talked about the rights of a party being implicated with no analysis of what those rights were and why in any way they'd be prejudiced. [00:40:37] Speaker 04: And the fact is they would not be prejudiced because [00:40:40] Speaker 04: Despite the fact that they reserve some rights within a field of use, those rights did not include the right to enforce the patent or to defend against validity. [00:40:49] Speaker 04: Those rights were given completely to MedImmune. [00:40:52] Speaker 04: And there's not a single case cited by MedImmune here in which a licensee was given the sole right to enforce and defend the patent and was found to have to still join the licensor. [00:41:04] Speaker 04: And none of the field of use cases that they cite are relevant. [00:41:07] Speaker 04: The other point I want to make [00:41:09] Speaker 04: And one of the other reasons the discretion was abused here is what Judge Prost, you alluded to, which is this is a case where the exercise of discretion by the district court effectively denies my client of any remedy. [00:41:21] Speaker 04: There is no other court that can decide the validity of this patent. [00:41:25] Speaker 04: And so by exercising this discretion, we've effectively been denied of a remedy. [00:41:31] Speaker 04: And I think the COPPA versus Dioptics and other cases say that's a very important factor in deciding whether there is [00:41:38] Speaker 04: abuse of discretion by the district court. [00:41:41] Speaker 04: The last point I want to make, Your Honor, is again in power tech. [00:41:44] Speaker 04: And I want to belabor this, but I do think that the opinion makes expressly clear that the only declaration that was sought there was a declaration that the products did not infringe in count one and that the patent was invalid in count two. [00:42:03] Speaker 04: And the court went on to conclude that the merits of the contract dispute were in front of the court [00:42:08] Speaker 04: And they were merits issue that the district court could decide, which did not impact the court's jurisdiction. [00:42:15] Speaker 04: So I understand, Your Honor, saying that it's true that here there was an exercise of discretion, which was not specifically addressed. [00:42:23] Speaker 04: But I think all the factors that I've talked about in terms of how a district court has to exercise its discretion. [00:42:29] Speaker 01: Was there a motion to dismiss in that case due to piecemeal litigation? [00:42:34] Speaker 04: There was a motion to dismiss for lack of jurisdiction. [00:42:36] Speaker 01: But not on account of? [00:42:39] Speaker 01: some allegation that the complaint was incomplete in asking for entire relief of a larger dispute between parties. [00:42:48] Speaker 04: My understanding is the argument was made that the contract required the payment of royalties regardless of validity. [00:42:56] Speaker 04: And that argument was addressed by the court. [00:42:59] Speaker 04: So specifically, was there a specific claim along the lines that Your Honor is asking about? [00:43:04] Speaker 04: That's not revealed. [00:43:06] Speaker 04: But I think the issue was before the court and decided. [00:43:09] Speaker 04: Thank you. [00:43:12] Speaker 04: That concludes our proceedings this morning.