Voda v. Cordis and the New Score on Supplemental Jurisdiction over Foreign Patent Claims: Comity -1, Judicial Discretion - 0
By Chris Igielski
These days, when two American companies lock horns over a patented product and an accused infringing product, globalization may impart new international complexity to this old form of “homegrown” dispute. It is no longer fanciful to query: if a well-heeled American company willfully infringes an American inventor’s U.S. and foreign counterpart patents, by selling its infringing product domestically and internationally,1 must the American inventor bring separate suits before each foreign tribunal to obtain a whole remedy?
In fact, this was the question before the Federal Circuit, posed by cardiologist Dr. Jan Voda. He invented an angioplasty guide catheter, and sought adjudication in federal district court of his domestic and foreign infringement claims against his U.S. rival, Cordis,2 a subsidiary of the New Jersey based, Johnson & Johnson.3
On February 1, 2007, after accepting interlocutory review on the pleadings from the Federal District Court of Western Oklahoma, a panel majority of the Federal Circuit ruled in Voda v. Cordis Corp., 476 F.3d 887 (Fed. Cir.2007), that the district court abused discretion by allowing Dr. Voda to add foreign infringement claims to his U.S. patent infringement case against Cordis.4
The Voda court announced that the proper exercise of judicial discretion demands a case-specific analysis, concerning possible interference with obligations under patent treaties, and consideration of the important values of judicial economy, convenience, fairness, and comity.5 Then, taking a giant step further, Voda also held that comity and the principle of avoiding unreasonable interference with the authority of other sovereigns, dictated that the district court must decline the exercise of supplemental jurisdiction in the case.6 The opinion was a welcomed answer to the urgings of the patent community, who oppose the consolidation of multinational infringement claims into a single federal case. The American Intellectual Property Law Association, (“AIPLA”), and the Intellectual Property Owners Association (“IPOA”), each filed Amicus Curiae briefs ardently in support of Cordis. It should be noted that among the forty-five large U.S. multinational corporations comprising the board of IPOA, one seat is held by an executive from Johnson & Johnson.7
Prior to Voda, it appeared that federal district courts could, within their discretion, exercise federal supplemental jurisdiction under 28 U.S.C. §1367, to hear foreign patent disputes, which were so closely related to claims in the action within original jurisdiction as to form part of the “same case or controversy.”8 In United Mine Workers of America v. Gibbs, the U.S. Supreme Court further explained that the requisite relatedness for supplemental jurisdiction was present if the claims derived from a “common nucleus of operative fact,”9 and that when judicial power exists to hear a non-federal claim, the exercise of jurisdiction of that claim is discretionary with the court.10
Even the Federal Circuit previously visited the question of extending supplemental jurisdiction to foreign patent claims, more than a dozen years ago, in Mars v. Kabushiki-Kaisha Nippon Conlux, 24 F.3d 1368 (Fed. Cir. 1994). While Mars denied jurisdiction over the foreign patents at issue in the case, the opinion did not foreclose jurisdiction per se.11 In fact, Mars created a structure for extending jurisdiction to foreign patent claims in appropriate cases. Mars augmented the “common nucleus” test, coining four “Mars factors,” which compare the differences between: (1) the respective patents; (2) the accused devices; (3) the alleged acts; and (4) the governing laws.12
By all accounts, the facts in Dr. Voda’s case offered much better congruity among the Mars Factors than had been present under the facts in Mars itself. Voda involved a single accused catheter, manufactured by Cordis and sold internationally.13 All of Dr. Voda’s foreign patents shared a common lineage with a single PCT application, which in turn was based upon the original U.S. patent application.14 The four European patents were identical, but for translation,15 and all of these documents shared the same drawing, and at least a subset of the U.S. Patent’s specification.16 In its analysis, the district court found that Voda was unlike Mars, which involved Japanese patents comprising different claims, directed to different devices and processes from the U.S. patents of original jurisdiction before the court.17 Instead, the district court likened the facts of Voda to Ortman v. Stanray Corp., 371 F.2d 154 (7th Cir. 1967), an opinion predating the Federal Circuit, wherein jurisdiction over foreign counterpart patents was upheld at the pleadings stage between U.S. parties embroiled in an international patent licensing and infringement dispute.18
III. OPINION, DISSENT AND ANALYSIS
A. Judge Gajarsa’s Majority Opinion
In analyzing Voda, the Federal Circuit took a very different approach from its earlier decision in Mars. First, the court recast the Mars Factors as “neither an exhaustive list of the factors district courts may consider under 1367(a) or the necessary conditions for a finding of no supplemental jurisdiction.”19 Moreover, the majority dodged the predicate question of whether Dr. Voda’s foreign patent claims derived from the common nucleus of operative fact in the case, such that jurisdiction could exist in the first place.20 Instead, the court refocused the inquiry from whether the district court “could” extend jurisdiction under §1367(a), to whether a court “ought” to do so, as a matter of judicial discretion under §1367(c).
There is a logical and historical irony in the Voda approach. As a matter of logic, and appellate reasoning, it seems that only when jurisdiction is ascertained, may a court decline to exercise it.21 This was certainly the approach taken historically, when the Federal Circuit decided Mars, ruling that it was erroneous for the district court to skip the step of ascertaining jurisdiction under §1367(a), before declining to exercise jurisdiction under discretion provided by §1367(c).22
Nonetheless, the Voda majority held that limitations imposed by treaties and considerations of comity, judicial economy, convenience and fairness were exceptional circumstances, providing compelling reason for the district court to decline supplemental jurisdiction in this case, under §1367(c)(4).23 While these values were grouped together, the court analyzed comity very differently from the other four values.
The court extensively explored the values of judicial economy, convenience, fairness and obligations under treaties, expressing concern that exercising jurisdiction in this case “could” detrimentally affect one or all of them.24 Yet the court stopped short of finding that consideration of any of these values, or their combination, would necessarily compel against the extension of jurisdiction in the Voda case. Instead, the court found that the district court abused its discretion by failing to analyze each of these values, before allowing Dr. Voda to amend his complaint.
Although the interlocutory appeal was taken on the bare pleadings, the Federal Circuit demanded a complete analysis of these factors as a condition precedent to the proper exercise of jurisdiction, taking this hard tack in reliance upon the U.S. Supreme Court’s comment on the application of discretion under §1367(c), that “when deciding whether to exercise supplemental jurisdiction, a federal court should consider and weigh in each case, and at every stage of the litigation, the values of judicial economy, convenience, fairness, and comity.”25
As to these factors, the court posed tough standards: a district court’s exercise of supplemental jurisdiction could undermine the obligations of the United States under Treaties…accordingly, we must scrutinize such an exercise with caution;26 Judicial economy may not be served, since the likelihood of jury confusion in interpreting U.S. and foreign patents could result in the need for separate trials;27 convenience may not be served because of the cost of obtaining and translating evidence, especially experts in foreign patent law;28 and fairness may militate against jurisdiction, if the Act of State doctrine prevents a district court from inquiring as to the validity of a foreign patent, thereby stripping defendant of an important affirmative defense.29 The court went further to raise the specter of an unfathomable burden of analysis for the district court, stating that the factors it has raised are but a non-exhaustive list, not a test, for district courts to consider under §1367(c), and that district courts should examine these, along with other relevant reasons in every case.30
However, as to comity, the Federal Circuit was not content to merely remand for further analysis by the district court. Instead, the court found that considerations of Comity and the principle of avoiding unreasonable interference with the authority of other sovereigns, dictate “in this case” that the district court decline the exercise of supplemental jurisdiction under §1367(c).”31
The court arrived at this conclusion after scrutinizing four factors which it culled from Nationale Industrielle Aerospatiale v. U.S. Dist. Court for the S.D. of Iowa.32 The court concluded that there was: (1) no international duty of U.S. Courts to adjudicate foreign claims; (2) no showing of greater convenience in having U.S. Courts assume jurisdiction; (3) no showing that foreign courts would inadequately protect foreign patent rights held by U.S. Citizens; and (4) no showing that the foreign governments would not be prejudiced, (i.e. were willing to have U.S. courts exercise jurisdiction over infringement claims based on their patents.)33
Notably, each of these four “findings” bears little connection to the particular facts in Voda. They bespeak of the world around us, and would equally apply to virtually all foreign patent claims. Even in this case, involving only U.S. parties before a U.S. tribunal, and where no foreign sovereign’s cooperation would be needed to secure a judgment, the Voda court ruled that comity was still a compelling basis to decline jurisdiction over foreign patent claims. Therefore, despite the court’s lengthy required analysis of the other four factors, the true prospective effect of Voda is, as suggested in Judge Newman’s dissent, the preemption by comity, of federal jurisdiction over foreign patent claims.34
B. JUDGE NEWMAN’S DISSENT
In her Dissent, Judge Newman argues the majority ruling essentially eliminates discretion over supplemental jurisdiction, and she points out that such a result is in conflict with the circuit’s earlier holding, that §1367(c) reaffirms the district court’s discretion over supplemental jurisdiction.35 Newman also points to the U.S. Supreme Court’s recent counsel against unduly narrowing the application of §1367(a), and its discouragement of earlier attempts by the Federal Circuit to impose unique limits upon the equitable discretion of district courts, applicable only to patent law.36
Judge Newman proposes that while there may be instances for the proper use of discretion to decline jurisdiction, preclusion and prejudgment are inappropriate and unnecessary. Moreover, she argues that the majority has mistakenly staked a concern that foreign patent jurisdiction would interfere with obligation under treaties, or interfere with proper respect for foreign sovereigns under considerations of comity. She also argues that each of the majority’s other analytical roadblocks to foreign patent jurisdiction are flawed.
Judge Newman notes that federal courts have frequently interpreted and applied foreign law, citing a host of examples where various combinations of foreign law(s) and U.S. law have been applied within the same case, in accord with the basic principle that a court should apply the same law that would be applied in the nation where the event occurred, or the law having the most significant relationship to the event in dispute.37 The dissent argues there is no reason to carve out an exception as to foreign patent law.38 Patents result from an administrative process which is determinative of private rights, not of national interest of foreign sovereignties of the sort that might invoke concern about comity or the Act of State Doctrine. 39 If a U.S. district court interpreted and applied foreign patent law to determine the validity of a foreign patent, such a determination would apply to and be binding only upon the parties.40 It would not, as feared by the majority, usurp or interfere with a foreign sovereign’s generally power to decide validity of its patents.
Judge Newman goes farther, stating that the entire rubric of the majority’s analysis of supplemental jurisdiction under §1367 is unnecessary to jurisdiction of foreign patents. The dissent thus posits that statutory supplemental jurisdiction exists to limit the span of federal court jurisdiction as read against state’s autonomy, a constitutional limit which does not apply to foreign claims.41 She argues that it may provide a helpful analogy to a consideration of when to accept jurisdiction over foreign claims, but is not determinative of the issue.
The dissent also faults the majority’s treatment of the other values which inform judicial discretion. First, the dissent finds it unreasonable to expect district courts to collect expert testimony or pursue other means of fact-finding as a prerequisite to the pleadings.42 Moreover, the considerations of convenience, judicial economy and fairness should balance a concern for the time and resources of the plaintiff and defendant, as well as those of the court. Chief among these considerations would be the burden and cost of carrying forward parallel litigations before multiple tribunals.43 By contrast, the majority focused on the idea that by adjudicating all of Dr. Voda’s foreign patent claims together, these foreign claims might “substantially predominate” the claim giving rise to original jurisdiction, which is a basis for declining jurisdiction under §1367(c)(2).
Interpreting and applying foreign law may be challenging to federal courts, but Newman argues that judicial discretion should not be used as a tool of the courts to avoid difficult cases. The Federal Rules of Civil Procedure, expressly allow courts to freely access applicable foreign law, (Fed. R. Civ. P. 44.1), and to place burdens upon the parties to assist, and provides a default to home forum law as a gasp-filler gaps.44 However, Judge Newman points to evidence that foreign patent law has become largely harmonious to U.S. patent law, and in any event, it should not be more challenging than U.S. patent law, or beyond the reach of the district courts.45
Last, current treaties pose no barrier to U.S. jurisdiction. Treaties are contract between nations, limited to and by their express language, and their nature is to impose limits on the rights of party nations to act unilaterally. Therefore, the “silence” of current patent treaties regarding foreign adjudication, means simply that no treaty bars such dispute resolution.46 In fact, the courts of at least one other member nation, Japan, has interpreted and applied U.S. patent law in a U.S. patent dispute arising between Japanese entities.47
The multiple amicus filings in Voda demonstrate that this case holds importance beyond the parties.48 A key impact of the Voda decision is that it does little to mitigate the deepening disadvantage for individual inventors and small companies, who must protect their inventions despite pressures from the new paradigm of the globalized economy. Unfortunately, U.S. and international efforts to harmonize and streamline patent procurement and enforcement lag behind the new economic demands. Brad Smith, General Counsel of Microsoft succinctly framed the problem in his comments to the American Enterprise institute in March of 2005:
…As far as technology innovation is concerned, we already live in a truly global economy. But the multiplicity of national patent regimes impose disparate administrative burdens on inventors. One needs…an army of lawyers in order to patent an invention throughout the world, and…this doesn’t come cheap. For large companies like Microsoft…this problem is surmountable. But it can be a challenge for smaller companies and individual innovators who can’t afford to sort through the complexities of…disparate national systems. The world today cannot afford to discourage important advances in knowledge…by maintaining an impenetrable network of discordant patent regimes. We need to reward innovation, not stymie it.49
What is true about procuring worldwide patent protection is even truer about worldwide patent enforcement through the fractured, and piecemeal litigation perpetuated by the Federal Circuit in Voda. In fact, Dr. Voda’s district court case provides a compelling example of the crisis. In the district court trial of his U.S. patent claims only, Dr. Voda’s attorney fees and costs, exceeded $2.2 million.50
Clearly, when these costs are summed over multiple jurisdictions, the cost of enforcement may be prohibitive to all but the most solvent of small businesses. To those left without a remedy, the Federal Circuit’s careful exercise of discretion pronounced will be of little comfort, or relief. To be sure, the Federal Circuit is not responsible for the forces which have delivered globalization. But, to serve its purpose well, the court should work diligently to adapt to these changing needs.
- During pendency of appeal, the jury upheld the validity of Dr. Voda’s patents, and found that Cordis intentionally copied Voda’s catheter and willfully infringed all three U.S. patents. The district court denied a permanent injunction, but doubled the jury award as an enhancement for willfulness, awarding a total of $10.2 million in damages, attorneys fees and costs, and imposing a prospectively royalty for ongoing infringement. On March 27, 2007, after learning that Cordis withheld disclosure of its other infringing catheters models during trial, district court trebled compensatory damages.
- Voda brought suit only against Cordis Corporation one of the U.S. Cordis Subsidiaries of Johnson & Johnson, which also holds Cordis subsidiaries in Germany and France. (www.jnj.com/our_company/family/index.htm;
- Johnson & Johnson describes itself as the world’s largest medical device company, with 2005 worldwide sales of $50.5billion. (http://www.jnj.com/investor/documents/archive/2005factsheet.pdf).
- Voda v. Cordis Corp. 476 F.3d 887, 904 (Fed. Cir. 2007).
- Id. at 903.
- The board of directors of the Intellectual Property Owners Association comprises approximately forty-five executives from very large U.S. based multinational corporations, not surprisingly, including Philip S. Johnson, from Johnson & Johnson. For complete listing, see (http://www.ipo.org/AM/Template.cfm?Section=Board_Of_Directors).
- 28 U.S.C. 1367§(a)
- United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, (1966).
- Id, at 726, 86 S.Ct. at 1139.
- Mars, Inc. v. Kabushiki-Kaisha Conlux, 24 F.3d 1368, 1375 (Fed. Cir. 1994).
- Voda, 476 F.3d at 895.
- Id. at 911 n2.
- Id. at 910-11.
- Mars, 24 F.3d at 1375.
- Ortman v. Stanray Corp., 371 F.2d 154, 158 (7th Cir. 1967).
- Voda, 476 F.3d at 895.
- Id. at 897.
- Michael C. Elmer et. al., “Are U.S. Courts Going Global?” page 1, Copyright March, 2006, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. (See www. Finnegan.com/publications/news-popup.cfm?id=1541&type=article).
- Mars, 24 F.3d at 1375.
- Voda, 476 F.3d at 898.
- Id. at 898-904.
- City of Chicago v. Int’l Coll. Of Surgeons, 522 U.S. 156, 173, (1997).
- Voda, 476 F.3d at 899.
- Id. at 903.
- Id. at 904
- Id. at 905.
- Id. at 903.
- Societe Nationale Industrielle Aerospatiale et al v. United States District Court for the Southern District of Iowa, 482 U.S. 522, 543 n. 27, 107 S.Ct. 2542 (1987).
- Voda, 476 F.3d at 901.
- Id. at 909.
- Id. at 910.
- Citing eBay Inc. v. MercExchange L.L.C., ____ U.S. ____, 126 S.Ct. 1837 (2006).
- Voda, 476 F.3d at 906-07.
- Id. at 906 (citing Printz v. United States, 521 U.S. 898, 117 S.Ct. 2365, L.Ed.2d 914 (1997), for the observation that courts “applied the law of other sovereigns all the time.”)
- Voda, 476 F.3d at 906-07.
- Id. at 908 (citing Forbo-Giubiasco S.A. v. Congoleum Corp., 516 F.Supp. 1210, 1218 (S.D.N.Y.1981)).
- Id. at 909.
- Id. at 911.
- Id.at 911.
- Fed. R. Civ. P. 44.1. Determination of Foreign Law. A party who intends to raise an issue concerning the law of a foreign country shall give notice by pleadings or other reasonable written notice. The court, in determining foreign law, may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence. The court's determination shall be treated as a ruling on a question of law.
- Voda, at 912.
- Voda, at 915-16.
- K.K. Coral Corp. v. Marin Bio K.K., Case No. 1943(wa)/2002 (Tokyo District Court, Oct. 16, 2003).
- Amicii were filed by in support of Cordis, by The United States, the American Intellectual Property Lawyers Association, and by the Intellectual Property Owners Association. An amicus brief was filed in support of Dr. Voda, by “Law Professors in Support of the Appellee.”
- Brad Smith, “Improvements to the Global Patent System Start at Home, Prepared text of remarks by Brad Smith, Senior Vice President, General VCounsel & Corporate Secretary, Microsoft Corporation,” Delivered to American Enterprise Institute, March 10, 2005, Washington D.C. , page 4. (For full text See http://microsoft.com/presspass/exec/bradsmith/03-10-05AEIPatentReform.mspx).
- Voda v. Cordis Corp., No. CIV-03-1512-L (W.D.Okla. 09/05/2006), 2006.WOK.0000361http://www.versuslaw.com, at paragraph 28.