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CAFC vacates consent judgment in Jang v. Boston Scientific

By Lawrence B. Ebert, Esq.

The CAFC case of Jang v. Boston Scientific illustrates how easy it is for poorly written assignment (or licensing) agreements to go bad.

The CAFC gave the seemingly simple background:

Through a contract executed in 2002, Jang assigned the ?021 and ?743 patents to
Boston Scientific and Scimed. In exchange, Boston Scientific and Scimed agreed to
pay $50 million immediately and agreed to pay an additional amount (up to $110 million)
based on the sales of commercial products covered by the assigned patents if such
products were produced, or a noncommercialization payment of $10 million if such
products were not produced.

As might have been expected:

Boston Scientific and Scimed developed and sold several
stent designs that they asserted were not covered by the assigned ?021 and ?743
patents, and paid Jang only the initial $50 million payment and the $10 million
noncommercialization fee.

Legal action started 19 May 2005:

Jang?s breach of contract claim asserted that four
models of commercial intravascular stents sold by Boston Scientific and Scimed were
?covered by? either or both of the ?021 and ?743 patents (i.e., would infringe the patents),
and thus that Jang was entitled to an additional payment of $100 million under the
assignment agreement.

More than three years later, this disagreement was addressed by the CAFC, which began:

It is clear that a judgment entered based on a stipulation of the parties may in
appropriate circumstances be reviewed on appeal.

and then sent the whole thing back:

In this case, the consent judgment under review suffers from two ambiguities. As
a result, we conclude that it is appropriate to remand this case to the district court for
clarification.

The CAFC noted:

If we did not require clarification of the stipulated judgment in this case, we would
risk rendering an advisory opinion as to claim construction issues that do not actually
affect the infringement controversy between the parties.

The CAFC cited two old cases related to advisory opinions:

United States v. Evans, 213 U.S. 297, 300-01 (1909) (refusing on
advisory opinion grounds to consider merits of government?s appeal as to jury
instructions in criminal case where statute conferring appellate jurisdiction required that
acquittal could not be set aside); Yazoo & Miss. Valley R.R. v. Jackson Vinegar Co.,
226 U.S. 217, 219-20 (1912) (refusing to decide dispute as to constitutionality of statute
in hypothetical contexts that would not affect the outcome of the case before the court).

Full post as published by IPBiz on July 16, 2008 (boomark / email).