Acorda Therapeutics, Inc. v. Alkermes PLC

Authored by: Jeremy J. Gustrowsky

In the world of pharmaceutical partnerships, Acorda Therapeutics and Alkermes PLC once teamed up to bring Ampyra—a drug helping multiple sclerosis patients walk better—to market. Alkermes held a key patent on the drug’s active ingredient and licensed it to Acorda, who paid an 18% royalty on sales through two agreements: one for the license and another for supplying the ingredient. When the patent expired in July 2018, Acorda kept paying royalties without objection until July 2020, after which they started protesting the payments. Citing a Supreme Court rule from Brulotte v. Thys Co. that bans royalties extending beyond a patent’s life, Acorda launched an arbitration in 2020 to declare the royalty terms unenforceable and seek a refund of post-expiration payments.

The arbitration panel sided with Acorda on the unenforceability of the royalties under Brulotte, treating the two agreements as essentially one deal. However, they limited refunds to only those payments Acorda had formally protested, applying New York’s “voluntary payment doctrine” which generally bars recovering money paid knowingly without protest. This meant Acorda could recoup about $16.5 million from 2020 onward but not the over $65 million paid quietly from 2018 to 2020. Acorda then went to federal court in New York, asking to confirm most of the arbitration decision but modify the refund denial, arguing the panel had ignored clear federal patent law in favor of state rules—a claim known as “manifest disregard of the law.”

The district court reviewed Acorda’s arguments, which included both a patent-law angle (claiming state rules couldn’t override Brulotte’s protections) and a non-patent one (based on general principles against enforcing illegal contracts). Ultimately, the court confirmed the full arbitration award, finding no manifest disregard since Brulotte didn’t clearly require refunds of unprotested payments, and state law could apply without conflicting with federal patent rules. Acorda appealed to the Federal Circuit, the specialized court for patent matters, hoping to overturn the refund limit.

But the Federal Circuit hit pause on the merits, ruling it lacked jurisdiction because the case didn’t “arise under” federal patent law as required by statute. Looking at Acorda’s original court filing, the judges noted it was primarily an arbitration confirmation and modification request under the Federal Arbitration Act, not a direct patent claim. Crucially, Acorda’s push for more refunds relied on two alternative arguments, only one involving patent law; the court could have ruled for Acorda without touching patents at all. So, the Federal Circuit transferred the appeal to the Second Circuit Court of Appeals, leaving the royalty refund dispute unresolved for now.