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Exploring the Latest in Intellectual Property Law
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Hatch-Waxman Litigation Expenses Are Deductible Under Internal Revenue Code § 162(a)

by | Apr 3, 2025 |

The US Court of Appeals for the Federal Circuit upheld a US Court of Federal Claims ruling that Hatch-Waxman Act litigation expenses are ordinary and necessary business expenses under § 162(a) of the Internal Revenue Code, entitling an abbreviated new drug application (ANDA) filer to deduct litigation expenses incurred defending against a patent infringement lawsuit. Actavis Labs. FL, Inc. v. United States, Case No. 23-1320 (Fed. Cir. Mar. 21, 2025) (Chen, Cunningham, Stark, JJ.)

Actavis filed ANDAs with the US Food and Drug Administration (FDA) seeking approval to market and sell a generic version of a drug already offered for sale in the United States. Per the Hatch-Waxman Act, filing an ANDA is an act of patent infringement where the ANDA holder seeks FDA approval prior to the expiration of the new drug application (NDA) holder’s patent. Following Actavis’s filing, the NDA holder brought a patent infringement lawsuit against Actavis.

Actavis subsequently treated litigation expenses incurred in defending the patent infringement lawsuit as ordinary and necessary expenses. Actavis deducted those litigation expenses on its tax returns for that year. However, the Internal Revenue Service (IRS) considered these expenses to be nondeductible capital expenditures since they were incurred “in pursuit of an intangible capital asset: namely, FDA approval to lawfully market a generic drug product in this country.”

Actavis eventually paid its tax liability but then sued the IRS in the Court of Federal Claims to recover what Actavis considered an overpayment of its taxes. The claims court agreed with Actavis, holding that Hatch-Waxman litigation expenses were deductible as ordinary and necessary business expenses. The IRS appealed.

The Federal Circuit affirmed. When determining whether Hatch-Waxman litigation expenses are deductible under Code § 162(a), the Federal Circuit uses two tests to settle the issue: the “origin of the claim” test and the “most significant benefit” test. However, as the Court emphasized, regardless of which test applied, Actavis prevailed.

The Federal Circuit first explained that Actavis prevailed under either test because patent infringement (not the FDA approval process) is what triggers incurring litigation expenses. Further evidence that the “origin of the claim rests in the patentholder’s decision to sue, and not in the ANDA filer’s decision to seek drug approval from the FDA, is the fact that infringement litigation cannot provide the ANDA filer what it wants – only the FDA can,” the Court stated.

Relying on the Third Circuit’s 2023 decision in Mylan v. Comm’r of Internal Revenue, the Federal Circuit delved into the fairness aspect of allowing Hatch-Waxman litigation expenses to be deductible. Citing Mylan, the Court explained that generic manufacturers defending against patent infringement suits “obtain no rights from a successful outcome. They acquire neither the intangible asset of a patent nor an FDA approval.” The Court also noted that brand-name drug companies in Hatch-Waxman lawsuits may deduct litigation expenses incurred while enforcing their patent rights. “[I]mposing very different tax treatment on the warring sides in an ANDA dispute, as the Commissioner advocates, is at odds with the careful statutory [...]

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The Clear and Unmistakable Standard for Applying Prosecution Disclaimer

by | Apr 3, 2025 |

The US Court of Appeals for the Federal Circuit found that a district court misconstrued claim terms based on a misapplication of the clear and unequivocal disavowal standard and vacated its noninfringement decision. Maquet Cardiovascular LLC v. Abiomed Inc., Abiomed R&D, Inc., Abiomed Europe GMBH, Case No. 23-2045 (Fed. Cir. Mar. 21, 2025) (Reyna, Taranto, Cunningham, JJ.)

Maquet owns a patent related to a system that provides greater precision in deploying a blood pump to a patient’s circulatory system. The district court construed three patent terms. The district court construed the term “guide mechanism comprising a lumen” to include a negative limitation that the guidewire lumen “is not distal to the cannula.” The court justified this limitation by citing to the prosecution history of a related patent where Maquet disclaimed the broader claim by merely accepting the examiner’s proposed revisions. The district court also construed both guide wire terms in two other claims to include another negative limitation: “the guide wire does not extend through the free space in between the rotor blades.” The district court similarly justified this negative limitation by citing to the parent patent’s prosecution history, finding that Maquet had given up a broader version of the claim. The district court’s construction effectively limited the scope of Maquet’s claims to exclude the accused products, and the parties stipulated to the entry of a final appealable judgment of noninfringement. Maquet appealed.

Maquet argued that the district court erred in its construction of the three terms by misapplying the law of prosecution disclaimer. The Federal Circuit agreed, finding that the district court incorrectly relied on Maquet’s prosecution history to reach its conclusions on claim construction. The district court cited to an amendment made in a different (but related) patent prosecution and a different claim. The Federal Circuit explained that although the prosecution history of a related patent may be relevant, the claim limitations in the two applications must be similar in order for the prosecution disclaimer doctrine to apply. Here, the Court found that the amendment in the related patent was not sufficiently similar to the limitation at issue to constitute a disclaimer for the claim at issue. The related case claim did not claim a guide mechanism, nor did it require the lumen be in a specific position. The Federal Circuit found that the district court erred in its construction by improperly applying prosecution disclaimer.

The Federal Circuit also determined that the district court erred in its construction of the guide wire claim terms by applying prosecution disclaimer and interpreting a restriction on their scope. The Court found that while the prosecution history of the parent patent’s claims was sufficiently similar and thus relevant, Maquet did not disavow either claim’s scope during the relevant prosecution. The Court noted that mere silence in response to a notice of allowance typically does not rise to clear and unmistakable claim disavowal. The Court also observed that statements made during an inter partes review (IPR) proceeding may be used to support a [...]

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Human Authorship Required: AI Isn’t an Author Under Copyright Act

by | Mar 27, 2025 |

The US Court of Appeals for the District of Columbia upheld a district court ruling that affirmed the US Copyright Office’s (CO) denial of a copyright application for artwork created by artificial intelligence (AI), reaffirming that human authorship is necessary for copyright registration. Thaler v. Perlmutter, Case No. 23-5233 (D.C. Cir. Mar. 18, 2025) (Millett, Wilkins, Rogers, JJ.)

Stephen Thaler, PhD, created a generative AI system that he named the Creativity Machine. The machine created a picture that Thaler titled, “A Recent Entrance to Paradise.” Thaler applied to the CO for copyright registration for the artwork, listing the Creativity Machine as the author and Thaler as the copyright owner.

The CO denied Thaler’s application because “a human being did not create the work.” Thaler twice sought reconsideration of the application, which the CO denied because the work lacked human authorship. Thaler subsequently sought review in the US District Court for the District of Columbia, which affirmed the CO’s denial of registration. The district court concluded that “[h]uman authorship is a bedrock requirement of copyright.” Thaler appealed.

The DC Circuit reaffirmed that the Creativity Machine could not be considered the author of a copyrighted work. The Copyright Act of 1976 mandates that to be eligible for copyright, a work must be initially authored by a human being. The Court highlighted key provisions of the Copyright Act that only make sense if “author” is interpreted as referring to a human being. For instance:

  • A copyright is a property right that immediately vests in the author. Since AI cannot own property, it cannot hold copyright.
  • Copyright protection lasts for the author’s lifetime, but machines do not have lifespans.
  • Copyright is inheritable, but machines have no surviving spouses or heirs.
  • Transferring a copyright requires a signature, and machines cannot provide signatures.
  • Authors of unpublished works are protected regardless of their nationality or domicile, yet machines do not have a domicile or national identity.
  • Authors have intentions, but machines lack consciousness and cannot form intentions.

The DC Circuit concluded that the statutory provisions, as a whole, make human activity a necessary condition for authorship under the Copyright Act.

The DC Circuit noted that the human authorship requirement is not new, referencing multiple judicial decisions, including those from the Seventh and Ninth Circuits, where appellate courts have consistently ruled that authors must be human.

Practice Note: Only humans, not their tools, can author copyrightable works of art. Images autonomously generated are not eligible for copyright. However, works created by humans who used AI are eligible for copyright depending on the circumstances, how the AI tool operates, and to what degree the AI tool was used to create the final work. Authors whose works are assisted by AI should seek advice of counsel to determine whether their works are copyrightable.



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Zone of Natural Expansion Is a Shield, Not a Sword

by | Mar 27, 2025 |

The US Court of Appeals for the Federal Circuit upheld a Trademark Trial & Appeal Board decision to partially cancel trademarks, ruling that an opposition challenger could not use the zone of natural expansion doctrine to claim priority because the doctrine is strictly defensive. Dollar Financial Group, Inc. v. Brittex Financial, Inc., Case No. 23-1375 (Fed. Cir. Mar. 19, 2025) (Prost, Taranto, Hughes, JJ.)

Dollar Financial Group (DFG) is a loan financing and check cashing business that has used the mark MONEY MART since the 1980s. In 2012, DFG expanded and started using the mark in connection with pawn brokerage and pawn shop services. DFG registered MONEY MART for these new services in 2014. Brittex petitioned to cancel the registration on several grounds, including that the registrations were improperly issued in violation of the Lanham Act, which bars registration of a mark that “so resembles . . . a mark or trade name previously used in the United States by another and not abandoned, as to be likely, when used on or in connection with the goods of the applicant, to cause confusion, or to cause mistake, or to deceive.” 15 U.S.C. § 1052(d). Brittex has operated pawn shops under the names Money Mart Pawn and Money Mart Pawn & Jewelry since the 1990s and claimed prior common law rights to the MONEY MART mark for pawn services.

The Board ruled in favor of Brittex, finding that Brittex had priority over DFG for pawn services due to its earlier use of the mark. The Board also determined that DFG could not rely on the zone of natural expansion doctrine to establish priority because this doctrine is purely defensive and does not grant a proactive right to register a mark on an expanded line of goods or services. The Board also concluded that there was a likelihood of confusion between the marks, given their high similarity and the overlapping nature of the services provided by both parties. DFG appealed.

The Federal Circuit agreed that Brittex had established priority because it was the first to use the MONEY MART mark in connection with pawn services. The Court also rejected DFG’s zone of natural expansion argument, reiterating that the doctrine is defensive and cannot be used to establish priority offensively.

The doctrine of natural expansion, as explained in Orange Bang v. Ole Mexican Foods (TTAB 2015), states that:

[T]he first user of a mark in connection with particular goods or services possesses superior rights in the mark as against subsequent users of the same or similar mark for any goods or services which purchasers might reasonably expect to emanate from it in the normal expansion of its business under the mark.

However, the doctrine does not give the senior mark user an offensive or proactive use.

The Federal Circuit also addressed DFG’s argument regarding the doctrine of tacking, which allows trademark holders to make minor modifications to their own mark while retaining the priority position of the older mark. Tacking is generally permitted [...]

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What’s the (Re)issue? Patent Term Extensions for Reissue Patents

by | Mar 27, 2025 |

Addressing the calculation of patent term extensions (PTEs) under the Hatch-Waxman Act, the US Court of Appeals for the Federal Circuit affirmed a district court decision that under the act the issue date of the original patent should be used to calculate the extension, not the reissue date. Merck Sharp & Dohme B.V. v. Aurobindo Pharma USA, Inc., Case No. 23-2254 (Fed. Cir. Mar. 13, 2025) (Dyk, Mayer, Reyna, JJ.)

Merck owns a patent that is directed to a class of 6-mercapto-cyclodextrin derivatives. Four months after the patent issued, Merck applied to the US Food & Drug Administration (FDA) for approval of sugammadex, which it intended to market as Bridion®. During FDA’s review of Merck’s new drug application (NDA), Merck filed a reissue application that included narrower claims. The reissue application issued and included all the original claims and 12 additional claims. FDA regulatory review continued throughout the examination of the reissue application and extended almost two years beyond the date the patent reissued. In all, the FDA regulatory review lasted nearly 12 years.

The Hatch-Waxman Act provides owners of patents related to pharmaceutical products a process to extend the term of their patent rights to compensate for time lost during regulatory review of their NDAs. The act contains a clause providing that “the term of a patent . . . shall be extended by the time equal to the regulatory review period . . . occur[ring] after the date the patent is issued.” Having been unable to market the invention covered by the patent for almost 12 years because of FDA’s regulatory review, Merck filed a PTE application for its reissue patent seeking a five-year extension (the maximum allowed under the act) based on the patent’s original issue date. The US Patent & Trademark Office (PTO) agreed and granted the five-year extension.

Between the reissue date and the PTO’s grant of the five-year extension, Aurobindo and other generic manufacturers had filed abbreviated new drug applications (ANDAs) seeking to market generic versions of Bridion®. Merck sued for infringement. At trial, Aurobindo argued that the PTO improperly calculated the PTE by using the original issue date instead of the reissue date because only 686 days of FDA’s regulatory review occurred after the reissue date, as opposed to the almost 12 years which had passed since the initial issue date. The district court disagreed, finding that Aurobindo’s proposed construction “would undermine the purpose of the Hatch-Waxman Act.” Aurobindo appealed.

Aurobindo argued that the act’s reference to “the patent” referred to the reissue patent because that is the patent for which the patentee was seeking term extension. Merck argued that the act’s text, read in light of other patent statutes and the history of patent reissue, required the opposite conclusion (i.e., a PTE based on the original issue date).

The Federal Circuit agreed with Merck, explaining that while the language of the PTE text may be ambiguous, that ambiguity may be resolved by considering the PTE text in light of the history of [...]

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When “It’s Obvious” Just Isn’t Enough: Challenger’s Burden to Prove Obviousness

by | Mar 27, 2025 |

The US Court of Appeals for the Federal Circuit affirmed the Patent Trial & Appeal Board’s decision that a patent was not obvious because the petitioner failed to show sufficient support of obviousness based on prior art. AMP Plus, Inc. v. DMF, Inc., Case No. 23-1997 (Fed. Cir. Mar. 19, 2025) (Lourie, Bryson, Reyna, JJ.)

DMF owns a patent directed to a compact recessed lighting system designed for installation in a standard electrical junction box. In 2019, AMP, doing business as ELCO, petitioned for inter partes review of several claims of the patent on three grounds of unpatentability:

  • Anticipation by a prior reference
  • Obviousness based on a combination of two references
  • Further obviousness based on an additional source.

The Board found that one claim was anticipated but ruled that ELCO failed to prove unpatentability of the other claims, including the claim at issue on appeal. The claim at issue describes a system with wires connected to a driver and a first connector, coupled to a second connector that in turn is connected to the building’s electrical system. This specific connection was referred to as “Limitation M.” ELCO appealed. In that earlier appeal (2022), the Federal Circuit affirmed the Board’s ruling on all claims except the claim at issue and remanded the case back to the Board for further analysis.

On remand, the Board concluded that ELCO failed to demonstrate the unpatentability of the claim at issue because ELCO’s petition lacked a substantive analysis of Limitation M. The Board found ELCO’s argument that a prior art marine lighting system could be adapted for the claimed building use unsupported by evidence and ruled that the claim at issue was not obvious. Again, ELCO appealed.

ELCO raised two main arguments. First, it argued that the Board erred in not determining that the claim at issue was anticipated by a prior reference, as the Board had previously found another claim to be anticipated by the same reference. The Federal Circuit rejected this argument because ELCO had only challenged the claim at issue on the basis of obviousness in its original petition, not anticipation. Since the issue of anticipation was not raised in the petition, the Court determined that ELCO could not introduce this new ground of unpatentability on appeal.

Second, ELCO argued that its petition had sufficiently demonstrated the obviousness of Limitation M based on the prior references. The Federal Circuit disagreed, finding that ELCO’s petition did not adequately address the specific requirement for coupling the system to a building’s electrical infrastructure. The petition failed to discuss how the recessed lighting system would be installed in a building, and the references cited did not provide adequate support for the argument of obviousness for this particular limitation.

The Federal Circuit emphasized that it was not the Board’s responsibility to supplement the petitioner’s arguments or search for evidence to support an inadequately supported claim challenge. The Court reiterated that an obviousness analysis does not require the Board to fill gaps in the petitioner’s original [...]

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Even Jepson Preambles Require Written Description Support

by | Mar 27, 2025 |

The US Court of Appeals for the Federal Circuit found a Jepson claim unpatentable where the specification did not provide adequate written description for the portion of the claim purporting to recite what was already well known in the prior art. In re Xencor, Inc., Case No. 24-1870 (Fed. Cir. Mar. 13, 2025) (Hughes, Stark, Schroeder, JJ.)

Xencor filed a patent application claiming a modified anti-C5 antibody treatment with certain amino acid substitutions that provide for longer serum half-lives and reduce the need for more frequent treatment. The application included:

  • A Jepson claim reciting, “[i]n a method of treating a patient by administering an anti-C5 antibody with an Fc domain, the improvement comprising” certain amino acid substitutions, wherein the modified antibody has “increased in vivo half-life.”
  • A non-Jepson claim directed to “a method of treating a patient by administering an anti-C5 antibody comprising” certain amino acid substitutions, wherein the modified antibody “has increased in vivo half-life.”

The specification provided one example of an anti-C5 antibody, 5G1.1, and three high-level examples of potential uses for anti-C5 antibodies. The examiner rejected the claims for lack of written description. Xencor unsuccessfully appealed the rejection to the Patent Trial & Appeal Board. Xencor then unsuccessfully petitioned the Board for reconsideration. Xencor appealed to the Federal Circuit, which resulted in a remand to the Board’s Appeals Review Panel (ARP).

The ARP concluded that Jepson claim preambles require written description support and that the preamble language of “treating a patient” was limiting – even without the Jepson claim format – because it gave life and meaning to the claim recitations “increased in vivo half-life” and “administering.” Because the specification did not provide a representative number of species to support the broad genus of anti-C5 antibodies, a description of conditions that can successfully be treated with an anti-C5 antibody, or even a single working example describing treatment with an anti-C5 antibody with the claimed modifications, the ARP found that the claims lacked written description and that Xencor had not shown that anti-C5 antibodies were well known. Xencor again appealed, arguing that “treating a patient” was not limiting and that Jepson preambles do not require written description support.

With respect to the preamble of the method claim, the Federal Circuit noted that Xencor agreed that the “administering” portion was limiting but nonetheless argued that “treating a patient” was not. Although a preamble can be split into limiting and non-limiting parts, the Court reasoned that the preamble here could not be neatly packaged into separate portions because the phrase “treating a patient” was directly connected through the word “by” to the phrase “administering an anti-C5 antibody,” and each phrase gave meaning to the other. The Court further explained that the entire preamble provided the raison d’être of the claimed method: When a patient is treated with the modified anti-C5 antibody, the treatment lasts longer, reducing the frequency of treatments. Accordingly, the Court agreed with the ARP that the recitation “treating a patient” was limiting.

The Federal Circuit [...]

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No APA Review of Commission Refusal to Issue Sua Sponte Show Cause Order

by | Mar 27, 2025 |

The US Court of Appeals for the Federal Circuit dismissed an appeal challenging a US International Trade Commission decision that upheld an administrative law judge’s (ALJ) order, ruling that such an order was within the Commission’s discretion and unreviewable. Realtek Semiconductor Corp. v. International Trade Commission, Case No. 23-1095 (Fed. Cir. Mar. 18, 2025) (Moore, C.J.; Reyna, Taranto, JJ.)

DivX filed a complaint at the Commission against Realtek alleging a violation of § 1337 of the Tarriff Act. DivX later withdrew the complaint. Realtek subsequently filed a motion for sanctions against DivX, alleging certain misconduct. The ALJ denied the motion on procedural grounds. Realtek subsequently petitioned for Commission review, asking the Commission to exercise its authority to issue a sua sponte order requiring DivX to show cause explaining why it had not engaged in sanctionable conduct. The Commission decided not to review and adopted the ALJ’s order without comment.

Realtek appealed, contending that the Commission violated the Administrative Procedure Act (APA) by not issuing a sua sponte show cause order. The Commission argued that Realtek’s appeal should be dismissed, contending that the issue raised was unreviewable.

The Federal Circuit agreed with the Commission, stating that under § 701(a)(2) of the APA, decisions made by an agency are unreviewable by the Court when they are entrusted to the agency’s discretion by law. The Court explained that the sua sponte issuance of a show cause order is a decision that “may be, not must be,” entered by the ALJ or on the Commission’s initiative. Therefore, the decision not to act sua sponte is a decision that remains wholly within the agency’s discretion.

The Federal Circuit rejected Realtek’s argument that the Commission’s refusal to act was reviewable because the Commission failed to provide reasoning, and that Commission review would have allowed the Court to determine if there were “illegal shenanigans” in exercising discretion. However, the case cited by Realtek involved the review of “shenanigans” that fell within the Court’s reviewable categories, not one related to the Commission’s refusal to issue a show cause order sua sponte. The Court found no support for Realtek’s claim that discretionary agency actions under § 701(a)(2) become reviewable under the APA simply because the agency fails to provide its reasoning.



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No Bull: Historically Generic Term Can Become Non-Generic

by | Mar 20, 2025 |

The US Court of Appeals for the Federal Circuit affirmed Trademark Trial & Appeal Board rulings, finding that a previously generic term was not generic at the time registration was sought because at that time the mark, as used in connection with the goods for which registration was sought, had achieved secondary meaning. Bullshine Distillery LLC v. Sazerac Brands, LLC, Case Nos. 23-1682; -1900 (Fed. Cir. Mar. 12, 2025) (Moore, C.J.; Reyna, Taranto, JJ.)

In 2015 Bullshine sought to register the trademark BULLSHINE FIREBULL for its line of “[a]lcoholic beverages except beers.” Sazerac, the owner of the FIREBALL marks used for liqueurs and whiskey, opposed registration. Sazerac argued that the registration of BULLSHINE FIREBULL would likely cause consumer confusion due to its similarity to Sazerac’s FIREBALL marks. Bullshine counterclaimed, asserting that the term “fireball” had become generic and was commonly used to describe a type of alcoholic drink, thus invalidating Sazerac’s claim to exclusivity.

The Board found that the FIREBALL mark was not generic either at the time of registration nor at the time of trial, and that BULLSHINE FIREBULL was not likely to cause confusion with Sazerac’s marks. The Board determined that the FIREBALL mark was “commercially strong but conceptually weak,” that the respective marks of Sazerac and Bullshine were dissimilar when considered in their entireties, and that Bullshine did not act in bad faith in choosing its marks. The Board denied Sazerac’s opposition to the BULLSHINE FIREBULL mark as well as Bullshine’s counterclaim that the FIREBALL mark was generic. Both parties appealed.

Bullshine argued that the Board applied the incorrect legal standard in finding FIREBALL not generic and that consequently, the finding of non-genericness (upon consideration of secondary meaning) was erroneous. Bullshine argued that since “fireball” was a generic term prior to Sazerac’s registration (as both parties agreed), that fact should have precluded Sazerac’s registration, and the Board erred in considering evidence of secondary meaning. Bullshine argued that if a term was generic at any time prior to registration, it remains generic, regardless of how it might be understood at the time of registration (i.e., once generic, always generic). Sazerac argued that the time to assess genericness is at the time of registration. The Federal Circuit agreed with Sazerac.

The Federal Circuit explained that the genericness inquiry is ultimately guided by “what consumers would think at the time of registration,” and that this ruling is supported by the statutory scheme of the Lanham Act. The Court explained that the Lanham Act, in addition to preventing registration of generic terms, also provides for cancellations of marks “[a]t any time,” and even marks with incontestable statuses can be challenged based on genericness. Therefore, Congress intended that the analysis of whether a term is generic can change over time, and Bullshine’s argument was inconsistent with the statute. This conclusion follows from the legal premise that impression of consumers is “necessarily contemporaneous with the time of registration.”

Bullshine cited the 1961 CCPA decision in Weiss Noodle in support of its argument that [...]

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Power Play: Pull the Plug on Parallel District Court Litigation, ITC Investigation

by | Mar 20, 2025 |

The US Court of Appeals for the First Circuit vacated a preliminary injunction, explaining that the district court should have immediately issued a statutory stay of the proceeding under 28 U.S.C. § 1659(a) because a co-pending case at the International Trade Commission involved the same issues and parties. Vicor Corp. v. FII USA Inc., Case No. 24-1620 (1st Cir. Mar. 6, 2025) (Gelpí, Thompson, Rikelman, JJ.)

Vicor filed a § 337 complaint with the Commission against Foxconn asserting power converter module patents while simultaneously suing Foxconn for patent infringement in a Texas district court. Under § 1659, at the request of the party charged in the § 337 complaint, a federal district court must stay proceedings in a civil action between the same parties “with respect to any claim that involves the same issues [as those] involved” in the Commission action. Foxconn successfully secured a stay of the Texas litigation under § 1659.

Foxconn then initiated arbitration in China before the China International Economic and Trade Arbitration Commission (CIETAC), claiming that Vicor had agreed to such arbitration under the terms of their purchase order. The Commission’s administrative law judge denied Foxconn’s request to terminate the § 337 case, finding that Foxconn had waived that defense by failing to timely raise an arbitration defense.

Vicor then sued Foxconn in a Massachusetts district court, disputing any arbitration agreement. The district court issued a temporary restraining order (TRO) and later a preliminary injunction, blocking the CIETAC arbitration. In the Massachusetts litigation, Foxconn sought a § 1659 stay and sought to vacate the TRO. Although the district court agreed that a stay would be permitted, the court rejected the motion to vacate the TRO. The court referenced the All Writs Act, which provides that federal courts “may issue all writs necessary or appropriate in aid of their respective jurisdictions,” as justifying injunctive relief. Foxconn appealed.

The First Circuit agreed that § 1659 applied in the Massachusetts litigation and found that the statute’s plain text required an immediate stay upon Foxconn’s request without granting Vicor a preliminary injunction. The primary issue before the First Circuit was whether Vicor’s claims against Foxconn at the Commission involved the same issues as those in the Massachusetts litigation.

Reviewing the text of § 1659, the First Circuit determined that Vicor’s district court claims in the Massachusetts litigation encompassed the same issues as those raised in the § 337 proceeding. In its Massachusetts litigation, Vicor sought relief under the Federal Arbitration Act to enjoin the CIETAC arbitration and relief under the Declaratory Judgment Act for a ruling that Vicor was not bound by the arbitration terms of the purchase order agreements with Foxconn. Central to both proceedings was Vicor’s argument that it had not agreed to the purchase order terms. Because this issue was common to both the § 337 proceedings and the Massachusetts litigation, the First Circuit determined that the district court needed to issue an immediate stay to Foxconn under § 1659.

Vicor argued that for § 1659 [...]

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