Endo Pharms. Inc. v. Actavis, Inc. (Fed Cir)


Case Name: Endo Pharms. Inc. v. Actavis, Inc., Nos. 2013-1658, -1662, 2014 U.S. App. LEXIS 5879 (Fed. Cir. Mar. 31, 2014) (Circuit Judges Newman, Dyk, and Moore presiding; Opinion by Moore, J.; Dissent-in-part by Dyk) (appeal from S.D.N.Y., Griesa, J.)

Drug Product and Patent(s)-in-Suit: Opana® ER (oxymorphone); U.S Patent Nos. 8,309,122 (“the ’122 patent”), 8,329,216 (“the ’216 patent”), 7,851,482 (“the ’482 patent”)

Nature of the Case and Issue(s) Presented: Prior to this litigation, Endo sued defendants for patent infringement based on their ANDAs to market generic versions of Opana ER. The first set of lawsuits settled after Endo granted to defendants a license and a covenant not to sue. The settlement and license agreement between Endo and Roxane (Roxane Agreement) defines “Licensed Patents” as follows: (a) any [U.S.] patents that are both (i) now owned by Endo…and (ii) issued as of the Effective Date of this Agreement, including the Opana ER Patents, (b) any [U.S.] patent applications that claim priority to the Opana ER Patents, including any continuation, continuation-in-part and divisional patent applications that claim priority to Opana ER Patents, and (c) any patents resulting from the reissue or reexamination of patents or patent applications comprised within clauses (a) and (b)…. Pursuant to the agreement, Endo granted Roxane a covenant that it would not assert that Roxane’s generic versions of Opana ER infringe the licensed patents and a license under the licensed patents to make, use, have made, sell, offer to sell, import and use those generic products. Finally, the Roxane Agreement includes a “No Implied Rights” provision stating that Endo does not grant to Roxane any license or right “whether by implication, estoppel or otherwise, other than as expressly granted herein.” The settlement and license agreement between Endo and Actavis (Actavis Agreement) is similar.

The patents-in-suit issued after Endo’s agreements with defendants. Endo again sued defendants for patent infringement and moved for a preliminary injunction. Defendants opposed on the theories of express license and implied license by reason of legal estoppel. The court held that “as a matter of law…Endo is estopped from claiming that the activity of Actavis and Roxane, which has gone on for a substantial period of time, is now suddenly barred because of these new patents. The court therefore denied Endo's motions. Endo appealed and the Federal Circuit vacated the district court’s judgment and remanded the case.

Why Endo Prevailed:  The Federal Circuit found that Roxane’s express license arguments were meritless. The Roxane Agreement covers U.S. patent applications that “claim priority to the Opana ER Patents, including any continuation, continuation-in-part and divisional patent applications that claim priority to Opana ER Patents.” There can be no dispute that the ’122 and ’216 patents are not continuations of any of the licensed patents. Likewise, there is no reasonable argument that the ’122 and ’216 patents claim priority to any of the licensed patents. The Actavis Agreement likewise does not cover the ’122, ’216, and ’482 patents-in-suit in the Actavis appeal. It contained the same “continuations, continuations-in-part or divisionals” language as the Roxane Agreement. Because the asserted patents are not continuations, continuations-in-part, or divisionals of the licensed patents, they are also not covered. Finally, the ’482 patent is completely unrelated to any of the previously licensed patents, and is likewise not covered by the agreement. Therefore, the Federal Circuit found that defendants did not have an express license to practice any of the patents-in-suit.

Concerning defendants’ implied license argument, the Federal Circuit held that the district court erred as a matter of law in finding legal estoppel in favor of Actavis and Roxane. A patent license does not convey to the licensee “an absolute right” to make, use, or sell a product “because not even the patentee…is given that right.” The doctrine of legal estoppel does not nullify this general principle. Moreover, Federal Circuit precedent establishes that a license or a covenant not to sue enumerating specific patents may legally estop the patentee from asserting continuations of the licensed patents in the absence of mutual intent to the contrary. Put plainly, “[y]ou get what you bargain for[, a]nd we will not use the implied license doctrine to insert ourselves into that bargain and rewrite the contract.” Endo was not estopped from asserting the patents-in-suit because none of the asserted patents is a continuation of any of the licensed patents. The only familial relationship between the asserted and licensed patents was that the ’122 and ’216 patents claimed priority to the same provisional application as the ’250 patent. That, however, did not make those patents continuations of the ’250 patent. And the ’482 patent was not related to any of the licensed patents.

Endo granted to defendants a license and covenant not to sue limited to specific patents and patent applications. If defendants wanted to market and sell their accused generic products free from any threat of being sued by Endo for patent infringement, they could have negotiated for the appropriate language in the settlement and license agreements. Having agreed to licenses that do not cover the patents-in-suit, the Federal Circuit explained, defendants cannot not now be heard to complain.

Judge Dyk’s dissent-in-part concerns the question of whether Actavis had an implied license to the ’122 and ’216 patents. At the time of their settlement agreement, Endo owned those patent applications, which claimed priority to the same provisional application that provided priority to a patent covered by the settlement agreement (the ’250 patent). During the settlement negotiations, Endo did not disclose the ’122 and ’216 patent applications, but rather licensed Actavis to produce the product at issue here. Furthermore, Judge Dyk found that there were material differences between the Actavis and Roxane agreements and negotiations. Under those circumstances, he concluded that Actavis had an implied license to practice the ’122 and ’216 patents.

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