Injunction Junction, What’s Your Function under the Patent Safe Harbor?

In yet another installment of the drama that is Jazz v. Avadel, the Federal Circuit recently reviewed a decision from the U.S. District Court for the District of Delaware that addressed the scope of an injunction under the patent safe harbor imposed on Avadel’s Lumryz (sodium oxybate).   Specifically, the District Court enjoined Avadel from (1) offering open-label extensions to clinical trial participants, (2) applying for FDA approval of Lumryz for idiopathic hypersomnia, and (3) initiating new clinical trials or studies after the Court’s Order.  But because the District Court failed to seriously consider the application of the safe harbor under 35 U.S.C. § 271(e), the Federal Circuit reversed in part, vacated in part, and remanded in part.

As long time readers know, Jazz and Avadel have been fighting a battle over sodium oxybate for a while (see our coverage here, here, and here).  Jazz is the sponsor of two products, Xywav and Xyrem, both of which are approved for the treatment of cataplexy or excessive daytime sleepiness in patients 7 years of age and older with narcolepsy, and Xywav also is approved for the treatment of Idiopathic Hypersomnia in adults.  Avadel is the sponsor of its own sodium oxybate product, Lumryz, which is also approved in excessive daytime sleepiness in narcolepsy patients older than 7.  Avadel’s product was approved as a 505(b)(2) referencing Xyrem.

Jazz holds a patent that does not cover Xyrem or Xywav and, therefore, is not listed in the Orange Book.  Jazz nonetheless sued Avadel for patent infringement on that patent after Avadel submitted its 505(b)(2), but Avadel claimed the patent was invalid.  After a jury found the patent valid and awarded Jazz royalties for past infringement, the District Court imposed an injunction that prohibited Avadel from seeking approval of Lumryz in idiopathic hypertension; from offering open-label extensions to clinical trial participants; and from initiating new clinical trials or studies after the injunction effective date.  Avadel both appealed and sought an emergency stay in the District Court; the stay was denied.

In this appeal, Avadel argued that the forward-looking injunction is unlawful because it “enjoins Avadel from making, using, and selling Lumryz ‘solely for uses reasonably related to the development and submission of information’ to the FDA . . . in violation of § 271(e)(3)”.  Section 271(e)(3) states: “no injunctive or other relief may be granted which would prohibit the making, using, offering to sell, or selling within the United States or importing into the United States of a patented invention under paragraph (1),” which essentially precludes an injunction against activities protected by the patent safe harbor.

The Federal Circuit agreed with Avadel and reversed the District Court’s injunction prohibiting any new clinical trials as unlawfully overbroad.  Further, the Federal Circuit explained that open label extensions cannot be enjoined without an accusation of infringement and “[o]nly if and when that activity is adjudicated to fall outside the protection of the safe harbor, and only if and when the district court finds the eBay factors to favor an injunction, may it be permanently enjoined.”   Finally, the Court vacated and remanded the injunction prohibiting Avadel from seeking FDA approval of new indications because the submission of the application to FDA is not infringement under § 271(a), as it “is not a making, using, offering to sell, selling, or importing of a patented invention.”  Implicitly, this decision limited the imposition of injunctions that would interfere with patent safe harbor.

The decision leaves open a question posed by Avadel: whether a 505(b)(2) submission is an artificial act of infringement under § 271(e)(2) if there was no Orange Book patent certification.  The Court remanded that back to the District Court to discern, explaining that if it is the submission of the NDA that is the artificial act of infringement, then the District Court’s injunction barring Avadel from seeking FDA approval of any new indications was unlawful because it exceeds the scope of the remedies available to a patent owner for an artificial act of infringement.  If, however, Avadel’s submission of its paper NDA is not an act of infringement under § 271(e)(2), then an injunction could have been appropriate if it would prevent infringement.  In other words, to determine the appropriate remedy, the District Court must determine whether the NDA submission is the artificial act of infringement or the submission of a patent certification.