Jazz Pharmaceuticals v. Avadel CNS Pharmaceuticals

This write-up summarises the decision of the United States Court of Appeals for the Federal Circuit (CAFC) regarding a patent infringement case between Jazz Pharmaceuticals, Inc. (Jazz) and Avadel CNS Pharmaceuticals, LLC (Avadel). (06 May 2025)

1. The dispute centered around Avadel's attempts to gain FDA approval and market its drug, Lumryz, for the treatment of idiopathic hypersomnia (IH), a condition characterised by excessive daytime sleepiness. 
2. Jazz, the manufacturer of Xyrem® and Xywav® (sodium oxybate products used for narcolepsy and IH), sought to prevent Avadel from entering the IH market, claiming Avadel's actions infringed its patent rights.
3. The case originated in the U.S. District Court for the District of Delaware, where Jazz obtained a permanent injunction preventing Avadel from pursuing FDA approval and marketing Lumryz for IH. 
4. Avadel appealed, arguing the injunction was overly broad and infringed on activities protected by the Hatch-Waxman Act’s safe harbour provision.
5. The CAFC’s decision focused on patent infringement, the scope of the Hatch-Waxman Act’s safe harbour, and the validity of the injunction. 
6. It addressed three specific activities the district court had restricted: initiating new clinical trials, offering open-label extensions (OLEs) in ongoing clinical trials, and seeking FDA approval of Lumryz for IH. 
7. Ultimately, the CAFC partially reversed, partially vacated, and remanded the case, providing a detailed analysis of patent law and regulatory considerations.

Background

1. Jazz markets Xyrem® and Xywav®, both sodium oxybate medications, for excessive daytime sleepiness and cataplexy associated with narcolepsy. 
2. Xywav® is also approved for IH and is currently the only FDA-approved treatment for this condition.
3. Avadel sought to introduce Lumryz, a once-nightly sodium oxybate formulation, for EDS and cataplexy in adults with narcolepsy, submitting a "paper New Drug Application (NDA)" under Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act (FDCA). This type of NDA allows applicants to rely on existing FDA findings of safety and efficacy, reducing the need for extensive new studies.
4. The main difference between a standard New Drug Application (NDA) and a "Paper NDA" is the submission format. A traditional NDA is a comprehensive, detailed application that includes all the necessary information for the FDA to review and approve a new drug. A "Paper NDA," on the other hand, is a simplified version that may focus on specific aspects of the drug application, often used in situations where a full application is not required or feasible.
5. Following Avadel's NDA submission, Jazz filed a patent application for a "GHB [(i.e., oxybate)] Formulation and Method for its Manufacture," which was later issued as patent US 11,147,782 ('782 patent). Claims 14 and 24 of the patent cover a unit dose of gamma-hydroxybutyrate with specific components. Importantly, neither Xyrem nor Xywav practices claim 24, the only claim in this litigation, and the '782 patent is not listed in the Orange Book.
6. Jazz then sued Avadel, alleging that its FDA submission infringed the '782 patent under 35 U.S.C. § 271(e)(2)(A), which defines the submission of an application for a drug claimed in a patent as an act of infringement if the purpose is to gain approval for commercial activities before the patent's expiration. Jazz sought a permanent injunction and damages. Initially, Jazz’s claims relied on the artificial act of infringement, but this changed once the FDA approved Avadel’s NDA and Avadel began commercially marketing Lumryz. Subsequently, Jazz amended its complaint to remove artificial infringement allegations and assert direct infringement.
7. After discovery, the parties stipulated that Lumryz would infringe claim 24 of the '782 patent if the claim were valid. Following a trial, a jury found the claim valid and awarded Jazz $233,562.83 for Avadel's past infringement. Based on this, Jazz requested a permanent injunction to prevent Avadel from making, using, or selling Lumryz until the patent’s expiry. However, Jazz proposed excluding certain activities, including use for patients already prescribed Lumryz, ongoing clinical trials, data updates, and quality control.
8. During this period, Avadel launched its REVITALYZ clinical trial to investigate Lumryz's efficacy and safety for IH.
9. The district court granted a limited permanent injunction prohibiting Avadel from seeking FDA approval and marketing Lumryz for IH but excluded Avadel’s activities in ongoing clinical trials. The order prevented Avadel from seeking FDA approval for IH or any indication not on Lumryz's approved label as of March 4, 2024. 
10. Avadel appealed this order.

Federal Circuit's Analysis

The Federal Circuit (CAFC) outlined standards for granting injunctions, emphasising they are extraordinary equity-based remedies. A plaintiff must demonstrate irreparable injury, inadequate legal remedies, a favourable balance of hardships, and no disservice to the public interest. The court cautioned against sweeping injunctions and emphasised restricting them to specific adjudicated infringing activity. They review the grant and scope of injunctions for an abuse of discretion.

The court addressed each enjoined activity separately:

1. Initiating New Clinical Trials: The CAFC deemed the injunction against initiating new trials unlawful, citing the Hatch-Waxman Act's safe harbour. Section 271(e)(1) promotes experimentation with patented drugs for post-patent expiration commercial activity. Citing Merck KGaA v. Integra Lifesciences I, Ltd., the court stated that Section 271(e)(1) exempts all uses of patented inventions reasonably related to developing and submitting information to the FDA, including preclinical studies. The court found the district court's injunction was overbroad. The Court rejected Jazz's contention that the safe harbour was an affirmative defence that Avadel had not adequately pleaded or developed in the district court.
2. Offering Open-Label Extensions (OLEs): Offering Open-Label Extensions (OLEs) in clinical trials means that, after a double-blind, randomised controlled trial (RCT) phase, participants who have benefited from the study drug are offered continued access to it in an open-label, single-arm trial. Both participants and researchers know which drug everyone is receiving. OLEs are primarily designed to gather data on the drug’s long-term safety, tolerability, and efficacy.  In this case, the CAFC addressed the injunction against Avadel’s offering OLEs to clinical trial participants, emphasising that the arguments hadn’t been properly raised in the district court until Avadel’s emergency motion. The district court addressed the injunction only to clarify its scope. The court reversed, stating that entering a permanent injunction was inappropriate.
3. Applying for FDA Approval: The court examined whether enjoining Avadel from applying for FDA approval constituted an abuse of discretion. Avadel argued that simply seeking FDA approval does not amount to infringement. The Federal Circuit concurred that merely submitting an application does not equate to making, using, or selling the patented invention, as required for infringement under 35 U.S.C. § 271(a).

The Key Issue: Orange Book Listing and 35 U.S.C. § 271(e)(2)

The court then identified a pivotal issue that was not fully briefed. It centred on the connection between 35 U.S.C. § 271(e)(2) and the Orange Book listing requirements. Avadel argued that because the '782 patent was not listed in the Orange Book, its paper NDA could not trigger infringement under § 271(e)(2). Avadel contended that only patent applications demanding paragraph IV certifications for Orange Book-listed patents can trigger infringement under this provision.

The CAFC scrutinised this argument and observed contradictory positions. Section 271(e)(2) stipulates that the application submission, either an ANDA or a paper NDA, constitutes infringement if the approval sought concerns a drug claimed in a patent. This implies that any existing patent can trigger infringement, regardless of whether the patent is included in the Orange Book.

Countering this, the CAFC acknowledged that locating Section 271(e)(2) within the broader context of the Hatch-Waxman Act might suggest that the provision applies exclusively when the ANDA or paper NDA aims to secure approval for a drug claimed in an Orange Book patent. This would be consistent with the intent to instigate litigation, enable a stay on regulatory approval, and expedite the introduction of generic alternatives if the relevant patents prove invalid or non-infringed.

The Federal Circuit's Decision and Remand

The Federal Circuit concluded that:

• The injunction prohibiting the initiation of new clinical trials was deemed unlawful.

• The injunction banning open-label extensions was overturned.

• The injunction preventing Avadel from seeking FDA approval for new indications was vacated.

The court remanded the case, instructing the district court to determine whether Avadel's paper NDA submission for an additional Lumryz indication would infringe under 35 U.S.C. § 271(e)(2). If the court finds infringement, that activity cannot be enjoined. If the paper NDA is not an act of infringement, the district court must reconsider the eBay factors and determine whether an injunction would be appropriate.

The four-factor test established in eBay Inc. v. MercExchange, L.L.C. (2006) outlines the criteria for determining when a permanent injunction is warranted in patent infringement cases. These factors are: (1) irreparable injury, (2) inadequacy of legal remedies, (3) balance of hardships, and (4) public interest. 

The CAFC summarised that they have considered the parties' remaining arguments and found them unpersuasive, reversing the injunction regarding clinical trials and OLE periods. They vacated the injunction about FDA approval and remanded it for reconsideration in light of their opinion. 

Decision is here