Federal Circuit Reverses Injunction That Barred Clinical Trials in Jazz v. Avadel

The Federal Circuit recently considered the scope of a permanent injunction that prohibited a drug manufacturer from conducting certain clinical and regulatory activities in Jazz Pharmaceuticals, Inc. v. Avadel CNS Pharmaceuticals LLC, No. 24-2274 (Fed. Cir. May 6, 2025) (“Appeal”). The District Court had enjoined Avadel from (1) initiating new clinical trials for its drug Lumryz, (2) offering open-label extensions of the drug in ongoing clinical trials, and (3) seeking Food and Drug Administration (FDA) approval or marketing its product, Lumryz, for the treatment of idiopathic hypersomnia. Id. at *24-27. In addition, the court questioned whether a Hatch-Waxman action could be instituted where the patent-in-suit was not listed in the Orange Book. Id.

Key points

• The Federal Circuit reversed the District Court’s injunction to the extent that it prevents Avadel from initiating new clinical trials or offering open-label extensions to current clinical trial participants.
• On the issue of Avadel’s application for FDA approval, the court vacated the injunction and remanded to the District Court for reconsideration.
• On remand, the District Court may also address whether an action under § 271(e)(2) requires that the asserted patent be listed in the Orange Book.

Statutory background

The safe harbor provision, 35 U.S.C. § 271(e)(1), was enacted as part of the Hatch-Waxman Act. In relevant part, it provides:

It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention . . . solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.

35 U.S.C. § 271(e)(1).

Factual background

Jazz sells both Xyrem® and Xywav®, two sodium oxybate medications used to treat excessive daytime sleepiness and cataplexy in patients with narcolepsy. Appeal at *2. Xywav® is also used to treat idiopathic hypersomnia, a condition that is “on a spectrum with narcolepsy” and is similarly characterized by excessive daytime sleepiness. Id. at *2-3 (internal quotations omitted). Xywav® is the first and only FDA-approved treatment for idiopathic hypersomnia. Id. at *3.

In December 2020, Avadel filed a “paper New Drug Application (NDA)” under 35 U.S.C. § 505(b)(2) for its product Lumryz, a sodium oxybate medication for the treatment of excessive daytime sleepiness and cataplexy in adults with narcolepsy. Id.

Just three months after the filing of Avadel’s paper NDA, Jazz filed a patent application covering an oxybate medication, which ultimately issued as U.S. Patent No. 11,147,782 (“the ʼ782 patent”). Id. at *4. Neither Jazz’s Xyrem® nor Xywav® practice the asserted claims of the ʼ782 patent. Id. Accordingly, Jazz did not list the ʼ782 patent in the Orange Book. Id.

In November 2021, Jazz filed suit against Avadel, alleging that Avadel’s submission of the paper NDA for Lumryz constituted an act of infringement under 35 U.S.C. § 271(e)(4)(B) and sought a permanent injunction preventing Avadel from the commercial manufacture, use, offer to sell, or sale of Lumryz. Id. at *5, n. 2. Because Jazz’s claims were based on the filing of Avadel’s paper NDA, Jazz’s claims, at that time, were based solely on an artificial act of infringement under § 271(e)(2). Id. at *5-6. But in May 2023, FDA approved Avadel’s paper NDA, and Avadel subsequently launched Lumryz in June 2023. Id. at *6. Accordingly, Jazz amended its complaint to assert infringement under §§ 271(a)-(c). Id. The parties stipulated that Lumryz would infringe claim 24 of the ʼ782 patent if valid. Id. *7. At trial, the jury found that Avadel failed to prove that claim 24 was invalid. Id.

Jazz subsequently moved for a permanent injunction to prevent Avadel from making, using, or selling Lumryz. Id. “Jazz proposed to exclude from the injunction, however, Avadel’s making, using, and selling Lumryz (a) for the patients who have been prescribed Lumryz as of the effective date of the injunction…; (b) [for patients] in currently-ongoing clinical trials and studies; and (c) to update data in old studies if necessary; and (d) to re-run necessary tests for quality control for regulators or customers.” Id. at *7-*8 (internal quotations omitted).

While Jazz’s motion for an injunction was pending, Avadel started its REVITALYZ clinical trial, a study of the efficacy and safety of Lumryz in patients diagnosed with idiopathic hypersomnia. Id. at *8. In August 2024, the District Court granted Jazz’s motion, issuing a permanent injunction “’prohibiting Avadel from seeking approval from the [FDA] and marketing Lumryz for the treatment of [idiopathic hypersomnia].’” Id. at *8-*9. As Jazz proposed, however, Avadel was not enjoined from continuing to use Lumryz in currently ongoing clinical trials or studies. Id. at *9. The District Court further stated, “[f]or the avoidance of doubt,… while Avadel may continue to use Lumryz in currently-ongoing clinical trials and studies… Avadel may not seek approval of Lumryz from the FDA for the treatment of [idiopathic hypersomnia] or for any indication that was not already part of Lumryz’s approved product labeling as of March 4 2024.” Id. at *9.

Avadel filed an appeal and moved the District Court to stay the injunction pending appeal. Avadel argued that enjoining it from initiating clinical trials and seeking FDA approval for idiopathic hypersomnia ignored the safe harbor. Id. Jazz countered that Avadel had waived this argument by failing to plead or pursue it. Id. at *10. While the court denied the motion to stay, it clarified that, under its permanent injunction, Avadel was still permitted to make, use, or sell Lumryz for its REVITALYZ clinial trial, enroll new subjects in the study, and submit information or results from ongoing studies to FDA. Id. But the District Court confirmed that Avadel was enjoined from “(1) offering open-label extensions to [REVITALYZ] trial participants; (2) applying for FDA approval of LUMRYZ for [idiopathic hypersomnia;] and (3) initiating new clinical trials or studies after the [PERMANENT INJUNCTION ORDER]’s effective date.” Id. at *11 (emphasis in original).

Were Avadel’s enjoined activities protected by the safe harbor?

Avadel argued that the District Court’s grant of a permanent injunction and the scope of the injunction was an abuse of the court’s discretion. Id. at *12. The Federal Circuit evaluated the three enjoined activities independently. Id. at *12-13.

Initiating new clinical trials for Lumryz

According to the Federal Circuit, the plain language of the Hatch-Waxman Act made enjoining Avadel from initiating new clinical trials for Lumryz unlawful and an abuse of discretion. Id. at *14. The court relied on the Supreme Court’s language in Merck KGaA v. Integra Lifesciences, quoting “‘it is apparent from the statutory text’ that development of submission of any information under the FDCA. . . necessarily include[ing] preclinical studies of patented compounds that are appropriate for submission to the FDA.” Id. at *14 (quoting Merck KGaA v. Integra Lifesciences, 545 U.S. 193, 202 (2005) (emphasis in original).

The court then rejected Jazz’s argument that Avadel waived its safe harbor defense by not pleading it or developing it during the litigation and noted that Avadel’s challenge was a facial challenge, arguing a “purely legal invocation of the safe harbor [that] does not require factual development.” Id. at *14-*16.

The court also noted that Jazz never argued that Avadel’s activities with respect to future clinical trials were necessarily infringing. Id. at *16-17. As such, it left open the door for Jazz to later plead that Avadel was making, using, or selling Lumryz for purposes outside the safe harbor. Id. at *18. The court noted that it may be “incumbent upon Avadel to plead” its safe harbor defense. Id.

Offering open-label extensions to patients in ongoing clinical trials

The court next considered whether the injunction was overbroad, as it prevented Avadel from offering open-label extensions to participants in ongoing clinical trials. Because the arguments were raised only in Avadel’s emergency motion to stay the injunction pending appeal, the District Court never considered whether these acts would be infringing. Id. at *19-20. “Only 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.” Id. at *20. Because this activity was never accused of infringement, the court reversed the injunction to the extent that it enjoined Avadel from offering open-label extensions to patients in ongoing clinical trials. Id.

Applying for FDA approval of Lumryz for idiopathic hypersomnia

The court finally considered whether the injunction was overbroad in preventing Avadel from applying for FDA approval of Lumryz for idiopathic hypersomnia. Id. at *21. On appeal, Avadel argued that its submission of an application for FDA approval of the idiopathic hypersomnia indication was not an act of infringement under § 271(a), or if it were a “use” under that statute, its conduct was within the safe harbor. Id. at *21-*22. The appellate court agreed that submission of an application to the FDA is not infringement under § 271(a); however, it is an act of infringement under § 271(e)(2), which neither party meaningfully addressed:

It shall be an act of infringement to submit an application under section 505(j) of the [FDCA] or described in section 505(b)(2) of [the FDCA] for a drug claimed in a patent or the use of which is claimed in a patent. Id. at *22-*23 (citing § 271(e)(2)(A) (emphasis in original)).

Because this issue was only raised at oral argument and not briefed, the Federal Circuit remanded the case to the District Court to determine whether Avadel’s submission of a paper NDA for Lumryz for the treatment of idiopathic hypersomnia or any other indication is an act of infringement under § 271(e)(2). Id. at *27. The resolution of that question will necessarily resolve the question of whether the District Court’s injunction was overbroad. Id. at *27-*29. If the District Court finds that Avadel’s submission of a paper NDA for Lumryz is an act of infringement under § 271(e)(2), then the injunction prohibiting Avadel from seeking FDA approval for any indications was unlawful as it exceeded the scope of remedies under § 271(e)(4). Id. at *28. If, however, the District Court finds that Avadel’s submission of a paper NDA was not an act of infringement under § 271(e)(2), then the District Court would not be limited by § 271(e)(4); however, the District Court would have to find that the injunction was necessary to prevent infringement, which it did not do in the first instance. Id. at *28-*29.

Can a § 271(e)(2) action be filed where the patent-in-suit is not listed in the Orange Book?

On appeal, Avadel argued that its paper NDA did not trigger an infringement claim under § 271(e)(2) because the asserted patent was not listed in the Orange Book. In evaluating this argument, the Federal Circuit, relying on the explicit language of § 271(e)(2), stated:

The provision does not mention or otherwise appear to limit the act of infringement [under § 271(e)(2)] to only Orange Book patents. Rather, its plain language would seem to render any ANDA or paper NDA submitted in the face of any existing patents that claim the applied– for drugs or its use to be an act of infringement. Id. at *22.

Considering the opposing view, the Court continued:

On the other hand, the placement of §271(e)(2) within the context of the Hatch-Waxman Act suggests that the provision may only apply where the ANDA or paper NDA seeks approval of a drug claimed in an Orange Book patent. That interpretation would comport with Congress’s intention of triggering litigation, after notice is given to a patent owner and regulatory approval is stayed, to hasten the introduction of generic drugs to the market if the relevant patents are found to be invalid or not infringed. Indeed, portions of the legislative history of the Act suggest that Congress “expect[ed] that infringement actions ... w[ould] only be brought in the instance described in section 271(e)(2), where a party submitting an [ANDA] certifies that a patent is invalid or non-infringed and gives the required notice of that certification to the patent owner.” H.R. Rep. No. 98-857, pt. 1, at 46 (emphases added). After all, we have not been made aware of any cases before or after the enactment of the Hatch-Waxman Act where a regulatory filing alone was held to be a patent infringement. Id. (Emphasis in original).

This issue may not be one of first impression as the Federal Circuit suggested because decisions do exist addressing whether an action under § 271(e)(2) is limited to patents listed in the Orange Book. The decisions uniformly hold that a listing is not required.

In AstraZeneca Pharmaceuticals LPN Apotex Corp., the Federal Circuit affirmed the District Court’s dismissal of an action under § 271(e)(2) where Apotex’s ANDA did not cover any of the uses claimed in the asserted patent. 669 F.3d 1370 (Fed. Cir. 2012). While not directly on point, the court, however, did observe that “the requirements for jurisdiction in district courts are met once a patent owner alleges that another’s filing of an ANDA infringes its patent under § 271 (e)(2)…” Id. at 1377. Even though the decision focused on the necessity of a Paragraph IV certification, courts have applied its sweeping language to instances where no Orange Book patent is listed.¹

The requirement of an Orange Book-listed patent was central in Takeda Pharm Co. v. TWI Pharms. 2013 WL 12164680 (N.D. Cal. 2013). As summarized by the court: “TWI contends that there is no subject matter jurisdiction over Takeda’s ʼ282 patent infringement claim under 35 U.S.C § 271(e)(2) because Takeda did not list that patent in the Orange Book. The Court disagrees.” Id. at *71. The court concluded:

In light of the Caraco decision and the Federal Circuit’s recent decision in AstraZeneca, the Court joins a number of the other district courts in concluding that there is no requirement under the Hatch-Waxman Act that a patent must be listed in the Orange Book in order for a drug manufacturer to bring an infringement action based on that patent against an ANDA applicant. Id. at 78.²

Other decisions, some in dicta, are consistent with the holding in Takeda.

For example, in Medicines Co. v. Eagle Pharmaceuticals, Inc., the defendants moved to dismiss the patent infringement action because “35 U.S.C. § 271(e)(2) applied only to patents listed in the Orange Book.” 2016 WL 4418230 (D.N.J. 2016). In denying the motion, the court stated that “Eagle submitted a [paper NDA] for a drug claimed in the [asserted] patents. Section 271(e)(2)(A) does require more.” Id. at *2. In support, the court cited AstraZeneca Pharms LP, supra, where the Federal Circuit held that jurisdictional requirements are met “once a patent owner alleges that another’s filing of an ANDA infringes its patent under § 271(e)(2).” 669 F.3d 1370, 1377 (Fed. Cir. 2012).³

In Celgene Corp. v. Sun Pharma Global TZE, the defendants moved to dismiss because the asserted patents were not listed in the Orange Book and were not subject to any Paragraph IV certifications. 2020 WL 1921700 (D.N.J. 2020). The court denied the motion and stated: “[T]he plain text of the Hatch-Waxman Act does not require the submission of a Paragraph IV certification to the FDA, nor does it require that the asserted patent be listed in the Orange Book.” Id. at *2.⁴

In Merck Sharpe Dohme Corp., v. Sandoz Inc., the court denied a motion to dismiss, stating, “Nothing in the plain language [of § 271(e)(1)] suggests that infringement actions against ANDA filers must be based only on Orange Book listed patents.” 2013 WL 591976, *4 (D.N.J. 2013). Similarly, in Purdue Pharma Products L.P. v. Par Pharmaceuticals Inc., the court observed that “there is no requirement that infringement actions against ANDA filers must be based on patents listed in the Orange Book.” 642 F. Supp. 2d 329, 363 n.49 (D. Del. 2010).

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Jazz’s permanent injunction against Avadel is in pieces. The Federal Circuit reversed the injunction to the extent that it prevents Avadel from initiating new clinical trials or offering open-label extensions to current clinical trial participants. Appeal at *31. Then the Federal Circuit vacated the injunction to the extent that it prevents Avadel from seeking FDA approval for idiopathic hypersomnia and remanded to the District Court for further consideration. Id. On remand, the District Court will have to consider not only whether Avadel’s actions were infringing but also whether the remaining scope of the injunction is proper. Id. at *27-*31. The District Court may also address the issue of whether an action under § 271(e)(2) requires that the asserted patent be listed in the Orange Book. Id. at *27.