Horizon Medicines LLC v. Apotex Inc.

Case Name: Horizon Medicines LLC v. Apotex Inc., Civ. No. 22-640-CJB, 2022 WL 16739909 (D. Del. Nov. 7, 2022) (Burke, M.J.) 

Drug Product and Patent(s)-in-Suit: Pennsaid® 2% (diclofenac sodium); U.S. Patent No. 9,066,913 (“the ’913 patent”)

Nature of the Case and Issue(s) Presented: In 2013, Apotex entered into a settlement agreement Nuvo Research and Mallinckrodt to resolve litigation between the parties over Pennsaid 1.5%. At the time, Nuvo owned U.S. Patents Nos. 8,217,078 (“the ’078 patent”) and 8,252,838 (“the ’838 patent”). Mallinckrodt was an exclusive licensee of the ’078 and ’838 patents and the holder of the NDA for Pennsaid 1.5%. The 2013 settlement agreement granted Apotex a license to certain patents relating to Pennsaid 1.5% and also granted Apotex rights relating to potential future manufacture and commercialization of a generic version of a Pennsaid 2% strength topical diclofenac sodium product. Specifically, Apotex was granted a license to “the ’838 Licensed Patent, and to any other patent that they now own or that they may acquire in the future, sufficient to allow Apotex to make, have made, use, sell, offer to sell, import, and distribute the Apotex 2.0% Product in and for the Territory….” The “’838 Licensed Patent” is defined in the 2013 Settlement Agreement as the “[’838 patent] and any patents that issue from any divisions, continuations, reissues or reexaminations thereof.”

The ’913 patent-in-suit is a continuation of the ’838 patent. The ’913 patent issued from an application filed by Nuvo on September 25, 2011. On October 17, 2014, Nuvo and Horizon entered into an agreement by which Horizon acquired Pennsaid 2% and Nuvo’s related patent rights. The ’096 application later issued to Horizon as the ’913 patent on June 30, 2015. On August 4, 2020, Apotex received tentative approval from FDA for its generic Pennsaid 2% product, but could not launch due to the first-filer’s exclusivity. On May 5, 2022, FDA “extinguished” the first-filer’s exclusivity and Apotex received final approval and launched its product shortly thereafter. Horizon sued Apotex on May 13, 2022. Apotex agreed to be enjoined from selling its generic product pending the instant summary-judgment motion, which sought to decide the sole issue concerning whether Apotex’s license from the 2013 settlement agreement applies to the ’913 patent-in-suit. The court granted Apotex’s motion for summary judgment, finding that Apotex has a license and does not infringe.

Why Apotex Prevailed: The court’s analysis centered on two issues: (i) could Nuvo grant a license to a future continuation patent that does not ultimately issue to Nuvo, and instead issues to Horizon; and (ii) if Nuvo can lawfully do so, does the 2013 settlement agreement utilize language that is sufficient to accomplish this? The court answered both in the affirmative.

Horizon’s primary argument in response to the first issue was “that Nuvo did not and could not grant Apotex a license to the ’913 patent, because that continuation patent did not issue to Nuvo (instead, it issued to Horizon in June 2015) and thus Nuvo did not own it.” In simpler terms, “one cannot convey what one does not own.” But that is not the law. The court, with extensive reliance on the Federal Circuit’s decision in Intel Corp. v. Negotiated Data Solutions, Inc., 703 F.3d 1360 (Fed. Cir. 2012), found that it is legally possible for a licensor to grant a license to a future continuation patent that does not ultimately issue to that licensor (and instead issues to a third party).

Next, the court found that the answer to the second issue was a “very clear yes.” The language of the agreement defining the ’838 Licensed Patent to expressly include, in addition to the ’838 patent itself, “any patents that issue from any divisions, continuations, reissues or reexaminations thereof” clearly means that if a patent were to issue in the future from a continuation application of the ’838 patent, then the parties intended that this future patent would be included in the definition of ’838 Licensed Patent. Moreover, the license grant itself includes a license to any patents that issue from any continuation applications of the ’838 patent. The parties intentions were therefore clear. Horizon raised several arguments in response, but all were rejected.