Analyzing an injunction preventing a generic pharma house from introducing a new generic drug, the U.S. Court of Appeals for the Federal Circuit upheld a lower court’s decision to issue equitable relief, finding that the generic pharma failed to file a timely appeal against an injunction. In re Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent Litigation, No. 12-1280 (Fed. Cir., Feb. 1, 2013) (O’Malley, J.)

In 2007, shortly after Cephalon filed a New Drug Application for AMRIX®, Impax, Mylan Inc. and Mylan Pharmaceuticals (Mylan), and Par Pharmaceutical, among others, filed Abbreviated New Drug Applications seeking U.S. Food and Drug Administration approval to make and sell generic versions. Cephalon sued for patent infringement and on the last day of trial settled with Impax. The settlement agreement granted a non-exclusive license in the patents that cover AMRIX® and controlled the timing of Impax’s entry into the generic market.

In May 2011, the district court held the patents invalid as obvious and entered soon after an injunction enjoining Mylan and Cephalon, along with all parties “acting in active concert or participation” with them, from selling a generic version of AMRIX® so as to maintain the status quo pending an appeal on the invalidity ruling.

In November 2011, Mylan asked the district court to confirm that the May 2011 injunction covered any party in privity with Cephalon via license, settlement or contract. The district court confirmed that the injunction covered Impax because it was in active concert and participation with Cephalon via the settlement agreement. Impax then argued that a triggering event under the settlement agreed had occurred, which allowed it to sell a generic. The district court disagreed, and Impax appealed.

On appeal, the Federal Circuit found that Impax’s appeal of the district court’s injunction was untimely because Impax did not file an appeal within 30 days of the original May 2011 injunction. The Court found that Impax was covered by the original injunction because it derived its right to enter the market through the settlement agreement. The Court reasoned that a contrary result would allow Impax to get around the injunction. For the same reasons, the Federal Circuit found that the district court did not modify the original injunction, but only clarified it.

The Federal Circuit also rejected Impax’s argument that changed circumstances required a prospective modification of the injunction. The changed circumstances, including the transfer of generic product from Cephalon to Impax to go to market, did not rise to the level of modifying the injunction because they were circumstances contemplated by the original injunction and necessarily included within it.

Finally, Impax argued that a triggering event under the settlement agreement authorized its sale of generic products. The triggering event recited: “the same day that any Third Party which is not entitled to First to File Exclusivity is licensed or authorized by [Cephalon] to begin selling Generic Equivalent Product in the Territory.” The Federal Circuit rejected Impax’s argument that Cephalon’s appointment of Watson Pharmaceuticals as its sales agent was a triggering event under this provision.

The Court found that Watson was merely Cephalon’s sales agent. Essentially, Cephalon would be selling the generic product, and the settlement agreement explicitly excluded Cephalon’s entry into the generic market from the triggering events.