In a precedential ruling, the U.S. Court of Appeals for the Federal Circuit in Jazz Pharma. v. Avadel CNS Pharma., 2025 WL 1298920, — F.4th — (Fed. Cir. May 6, 2025), addressed the scope of the 35 U.S.C. § 271(e)(1) “safe harbor” provisions for certain clinical trials and regulatory filings. Although the case arose under the Hatch-Waxman Act, the same safe harbor provision applies to biologics.[1]
Background
Jazz Pharmaceuticals markets XYREM and XYWAV (sodium oxybate) for narcolepsy and related conditions. Avadel CNS Pharmaceuticals developed LUMRYZ, a competing sodium oxybate product approved under the FDA’s 505(b)(2) pathway.
The dispute centers on Jazz’s U.S. Patent No. 11,147,782, which cover sustained-release formulations. Notably, while this patent was held to cover LUMRYZ, it does not cover either XYREM or XYWAV, and is thus not listed in the FDA’s listing of “Approved Drug Products with Therapeutic Equivalence Evaluations” (a.k.a., “Orange Book”).[2]
Avadel stipulated that LUMRYZ would infringe claim 24 of the ’782 patent if it were not found invalid. After a jury found that claim 24 was not invalid, the U.S. District Court for the District of Delaware issued an injunction that barred Avadel from engaging in certain clinical trials and regulatory activities for LUMRYZ, specifically: (1) offering open-label extensions to clinical trial participants, (2) applying for FDA approval and marketing LUMRYZ for new indications, including idiopathic hypersomnia (an indication for which Avadel had begun clinical trials), and (3) initiating new clinical trials or studies after the effective date of the injunction.[3]
Avadel appealed, arguing that the injunction was overly broad, particularly in restricting activities protected under the “safe harbor” provision of 35 U.S.C. § 271(e)(1). This provision shields certain activities related to regulatory approval from patent infringement liability by providing that:
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 (other than [certain animal drugs and veterinary biological products]) 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).
The Federal Circuit reversed in part and remanded in part, holding that injunction prohibiting new clinical trials and open-label extensions was “overbroad as a matter of law.”[4] The court emphasized that the safe harbor applies broadly to “all uses of patented inventions that are reasonably related to the development and submission of any information under the FDCA,” even if the commercial product has been held to infringe a valid patent.[5] At the same time, the court underscored the fact-specific nature of the safe harbor inquiry, pointing out that Jazz may in the future bring patent infringement claims based on specific clinical trial-related activities that it believes fall outside of the § 271(e)(1) safe harbor.[6]
Key points from the ruling include:
- Future Clinical Trials: The Federal Circuit reversed the injunction’s prohibition on initiation of new clinical trials, holding that “the plain language and purposes” of § 271(e)(1) exempts from infringement such clinical trial activities.[7] The court noted that in enacting the Hatch-Waxman Act’s safe harbor provision, Congress expressed its intent that “experimentation with a patented drug, when the purpose is to prepare for commercial activity which will begin after a valid patent expires, is not a patent infringement.”[8]
- Safe Harbor as an Affirmative Defense: The Federal Circuit rejected Jazz’s argument that Avadel had waived the protection of the safe harbor by not pleading it as an affirmative defense. The court found that the “forward-looking injunction” against future clinical trial activities turned entirely on a question of law and was facially in violation of § 271(e)(3), which expressly prohibits injunctions against activity that falls within the safe harbor.[9] Because Avadel had not been accused of specific infringing acts involving its future clinical trials, it would be premature to require it to plead (much less develop facts to support) a safe-harbor defense. The court noted, however, that Jazz could in the future challenge specific activities by Avadel that it believes fall outside of the safe harbor, and that it then would be “incumbent upon Avadel to plead its entitlement to safe-harbor protection” as an affirmative defense.[10]
- Open Label Extensions: An open label extension (“OLE”) “allows clinical trial participants to receive a trial drug past the formal completion of the trial, both to gather additional safety data for submission to the FDA and to maintain continuity of patient treatment.”[11] Although the parties presented extensive arguments on appeal about whether Avadel’s use of OLEs was protected by the safe harbor, the Federal Circuit noted those issues had not been decided by the district court and reversed the injunction prohibiting Avadel from offering OLEs. The court held that specific OLE activity must first be accused of infringement and held outside the protection of § 271(e)(1) before an injunction may issue. “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.”[12]
- Applying for FDA Approval for New Indications: The court vacated and remanded the portion of the injunction barring Avadel from seeking FDA approval for new indications. The court noted that merely filing an application seeking FDA approval is not an infringing act under § 271(a)-(c). While an injunction may extend to certain non-infringing acts, it may do so only if the injunction is “necessary” to prevent future infringement.[13] While the Federal Circuit noted several reasons that enjoining the filing of an FDA application does not seem necessary to prevent actual infringement, it remanded to the district court for further consideration.[14]
- Can there be an act of infringement under § 271(e)(2)(A) without an Orange Book listing? The court identified an apparent issue of first impression as to whether Avadel’s submission of a 505(b)(2) application for a new indication would be a technical act of infringement under § 271(e)(2)(A) even though the asserted patent is not listed in the Orange Book.[15] The appeals court noted that if such a submission is an infringing act under § 271(e)(2)(A), then the district court’s injunction against seeking approval for new indications exceeds the scope of its statutory powers under § 271(e)(4). However, the court remanded to the district court to decide this issue in the first instance.
The Federal Circuit’s decision reinforces the balance struck by Congress between patent protection and fostering generic or follow-on drug development. It underscores that clinical and regulatory activities, even for infringing products, are protected if they are solely for uses reasonably related to development and submission of information under the FDCA.
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[1] See, e.g., Amgen Inc. v. Hospira, Inc., 944 F.3d 1327 (Fed. Cir. 2019).
[2] Jazz Pharma. v. Avadel CNS Pharma., 2025 WL 1298920, at *2 (Fed. Cir. May 6, 2025). Notably, the district court did not enjoin Avadel from making, using, or selling LUMRYZ for its FDA-approved indication (treatment of narcolepsy). The district court found the potential harms to the public from such an injunction outweighed any irreparable harm to Jazz. Id. at *3, n. 5. Jazz did not appeal that issue.
[3] Id. at *4.
[4] Id. at *5; see id. at *7.
[5] Id. at *5 (quoting Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193, 202 (2005)). The “FDCA” is the Federal, Food, Drug and Cosmetics Act, codified in Title 21, Chapter 9 of the United States Code.
[6] See id. at *7 (finding “no support in the record to sustain a determination one way or the other on whether the safe-harbor provision applies to those [future] activities” not yet accused of infringement).
[7] Id. at *5.
[8] Id. at *5 (quoting H.R. Rep. No. 98-857, pt. 1, at 45-46 (1984), as reprinted in 1984 U.S.C.C.A.N. 2647).
[9] Id. at *6.
[10] Id. at *7.
[11] Id. at *3 (quoting J.A. 7511-12).
[12] Id. at *7.
[13] Id. at *10.
[14] See id. at *11. The Federal Circuit instructed the district court to first consider whether its injunction against filing a 505(b)(2) application for new indications would be prohibited by § 271(e)(4).
[15] Id. at *9-*10. This issue does not apply to biosimilars. Under the BPCIA, the technical act of infringement involved in filing an application for FDA approval refers to those patents identified in the lists provided under 42 U.S.C. § 262(l)(3) or (l)(7).