Endo Pharmaceuticals v. Actavis: An Analysis From A Transactional Perspective

On March 31, 2014, the U.S. Court of Appeals for the Federal Circuit vacated a denial of a preliminary injunction in Endo Pharmaceuticals, Inc. v. Actavis, Inc. and Actavis South Atlantic, LLC, in a decision that underscores the importance of careful drafting and knowledge of the patent landscape in executing patent license agreements. Endo Pharmaceuticals, Inc. sells Opana ER, which contains the painkiller called oxymorphone. Actavis, Inc., Actavis South Atlantic, LLC, and Roxane Laboratories, Inc. (collectively the "Defendant-Appellees") attempted to market generic versions of Opana ER. After an initial patent infringement suit between Endo and Actavis, all parties entered into settlement and license agreements. The license agreement between Endo and Roxane, to which the license agreement between Endo and Actavis is similar, dictated that Endo would grant patent licenses for:

"(a) any [U.S.] patents that are both (i) now owned by Endo...and (ii) issued as of the Effective Date of this Agreement, including the Opana ER Patents, (b) any [U.S.] patent applications that claim priority to the Opana ER Patents, including any continuation, continuation-in-part and divisional patent applications that claim priority to Opana ER Patents, and (c) any patents resulting from the reissue or reexamination of patents or patent applications comprised within clauses (a) and (b)..."

As a result of clauses (a) through (c), the license agreement granted express license rights to the Defendant-Appellees for three of Endo's Opana ER patents. As a limitation to the scope of the Licensed Patents, the license agreements contained provisions expressly barring any patent rights to Actavis and Roxane "whether by implication, estoppel or otherwise, other than as expressly granted herein." Roxane J.A. 4949 § 4.4. While the license agreements contained covenants not to sue, detailing that Endo would not assert that Defendant-Appellees' generic versions of Opana ER infringe, those covenants were limited to the Licensed Patents. Subsequent to the license agreement, the USPTO issued two additional Endo patents relating to Opana ER. Endo then sued Actavis and Roxane, alleging that their generic versions of Opana ER violated these two newly issued patents, for which Actavis and Roxane did not have a license. Endo moved for a preliminary injunction to prevent further marketing of the Defendant-Appellees' generic versions of Opana ER. In response, Actavis and Roxane argued...