Late last month, the Federal Circuit issued its opinion in Jazz Pharmaceuticals, Inc. v. Avadel CNS Pharmaceuticals LLC, a patent case that attracted an amicus brief. In this case, the Federal Circuit reviewed a determination by a district court that Jazz must request the Food and Drug Administration remove (or “delist”) one of its patents from the FDA’s so-called Orange Book because that patent was improperly listed. In an opinion authored by Judge Lourie and joined by Judges Reyna and Taranto, the Federal Circuit affirmed the district court’s judgment. This is our opinion summary.

Judge Lourie presented the facts of the case:

Jazz holds an approved New Drug Application (“NDA”) for the narcolepsy drug Xyrem®. J.A. 1445. Xyrem’s active ingredient is sodium gamma-hydroxybutyrate (“GHB”), which is also known as sodium oxybate. Id. GHB exerts a heavily sedating effect, which is theorized to grant deepened nighttime sleep, resulting in improved daytime wakefulness. GHB is prone to heavy misuse and is infamously known as a date-rape drug. Given that misuse, the FDA conditioned approval of Jazz’s NDA upon development of
Risk Evaluation and Mitigation Strategies (“REMS”), which include protocols that must be followed prior to prescribing or dispensing Xyrem. Id. Xyrem’s REMS originally restricted distribution to a single pharmacy system, although the FDA waived that requirement in 2017. J.A. 5660

Under the Hatch-Waxman Act (“the Act”), when a drug developer files an NDA, information on each patent “for which a claim of patent infringement could reasonably be asserted” must be submitted to the FDA if the patent claims either (i) the drug submitted for approval, or a formulation or composition thereof, or (ii) “a method of using such drug for which approval is sought or has been granted in the application.” 21 U.S.C. § 355(b)(1)(A)(viii). For “patents that claim a method of use, the applicant must submit information only on those patents that claim indications or other conditions of use for which approval is sought or has been granted in the NDA.” 21 C.F.R. § 314.53(b)(1). The FDA publishes that information in the Orange Book, arming the patent owner with the ability to trigger a presumptive, thirty-month suspension of the FDA’s approval of a competitive product.

In December 2020, Avadel submitted an NDA for GHB based drug FT218, along with amendments pursuant to § 505(b)(2) and a proposed REMS. Unlike Xyrem, which requires the patient to wake up a few hours into the night to ingest a second dose, FT218 is dosed once nightly. Decision at *1. FT218’s REMS also uses multiple pharmacies and databases for ensuring proper drug handling. Despite these differences, and the fact that Avadel had filed an NDA, not an ANDA, the FDA required Avadel to file a certification regarding the ’963 patent’s single-pharmacy system. Jazz subsequently sued Avadel for infringement of the ’963 patent. Avadel contemporaneously sued the FDA, alleging that it violated the Administrative Procedure Act (“APA”) by requiring certification over the ’963 patent. Notably, the FDA does not verify that submitted patents actually meet statutory listing criteria, nor does the FDA proactively remove improperly listed patents.

Another remedy for an improper listing is for an accused infringer to counterclaim when it is sued, seeking an order requiring the patent owner to correct or delete a listing under 21 U.S.C. § 355(c)(3)(D)(ii)(I) for NDA filers and under § 355(j)(5)(C)(ii)(I) for ANDA filers. Avadel’s suit against the FDA was accordingly dismissed after the district court identified that § 355(c)(3)(D)(ii)(I) provided Avadel with a separately available and adequate remedy for its alleged harms.

Avadel thus responded to Jazz’s infringement assertions with a counterclaim seeking delisting of the ’963 patent for failure to claim a drug or method of use. In evaluating the counterclaim, the district court found that, as a matter of claim construction, the ’963 patent claims a system and thus does not claim an approved method of use.

The district court subsequently ordered Jazz to ask the FDA to delist the ’963 patent. Jazz filed a notice of appeal and moved the district court and this court to stay the injunction pending appeal. On November 29, 2022, we issued a temporary stay pending resolution of the concurrent district court motion. After the district court denied Jazz’s stay motion on December 5, 2022, we extended the stay until the issues on appeal could be evaluated by this court on the merits.

After providing this background, Judge Lourie first addressed “whether the district court erred in determining that the ’963 patent is not a method-of-use patent under the FDCA.” He explained that “method claims require the performance of steps; claims that describe physical components of a whole are system, or apparatus, claims.” He rejected Jazz’s contention that “the word ‘system’ as it appears in the ’963 patent claims is, essentially, a synonym for ‘method.'” Judge Lourie reasoned that “claims to a system comprising computer memories and a data processor are not claims to a method,” and “[e]ach of the ’963 patent’s three independent claims describes a ‘computer-implemented system’ that comprises ‘one or more computer memories’ and a ‘data processor.'”

Next, Judge Lourie analyzed “whether the system claimed in the ’963 patent is ‘an approved method of using the drug’ under 21 U.S.C. § 355(c)(2) and § 355(c)(3)(D)(ii)(I).” He explained that, “[a]lthough the FDA has opened several notice-and-comment inquiries into whether REMS patents belong in the Orange Book, it has never proclaimed an official agency stance on that issue, instead proclaiming that ‘its duties with respect to Orange Book listings are purely ministerial.'” He concluded “that the district court did not err in concluding that the ’963 patent must be delisted.”

In short, in this case the Federal Circuit held that “[t]he district court . . . correctly ordered Jazz to seek delisting of the ’963 patent from the Orange Book.” As a result of its analysis, the Federal Circuit affirmed the district court’s judgment and lifted the court’s “stay of the injunction requiring Jazz to ask the FDA to delist the ‘963 patent.”