Judge Griesa declines to revisit Federal Circuit’s finding that a license and settlement agreement is “clear on its face.”

Endo Pharmaceuticals, Inc. v. Roxane Laboratories, Inc.

Case Number: 1:13-cv-03288-TPG

Defendant Roxane Laboratories, Inc. (“Roxane”) was sued by Endo Pharmaceuticals, Inc. (“Endo”) when Endo learned that Roxane intended to manufacture and sell a generic version of Endo’s Opana® ER tablets.  Endo sought a preliminary injunction, alleging that Roxane’s generic version of its branded drug would infringe U.S. Patent Nos. 7,851,122 (the “122 patent”), 8,329,216 (the “216 patent”), and 7,851,482 (the “482 patent”).  The SDNY denied the motion for a preliminary injunction, on the basis that Endo was estopped from asserting the patents due to an existing settlement and license agreement between the parties.

On appeal, the United States Court of Appeals for the Federal Circuit vacated the district court’s denial of Endo’s motion for a preliminary injunction.  After the Federal Circuit’s ruling, Roxane filed a motion with the district court to amend its answer to include implied and express license affirmative defenses as well as an unclean hands defense.

Judge Griesa noted that the issue before the district court was whether it would be futile to allow Roxane to assert defenses that were rejected by the Court of Appeals in the context of reviewing the denial of the plaintiff’s motion for a preliminary injunction.  Judge Griesa noted that as a general matter, the law of the case doctrine mandates that a trial court is bound by the appellate court’s previous ruling on an issue in the same case.  He also addressed the fact that it is less clear whether an appeals court’s conclusions in reviewing the denial of a preliminary injunction have the same preclusive effect on those same issues in the district court.

Judge Griesa found that there was nothing tentative in the Federal Circuit’s decision regarding the settlement and license agreement.  The Federal Circuit determined that Roxane’s express license defense was meritless because the asserted patents were not continuations of the licensed patents, and there was no evidence that the asserted patents claimed priority to any of the licensed patents.  The Federal Circuit similarly rejected Roxane’s implied license defense because the case relied upon by Roxane contained a narrow holding, and was limited to a licensed patent and continuations of the licensed patent.

Roxane attempted to escape from the consequences of the Federal Circuit’s conclusions by arguing that its evidence relating to the contract negotiations had been excluded from the Federal Circuit’s review.  It also cited new deposition testimony that it claimed refuted the plaintiff’s description of the contract negotiations.

Judge Griesa was not swayed by Roxane’s arguments.  He noted that although the Federal Circuit briefly discussed the contract negotiations in its opinion, it ultimately held that the terms of the settlement and license agreement were unambiguous as a matter of law.  Judge Griesa was concerned that allowing Roxane to assert its implied and express license affirmative defenses would require the district court to reinterpret the settlement and license agreement and potentially put the district court at odds with the Federal Circuit’s conclusion that the agreement was “clear on its face.”  Accordingly, Judge Griesa denied Roxane’s motion, finding that the amendment sought would have been futile.  However, Judge Griesa did permit Roxane to amend its answer to include an unclean hands defense, due to the fact that the Federal Circuit had not considered the defense in its order, and the plaintiff had not opposed it.

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