In a recent Federal Circuit case Endo Pharmaceuticals Inc. v. Actavis, Inc., one of issues that the court faced was whether there was an implied license for a patent that claimed the same priority to a provisional patent application as another patent that had an express license. The Federal Circuit vacated and remanded the district court’s denial of a preliminary injunction, with Judge Dyk dissenting.
Endo and Actavis entered into a settlement agreement pursuant to a previous case “specifi[ng] that “Endo . . . covenant[s] not to sue [i.e., licenses] Actavis . . . for infringement of . . . the Opana® ER Patents [i.e., the ’250, ’933, and ’143 patents]” Slip op. at 3. During the settlement agreements, Endo had two pending patent applications, the ‘122 and ‘216 patents that were not disclosed to Actavis. The ‘122 and ‘216 patents claim priority to the same 2001 provisional patent application as the ‘250 patent that Endo covenanted not to sue on. In this case, Endo sought to enjoin Actavis from producing Opana® ER generic products on the ground that the sales would infringe their ’122 and ’216 patents. Thus, one of the questions was whether the district court rightfully held Actavis had an implied license to produce the disputed products under its settlement agreement with Endo.
The majority and Judge Dyk parted ways in their interpretation of the prior case law, TransCore, LP v. Electronic Transaction Consultants Corp., 563 F.3d 1271 (Fed. Cir. 2009) and General Protecht Group, Inc. v. Leviton Manufacturing Co., Inc., 651 F.3d 1355 (Fed. Cir. 2011). The Federal Circuit previously held that “a license or a covenant not to sue enumerating specific patents may legally estop the patentee from asserting continuations of the licensed patents in the absence of mutual intent to the contrary.” Slip. op. at 13 (emphasis in original). The majority refused to expand “continuations” of a licensed patent to cover patents that claim the same priority of a provisional application. However, Judge Dyk believed that the shared provisional-patent priority-claim relationship between the ‘250 and ‘122/’216 patents should be no different.
If the majority ruling stands, the implications on provisional patents may be that when claiming priority based on a provisional, or during settlement agreements involving provisional applications, it is important to consider all subsequent patents claiming the same provisional application as separate entities in terms of licenses.