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

Last Updated: May 6 2014
Article by Brett A. Garner and Pauline P. Jaturongpanich

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 that they had an express license and an implied license to the later-issued patents, the latter license by reason of estoppel because Endo was effectively trying to deprive them of "the benefit of [the earlier] bargain." Roxane J.A. 4823; see also Actavis J.A. 2717. 

With regard to the Defendant-Appellees' argument that they had an express license, the question goes to whether the subsequent Endo patents fall within the scope of clauses (a) through (c) of the prior agreements. The court held that the patents did not, focusing its analysis on clause (b).

According to the court, to satisfy clause (b), "a patent must make an express cross-reference to the nonprovisional application from which the prior patent issued." Endo Pharmaceuticals, Inc. v. Actavis, Inc., No. 2013-1662, 2014 WL 1272846 *7, n. 1 (Fed. Cir. Mar. 31, 2014).  The court found that none of the subsequent Endo patents were continuations of the patents governed by the license agreements because the subsequent patents did not cross-reference the Licensed Patents.

However, the subsequent patents did claim priority to a U.S. provisional application to which one of the Licensed Patents also claimed priority. On this basis, Actavis and Roxane argued the subsequent patents satisfied clause (b).  The court rejected those arguments, holding that a common provisional application was insufficient to satisfy clause (b).  Instead, the later-issued patents would have had to cross-reference a Licensed Patent in order to be a "continuation" of a Licensed Patent.

The court explained that Actavis and Roxane were only granted licenses limited to specific patents and patent applications, not to entire subject matters. The court effectively held that estoppel does not grant an implied license to unrelated patents. Thus, Endo was not estopped from asserting the subsequent patents because the subsequent patents are not continuations of the Licensed Patents. Accordingly, the court vacated the district court's denial of a preliminary injunction and remanded for further proceedings.

From a transactional standpoint in drafting patent license agreements, the court suggested two provisions that would have expressly included the later-issued patents in the license and prevented Endo from suing the Defendant-Appellees for patent infringement.

First, in a situation where several patents have a provisional application in common, a licensee should include language that the licensed patents include "any application claiming a common priority date as the licensed patents." This language would have expressly made the subsequent patents Licensed Patents under the agreement. 

Second, if properly drafted, a license agreement may provide an implied license to subsequent patents where the subsequent patents have the "same inventive subject matter" as the licensed patents. Endo Pharmaceuticals, Inc. v. Actavis, Inc., No. 2013-1662, 2014 WL 1272846 *12 (Fed. Cir. Mar. 31, 2014) (citing General Protecht Group, Inc. v. Leviton Manufacturing Co., Inc., 651 F.3d 1355, 1361 (Fed. Cir. 2011)). Such implied license was found when the license agreement at issue gave a license "to practice, and cause to be practiced...throughout the world, each Subject Invention." This language does not limit the license to specific patents. Id. (citing AMP Inc. v. United States, 389 F.2d 448, 454 (Ct. Cl. 1967)). Rather, such language grants a license to the overall concept and subject matter of the related patents, rather than a license to specific patents, regardless of whether such patents were issued or in existence at the time of the agreement. 

Following Endo, transactional attorneys drafting patent license agreements should be careful to avoid these pitfalls. Given the court's analysis, it is crucial to identify the potential implications of future patents and adequately address their treatment in each patent license agreement. The results of the case may cost Actavis and Roxane the ability to market their generic versions of Opana ER, despite the consideration they paid to Endo in the settlement and license agreement. As this case demonstrates, courts will not rewrite written agreements between the parties, even when the rules of patent law may render the license ineffective.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions