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September 2015: Quinn Wins Bet for Avanir in “Bet-the-Company” Case

September 2015

The firm recently secured a key victory at the United States Court of Appeals for the Federal Circuit (“Federal Circuit”) for our client Avanir Pharmaceuticals, Inc. (“Avanir”), an innovator pharmaceutical company, in a “bet-the-company” Hatch-Waxman patent litigation relating to Avanir’s flagship Nuedexta® product. The judgment affirmed the District Court of Delaware’s holding that Nuedexta® is entitled to patent protection until 2026. Nuedexta® is a combination of two drugs, dextromethorphan (“DM”) and quinidine (“Q”), that is used for the treatment of pseudobulbar affect, or PBA—a devastating neurological disorder characterized by episodes of involuntary laughing and crying that are unrelated to the patient’s mood.

The case began in July 2011, when Avanir received its first notice that a generic (Par) had submitted an application to the FDA to market a generic version of Nuedexta®. Five other generics (Actavis, Wockhardt, Impax, Watson, and Ranbaxy) quickly followed Par’s lead. Avanir’s patents claim the use of low-dose DM and Q combinations for the treatment of PBA—with DM as the therapeutic ingredient and Q acting to inhibit the body’s metabolism of DM. The generics argued that Avanir’s patents were invalid as obvious in view of earlier patents that broadly claimed the use of DM and Q to treat PBA, but at much higher doses.

Quinn Emanuel quickly identified that the generics’ obviousness theories were based entirely on hindsight—starting with Avanir’s patents and working backwards to piece together the claimed inventions. Throughout discovery, the firm sought to highlight the hindsight-based nature of the generics’ theories, including that persons skilled in the art at the time would not have ignored the prior art’s teachings that much higher amounts of DM and Q were believed to be required to treat PBA. The firm obtained key admissions from the generics’ experts that persons skilled in the art at the time of invention would not have had any reason to lower the doses of DM and Q used in the prior art to treat PBA, and that even if they did, they would not have reasonably expected that the claimed lower dose combinations could effectively treat PBA.

The firm’s litigation strategy was so effective that only two generics remained when the case proceeded to trial; two of the generics settled just days before trial. After a six-day bench trial in front of Judge Leonard P. Stark and extensive post-trial briefing, the district court ruled in Avanir’s favor, holding the patents valid and infringed.

After the district court’s decision, one of the remaining two generics bowed out. The last generic standing (Par) appealed the district court’s validity ruling. Oral argument was held on Friday, August 7, 2015. During argument, the three-judge Federal Circuit panel was highly critical of Par’s obviousness theories, relying heavily on the flaws that Quinn Emanuel pointed out in appellate briefing. The morning of Monday, August 10, 2015—less than one business day after the argument—the Federal Circuit issued a Rule 36 affirmance of the district court’s decision.

Both the district court and appellate victory were critical to Avanir’s future. Nuedexta® provided virtually all of Avanir’s revenue, and many analysts predicted that Avanir would have had to shut its doors if it suffered defeat in this litigation. Instead, as a result of Quinn Emanuel’s victory, Avanir was acquired by Otsuka Pharmaceuticals, and Nuedexta® remains protected by its core patents until 2026.