IP Law Daily, PATENT—Fed. Cir.: Preliminary injunction against generic neurological drug launch largely upheld on appeal, (Jul 6, 2026)

By Mandavi Singh, LL.M.

A bond was still required under Rule 65(c), however, because Third Circuit precedent permits waiver only in narrow circumstances and not in ordinary commercial disputes.

The U.S. Court of Appeals for the Federal Circuit has largely affirmed a preliminary injunction preventing Hetero Labs Limited from launching a generic version of Nuedexta®, a prescription drug used to treat pseudobulbar affect (PBA), a neurological disorder marked by involuntary episodes of laughing or crying. The court held that Otsuka America Pharmaceutical, Inc. and Avanir Pharmaceuticals, LLC were likely to succeed in proving infringement of a patent covering methods of treating PBA by administering dextromethorphan and quinidine in specified dosage ranges and proportions. However, the Federal Circuit vacated the district court's decision to waive the security requirement under Federal Rule of Civil Procedure 65(c), holding that Third Circuit precedent permits dispensing with a bond only in limited circumstances not present in an ordinary commercial dispute (Otsuka America Pharmaceutical, Inc. v. Hetero Labs Ltd., No. 25-2016 (Fed. Cir. Jul. 1, 2026)).

Background. The plaintiffs-appellees, Otsuka America Pharmaceutical, Inc. and its subsidiary Avanir Pharmaceuticals, LLC (collectively, “Otsuka”), develop and market pharmaceutical products. Avanir developed Nuedexta®, while Otsuka later acquired Avanir and commercialized the drug. The defendants-appellants, Hetero Labs Limited, Hetero Labs Limited Unit-III, and Camber Pharmaceuticals Inc. (collectively, "Hetero"), manufacture and distribute generic pharmaceutical products.

The dispute centered on U.S. Patent No. 7,659,282 (the ’282 patent), which claims methods of treating PBA using a combination of dextromethorphan and quinidine administered within specified dosage ranges and weight-to-weight ratios. Nuedexta® contains dextromethorphan hydrobromide and quinidine sulfate, while Hetero's FDA-approved generic product contains the same active ingredients in the same strengths.

After obtaining approval of its Abbreviated New Drug Application (ANDA), Hetero notified Otsuka of its intent to launch its generic product in July 2025. Otsuka filed a Hatch-Waxman infringement action in the District of Delaware and obtained a temporary restraining order followed by a preliminary injunction barring Hetero's launch pending resolution of the litigation. Hetero appealed the injunction.

Claim construction. The appeal principally turned on the meaning of the claim terms "dextromethorphan" and "quinidine" in the patent's weight-to-weight ratio limitation. Hetero argued that when the compounds are administered as salts, the ratio should be calculated using only the weight of the active moieties, excluding the accompanying salt portions. Under that approach, its product would fall outside the claimed ratio. Otsuka contended that the ratio should instead be calculated using the compounds in the form actually administered to patients, including their pharmaceutically acceptable salts.

The Federal Circuit agreed with Otsuka. Applying the claim-construction principles articulated in Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc), the court found that the patent's intrinsic evidence consistently used the terms "dextromethorphan" and "quinidine" to encompass both the free-base compounds and their pharmaceutically acceptable salts. The specification repeatedly referred to doses of dextromethorphan hydrobromide and quinidine sulfate simply as doses of "dextromethorphan" and "quinidine," while dependent claims expressly contemplated administration of the compounds in salt form. Nothing in the intrinsic record suggested that the inventors intended the ratio limitation to be calculated solely using active moieties.

The court further observed that Hetero's interpretation would produce an implausible result by excluding Nuedexta® itself—the commercial embodiment described throughout the patent—from the scope of the asserted claims. Citing Osram GmbH v. International Trade Commission, 505 F.3d 1351 (Fed. Cir. 2007), the Federal Circuit reiterated that claim constructions excluding a preferred embodiment are generally disfavored absent compelling evidence. Because Hetero's product contained 20 milligrams of dextromethorphan hydrobromide and 10 milligrams of quinidine sulfate, it likely satisfied the claimed ratio under the district court's construction. The Federal Circuit therefore concluded that Otsuka had demonstrated a likelihood of success on the merits of its infringement claim and that the district court did not abuse its discretion in granting preliminary injunctive relief.

The appellate court also rejected Hetero's remaining challenges to the injunction, including its arguments regarding irreparable harm, the balance of hardships, and the public interest, and found no abuse of discretion in the district court's analysis.

Rule 65(c) bond. The Federal Circuit reached a different conclusion regarding the district court's decision to waive the security requirement under Rule 65(c).

Because the issue involved a procedural rule rather than patent law, the court applied Third Circuit precedent. Citing Frank's GMC Truck Center, Inc. v. General Motors Corp., 847 F.2d 100 (3d Cir. 1988), the court explained that although district courts possess limited discretion regarding the amount of security required, waiver of the bond requirement is reserved for exceptional circumstances. The court further relied on Zambelli Fireworks Manufacturing Co. v. Wood, 592 F.3d 412 (3d Cir. 2010), which emphasized that Third Circuit courts have never dispensed with Rule 65(c)'s bond requirement where an injunction restrains ordinary commercial activity conducted for profit.

The Federal Circuit concluded that Hetero sought to market a commercial generic pharmaceutical product and therefore fell squarely within the category of cases requiring security. Accordingly, while affirming the preliminary injunction, the court vacated the district court's decision requiring no bond and remanded for the district court to determine an appropriate amount of security, taking into account the patent's impending expiration.

Partial dissent. Circuit Judge Timothy B. Dyk dissented in part. He disagreed with the majority's claim construction, arguing that the patent's weight-to-weight ratio should be calculated based on the active moieties of dextromethorphan and quinidine rather than their salt forms. In his view, Hetero had raised a substantial question of noninfringement, precluding Otsuka from establishing the likelihood of success required for a preliminary injunction. Judge Dyk agreed, however, that the district court improperly waived Rule 65(c)'s bond requirement and joined that portion of the court's judgment.

The Case is No. 25-2016.

Judge: Bryson, W.

Attorneys: Eric C. Stops (Quinn Emanuel Urquhart & Sullivan, LLP) for Otsuka America Pharmaceutical, Inc. Ehab M. Samuel (Orbit IP, LLP) for Hetero Labs Ltd.

Companies: Otsuka America Pharmaceutical, Inc.; Hetero Labs Ltd.

Cases: Patent FedCirNews