Federal Circuit Affirms Ruling Blocking Generic Nuedexta

The U.S. Court of Appeals for the Federal Circuit (CAFC) issued a precedential decision today in Otsuka America Pharmaceutical, Inc. v. Hetero Labs Limited, affirming a preliminary injunction that blocks Hetero Labs Limited from launching a generic version of the neurological drug Nuedexta. The court also vacated a district court order that had excused Otsuka from posting a bond pending appeal, remanding the issue for further proceedings. Circuit Judge Dyk dissented in part from the majority’s claim construction and would have reversed the injunction.

Otsuka America Pharmaceutical, Inc. and its subsidiary Avanir Pharmaceuticals, LLC own U.S. Patent No. 7,659,282, which covers a method of treating pseudobulbar affect, also called emotional lability, a condition marked by an inability to control emotional expression in patients with certain neurological conditions. The patented method involves administering dextromethorphan, which provides the therapeutic effect, in combination with quinidine, which slows the breakdown of dextromethorphan in the liver. Avanir’s branded product, Nuedexta, combines the two compounds in salt form, and the ‘282 patent is scheduled to expire on August 13, 2026.

In August 2024, the U.S. Food and Drug Administration (FDA) approved an Abbreviated New Drug Application (ANDA) filed by Hetero Labs Limited for a generic version of Nuedexta containing the same components in the same amounts. After Hetero signaled its intent to launch the product on or after July 10, 2025, Otsuka filed suit in the U.S. District Court for the District of Delaware and obtained a temporary restraining order followed by a preliminary injunction from Judge Gregory Brian Williams on July 23, 2025. The district court also waived the bond ordinarily required under Federal Rule of Civil Procedure 65(c), finding the equities favored waiver.

The central dispute on appeal concerned how to calculate the weight-to-weight ratio of “dextromethorphan” to “quinidine” recited in claim 1 of the ‘282 patent, which requires a ratio of “1:0.5 or less.” Hetero argued the ratio must be calculated using the weight of the active moiety in each compound, meaning that any salt forms must first be converted to their free base equivalents. Applying that method, Hetero calculated a ratio of 1:0.56 for its generic product, which it argued fell outside the claim. Otsuka countered that the ratio should be based on the compounds as actually administered, salt forms included, under which both Nuedexta and Hetero’s product would fall within the claim.

Writing for the majority, Circuit Judge Bryson, joined by Circuit Judge Stoll, agreed with Otsuka’s proposed construction. The court found that “the embodiments in this patent encompass the ranges claimed and expressly include the 1:0.5 ratio.” It pointed to dependent claims expressly referencing salt forms, specification language identifying quinidine sulfate and dextromethorphan hydrobromide as included embodiments, and prosecution history statements in which the examiner described the claims as covering both salt and free base forms. The majority also noted that under Hetero’s construction, Nuedexta itself would fall outside claim 1, and found it “highly improbable” that Avanir would have drafted or amended the claims in a way that excluded the product the patent was meant to protect.

Judge Dyk dissented from the claim construction, the infringement finding, and the decision to sustain the injunction, though he joined the majority’s ruling on the bond issue. He wrote that the purpose of the invention, as described in the specification, was to reduce the blood level of quinidine while maintaining a therapeutically effective level of dextromethorphan, and that comparing the full weight of the salt forms rather than the weight of the active moieties would distort that relationship. He cited unrebutted testimony from Hetero’s expert stating that “the various salt and hydrate forms are merely formulation tools to deliver the active drug compounds.” Judge Dyk argued the majority relied on portions of the specification and prosecution history that did not speak to how the ratio itself should be calculated, and said he would have reversed the injunction because Hetero raised a substantial question of noninfringement.

In regard to the bond requirement, the CAFC applied Third Circuit law, since the obligation under Federal Rule of Civil Procedure 65(c) is not unique to patent cases. The court noted that the Third Circuit has described waiver of the bond requirement as “so rare that the requirement is almost mandatory,” and has stated it has “never excused a [d]istrict [c]ourt from requiring a bond where an injunction prevents commercial, money-making activities.” The district court had waived the bond after finding the risk of financial harm to Hetero “speculative at best” and citing concern over a “chilling effect on access to justice.” The CAFC held that Hetero’s attempted market entry with its generic product constituted a commercial, profit-seeking activity under Third Circuit precedent. Accordingly, the court vacated the waiver and remanded the case for the district court to determine an appropriate bond amount in light of the limited time remaining before expiration of the ‘282 patent.

The CAFC ultimately affirmed the district court’s grant of a preliminary injunction against Hetero, but vacated and remanded the decision to waive the Rule 65(c) bond requirement, with no costs awarded.