Nippon Sinyaku Co., Ltd. v. Sarepta Therapeutics, Inc.
Docket No. 2021-2369 (https://cafc.uscourts.gov/opinions-orders/21-2369.OPINION.2-8-2022_1904898.pdf)
NEWMAN, LOURIE, STOLL
February 8, 2021
Brief Summary: DC denial of preliminary injunction against Sarepta’s IPR filings reversed.
Summary: Nippon appealed from DC DE decision denying its motion for a preliminary injunction regarding a Mutual Confidentiality Agreement (MCA). The purpose of the MCA “was for the parties ‘to enter into discussions concerning the Proposed Transaction,’ which the MCA defined as ‘a potential business relationship relating to therapies for the treatment of Duchenne Muscular Dystrophy.’” The parties agreed “that during the Covenant Term [“twenty (20) days after the earlier of: (i) the expiration of the Term, or (ii) the effective date of termination”; in this case being June 21, 2021] it: shall not directly or indirectly assert or file any legal or equitable cause of action, suit or claim or otherwise initiate any litigation or other form of legal or administrative proceeding against the other Party . . . in any jurisdiction in the United States or Japan of or concerning intellectual property in the field of Duchenne Muscular Dystrophy” (a mutual covenant not to sue), including “patent infringement litigations, declaratory judgment actions, patent validity challenges before the U.S. Patent and Trademark Office or Japanese Patent Office, and reexamination proceedings before the U.S. Patent and Trademark Office”. The MCA also states that “all Potential Actions arising under U.S. law relating to patent infringement or invalidity… shall be filed in the United States District Court for the District of Delaware”, although it also defines “Potential Actions” as ““any patent or other intellectual property disputes… filed with a court or administrative agency prior to or after the Effective Date in the United States, Europe, Japan or other countries in connection with the Parties’ development and commercialization of therapies for Duchenne Muscular Dystrophy”. On the day the Covenant Term ended (June 21, 2021), Sarepta filed seven IPRs, which Nippon alleged ““directly contravenes the MCA’s forum selection clause” and requested a preliminary injunction regarding the same with the DC, which was denied based on the DC’s consideration of “the four well-established preliminary injunction factors” (likelihood of success, irreparable harm, balance of harms, or public interest), “[t]he best reading of Section 6 is that the parties intended to allow IPRs to proceed after the Covenant Term expired”, the Potential Actions section “applies only to cases filed in federal court”, and if Sarepta were “forced to wait” two years under the Covenant Term to file IPRs it would be “time-barred’ under 35 U.S.C [section] 315(b).” The FC panel interpreted the contract under DE law (“‘objective’ theory of contracts, i.e. a contract’s construction should be that which would be understood by an objective, reasonable third party”, read “as a whole”), and found Sarepta’s IPRs “contravened the plain language of the forum selection clause” and violated the forum selection clause, and concluded Nippon satisfied the remaining preliminary injunction factors (e.g., “forced to litigate its patent rights in multiple jurisdictions”, “Sarepta will potentially get multiple bites at the invalidity apple”, not “necessarily against the public interest for an individual party to bargain away” forum selection). The DC decision was therefore reversed and remanded.