An opinion issued on Tuesday by the Federal Circuit appellate court reversed the denial of Nippon Shinyaku Co. Ltd.’s motion for a preliminary injunction in a dispute with Sarepta Therapeutics Inc.
The 16-page order explains that in June 2020, Nippon and Sarepta executed a Mutual Confidentiality Agreement (MCA) to discuss a potential business relationship regarding therapies for the treatment of Duchenne Muscular Dystrophy. The MCA established a covenant term during which the parties agreed to refrain from certain legal action and a forum selection clause to govern patent and other intellectual property disputes after the expiration of the covenant term.
Specifically, the panel found that the terms of the parties’ confidentiality agreement barred Sarepta from filing inter partes review (IPR) petitions with the Patent Trial and Appeal Board given the agreement’s enforceable forum selection clause.
According to the opinion, the covenant term ended on June 21, 2021, at which point the two-year forum selection clause took effect. Yet, the same day, Sarepta filed seven petitions for IPR, contesting the validity of Nippon’s Muscular Dystrophy treatment patents.
The next month, Nippon filed a complaint in the District of Delaware asserting claims against Sarepta for breach of contract and both defensive and affirmative patent-related causes of action. Nippon sought a preliminary injunction, alleging that Sarepta breached the MCA by filing the IPR petitions with the Board whereas the forum selection clause requires the parties to bring such patent challenges in the District of Delaware.
In this week’s opinion, the Federal Circuit reversed the judge’s preliminary injunction findings, primarily that Nippon was unlikely to succeed on the merits of its claim for breach of contract. Weighing Delaware law contractual interpretation principles, the panel held that under the MCA’s plain language, “Sarepta was required to bring all disputes regarding the invalidity of Nippon Shinyaku’s patents—including the allegations and contentions contained in Sarepta’s IPR petitions— in the District of Delaware.”
The court overrode the bases for the district court’s decision. Among other issues, the panel contemplated its decision that neither party intended to bargain away their right to file IPR petitions, which, due to the statutory time bar, “would be the practical effect of [the panel’s] reading of the forum selection clause.”
The opinion said that Federal Circuit precedent recognizes parties’ ability to bargain away their rights to file IPR petitions, including through the use of forum selection clauses. It also said that the practical effects about which the trial court was concerned, “that Sarepta’s IPRs will be time barred by the time the forum selection clause expires—resulted from Nippon Shinyaku’s filing of a patent infringement complaint, not from the parties’ entry into the MCA itself.”
Finding Nippon likely to succeed on the merits of its breach of contract claim and in favor of Nippon as to the other preliminary injunction factors, the Federal Circuit directed the lower court to enter an injunction halting Sarepta’s IPRs.
Nippon is represented by Morgan, Lewis & Bockius LLP and Sarepta by Finnegan, Henderson, Farabow, Garrett & Dunner LLP.
