NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
IN RE CYCLOBENZAPRINE HYDROCHLORIDE
EXTENDED-RELEASE CAPSULE PATENT
LITIGATION
---------------------------------------------------------------------------------
EURAND, INC. (now known as Aptalis Pharmatech,
Inc.), CEPHALON, INC., AND ANESTA AG,
Plaintiffs-Appellees,
v.
IMPAX LABORATORIES, INC.,
Defendant-Appellant,
AND
MYLAN INC. AND MYLAN PHARMACEUTICALS,
INC.,
Defendants-Appellees,
AND
PAR PHARMACEUTICAL INC. AND TWI
PHARMACEUTICALS INC.,
Defendants.
______________________
2012-1280
______________________
2 EURAND, INC. v. IMPAX LABORATORIES, INC.
Appeal from the United States District Court for the
District of Delaware (Wilmington) in no. 09-MD-2118,
Judge Sue L. Robinson.
______________________
Decided: February 1, 2013
______________________
JONATHAN E. SINGER, Fish & Richardson P.C., of Min-
neapolis, Minnesota, argued for plaintiffs-appellees. With
him on the brief were WILLIAM J. MARSDEN, JR., of Wil-
mington, Delaware; and CHERYLYN ESOY MIZZO, of Wash-
ington, DC; and JOHN R. LANE, of Houston, Texas. Of
counsel on the brief was TRYN T. STIMART, Cooley LLP, of
Washington, DC.
C. KYLE MUSGROVE, Haynes and Boone, LLP, of
Washington, DC, argued for defendant-appellant. With
him on the brief was MICHAEL M. SHEN. Of counsel on the
brief was DEBRA J. MCCOMAS, of Dallas Texas.
JAMES H. WALLACE, JR., Willey Rein LLP, of Washing-
ton, DC, for defendants-appellees. With him on the brief
were MARK A. PACELLA, ROBERT J. SCHEFFEL and
MATTHEW J. DOWD.
______________________
Before NEWMAN, O'MALLEY, and REYNA, Circuit Judges.
O’MALLEY, Circuit Judge.
Impax Laboratories, Inc. (“Impax”) appeals from the
November 8, 2011 decision of the United States District
Court for the District of Delaware explicitly adding Impax
to a preliminary injunction originally entered in May
2011. The injunction barred all generic versions of
AMRIX® from the market. Because Impax was subject to
EURAND, INC. v. IMPAX LABORATORIES, INC. 3
the May 2011 injunction and failed to file a timely appeal,
we lack jurisdiction over Impax’s appeal of the district
court’s November 8, 2011 order clarifying that injunction.
Impax also complains of the district court’s failure to
require Cephalon to post a bond in its favor upon entry of
the injunction. Because we have no jurisdiction over
Impax’s appeal from the injunction which bars its entry
into the market for generic AMRIX®, we also have no
jurisdiction to assess the niceties thereof. Impax next
appeals from the district court’s refusal to modify or
discontinue the injunction prospectively, following a
motion asking that it do so. While we have jurisdiction
over that aspect of Impax’s appeal, we affirm the district
court’s conclusion that Impax failed to justify its request
for modification. Impax finally appeals from the district
court’s March 15, 2012 decision that Impax’s right to
enter the generic market for extended-release cycloben-
zaprine hydrochloride had not been triggered under the
terms of Impax’s settlement agreement with Plaintiffs
Aptalis Pharmatech, Inc., Cephalon, Inc. and Anesta AG
(collectively “Cephalon”). Because the district court
correctly interpreted the agreement, however, we affirm.
I.
We only recite the facts necessary to address the cur-
rent issues on appeal. A more detailed history of the
underlying action appears in In re Cyclobenzaprine Hy-
drochloride Extended-Release Patent Litig., 676 F.3d 1063
(Fed. Cir. 2012).
Cephalon manufactures and sells AMRIX®, an ex-
tended-release formulation of cyclobenzaprine hydrochlo-
ride. Cephalon is the owner of U.S. Patent Nos. 7,387,793
and 7,544,372 (collectively “patents-in-suit”), that cover
the formulation of and method of administering AMRIX®.
The United States Food and Drug Administration (“FDA”)
approved Cephalon’s New Drug Application (“NDA”) for
AMRIX® in 2007.
4 EURAND, INC. v. IMPAX LABORATORIES, INC.
Shortly thereafter, Impax, Mylan Inc. and Mylan
Pharmaceuticals, Inc. (collectively “Mylan”), and Par
Pharmaceutical, Inc. (“Par”), among others, filed Abbrevi-
ated New Drug Applications (“ANDAs”) seeking FDA
approval to make and sell generic versions of AMRIX®.
Mylan, as the first party to file a complete Paragraph IV
certification, was granted a 180-day exclusive marketing
period for its generic product. See 23 U.S.C. §
355(j)(2)(A)(vii)(IV) (2006). Cephalon sued for patent
infringement and proceeded to trial against Mylan, Par,
and Impax, with Impax only participating in the validity
portions of the trial. 1 On the last day of trial, Cephalon
and Impax settled (“Cephalon-Impax Settlement Agree-
ment”).
Cephalon granted Impax a non-exclusive license to
the patents-in-suit as part of the parties’ agreement.
Section 3.2 of the Cephalon-Impax Settlement Agreement
controls the timing of Impax’s entry date into the generic
market. Section 3.2 is entitled “License Effective Date,”
and provides five different “triggering events,” upon the
earliest of which Impax may enter the generic market.
The first, and baseline date, is one year prior to the
expiration of the ’793 patent. Another trigger is when
and if Cephalon grants a license to, or authorizes, a third
party entitled to first-to-file exclusivity to sell a generic
product following expiration of the exclusivity period.
Impax would also be granted a right to enter the generic
market should Cephalon license or authorize a third
party, not entitled to first-to-file exclusivity, to sell a
1 The district court precluded Impax from presenting
a non-infringement defense because, during the course of
discovery, Impax failed to serve non-infringement conten-
tions, produce documents, take or attend depositions,
identify witnesses, participate in claim construction, or
serve expert reports.
EURAND, INC. v. IMPAX LABORATORIES, INC. 5
generic product. And, Impax may enter the market on the
same date an ANDA filer with first-to-file exclusivity
enters prior to that party obtaining a final non-appealable
judgment of non-infringement, invalidity, or unenforcea-
bility of the patents-in-suit, otherwise known as an “at-
risk” launch. Finally, Impax may enter the market if a
third party obtains a final, non-appealable judgment of
invalidity, unenforceability, or non-infringement of the
“Orange Book Patents,” following the expiration of any
applicable first-to-file exclusivity period.
Upon the occurrence of a triggering event, Impax may
choose to market either its own ANDA product, or an
authorized generic supplied by Cephalon. Impax and
Cephalon, however, also signed an attendant “Transfer
Price Agreement” (“TPA”) on the same day as the settle-
ment agreement. Impax, via the TPA, essentially surren-
dered its right to produce its own ANDA product and
concedes that Cephalon will be its sole and exclusive
manufacturer of generic AMRIX®, unless Cephalon fails
to deliver the product. In other words, for all intents and
purposes, Impax agreed not to pursue the sale of its own
ANDA product in the near term, absent narrow circum-
stances. In return, Cephalon agreed to, and did begin to,
supply its generic product to Impax in anticipation of a
possible triggering event by which Impax could enter the
market with that product.
In addition to settling with Impax, Cephalon also
made contingency plans to launch its own generic version
of AMRIX® should Mylan and the other defendants
prevail at trial. As is common industry practice, Cepha-
lon partnered with a generic company to gain access to
generic distribution channels and marketing expertise. In
May 2011, Cephalon entered a “Sales Agent Agreement”
(“Cephalon-Watson Agreement”) naming Watson its sales
agent for authorized generic versions of AMRIX® should
the litigation result in an ANDA filer launching “at-risk.”
6 EURAND, INC. v. IMPAX LABORATORIES, INC.
Watson was given the authority to solicit orders for
Cephalon’s generic version of AMRIX®. Watson was
required to notify customers that it was acting as Cepha-
lon’s sales agent. The agreement stated that Cephalon
maintained title of the generic drugs at all times, even
when in Watson’s possession, until the drugs were trans-
ferred to the ultimate customer. The generic versions
were also to be sold solely under Cephalon’s trademarks
and product labeling. Watson was also foreclosed from
marketing or selling any other generic extended-release
cyclobenzaprine hydrochloride product.
After the bench trial, on May 12, 2011, the district
court issued an order finding the asserted claims of the
patents-in-suit invalid as obvious. Mylan launched “at-
risk” the next day. That same day, Cephalon instructed
Watson to begin soliciting orders for Cephalon’s author-
ized generic version of AMRIX®. On May 24, 2011, the
district court enjoined Mylan and Cehpalon, along with
all persons “acting in active concert or participation” with
them, from selling generic versions of AMRIX® so as to
maintain the status quo pending the outcome of any
appeals from its invalidity ruling. In other words, the
district court sought to prohibit all generic versions of
AMRIX® from entering the market while its order effec-
tively authorizing such entry was affirmed on appeal.
Cephalon appealed the invalidity finding. Mylan ap-
pealed the injunction.
After the May 24, 2011 injunction, neither Mylan,
Cephalon/Watson, nor Impax sold or offered to sell any
generic extended-release cyclobenzaprine product. 2 This
2 An exception to the absence of sales may have oc-
curred when this court briefly stayed the injunction.
There is no dispute, however, that, to the extent such
sales occurred, Impax made no sales. See In re Cycloben-
zaprine Hydrochloride Extended-Release Capsule Litiga-
tion, 2011-1399, -1409, Docket Entry No. 62.
EURAND, INC. v. IMPAX LABORATORIES, INC. 7
court heard oral argument in the pending appeals on
September 7, 2011 and took the matter under advise-
ment. On November 7, 2011, before this court issued its
opinion, Mylan asked the district court to confirm that its
May 2011 injunction covered “any person in privity with
[Cephalon] via license, settlement, contract.” During a
hearing held the next day, Mylan informed the district
court that its 180-day marketing exclusivity period was
set to expire at midnight, and that it had information that
other generic manufacturers were planning to enter the
market. Mylan argued that the original injunction pre-
vented Impax from launching a generic because Impax
was in “active concert or participation” with Cephalon
through their settlement agreement. Cephalon did not
object to Mylan’s characterization of Cephalon’s relation-
ship with Impax and of the scope of the injunction. Mylan
requested that the district court explicitly include Impax
in the injunction to avoid any confusion. Again, Cephalon
did not object. Impax and its counsel had notice of the
hearing and its purpose, but failed to appear.
Immediately following the hearing, the district court
confirmed that Impax was an enjoined party under the
May 24, 2011 injunction:
Plaintiffs Anesta AG, Cephalon, Inc. and Eurand,
Inc. (collectively, “plaintiff”), their officers, agents,
servants, employees, and attorneys, any person in
privity with Cephalon, Eurand, or Anesta via li-
cense, settlement, contract, including Impax La-
boratories, Inc., any company in privity with
Teva/Barr via the transfer for Barr’s ANDA – i.e.,
Par Pharmaceutical – and any other persons who
are in active concert or participation with any of
these persons, shall not engage in the commercial
use, offer for sale, or sale within the United
States, or authorize or license any generic cyclo-
benzaprine extended release product.
8 EURAND, INC. v. IMPAX LABORATORIES, INC.
Two weeks after the district court issued its order,
Impax retained new counsel and filed a “Motion to Rear-
gue and to Modify Injunction.” Impax and Cephalon filed
a series of dueling motions over the next few months
regarding the district court’s injunction and the parties’
settlement agreement. In particular, the parties sparred
over whether the injunction should continue to apply to
Impax and whether Impax’s right to sell generic versions
of AMRIX® had been triggered by Cephalon’s agreement
with Watson. These issues were presented both in the
context of Impax’s motion to modify, and supplements
thereof, and in the context of a “Motion to Enforce Settle-
ment Agreement,” also filed by Impax.
After a February 2012 hearing on the parties’ mo-
tions, the district court issued an opinion on March 15,
2012. The district court concluded that Cephalon’s use of
Watson as its sales agent to market Cephalon’s own
generic product did not trigger Impax’s right to enter the
market pursuant to the Cephalon-Impax Settlement
Agreement. The district court also confirmed that the
May 24, 2011 injunction, as clarified on November 8,
2011, remained in effect and prohibited Impax from
selling any generic product, including the product it had
earlier received from Cephalon.
II.
Impax makes three arguments in support of its con-
tention that it is not subject to the May 24, 2011 injunc-
tion and that its appeal seeking an order to that effect is
timely. First, Impax argues that the district court abused
its discretion when it enjoined Impax from generic sales of
extended-release cyclobenzaprine on November 8, 2011.
Because we find that Impax was enjoined from such sales
as of May 24, 2011, its appeal, filed months after the
injunction was entered is untimely. Next, Impax con-
tends that the district court substantially modified the
EURAND, INC. v. IMPAX LABORATORIES, INC. 9
May 2011 injunction in November 2011 by adding Impax,
and that its appeal from that modification is timely. This
argument also fails because we conclude that the district
court’s November 2011 order merely clarified—and did
not modify the scope of its original injunction. Last,
Impax argues that it sought to modify or dissolve the
injunction prospectively, and that its appeal from the
district court’s denial of that motion is timely. Impax has
not demonstrated sufficient changed circumstances,
however, to justify its request for review of the underlying
injunction. Each of Impax’s arguments will be addressed
in turn.
A.
Impax’s appeal of the district court’s injunction is un-
timely. Pursuant to Federal Rule of Appellate Procedure
4(a)(1)(A), any appeal of the May 2011 district court
injunction was to have been filed within 30 days thereof,
or, by June 23, 2011. Impax argues that it was never
subject to the district court’s May 2011 injunction. We
disagree. Impax was enjoined as a person acting “in
active concert or participation” with Cephalon by virtue of
the Cephalon-Impax Settlement Agreement. As a result,
Impax failed to timely appeal the May 2011 injunction.
The district court’s May 24, 2011 preliminary injunc-
tion barred Cephalon, and other persons who were in
active concert or participation with it, from “engag[ing] in
the commercial use, offer[ing] for sale, or [selling] within
the United States, or authoriz[ing] or licens[ing], any
generic cyclobenzaprine extended release product.”
Impax contends that, because it had settled with Cepha-
lon before May 24, 2011 it was no longer a party to the
action and, thus, it could not be subject to the injunction.
Impax’s only right to sell a generic, however, is derived
from the Cephalon-Impax Settlement Agreement, making
it a party in “active concert or participation” with Cepha-
lon.
10 EURAND, INC. v. IMPAX LABORATORIES, INC.
Generally a court may not enjoin a non-party to the
action before it. Additive Controls & Measurement Sys.,
Inc. v. Flowdata, Inc., 96 F.3d 1390, 1394-95 (Fed. Cir.
1996) (citing Alemite Mfg. Corp. v. Staff, 42 F.2d 832 (2d
Cir. 1930)). A party who acts in concert with an enjoined
party, however, may be subject to the strictures of an
injunction. See Alemite, 42 F.2d at 833. These common
law principles are codified in Rule 65(d)(2)(C), which
provides that an injunction binds “other persons who are
in active concert or participation with [the parties].” Fed.
R. Civ. P. 65(d)(2)(C).
“Active concert or participation” has been interpreted
to include both aiders and abettors of, and privies of, an
enjoined party. See Golden State Bottling Co., Inc. v.
NLRB, 414 U.S. 168, 179-80 (1973) (citing Regal Knitwear
Co. v. N.L.R.B., 324 U.S. 9, 14 (1930)); Additive Controls,
96 F.3d at 1395; Rockwell Graphics Sys., Inc. v. Dev
Indus., Inc., 91 F.3d 914, 919-20 (7th Cir. 1996). Such
interpretations of “active concert or participation” recog-
nize “that the objectives of an injunction may be thwarted
by the conduct of parties not specifically named in its
text.” Rockwell Graphics, 91 F.3d at 920.
The Cephalon-Impax Settlement Agreement sets forth
a series of events that trigger Impax’s right to sell a
generic. Once triggered, Impax may choose to either sell
its own ANDA version of cyclobenzaprine extended-
release generic or an “Authorized Generic Product” which
it purchases from Cephalon. Impax, under either scenar-
io, was subject to the May 2011 injunction as a party
acting in “active concert or participation” with Cephalon—
an enjoined party.
First, had Impax attempted to enter the market with
its own ANDA product, its right would derive directly
EURAND, INC. v. IMPAX LABORATORIES, INC. 11
from the settlement agreement 3 and, by virtue of the
agreement, Impax would be enjoined as a privy of Cepha-
lon regarding a common subject matter. See Adefumi v.
City of Phila., 445 F. App'x 610, 611 (3d Cir. 2011) (“Privi-
ty has ‘traditionally been understood as referring to the
existence of a substantive legal relationship, such as by
contract, from which it was deemed appropriate to bind
one of the contracting parties to the results of the other
party’s participation in litigation.”); Nat’l Spiritual As-
sembly of Baha’is of U.S. Under Hereditary Guardianship
v. Nat’l Spiritual Assembly of the Baha’is Council of the
United States of America, 628 F.3d 837, 848-9 (7th Cir.
2010) (Privity has come to be “seen as a descriptive term
for designating those with a sufficiently close identity of
interests to justify . . . enforcement of an injunction
against a nonparty.”) (internal citations and quotations
omitted). Because Cephalon and Impax are in privity of
contract regarding the subject matter, the May 2011
injunction necessarily extends to bar Impax from entering
the generic market. 4 Next, had Impax attempted to enter
A settlement agreement is akin to a contract, and
3
principles of contract law govern its interpretation.
Tedesco Mfg. Co. v. Honeywell, Intern., Inc., 127 F.App’x
50, 52 (3d Cir. 2005).
4 Under the terms of the settlement agreement and at-
tendant TPA, it is unlikely Impax would ever go to mar-
ket with its own ANDA product. Impax’s ANDA, at least
through the time of oral argument, was not approved by
the FDA; therefore, it could not manufacture and sell its
own generic product even if its rights under the agree-
ment were triggered.
12 EURAND, INC. v. IMPAX LABORATORIES, INC.
the market by selling the authorized generic product it
purchased from Cephalon, it would fall directly within the
purview of the “acting in concert” language by placing
Cephalon generics on the market in contravention of the
injunction. Indeed, the district court’s purpose in enter-
ing the injunction was to maintain the status quo with
respect to the market for extended-release cycloben-
zaprine, regardless of its source.
A contrary result, under the circumstances here,
would provide Cephalon an avenue to sidestep the injunc-
tion. If Impax were permitted to enter the market, the
“objectives of [the] [May 2011] injunction [would be]
thwarted by the conduct of parties not specifically named
in its text.” Rockwell Graphics, 91 F.3d at 920. Allowing
Cephalon product on the market via its settlement
agreement with Impax while continuing to enjoin Mylan
would nullify the Court’s effort to protect the interests of
both parties pending appeal to this court.
Impax was always subject to the May 2011 injunction
as a party in privity of contract, or acting in concert with,
Cephalon. Impax failed to object to the injunction within
the requisite 30 days and this court now lacks jurisdiction
to determine the propriety of the injunction. See U.S. Fire
Ins. Co. v. Asbestospray, Inc., 182 F.3d 201, 207 (3d Cir.
1999) (holding that appellate jurisdiction “does not extend
to orders . . . interpret[ing] or clarify[ing] injunctions.”)
(citing Motorola, Inc. v. Computer Displays, Int’l, Inc., 739
F.2d 1149, 1155 (7th Cir. 1984)); see also Weight Watchers
Intern., Inc. v. Luigino’s, Inc., 423 F.3d 137, 141-42 (2d
Cir. 2005) (collecting cases). 5
Indeed, Impax’s failure to market the generic
5
AMRIX® in its possession at any point before November
EURAND, INC. v. IMPAX LABORATORIES, INC. 13
B.
Impax also contends that the district court’s Novem-
ber 8, 2011 order modified, rather than interpreted or
clarified, the May 2011 injunction. Impax, as a result,
contends that its appeal of the modified November injunc-
tion was timely. This argument need not detain us long.
While an order substantively modifying an injunction
may “reset” the time for appeal, the determination of
whether an order modified or merely interpreted an
injunction requires examination of the substance of the
order, not merely its language. U.S. Fire Ins. Co., 182
F.2d at 207; Favia v. Indiana Univ. of Penn., 7 F.3d 332,
337 (3d Cir. 1993) (citing Cromglass Corp. v. Ferm, 500
F.2d 601, 604 (3d Cir. 1974) (en banc)); Gregory v. Depte,
896 F.2d 31, 38, n.14 (3d Cir. 1990)). Impax was always
subject to the May 2011 injunction, however; the district
court made no substantive changes to the original injunc-
tion in November 2011 beyond clarifying that reality. We
find no merit to Impax’s argument that the trial court’s
November 8, 2011 order gave rise to an independent right
to appeal.
C.
Impax finally contends that it nevertheless is entitled
to prospectively seek modification of the injunction, and
its appeal from the district court’s denial of its motion to
modify is timely. Section 1292(a)(1) of Title 28 provides
that courts of appeal have jurisdiction over
“[i]nterlocutory orders . . . granting, continuing, modify-
ing, refusing or dissolving injunctions, or refusing to
modify injunctions, except where a direct review may be
had in the Supreme Court.” 28 U.S.C. § 1292(a)(1) (em-
phasis added). A district court may modify or dissolve an
injunction prospectively if it is no longer equitable.
2011 belies its contention that it never understood it was
bound by the court’s May 2011 injunction.
14 EURAND, INC. v. IMPAX LABORATORIES, INC.
Amado v. Microsoft Corp., 517 F.3d 1353, 1360 (Fed. Cir.
2008). Appellate review of such a grant or denial of a
prospective modification, however, is “confined to the
propriety of the denial of the motion, it does not extend to
the propriety of the entry of the underlying injunction.”
Twp. of Franklin Sewerage Auth. v. Middlesex County
Utils. Auth., 787 F.2d 117, 120 (3d Cir. 1986) (citing
Merrell-National Labs., Inc. v. Zenith Labs., Inc., 579 F.2d
786, 791 (3d Cir. 1978)). This rule is designed to foreclose
a party from using the “appealability of an order denying
modification of an injunction to circumvent the time bar
to appeal from the underlying injunction.” Id. Only
where “the movant has made a showing that changed
circumstances warrant discontinuation [or modification]
of the [injunction]” should an order to modify issue. Id. at
121. It is only over the trial court’s assessment of that
limited question that we have jurisdiction, which we
review for abuse of discretion. Id. at 120; see also Amado,
517 F.3d at 1357.
Impax points to three events which it claims demon-
strate sufficient “changed circumstances” to support its
request to modify the injunction prospectively: (1) the
district court only recently named Impax in the injunc-
tion; (2) Mylan’s exclusivity period had expired; and (3)
Impax had received authorized generics from Cephalon
and was ready to go to market. None of these factors are
relevant, or sufficient, to warrant modification of the
injunction.
As noted above, because Impax was subject to the
May 2011 injunction, explicitly naming Impax in Novem-
ber 2011 had no substantive effect on any party’s rights.
In short, adding Impax’s name to the injunction did not
qualify as a changed circumstance. Also, because Impax
was always subject to the May injunction and knew as of
then the length of Mylan’s exclusivity period, the predict-
ed end of that period had no bearing on Impax’s rights to
enter the generic market. Finally, Impax’s receipt of
EURAND, INC. v. IMPAX LABORATORIES, INC. 15
generics from Cephalon was not a changed circumstance
both because the original injunction prohibited sale of
those products when received and because the products
were received months before Impax sought to modify the
injunction. As explained further below, moreover, the
injunction itself is irrelevant to Impax’s right to sell
generic AMRIX® in its possession since Impax’s right to
enter the market has not matured under the Cephalon-
Impax Settlement Agreement. As such, we find no sup-
port for Impax’s request to modify the injunction prospec-
tively based on these factors.
III.
The parties next ask that we review the district
court’s determination that Cephalon’s appointment of
Watson as a sales agent authorized to solicit sales of
generic AMRIX® did not trigger Impax’s right to enter the
generic market for extended-release cyclobenzaprine.
Because we believe the district court properly interpreted
the settlement agreement, we affirm.
A.
Cephalon asserts that this court has declaratory
judgment jurisdiction to review the district court’s inter-
pretation of the Cephalon-Impax Settlement Agreement
to determine whether a contractually defined event has
occurred triggering Impax’s right to enter the generic
extended-release cyclobenzaprine market. It premises
this belief upon a “Motion for Declaratory and Injunctive
Relief” it filed in response to Impax’s motion to modify.
Federal question jurisdiction, however, “exists in a de-
claratory judgment action if the plaintiff has alleged facts
in a well-pleaded complaint which demonstrate that the
defendant could file a coercive action arising under feder-
al law.” Stuart Weitzman, LLC v. Microcomputer Res.,
Inc., 542 F.3d 859, 862 (11th Cir. 2008) (emphasis added)
(quoting Household Bank v. JFS Group, 320 F.3d 1249,
1253 (11th Cir. 2003)); see also Corey v. U.S. Postal Ser-
16 EURAND, INC. v. IMPAX LABORATORIES, INC.
vice, 485 F.App’x 228, 229 (9th Cir. 2012) (“The Declarato-
ry Judgment Act, 28 U.S.C. § 2201, does not confer juris-
diction by itself if jurisdiction would not exist on the face
of a well-pleaded complaint.”) (emphasis added) (citations
and quotations omitted); Wis. Interscholastic Athletic
Ass’n v. Gannet Co., Inc., 658 F.3d 614, 620-21 (7th Cir.
2011) (“If a well-pleaded complaint by the defendant (the
natural plaintiff) would have arisen under federal law,
then the court has jurisdiction when the ‘natural’ defend-
ant brings a declaratory-judgment suit.”) (emphasis
added) (internal quotations and citations omitted). No
such complaint was filed in this action. Impax settled
prior to judgment, and no subsequent complaint was filed
to confer declaratory judgment jurisdiction over the
parties and their settlement agreement.
We do have jurisdiction over the district court’s inter-
pretation of the settlement agreement, however, because
that determination arose in response to Impax’s motion to
enforce the settlement agreement. As such, the district
court’s order was a final order in a patent case because
the parties submitted to, and the district court retained,
exclusive and continuing jurisdiction over the parties for
the purpose of enforcing the settlement agreement. 6
6The parties’ submission of the docket sheet and un-
signed stipulation of dismissal demonstrate that the
district court retained jurisdiction over the parties for
purposes of enforcing and interpreting the settlement
agreement. Submission of a signed and docketed stipula-
tion of dismissal in which the district court agrees to
retain jurisdiction over a settlement agreement, however,
would provide a more direct and clear record basis for this
court to easily determine that it has jurisdiction over the
parties’ appeal. As the Supreme Court has cautioned,
federal courts do not automatically retain jurisdiction
over settlement agreements resolving disputes before
them. See Kokkonen v. Guardian Life Ins. Co. of Am., 511
EURAND, INC. v. IMPAX LABORATORIES, INC. 17
Thus, we may review the district court’s interpretation of
the settlement agreement under 28 U.S.C. § 1295(a). 7
B.
Contract interpretation is a question of law reviewed
de novo. Rembrandt Data Technologies, LP v. AOL, LLC,
641 F.3d 1331, 1336 (Fed. Cir. 2011) (citing Lucent Techs.,
Inc. v. Gateway, Inc., 543 F.3d 710, 717 (Fed. Cir. 2008).
The parties agree that the Cephalon-Impax Settlement
Agreement is governed by Delaware law. Abbott Point of
Care, Inc. v. Epocal, Inc., 666 F.3d 1299, 1302 (Fed. Cir.
2012) (citing Metabolite Labs., Inc. v. Lab. Corp. of Am.
Holdings, 370 F.3d 1354, 1369 (Fed. Cir. 2004)); Under
Delaware law, the court’s role is to determine the intent of
the contracting parties. JFE Steel Corp. v. ICI Americas,
Inc., 797 F.Supp.2d 452, 469 (D. Del. 2001) (citing Lo-
rillard Tobacco Co. v. Am. Legacy Found., 903 A.2d 728,
739 (Del. 2006)). The court must first determine whether
the contract is unambiguous. Id. (citing Nw. Nat’l Ins. Co.
v. Esmark, Inc., 672 A.2d 41, 43 (Del. 1996)). “A contract
U.S. 375, 380-82 (1994) (holding that, absent an inde-
pendent basis for federal jurisdiction, or the district court
embodying “the settlement contract in its dismissal order”
or retaining jurisdiction over the enforcement thereof, a
motion for enforcement of the settlement agreement is a
matter of state contract law); see also Shaffer v. GTE
North, Inc., 284 F.3d 500, 503 (3d Cir. 2002); Nat’l Presto
Indus., Inc. v. Dazey Corp., 107 F.3d 1576 (Fed. Cir.
1997).
7Alternatively, to the extent Impax asserted that the
status of its rights under the settlement agreement was
relevant to the propriety of a prospective modification of
the injunction (See Impax’s Opposition to [Cephalon’s]
Motion, Docket No. 40 at 6-9), we would possess jurisdic-
tion under 28 U.S.C. § 1292(c) to review the trial court’s
resolution of that question.
18 EURAND, INC. v. IMPAX LABORATORIES, INC.
is ambiguous only if it is fairly or reasonably susceptible
to different interpretations.” Id. Should the contract
language be unambiguous, extrinsic evidence is irrelevant
to its interpretation. GB Biosciences Corp. v. Ishihara
Sangyo Kaisha, Ltd., 270 F.Supp.2d 476, 481-82 (D. Del.
2003) (quoting Sanders v. Wang, 1999 Del.Super. LEXIS
203, 1999 WL 1044880, at *6 (Del. Ch. Nov. 8, 1999)).
The court should read the contract as a whole and inter-
pret it as an objective, third party would understand the
contract. Estate of Osborn v. Kemp, 991 A.2d 1153, 1159
(Del. 2010).
Because we find the relevant provisions of the settle-
ment agreement unambiguous, and find that, under those
unambiguous terms, Cephalon did not authorize any third
party to sell generic AMRIX®, the district court’s conclu-
sion that no triggering event occurred which authorized
Impax’s own generic sales was correct.
Section 3.2 of the Cephalon-Impax Settlement Agree-
ment provides five distinct “triggering events,” upon the
earliest of which Impax may enter the generic market.
Subsection (c) is at the crux of the parties’ dispute; it
provides that Impax may enter the generic market on:
the same entry date that any Third Party which is
not entitled to First to File Exclusivity is licensed
or authorized by [Cephalon] to begin selling Ge-
neric Equivalent Product in the Territory.
The defined terms include, “Third Party,” which
means, “a party that is neither Anesta, Eurand, nor
Impax;” “First to File Exclusivity,” which means, “the
period of one hundred eighty (180) days of marketing
exclusivity in the Territory granted by FDA under and
pursuant to 21 U.S.C. section 355(j)(5)(B)(iv),” and “Ge-
neric Equivalent Product,” which means, “(a) a pharma-
ceutical product which has been approved by or submitted
for approval to FDA under an ANDA as a therapeutic
equivalent (as defined in FDA regulations) to AMRIX®, or
EURAND, INC. v. IMPAX LABORATORIES, INC. 19
(b) an Authorized Generic Product (branded AMRIX® sold
absent the trademark).”
Impax contends that Watson is a “Third Party” which
was “licensed or authorized” to “begin selling Generic
Equivalent Product,” as contemplated by § 3.2(c). Impax
asserts that its right to enter the generic market for
AMRIX® has been triggered by virtue of Cephalon’s
appointment of Watson as its sales agent and Watson’s
subsequent solicitation of orders. The district court
disagreed and held that Cephalon’s use of Watson as a
sales agent to market Cephalon’s own generic product
does not trigger Impax’s right to enter the market pursu-
ant to § 3.2(c). We agree.
Watson did not file its own relevant ANDA. Cephalon
and Watson entered a “Sales Agent Agreement” on May
13, 2011. The Cephalon-Watson Agreement “appoints”
Watson as a sales agent to “solicit” orders for Cephalon’s
own generic version of AMRIX®, and requires Watson to
notify any potential customers that it is acting as Cepha-
lon’s sales agent. Cephalon maintains the right to set the
floor on prices, retains title to the generic drugs until they
are transferred to the customer, and the generic products
are to be sold solely under Cephalon’s labeling and
trademarks. A plain reading of the Cephalon-Watson
agreement reveals that it is what it claims to be: a sales-
agent agreement. Conforming to common industry prac-
tice, Cephalon contracted with Watson to gain access to
Watson’s expertise and distribution channels in the
generic market.
Considering the Cephalon-Impax Settlement Agree-
ment as a whole, Watson is not a “Third Party” as con-
templated by § 3.2(c). The term “Third Party” is
unambiguous, as it is explicitly defined to mean a party
that is not Anesta, Eurand, Cephalon, Impax, nor their
affiliates. Section 3.2(c) also excludes any “Third Party”
not entitled to “First to File Exclusivity” which, under the
20 EURAND, INC. v. IMPAX LABORATORIES, INC.
facts of this case, is Mylan. As such, Impax’s rights under
§ 3.2(c) would be triggered upon any party, other than
Eurand, Anesta, Cephalon, or Mylan, entering the generic
market. Impax’s right to enter the market is explicitly
not triggered by Cephalon’s entry into the market. Ceph-
alon’s use of Watson as a sales agent simply effectuated
its own entry into the market. Watson’s role as a sales
agent places it in Cephalon’s shoes in the marketplace.
Watson is Cephalon under the agreement.
Impax’s characterization of Watson as a “Third Party”
under the settlement agreement would create absurd
results contrary to ordinary distribution practices. Im-
pax’s interpretation would require Cephalon to own and
operate the entire distribution chain from manufacture to
retail sale before it could enter the generic market with-
out competition from Impax. Otherwise, any “third party”
that aids Cephalon in soliciting and “selling” its own
generics would trigger Impax’s rights under § 3.2(c). As
Impax concedes, however, the parties were well aware at
the time the settlement agreement was executed that
brand-name companies typically lack the infrastructure to
sell generic product without some assistance from some
third-party. Impax thus urges a construction of the
settlement agreement under which Cephalon would
authorize an entity with no authorized ANDA, who did
not meaningfully participate in litigation challenging
Cephalon’s patent, to compete with Cephalon’s own sales.
The district court correctly concluded that the settlement
agreement does not contemplate such a result. Watson is
not a “Third Party” entrant into the generic extended-
release cyclobenzaprine hydrochloride market as contem-
plated by the Cephalon-Impax Settlement Agreement.
Even assuming Impax’s interpretation of “Third Par-
ty” is correct, Cephalon did not authorize or license Wat-
son to “sell” Cephalon’s generics. “Selling” or “sale” of a
product requires the passage of title from seller to buyer.
See 6 Del. Code § 2-103, 2-106 (defining “sale” as “the
EURAND, INC. v. IMPAX LABORATORIES, INC. 21
passing of title from the seller to the buyer for a price”);
Black’s Law Dictionary, 1454 (9th ed. 2009) (defining
“sale” as “the transfer of property or title for a price”);
Enercon GmbH v. Int’l Trade Comm’n, 151 F.3d 1376,
1382 (Fed. Cir. 1998) (“the common or usual meaning of
the term sale includes those situations in which a contract
has been made between two parties who agree to transfer
title and possession of specific property for a price.”). The
Cephalon-Watson Agreement explicitly avoids the trans-
fer of title from Cephalon to Watson. Under the agree-
ment, Cephalon maintains title until the product is
transferred to the ultimate customer. Watson’s role is to
facilitate Cephalon’s own sales by soliciting orders,
providing marketing expertise, and opening access to
generic distribution channels. Watson never acquired
title to the generics. Therefore, Watson did not “sell” the
generics within the meaning of § 3.2(c), and Impax’s right
to enter the market was not triggered.
An objective, common sense reading of § 3.2(c) indi-
cates that it is a “most favored nation” clause. As the
district court found, the intent of the provision is to shield
Impax from losing market share should Cephalon license
or authorize another generic manufacturer to begin selling
generic AMRIX®. The intent was not to grant Impax the
right to enter the market because Cephalon itself went to
market to mitigate losses against Mylan’s at-risk launch.
In fact, that specific scenario is provided for in § 3.2(d),
which allows Impax to enter the market for the period of
an at-risk launch. Watson is merely Cephalon’s sales
agent appointed to facilitate sale of Cephalon’s own
generic version of AMRIX®.
Accordingly, the district court’s interpretation of the
unambiguous Cephalon-Impax Settlement Agreement
was correct, and Impax’s right to enter the market has
not been triggered pursuant to § 3.2(c).
22 EURAND, INC. v. IMPAX LABORATORIES, INC.
IV.
For the foregoing reasons, this court dismisses Im-
pax’s appeal of the district court’s preliminary injunction
for want of jurisdiction, and affirms the district court’s
conclusion that no triggering event under § 3.2(c) of the
settlement agreement has occurred entitling Impax to
enter the generic extended-release cyclobenzaprine hydro-
chloride market.
AFFIRMED
COSTS
No costs.