Otsuka America Pharmaceutical v. Hetero Labs — Federal Circuit Upholds Nuedexta Preliminary Injunction, Vacates Bond Waiver

Background

Nuedexta is a branded pharmaceutical that combines two drugs — dextromethorphan and quinidine — to treat pseudobulbar affect (PBA), a neurological condition that causes involuntary, uncontrollable outbursts of crying or laughing. It is used by patients with ALS, multiple sclerosis, and stroke survivors. Otsuka America Pharmaceutical owns the brand through its subsidiary Avanir Pharmaceuticals, and holds U.S. Patent No. 7,659,282 covering a method of administering dextromethorphan in combination with quinidine within a specific weight-to-weight ratio.

In August 2024, the FDA approved a generic version of Nuedexta submitted by Hetero Labs Limited. When Hetero announced it planned to launch the generic in July 2025, Otsuka filed suit in the District of Delaware and sought a temporary restraining order and preliminary injunction. The district court granted the injunction on July 23, 2025, blocking Hetero from entering the market while the underlying patent case proceeds. The court also waived the security bond that Federal Rule of Civil Procedure 65(c) ordinarily requires as a condition of injunctive relief, reasoning that the equities strongly favored Otsuka. Hetero appealed both decisions.

The central legal dispute involves how to calculate the weight-to-weight ratio of dextromethorphan to quinidine recited in the patent’s claim 1. The patent requires “the weight to weight ratio of dextromethorphan to quinidine is 1:0.5 or less.” The parties disagreed over whether to measure the active moiety (free base) form of each compound or the salt form used in the actual formulation. If Hetero’s construction prevailed — using active moiety weights — then the 20 mg dextromethorphan hydrobromide / 10 mg quinidine sulfate formulation would produce a ratio of 1:0.56, outside the patent’s claimed range, and the drug would not infringe.

The Court’s Holding

The Federal Circuit, in an opinion by Judge Bryson joined by Judge Stoll, affirmed the district court’s grant of the preliminary injunction. The court held that the terms “dextromethorphan” and “quinidine” in claim 1 refer to the compounds in both their free base and salt forms — not just the free base. Using that construction, 20 mg of dextromethorphan hydrobromide and 10 mg of quinidine sulfate yield a ratio of exactly 1:0.5, falling within the patent’s claimed range, and Otsuka was likely to succeed on the merits.

The panel found strong intrinsic evidence supporting Otsuka’s reading. Dependent claims 7 and 8 of the patent specifically address dextromethorphan and quinidine “in a form of a pharmaceutically acceptable salt,” which means the independent claim’s use of those same terms must encompass the salt forms — otherwise the dependent claims would have no work to do. The specification’s repeated cross-references to salt forms as examples of the compounds further supported the construction. The court rejected Hetero’s argument that the patent’s inclusion of chemical structures depicting only the free base forms required a narrower construction.

Judge Dyk dissented on the claim construction issue, arguing the majority’s reading conflates the compound with its salt and creates a ratio that distorts the true pharmacological relationship between the drugs. He would have reversed the preliminary injunction.

On the bond issue, however, the majority agreed with Judge Dyk. Rule 65(c) of the Federal Rules of Civil Procedure requires courts to set security “in an amount that the court considers proper to pay the costs and damages sustained by any party found to have been wrongfully enjoined.” Under Third Circuit law — which applies to non-patent procedural questions in cases from Delaware — bond waivers are strictly disfavored and limited to narrow exceptions such as when the restrained party has no assets or when the public interest clearly demands waiver. The district court waived the bond on equitable grounds without finding any such exception, and the Federal Circuit held that was an abuse of discretion. On remand, the district court must set an appropriate bond amount, taking into account that the patent expires August 13, 2026 — meaning only weeks of injunctive protection remain.

Key Takeaways

• When a pharmaceutical patent’s claim uses a compound name like “dextromethorphan” and the specification repeatedly uses both free-base and salt forms interchangeably, the claim term will be construed to encompass both — making it harder for generic manufacturers to design around the patent by measuring only the free-base fraction.
• Dependent claims that specify a compound “in the form of a pharmaceutically acceptable salt” are strong intrinsic evidence that the corresponding independent claim’s use of the bare compound name already includes the salt form.
• Federal Rule 65(c) bond requirements are not negotiable on pure equitable grounds in the Third Circuit. District courts must find a specific exception (lack of assets, public interest) before waiving the bond, and cannot substitute general equity balancing for the rule’s standard.
• The decision has limited near-term market impact because the ‘282 patent expires August 13, 2026 — though Hetero and other ANDA applicants may now enter the generic market in days rather than months.

Why It Matters

Pharmaceutical claim construction disputes over whether a term encompasses both free-base and salt forms of a drug compound arise regularly in ANDA (Hatch-Waxman) litigation. This precedential Federal Circuit opinion gives branded-drug patentees a roadmap for drafting and arguing claims that cover salt-form administration even when the independent claim does not expressly mention salts — as long as the dependent claims or specification make the salt forms part of the disclosure. Generic manufacturers, on the other hand, will need to demonstrate a cleaner prosecution or specification history to support an argument that salt forms are excluded.

The bond ruling serves as a cautionary reminder for preliminary injunction practice across all IP cases tried in the Third Circuit (Delaware, New Jersey, and Pennsylvania — home to the lion’s share of pharmaceutical patent litigation). Courts in that circuit cannot simply wave off the security requirement on equitable grounds; they must make specific findings that satisfy one of the recognized exceptions or set a meaningful bond amount.