Optinose AS v. Currax Pharmaceuticals, LLC

Citation: Not availableDocket: 48, 2021

Court: Supreme Court of Delaware; November 2, 2021; Delaware; State Supreme Court

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OptiNose AS and OptiNose, Inc., pharmaceutical companies, entered into a License Agreement with Currax Pharmaceuticals, LLC to license OptiNose's Exhalation Delivery Systems (EDS) technology for delivering the migraine treatment drug sumatriptan via a powder EDS device, trade-named ONZETRA® XSAIL. Currax holds limited rights to sell the product in Canada, the U.S., and Mexico, while OptiNose retains rights to sell EDS devices with different powders and liquids worldwide, and devices containing sumatriptan in other regions. Currax has the first right to prosecute certain patents related to the product but must obtain OptiNose's approval for filings that pertain to OptiNose's intellectual property. When the U.S. Patent and Trademark Office rejected Currax's ’009 Patent Application, which covers a powder EDS device, Currax needed to file a terminal disclaimer, requiring OptiNose's power of attorney, which OptiNose refused to grant. Currax sued for specific performance to compel OptiNose to provide the power of attorney, while OptiNose counterclaimed, arguing that the License Agreement did not obligate them to grant it. The Court of Chancery ruled in favor of Currax, determining that the License Agreement's language mandated OptiNose to provide the power of attorney and that OptiNose did not have the right to withhold approval for a terminal disclaimer not referring to the EDS Device. The Supreme Court of Delaware affirmed in part and reversed in part the lower court's decision.

Approval rights pertain specifically to statements about the tangible EDS Device, excluding those related to the intellectual property within it. The appeal has evolved into complex technical discussions beyond the original claims. Central to the dispute is whether a terminal disclaimer is relevant to the tangible EDS Device or other OptiNose intellectual property. The Court of Chancery's judgment affirming that filing a terminal disclaimer in the ’009 Application is within the rights granted to Currax under the License Agreement is upheld. Currax retains the initial right to prosecute Product Patents, including filing terminal disclaimers. However, the Court erred by narrowly interpreting what it means for a terminal disclaimer to "relate to or characterize" the tangible EDS Device. Such a disclaimer is indeed relevant because it pertains to the intellectual property embedded in the Device. Thus, that portion of the Court's decision is reversed.

OptiNose AS and OptiNose, Inc. are engaged in the development of pharmaceutical products, notably the Bi-Directional™ Exhalation Delivery Systems (EDS) technology for enhanced nasal drug delivery. The ONZETRA® XSAIL product combines sumatriptan with a powder EDS device. OptiNose licensed this product to Currax Pharmaceuticals LLC, which handles the sale of prescription drugs. The License Agreement, dated September 25, 2019, grants Currax rights to market the Product in North America and outlines various patents associated with it, categorized into Platform Patents and Product Patents based on the device type. Currax has the primary right to control the prosecution of Product Patents, subject to OptiNose’s review rights and approval requirements for filings related to the Device. OptiNose retains sole rights to prosecute and maintain Platform Patents. One such Product Patent, the U.S. Patent Application No. 15/879,009, focuses on powder EDS devices without specifying the drug type.

U.S. Patent No. 8,899,229 (the "229 Patent") is the parent patent of the ’009 Application, which shares significant claim overlap. The USPTO issued a nonstatutory obviousness-type double patenting rejection against the ’009 Application, which occurs when a new invention is not patentably distinct from an existing one, thus preventing the extension of the patent term. To address this, a patent applicant can file a terminal disclaimer, surrendering part of the patent's term and agreeing that the new patent will not outlast the parent patent. Such disclaimers can be used in litigation to challenge parent patents, indicating a lack of distinctiveness in claims.

Currax sought a power of attorney from OptiNose, the patent owner, to file a terminal disclaimer but was refused. Currax then filed a complaint in the Court of Chancery to enforce its right to prosecute the Product Patents per Section 5.01(c)(i) of their License Agreement, arguing this included obtaining a power of attorney. OptiNose countered, seeking a declaratory judgment that the License Agreement did not mandate granting such power and claiming an approval right before Currax could file a terminal disclaimer.

The Court of Chancery ruled in favor of Currax, stating that its prosecution powers under the License Agreement allowed it to file terminal disclaimers, and that OptiNose had agreed to execute the necessary power of attorney. The court clarified that OptiNose’s approval rights were limited to specific filings related to the tangible "Device component of the Product," rather than the underlying intellectual property.

Statements made to the USPTO regarding intellectual property, such as the terminal disclaimer, do not activate OptiNose's approval right. The court interpreted references to "other OptiNose intellectual property" as excluding the Product Patents, affirming that filing the terminal disclaimer did not trigger this right. The Court of Chancery's ruling granting Currax's motion for judgment on the pleadings is reviewed de novo. OptiNose contends that the court incorrectly required it to provide a power of attorney for Currax to file a terminal disclaimer during the prosecution of the ’009 Application, arguing that the License Agreement does not mandate such facilitation. However, the court held that the License Agreement obligates OptiNose to provide a power of attorney, as Currax has the right to control the prosecution and maintenance of the Product Patents, which includes filing terminal disclaimers. Only the patent owner or their attorney of record can file such disclaimers, necessitating OptiNose's cooperation.

OptiNose further argues that filing a terminal disclaimer constitutes abandoning a patent. The License Agreement stipulates that if Currax decides to abandon or not maintain a Product Patent, OptiNose may assume prosecution rights. However, the court clarified that the abandonment clause pertains to unilateral abandonment, while a terminal disclaimer allows the patent application to proceed without altering its scope. Thus, equating terminal disclaimers with abandonment would lead to impractical outcomes, as it would suggest that any limitation of claims by Currax constitutes abandonment. Therefore, the court concluded that Currax has not abandoned the ’009 Application or its claims.

The main issue in this appeal is whether Section 5.01(a)(i) of the License Agreement requires OptiNose’s approval before Currax can file a terminal disclaimer for the ’009 Application related to the ’229 Patent. This section grants Currax the primary right to control the prosecution of Product Patents but mandates that Currax provide OptiNose with copies of communications with patent offices in advance, allowing OptiNose to review and comment, particularly on filings that relate to or characterize the Device component of the Product, which require OptiNose’s prior approval.

The Court of Chancery determined that the "Device" is specifically the tangible EDS Device used to deliver a drug; therefore, a terminal disclaimer, which does not pertain to this tangible component, does not invoke OptiNose’s approval rights. OptiNose contends that the terminal disclaimer impacts the patent term for the "nosepiece assembly" of the EDS Device, suggesting it concedes that this assembly is not distinct from the one in the ’229 Patent, thereby characterizing the Device component.

Currax argues that approval rights are limited to statements regarding the tangible EDS Device rather than the underlying intellectual property. The Court of Chancery's interpretation was too narrow, as a terminal disclaimer does relate to the tangible EDS Device through its connection to the intellectual property within it. The terms “relating to” and “characterizing” indicate a broader interpretative scope. Definitions within the License Agreement clarify that the "Device" encompasses the tangible EDS Device and associated OptiNose Patents necessary for making and selling the Product, ONZETRA® XSAIL. The analysis emphasizes understanding the agreement's overall purpose and the business relationship between the parties.

Currax was granted a limited license to sell the sumatriptan powder EDS device for migraines, while OptiNose retained all other global rights to the Product Patents. Currax holds a "first right" to prosecute these patents, unlike OptiNose’s "sole right" for the Platform Patents. Prior approval from OptiNose is necessary for Currax to make statements to the USPTO regarding the EDS Device, as any unapproved statements could harm OptiNose’s patent portfolio, especially concerning other powder uses. The Court of Chancery determined that statements to the patent office do not pertain to the tangible "Device" when they do not reference intellectual property. However, this interpretation is contested, as the License Agreement defines "Device" to include the tangible EDS Device and related OptiNose Patents. The court's interpretation could effectively strip OptiNose of its approval rights, particularly since patent filings typically do not involve physical models. A terminal disclaimer in the ’009 Application, which relates to the EDS Device structure, indicates that the ’009 and ’229 Patent claims are not patentably distinct, linking the tangible device with its patent claims. Such a disclaimer could impact patent litigation, allowing an accused infringer to argue non-infringement based on distinctions between their product and the Device component of the Product. Consequently, the relationship between the tangible EDS Device and its associated patents is critical in patent office proceedings, including when making statements regarding the device.

The interpretation of the License Agreement maintains that it does not negate OptiNose’s separate provision restricting its right to review communications with patent offices. Certain Product Patents, such as those focused on "Sumatriptan Powder Delivery" and "Temperature/Moisture Regulation," do not directly pertain to the tangible EDS Device, with some filings being unrelated to the Device itself. OptiNose acknowledges that patents like U.S. Patent No. 9,649,456, which relate to a powder EDS device that delivers sumatriptan, are about the Product rather than the Device component, allowing Currax to prosecute these without OptiNose’s approval. Additionally, a statement from the original ’009 Application describes a capsule intended for the EDS Device but does not characterize the Device itself; thus, OptiNose would not have approval rights over it. Conversely, the ’009 Application relates specifically to the Device component, necessitating OptiNose’s approval—though not to be unreasonably withheld—before Currax can file a terminal disclaimer concerning the ’229 Patent and the ’009 Application’s claims. The Court of Chancery’s ruling is affirmed in principle regarding the power of attorney requirement for OptiNose but reversed concerning the terminal disclaimer's relevance to the Device component.