NEWS

Jazz Loses the Tune: Courts Strike a Sour Note on System Patents

June 19, 2025

Federal Circuit Draws New Limits on Injunctions and Orange Book Listings

In a decision likely to affect the pharmaceutical industry, the Federal Circuit ruled in Jazz Pharmaceuticals, Inc. v. Avadel CNS Pharmaceuticals, LLC. The court clarified limits on injunctive relief and patent listings under the Hatch-Waxman Act.

Notably, the May 6, 2025 ruling made one point clear. Even when infringement is found, courts cannot block certain regulatory activities. That remains true if those activities fall within the Act’s “safe harbor” provision.

A Closer Look at the Dispute

Xyrem, GHB, and a Patented Distribution System

The case centered on Jazz’s narcolepsy drug, Xyrem. The drug contains GHB, a powerful sedative with known abuse risks.

To manage those risks, Jazz patented a single-pharmacy distribution system. That system tracks and controls how Xyrem is dispensed.

Meanwhile, Avadel sought FDA approval for FT218. Like Xyrem, it is GHB-based. However, FT218 uses a once-nightly dose and a different distribution approach.

The NDA Filing and Orange Book Challenge

When Avadel filed its New Drug Application, the FDA required a patent certification. That requirement stemmed from Jazz’s patent being listed in the Orange Book.

Jazz then sued Avadel for infringement. In response, Avadel challenged the Orange Book listing itself.

Specifically, Avadel argued the patent did not claim a drug. Nor did it claim a method of using one. Those, however, are the only patents eligible for listing.

The District Court Agrees with Avadel

The district court sided with Avadel. It found Jazz’s claims covered a “system,” not a drug or method of use.

That distinction proved decisive. Under Hatch-Waxman, only drug compositions and methods of use qualify for Orange Book listing.

As a result, the court ordered Jazz to delist its patent. Jazz then appealed.

The Federal Circuit Affirms the Delisting

Why System Claims Still Are Not Method Claims

On appeal, Jazz raised two main arguments. First, it claimed the patent covered a method of using Xyrem. Second, it argued FDA regulations supported broader listing categories.

The Federal Circuit rejected both points. In doing so, it emphasized several principles:

Method claims must recite specific steps.
A system that enables use is not itself a method.
FDA regulations do not override patent-law fundamentals.
Prescribing conditions do not convert systems into methods of use.

Accordingly, the court upheld the delisting order.

Clinical Trials Remain Protected by the Safe Harbor

Jazz also sought to stop Avadel’s clinical research activities. That effort failed.

The Federal Circuit was unequivocal. Even where infringement exists, courts cannot block protected research.

This includes clinical trials and open-label extensions. If those activities fall within the Hatch-Waxman safe harbor, they may continue.

That protection, the court noted, serves a clear purpose. It promotes innovation while speeding FDA approval.

Why This Ruling Matters

Taken together, the decision reinforces a key boundary. Commercial infringement is distinct from regulatory research.

It also tightens Orange Book eligibility standards. As a result, system patents face greater scrutiny.

For brand-name companies, the message is direct. If a patent does not claim a drug or method of use, it does not belong in the Orange Book.

For generics and 505(b)(2) applicants, however, the ruling offers reassurance. It preserves the streamlined path to market. That remains true even when system-based innovation is involved.

Related articles on patent infringement: Generic Drug Label Doesn’t Induce Patent Infringement Just by Listing Optional Refrigeration

Divided Infringement

PatChat is now operational

June 18, 2025

We have added some AI functionality to our website in the form of a personalized Chat GPT-based AI agent.

You can access the chatbot at the lower righthand corner of the website. Just click on the little icon and it will open up the chatbot.

The AI is trained on Bob’s books, and the FAQs from our website, so asking it questions will be like talking to Bob himself.

Have fun with it, but don’t bother asking non-IP related questions, it’s trained to stick to IP related topics.

IP Updates in Korea

June 17, 2025

Export may constitute infringement

Korea has added exporting an invention to the list of what constitutes “practicing an invention”. This means patent holders can claim damages from overseas sales more actively.

“Before the revision, if an unauthorized third party exported patented products overseas, it was not considered patent infringement.”

New Patent Term Extension system

Korea has also introduced two limitations on patent term extensions. The first is that a patent term can’t be extended over 14 years from the date of receipt of marketing approval. The second is that only one patent becomes eligible for patent term extension per approval.

Graph source: Hanol IP & Law newsletter

Consumer Survey Evidence

In trademark litigation, the Korean Supreme Court clarified standards for consumer surveys used as evidence of consumer recognition or perception.

USPTO discontinues the Accelerated Examination program

June 17, 2025

Given the long wait times for patent prosecution, the USPTO had offered several ways to speed the process up*. One of those, Accelerated Examination, offered the option of having the attorney certify much of the examination work in advance.

We used the accelerated examination process several times, and got quite good at it.

The USPTO puts the brakes on the Accelerated Examination program

In one instance we received notice of allowance in less than a month!

Nevertheless, it seems many attorneys did a poor job of searching (intentionally or unintentionally), so the original premise of faster prosecution was faulty.

The USPTO is discontinuing the Accelerated Examination Program.

Track One, or Prioritized Examination, is still an option for speeding up the prosecution process.

* See our FAQ page on Patent Prosecution, under the questions: How can an applicant speed up patent prosecution?
and What was accelerated examination?

The video found in those questions can be seen directly here: FishFAQ 26 Speeding Up Prosecution

Copyright Office Report on AI Training and Fair Use

June 16, 2025

Can AI Use Copyrighted Material Under Fair Use?

Can AI systems rely on the fair use doctrine when training on copyrighted works? That question sits at the center of ongoing copyright debates.

Fair use is a doctrine in U.S. copyright law. It allows limited use of copyrighted material without permission in certain situations. Courts apply a four-factor test to determine fair use. Those factors include the purpose of the use, the nature of the work, the amount used, and market impact.

However, these factors are only guidelines. Importantly, no single factor guarantees fair use on its own.

Common Examples of Fair Use

Fair use often applies to criticism, commentary, and news reporting. It also commonly applies to teaching, scholarship, and research. For example, a reviewer may quote a copyrighted book without permission when critiquing that book. However, fair use is context-specific. Uses outside these categories may still qualify, while listed purposes may still fail.

AI Training Raises New Fair Use Questions

Generative AI systems train on massive datasets. Those datasets often include copyrighted material. As a result, a key question arises. Can AI training qualify as fair use and avoid infringement? This issue was the focus of a recent study. The study was issued by the U.S. Copyright Office (USCO).

Do AI models Infringe Training Data?

The USCO report concludes that AI training implicates several exclusive copyright rights. These include reproduction and derivative work rights.

The report also examines a critical issue. Are a model’s weights themselves infringing copies?

Developers argue that models contain only numerical values. They claim these values are not copies of copyrighted works. Others disagree, pointing to AI outputs that closely resemble training data.

According to the USCO, similarity matters. When outputs are substantially similar, infringement concerns grow stronger. In those cases, the report finds a compelling argument. Copying model weights may implicate reproduction and derivative rights.

How the Fair Use Defense Applies to AI

The key issue when analyzing fair use has been whether the use is “transformative”. There is of course a spectrum. Where the output is based on a diverse dataset, it is more likely to be transformative. But where it is trained to generate outputs substantially similar to copyrighted works, then it is “at best, modestly transformative”.

Why the Human Learning Analogy Falls Short

The USCO rejected arguments that AI training is inherently transformative, because it is analogous to human learning. The report asserts that the analogy rests on a faulty premise. Fair use is not a defense for all acts if those acts are used for learning. An example was given that a student couldn’t rely on fair use to copy all of the books at a library. The analogy also breaks down technically. Humans retain imperfect, filtered impressions of works. AI systems do not. The structure of exclusive copyright rights is premised on certain human limitations.

What Comes Next for AI and Copyright

Currently, there are more than 40 cases currently pending related to the issue of AI using copyrighted materials. There won’t be a single answer whether unauthorized use is fair use. There is an ongoing discussion of some form of licensing scheme for AI training data. For now, the recommendation is to continue development without government intervention.

More copyright, AI, and Fair use articles: AI and Copyright: Court Rules Against Fair Use in Training AI Models

Did Fair Use get a Face-Lift?

Revised Policy on Same-Day Dual Filings in China: Invention and Utility Model Applications

June 12, 2025

China's Two Patent Model Types

There are two types of patent protection in China: invention and utility model patents. Invention patents are similar to the US utility patents. Whereas, utility model patents are granted for technical solutions relating to shapes or structures of a product.

Same Day Dual Filing

Under Chinese patent law, when the same applicant files both an invention patent application and a utility model application for the same invention on the same day (i.e., same filing date), it is considered a same-day dual filing. Whether these applications relate to the same invention is determined based on a declaration made in the request form.

To obtain a patent for the invention, the applicant must waive the corresponding utility model right. The older practice of amending the invention application to distinguish it from the utility model is no longer permitted.

Now You Must Choose One

Previously, if the utility model right was still valid and a declaration was submitted at the time of filing, applicants had two options:

Modify the invention application to differentiate it from the utility model, or
Waive the utility model right.

Now, only the second option—waiving the utility model right—is allowed. This amendment is intended to streamline examination procedures and reduce the burden on both applicants and the patent office.

Implication for Applicants

At the time of filing in China, applicants should carefully assess:

Whether filing for both invention and utility model is necessary, especially if the scopes of protection are the same.
If the scopes are identical, whether to pursue protection via a utility model or an invention patent.

Other articles on Chinese Patent Policy: Update on the Chinese Foreign Filing License Requirement

China implements stronger punitive damages

What Did Those Claims Consist Of?

June 9, 2025

This is a very weird case interpreting “consisting of”. The Federal Circuit recently affirmed a ruling of non-infringement in Azurity Pharmaceuticals v. Alkem Laboratories. Azurity had sued Alkem for allegedly infringing patent claims related to a drinkable antibiotic.

The patent at issue—Azurity’s U.S. Patent No. 10,959,948—was a continuation of an earlier application that had been rejected due to prior art referencing the ingredient propylene glycol. To overcome that rejection, Azurity amended its claims to disclaim propylene glycol, arguing that its absence distinguished the invention from the prior art. Instead, Azurity used the more generic term “flavoring agent.”

How the Prosecution History Set the Trap

During prosecution, Azurity clearly and unmistakably argued that its claimed formulation excluded propylene glycol in order to overcome prior art. That argument worked—at least to secure allowance.

But prosecution disclaimer cuts both ways. Statements made to obtain a patent can later limit its scope. By distinguishing prior art based on the absence of propylene glycol, Azurity boxed itself in.

Why “Consisting Of” Left No Wiggle Room

In patent law, wording matters.

“Comprising” is open-ended. It allows additional, unrecited elements.
“Consisting of” is closed. It excludes anything not specifically listed.

Here, the claims used “consisting of,” which strictly limits the formulation to only the listed ingredients. When paired with the prosecution history disclaiming propylene glycol, the claim language reinforced a narrow construction.

The Stipulation That Didn’t Save the Claims

At trial, both parties stipulated that “flavoring agents” in the asserted claims could include substances with or without propylene glycol. Azurity argued that this meant a product containing a flavoring agent with propylene glycol would still infringe.

The district court disagreed. A litigation stipulation cannot erase a clear and unmistakable prosecution disclaimer. Even if “flavoring agent” could theoretically encompass propylene glycol, the intrinsic record controlled.

Federal Circuit Affirms Non-Infringement

The Federal Circuit agreed: Alkem’s product, which contained propylene glycol, fell outside the scope of claims that—through both language and prosecution history—excluded it.

The takeaway is simple but powerful. When you amend claims to overcome prior art—especially when using closed language like “consisting of”—you may be defining not just what your invention is, but what it can never cover.

For some other articles about patent claims: Patent Like You Mean It, But Also Show the Structure

Federal Circuit Clarifies Limits on Prosecution Disclaimer Across Patent Families