Incyte Corporation v. Sun Pharmaceutical Industries, Ltd., decided May 7, 2025 (Precedential)

Case Title: INCYTE CORPORATION v. SUN PHARMACEUTICAL INDUSTRIES, LTD. Court: United States Court of Appeals for the Federal Circuit

Date Decided: May 7, 2025

Overview:

This briefing document summarizes the key issues, arguments, and the decision of the United States Court of Appeals for the Federal Circuit in the case of Incyte Corporation v. Sun Pharmaceutical Industries, Ltd. The case involves an appeal by Sun Pharmaceutical Industries, Ltd. (Sun) against a preliminary injunction granted by the District Court for the District of New Jersey, which had enjoined Sun from launching its drug Leqselvi. The Federal Circuit reversed the district court's decision, vacating the preliminary injunction.

Key Parties:

• Plaintiffs-Appellees: Incyte Corporation, Incyte Holdings Corp. (collectively, Incyte)

• Defendants-Appellants: Sun Pharmaceutical Industries, Ltd., Sun Pharmaceutical Industries, Inc. (collectively, Sun)

Background:

• Incyte owns U.S. Patent No. 9,662,335, which claims deuterated versions of ruxolitinib, a JAK modulator used to treat autoimmune disorders.

• Claim 1 of the ’335 patent describes a specific compound: "3-cyclopentyl-3-[4-(7H-pyrrolo[2,3-d]pyrimidin-4-yl)-1H-pyrazol-1-yl]propanenitrile, wherein one or more hydrogen atoms are replaced by deuterium; or a pharmaceutically acceptable salt thereof."

• In July 2024, Sun received FDA approval for an oral deuterated ruxolitinib product, Leqselvi, for the treatment of alopecia areata (AA).

• Sun planned to launch Leqselvi in October 2024.

• Incyte sued Sun for alleged infringement of the ’335 patent and sought a preliminary injunction to prevent the launch of Leqselvi.

• The district court granted Incyte's motion for a preliminary injunction.

• Sun appealed the district court's order.

Legal Standard for Preliminary Injunction:

The Federal Circuit reviews the grant of a preliminary injunction under the law of the regional circuit (Third Circuit) for general principles, but applies Federal Circuit law to patent-specific issues. An abuse of discretion standard is used for reviewing the grant of a preliminary injunction. To obtain a preliminary injunction, the moving party must demonstrate:

• Likelihood of success on the merits.

• Likelihood of suffering irreparable harm in the absence of preliminary relief.

• The balance of equities tips in their favor.

• An injunction is in the public interest.

The finding of irreparable harm is reviewed for clear error.

Sun's Appeal Arguments:

Sun appealed the preliminary injunction, arguing that Incyte failed to demonstrate:

1. Likelihood of suffering irreparable harm.

2. Likelihood of success on the merits.

Federal Circuit's Decision and Reasoning:

The Federal Circuit focused its decision on the issue of irreparable harm, finding that the district court clearly erred in its analysis. Therefore, the court did not reach Sun's arguments regarding the likelihood of success on the merits.

Key Themes and Important Ideas/Facts:

• Irreparable Harm and the "Head Start" / "First Mover Advantage": A significant theme in patent litigation seeking preliminary injunctions is the potential for irreparable harm stemming from an alleged infringer gaining an improper "head start" or losing the "first mover advantage." This advantage allows a company to capture market share and build a competitive lead.

• The court notes: "A patentee can be irreparably harmed by an alleged infringer’s improper “head start” and the loss of the “first mover advantage” because the alleged infringer can capture market share and secure a competitive lead."

• In the medical context, this is particularly relevant when patients are unlikely to switch treatments, leading to "sticky" customer relationships and a loss of "continuity of care" for the patent holder.

• District Court's Finding of Irreparable Harm: The district court found irreparable harm based on Incyte's "head start" theory, believing that without the injunction, Sun would prevent Incyte from being the first to market a deuterated ruxolitinib AA treatment. The district court also linked this to a diminished value of Incyte's investment in its product development.

• The district court stated: "but for Sun’s Leqselvi, Incyte’s ’335 patent would provide it with the ability to bring a [deuterated ruxolitinib] AA treatment first to market."

• And: "Sun’s premature entrance into the AA market diminishes the value of [Incyte]’s investments in a topical AA product."

• Federal Circuit's Rejection of the District Court's Finding (Clear Error): The Federal Circuit determined that the district court's finding that Incyte would be the first to market was a "clearly erroneous fact finding." The undisputed facts presented to the court contradicted this finding.

• Key facts leading to this conclusion:

• Sun was prepared to launch Leqselvi imminently (October 2024).

• The ’335 patent expires in December 2026.

• Incyte's own topical deuterated ruxolitinib product, still in early development, was projected to launch "at least several years after its ’335 patent expires."

• The court emphasizes: "Because Incyte cannot enjoin Sun from launching after its ’335 patent expires, Sun’s multi-year head start is inevitable regardless of any injunction."

• The court further notes that Incyte's argument that Sun would receive an additional two years on the market due to the injunction did not constitute non-speculative evidence of irreparable harm given the inevitable multi-year head start Sun would have after the patent expired.

• Lack of Non-Speculative Evidence of Harm: Incyte failed to provide concrete evidence that Sun's launch under these specific circumstances (where Sun's multi-year head start was unavoidable) would cause irreparable harm. Speculative claims about loss of market share were not sufficient.

• The court states: "Incyte fails to provide non-speculative evidence that it will be irreparably harmed by Sun’s launch under these circumstances where Sun’s multi-year head start is inevitable."

• Reversal of the Preliminary Injunction: Based on the clear error in the district court's irreparable harm finding, the Federal Circuit reversed the grant of the preliminary injunction.

Conclusion:

The Federal Circuit reversed the district court's preliminary injunction because the district court's finding of irreparable harm was based on a clear factual error. The court found that the district court incorrectly believed that Incyte would be the first to market a deuterated ruxolitinib AA treatment if the injunction were granted. In reality, Incyte's product launch was projected to occur years after the relevant patent expired, making Sun's multi-year head start inevitable regardless of the preliminary injunction. This inevitable delay for Incyte meant that Sun's launch, while potentially giving them an earlier entry before patent expiration, did not constitute the kind of irreparable harm (losing the initial first-mover advantage) required for a preliminary injunction in this specific context. The court therefore concluded that Incyte had not established the necessary condition of likely irreparable harm.