The court delivered its verdict yesterday.
Setting aside an earlier ruling given by a New Jersey Court, the Federal Circuit Court said that the lower court has "erred" in granting summary judgement of non-infringement by Dr. Reddy's Laboratories (DRL).
Lunesta (eszopiclone) is the prescription brand to treat insomnia.
Sunovin is a wholly-owned subsidiary of Dainippon Sumitomo Pharma Co. Ltd (DSP).
According to Dainippon Sumitomo Pharma, Lunesta generated USD 136 million revenues in North America and Chinese markets in the April-June quarter of the current fiscal.
"In view of the foregoing, we conclude that the district court's construction of the asserted claims was correct, but we also conclude that the court erred in granting summary judgement of non-infringement to Dr. Reddy's Laboratories.
"Therefore, because Dr. Reddy's Laboratories ANDA (Abbreviated New Drug Application) specification infringes claim 1 of Sunovion's 673 patent as a matter of law, the judgement of the district court is reversed," the court said in its order.
DRL officials offered no comments on the matter.
Commenting on the Lunesta patent case, Sarabjit Kour Nangra (VP-Research, Pharma) Angel Broking said Sunovin has reached settlements with other companies over the sleep medicine, including one with Teva Pharmaceutical Industries Ltd.
That enabled low-cost versions to enter the market before the expiry of the patent. she said.
"We maintain our estimates on the company and hence our neutral rating on the stock," she said.
Sunovion, formerly known as Sepracor Inc., filed its infringement suit in March 2009, targeting 10 generics makers including Dr. Reddy's Laboratories, that had filed ANDAs for their own versions of Lunesta.
In January, the New Jersey federal judge observed that Dr Dr. Reddy's Laboratories didn't infringe the patent of the drug belonging to Sunovion, and that the Indian drug maker's proposed generic version of the sleep aid is chemically different.
Sunovion argued that the District Court erred in concluding that DRL would not infringe by making and selling its product approved by the FDA.
According to the Federal Court judgment copy, Dr. Reddy's Laboratories original ANDA specification submitted to the FDA on December 15, 2008, requested regulatory approval for generic eszopiclone products with some specifications.
However, the regulator on June 24, 2010, communicated to the company deficiencies in its ANDA specification and DRL submitted an amendment to the FDA on April 26, 2012, revising its ANDA specification and to request approval for the generic products.
In another development, Dr. Reddy's Laboratories subsidiary in USA has initiated voluntary recalling of IBU (TM) Ibuprofen Tablets, USP, 800 mg, and 500 -count bottle from the market on labelling issue.
"Incorrect or missing lot and/or exp date- This product is being recalled due to an incorrect expiration date of 05/2017.
"The correct expiration date is 10/2016, US FDA website said on the reasons for recall (class-II).
A DRL official said the financial implications of the recall would be negligible.
Dr. Reddy's Laboratories shares was quoting at Rs 2421 apiece, down 1.42 per cent on BSE at 1.45 pm.