Abbott Laboratories v. Andrx Pharm., Inc. (Fed. Cir. 2006)
In Federal tort cases, a plaintiff may seek a preliminary injunction prior to adjudication on the merits to force the defendant to cease a particular activity. In intellectual property cases, a preliminary injunction may prevent the defendant from, among other things, continuing the activity that is alleged to constitute an infringement. In other words, a preliminary injunction is often designed to preserve the status quo of the parties. In the present case, the Federal Circuit held that where a defendant raises a substantial question regarding the validity of an asserted patent, a preliminary injunction may not issue because it necessarily precludes the patentee from establishing a likelihood of success on the merits.
At issue between the parties were two patents generally directed to clarithromycin, a broad spectrum antibiotic from the macrolide family of antibiotics, all of which are derived from erythromycin A. Three of the asserted claims were affi liated with a first patent that described and claimed an extended release formulation of an erythromycin derivative combined with a pharmaceutically acceptable polymer. As taught, the extended release formulation allowed for the ingestion of one pill per day instead of the previously required daily ingestion of two immediate release formulation pills. The fourth asserted claim was affi liated with a second patent that reduced side effects of erythromycinderived drug formulations using extended release formulations.
In an appeal from the grant of a preliminary, the Court of Appeals for the Federal Circuit revisited the standards for granting and reviewing injunctions as set forth by the Supreme Court of the United States in eBay v. MercExchange, LLC (see May 2006 Newsletter) and observed that “the decision to grant or deny…injunctive relief is an act of equitable discretion by the district court, reviewable on appeal for abuse of discretion.” Four factors influence the grant of a preliminary injunction: (1) the plaintiff’s likelihood of success on the merits of the litigation; (2) the immediate and irreparable harm the plaintiff will suffer if the injunction is not granted; (3) the balance of hardships with respect to the grant or denial of the injunction; and (4) whether the public interest is best served by the grant of the injunction.
Addressing the first factor, the likelihood of success on the merits, the Federal Circuit explained that “if the defendant raises a substantial question concerning validity, i.e.[,] an invalidity defense that the patentee cannot prove lacks substantial merit[,] then the patentee has not established a likelihood of success on the merits.” Put another way, the patent owner must demonstrate that it will withstand the validity challenges raised by the accused infringer to succeed with respect to this factor. Notably, the Federal Circuit set the bar to which a validity challenge must rise at trial to preclude a preliminary injunction lower than the level to which a similar challenge must rise at trial to support a judgment of invalidity. The Court explained that “vulnerability is the issue at the preliminary injunction stage, while validity is the issue at trial. The showing of a substantial question as to invalidity thus requires less proof than the clear and convincing showing necessary to establish invalidity at trial.” When applying the above legal framework to each of the four asserted claims, the Federal Circuit concluded that the accused infringer had raised substantial questions as to the validity of each of the four claims. Accordingly, the patent owner had not established a likelihood of success on the merits as to any of the asserted claims; this factor favored the accused infringer.
The Court’s analysis of one of the asserted claims warrants further discussion as it shows how an issued patent claim may provide a motivation to combine teachings in the art for purposes of establishing an invalidity position in a preliminary injunction hearing. Specifically, this claim, affiliated with the first patent, required a compound for extended release of an erythromycin derivative in a gastrointestinal environment comprising an erythromycin derivative and an acceptable polymer (“an HPMC-like polymer”) similar to hydroxypropylmethyl cellulose (“HPMC”) such that the combination had defined pharmacokinetic parameters that described the effect of oral ingestion on the pharmaceutical and on the body. According to the Federal Circuit, the accused infringer had raised substantial arguments that: (1) by disclosing an extended release formulation of clarithromycin with an alginate polymer, one of patentee’s previously issued patents disclosed each claim limitation but the specifi c HPMClike polymer; (2) another prior art patent disclosed extended release forms of azithromycin (an antibiotic and compound related to clarithromycin) with HPMC; (3) a claim in the patentee’s previously issued patent suggested that azithromycin could be substituted for clarithromycin. Despite the patentee’s arguments that a skilled artisan would not be motivated to combine the above teachings with a reasonable expectation of success to obviate the asserted claim, the Court held that, because issued claims are presumed enabled, the accused infringer had raised substantial questions of invalidity based on obviousness. That is, because an issued claim is presumed to be enabled such that a skilled artisan could practice (i.e., make and use) the claimed invention, the accused infringer had raised substantial questions of obvious-type invalidity.
With respect to the second factor, irreparable harm, the Federal Circuit held that, because the patentee failed to establish a likelihood of success on the merits, the patentee was not entitled to a presumption of irreparable harm. Although both parties proffered “speculative” models predicting how the market would react to the introduction of the accused infringer’s competing pharmaceutical, the Court found that the patentee failed to show that money damages would not suffice (e.g., it failed to show that it would suffer an irreparable injury). Simultaneously, the Court also found that the accused infringer failed to establish that money damages would suffice. Hence, the factor favored neither party.
As to the third factor, balance of hardships, the Federal Circuit affirmed the trial court’s fi nding that this factor tipped in favor of the patentee because the accused infringer did not appeal this issue. With respect to the public interest factor, the Court also agreed with the trial court in noting that the public is best served by enforcing patents that are likely valid and infringed. However, because the patentee failed to establish a likelihood of success on the merits, the public interest favored the accused infringer and denial of an injunction. Therefore, because two of the factors favored the accused infringer and only one favored the patentee, the Federal Circuit vacated the district court’s injunction.
In a dissenting opinion, Judge Newman cautioned that the majority’s opinion failed to offer any level of deference to the district court’s opinion, as required by Supreme Court precedent, and appeared to constitute a de novo review. Because the majority allegedly failed to discuss any clear error in the district court’s decision, Judge Newman asserted that the majority failed to show an abuse of discretion and therefore improperly vacated the preliminary injunction and altered the status quo.