The U.S. Court of Appeals for the Federal Circuit recently affirmed a district court’s denial of a request by Altana Pharma and Wyeth (collectively Altana) for a preliminary injunction to prevent Teva Pharmaceuticals (Teva) from marketing a generic version of the anti-ulcer drug Protonix®. Altana Pharma AG v. Teva Pharmaceuticals USA, Inc., Case No. 08-1039 (Fed. Cir., May 14, 2009) (Ward, J., sitting by designation).

Altana is the owner of a U.S. patent directed to the compound pantoprazole, the active ingredient in Altana’s anti-ulcer drug Protonix®. The compound pantoprazole belongs to a class of compounds known as proton pump inhibitors that are used to treat gastric acid disorders in the stomach. Teva and Sun filed Abbreviated New Drug Applications (ANDA) requesting FDA approval to sell a generic version of Protonix® prior to the expiration of Altana’s patent along with paragraph IV certifications. Altana filed a motion for preliminary injunction; Teva and Sun conceded infringement. However, they maintained that the patent is invalid. Specifically, the firms argued that the patent was obvious in light of the teachings in an earlier Altana’s patent in combination with other prior art.

After considering the evidence and the arguments, the district court denied Altana’s request for a preliminary injunction. With respect to the likelihood of success on the merits, the district court found that the defendants had demonstrated a substantial question of invalidity and Altana had not shown that it lacked substantial merit. The district court also considered, but rejected, Altana’s position on irreparable harm. As a result, the district court concluded that Altana had failed to show that it would suffer irreparable harm if the injunction was not issued. Based on Altana’s failure to establish either a likelihood of success on the merits or irreparable harm, the district court denied the motion for preliminary injunction.

On appeal, Altana argued that the district court incorrectly placed the burden on Altana to show that the obviousness defense lacks substantial merit, rather than putting the burden on the defendants to establish a substantial question of invalidity. In rejecting Altana’s argument, the Federal Circuit held that if an accused infringer raises a “substantial question” concerning validity, enforceability or infringement, a preliminary injunction should not issue.

Altana also challenged the district court’s obviousness analysis on the merits. The Court noted that its review of the district court’s decision is limited and placed the district court’s findings in perspective by pointing out that applications for preliminary injunctions are typically presented on an abbreviated record without the benefit of a full trial. Although the Federal Circuit agreed with Altana that some of the district court’s findings with respect to its obviousness analysis were incorrect, the Court ultimately concluded that the evidence supported the district court’s overriding decision that the defendants had made out a sufficient case of obviousness to defer the matter for trial on the merits, as opposed to granting the preliminary relief sought by the Altana.

Finally, Altana argued that the district court abused its discretion when it found that Altana had failed to demonstrate irreparable harm. The Court, however, held that irreversible price erosion, substantial loss of profits, decrease in market share, inability to service debts, employee layoffs and loss of research opportunities were not irreparable to Altana in this case and that the defendants would be able to satisfy a judgment should Altana prevail at trial.