STARK, United States Magistrate Judge.
In this patent infringement action, Plaintiffs—The Research Foundation of State University of New York ("SUNY"), New York University ("NYU"), Galderma Laboratories, Inc. ("Galderma"), and Galderma Laboratories L.P. ("GLLP") (collectively, "Plaintiffs")-seek to preliminarily enjoin Defendant, Mylan Pharmaceuticals, Inc. ("Mylan"), from bringing to market Mylan's generic version of Plaintiffs' 40 mg Oracea® capsules.
Mylan has filed an Abbreviated New Drug Application ("ANDA") with the U.S. Food and Drug Administration ("FDA") seeking approval for the commercial use, manufacture, and sale of a generic version of Oracea® capsules prior to the expiration of the patents-in-suit.
The Court held a preliminary injunction hearing on May 24, 2010. Defendants thereafter voluntarily agreed to refrain from launching their proposed generic product until at least July 1, 2010. (D.I. 146 at 3; see also D.I. 152.) For the reasons that follow, the Court will GRANT Plaintiffs' motion for a preliminary injunction.
Acne rosacea, also known as rosacea, is a chronic inflammatory skin disorder that affects approximately 14 million Americans. (Webster Decl. (D.I. 91) ¶ 11) Rosacea is not an infection but, instead, a chronic inflammatory disorder. (Id. ¶ 15) Therefore, treatment by antibiotics—i.e., drugs that kill bacteria—is not required. (Id.) Also, given rosacea's chronic nature, longterm treatment is necessary. (Id.) Because long-term treatment with antibiotics can have significant side effects— such as dizziness and gastrointestinal disturbances for the patient and the development of antibiotic-resistant organisms for society-it is preferable not to treat rosacea with an antibiotic. (Id. ¶¶ 16-17)
Robert A. Ashley, the inventor of the patents-in-suit that are the subject of the preliminary injunction motion, claims to have discovered that administration of compounds of the antibiotic tetracycline in amounts too small to have antibiotic effect could effectively and safely treat rosacea without the unwanted side effects of antibiotics. (See D.I. 88 Exs. A & B at Example 38.) On May 26, 2006, Oracea® became the first—and remains the sole—oral therapy approved by the FDA for the treatment of rosacea. (D.I. 88 at 3) Plaintiffs insist Oracea® has no antimicrobial effect but, instead, acts only as an anti-inflammatory drug. (Webster Decl. (D.I. 91) ¶ 19)
The Ashley patents are directed to methods of treating acne and rosacea with tetracycline compounds. The other patents-in-suit, referred to as the "Amin patents," are U.S. Patent Nos. 5,789.395 ("the '395 patent") and 5,919,775 ("the '775 patent").
All four of the patents-in-suit are listed in the Approved Drag Products with Therapeutic Equivalence Evaluations ("Orange Book") for Oracea®. Plaintiffs' preliminary injunction motion is based only on the Ashley patents (i.e., the '267 and '572 patents). (D.I. 88 at 5 n. 4) The '572 patent is a continuation of the '267 patent. (D.I. 88 at 16)
Mylan has submitted ANDA No. 90-855 to the FDA under § 505(j) of the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 355(j). (D.I. 88 Ex. X) As required by statute, on February 4, 2009 Mylan notified Plaintiffs of its ANDA filing and certified to the FDA its belief that the Ashley patents are invalid and/or would not be infringed by the commercial manufacture,
On March 19, 2009, Plaintiffs filed their complaint, alleging that Mylan's generic version of Oracea® would infringe the patents-in-suit. (D.I. 1) On April 16, 2009, Mylan filed its answer and counterclaims, asserting counterclaims seeking declaratory judgments of invalidity and non-infringement with respect to both Ashley patents. (D.I. 14) On April 9, 2010 Mylan filed a motion for" leave to amend its answer and counterclaims to add a counterclaim seeking a declaratory judgment that the Ashley patents are unenforceable due to inequitable conduct before the U.S. Patent and Trademark Office ("PTO"). (D.I. 96)
Trial is scheduled for December 7, 2010. (D.I. 26)
The Court held a Markman hearing to consider the parties' claim construction disputes on March 23, 2010. See March 23, 2010 Hearing Transcript (D.I. 133) (hereinafter "Markman Tr"). The undersigned magistrate judge issued a Report & Recommendation as to the proper resolution of these disputes on May 12, 2010. (D.I. 134) No objections were filed. On June 24, 2010, Chief Judge Gregory M. Sleet adopted the Report and Recommendation. (D.I. 166)
At the conclusion of the Markman hearing, the parties advised the Court that Mylan was contemplating an "at-risk launch" of its proposed generic product in the event that Mylan were to receive FDA approval for it. (Markman Tr. at 118-26) Thereafter, Mylan agreed voluntarily to refrain from launching its generic product until May 31, 2010. (D.I. 77 at 2) On April 2, 2010, Plaintiffs filed their motion for a preliminary injunction to enjoin Mylan's launch until after conclusion of this litigation. (D.I. 87; D.I. 88) The parties filed additional pre-hearing submissions on April 30 and May 14, 2010. (D.I. 105; D.I. 138) Among the parties' filings were declarations from Brian Johnson, Galderma's Vice President of Prescription Marketing (D.I. 89); Professor Jerry A. Hausman, Plaintiffs' damages expert (D.I. 90; D.I. 140); Dr. Guy F. Webster, Plaintiffs' infringement and validity expert (D.I. 91; D.I. 139); Dr. Harry F. Chambers, Mylan's infringement expert (D.I. 106); Dr. Ronald N. Jones, Mylan's expert in the area of microbiology (D.I. 107); Jason Harper, Mylan's Executive Director of Product Portfolio Management (D.I. 108): Dr. Philip B. Nelson, Mylan's damages expert (D.I. 111); and Dr. Barbara A. Gilchrist, Mylan's invalidity expert (D.I. 112; D.I. 113; D.I. 114),
On May 24, 2010, the Court held an evidentiary hearing on the preliminary injunction motion. See May 24. 2010 Hearing Transcript (D.I. 169) (hereinafter "Tr."). In addition to legal argument, the Court heard testimony from the following witnesses called by Plaintiffs: Dr. Webster (Tr. at 107-79), Mr. Johnson (Tr. at 180-204), and Professor Hausman (Tr. at 208-44). Defendants chose not to call any witnesses.
At the direction of the Court, the parties filed post-hearing letter briefs on May 25, 2010 (D.I. 146; D.I. 147) and May 26, 2010 (D.I. 149; D.I. 150). In its letter of May 25, Mylan advised the Court that it would agree not to launch a product pursuant to the ANDA at issue in this litigation before July 1, 2010. (D.I. 146 at 3)
On June 16, 2010, Plaintiffs wrote to the Court pursuant to D. Del. LR 7.1.2(b) to bring new case law and facts to the Court's attention. (D.I. 160) Specifically, Plaintiffs provided the Court with copies of a recent opinion in the District of New Jersey preliminarily enjoining the launch of a generic drug. (D.I. 160 Ex. 1) They also provided
Federal Circuit law provides the standard for granting an application for a preliminary injunction of patent infringement. See Hybritech, Inc. v. Abbott Labs., 849 F.2d 1446, 1451 n. 12 (Fed.Cir.1988). A preliminary injunction is "extraordinary relief." Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372, 1375 (Fed. Cir.2009). A "patentee's entitlement to such an injunction is a matter largely within the discretion of the trial court." Id.
"`[A] plaintiff seeking a preliminary injunction must establish [1] that he is likely to succeed on the merits, [2] that he is likely to suffer irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in his favor, and [4] that an injunction is in the public interest.'" Id. at 1375-76 (quoting Winter v. Natural Res. Def. Council, Inc., ___ U.S. ___, 129 S.Ct. 365, 374, 172 L.Ed.2d 249 (2008)).
"[A]ll findings of fact and conclusions of law at the preliminary injunction stage are subject to change upon the ultimate trial on the merits." Purdue Pharma L.P. v. Boehringer Ingelheim GmbH, 237 F.3d 1359, 1363 (Fed.Cir.2001).
As set forth below, the Court finds that Plaintiffs have established a strong likelihood of success on the merits of their claims. The Court further finds that Plaintiffs have met their burden to show they will suffer irreparable harm in the absence of preliminary relief, that this harm outweighs the harm that will be suffered by Mylan in the event that the pre-liminary injunction turns out to have been improvidently granted, and that the competing public interests at stake favor Plaintiffs. Although these latter three factors weigh only slightly in favor of Plaintiffs, on the whole the factors the Court must consider in exercise of its discretion justify granting Plaintiffs the extraordinary relief they seek. See generally FMC Corp. v. U.S., 3 F.3d 424, 427 (Fed.Cir. 1993) ("If a preliminary injunction is granted by the trial court, the weakness of the showing regarding one factor may be overborne by the strength of the others."); Illinois Tool Works, Inc. v. Grip-Pak, Inc., 906 F.2d 679, 683-84 (Fed.Cir.1990) (suggesting that not all preliminary injunction factors need be weighed equally).
"With regard to the first factor— establishing a likelihood of success on the merits—the patentee seeking a preliminary injunction in a patent infringement suit must show that it will likely prove infringement, and that it will likely withstand challenges, if any, to the validity of the patent.'" Titan Tire, 566 F.3d at 1376. "[T]he ultimate question regarding the first preliminary injunction factor remains that of the patentee's likelihood of success on the merits.... That test places the burden on the plaintiff to prove likelihood of success." Id. at 1380.
Assessing whether Plaintiffs are likely to prove that Mylan's generic product will infringe the Ashley patents requires a two-step analysis. First, the Court must determine "the meaning and scope of the patent claims asserted to be infringed." Markman v. Westview Instruments, Inc., 52 F.3d 967, 976 (Fed.Cir. 1995). Second, the Court must compare the properly construed claims to the accused device. Id.
The Court held a Markman hearing and construed the claims. (D.I. 134; D.I. 166) The Court will apply the constructions already provided for purposes of evaluating the preliminary injunction motion.
In support of their motion for a preliminary injunction, Plaintiffs assert that Mylan infringes claims 1. 22. 24, and 26 of the '267 patent and claims 1, 12, and 14 of the '572 patent. (D.I. 88 at 7, 9) Plaintiffs may satisfy their burden on likelihood of success on the merits by demonstrating they are likely to prove infringement on any single claim. See Erico Intern. Corp. v. Vutec Corp., 516 F.3d 1350, 1354 (Fed.Cir.2008) (stating that to support preliminary injunction a patentee must show likelihood that alleged infringer "infringes a valid claim" of a patent) (emphasis added). Much of the parties' argument has focused on Plaintiffs' allegations of infringement of claims 1 of both the '267 and '572 patents. The Court will limit its analysis to these two claims.
For purposes of the instant motion, Mylan admits that it infringes all but one limitation in each of these two claims: that Mylan's generic product does not involve administration of a "sub-antibacterial amount" ('267 patent, claim 1) and that Mylan's generic product does not involve administration of "an amount that ... has substantially no antibiotic activity" ('572 patent, claim 1). (D.I. 105 at 5) These claim limitations are related; indeed, the Court has construed them in an essentially identical manner. Specifically, "sub-antibacterial amount" as used in claim 1 of the '267 patent is construed as "an amount that does not significantly inhibit the growth of microorganisms, e.g., bacteria," and "an amount that ... has substantially no antibiotic activity" as used in claim 1 of the '572 patent is construed as "an amount that is effective to treat the papules and pustules of rosacea but does not significantly inhibit the growth of microorganisms, e.g., bacteria." (D.I. 166; D.I. 134 at 17) (emphasis added) Mylan argues that its generic product does not infringe because it "contains an amount of doxycycline that does significantly inhibit the growth of bacteria." (D.I. 105 at 6) (citing Chambers Decl. (D.I. 106) at ¶¶ 28-29)
The Court does not agree. As explained by Plaintiffs, the label that Mylan has proposed to the FDA to accompany its generic product expressly states that [Redacted] (emphasis omitted)
Mylan argues that it is not proper for the Court to rely on its proposed label, because, by law, Mylan is required to copy the label Plaintiffs use for Oracea®. (D.I. 105 at 11; Tr. at 49) However, the law also requires that Mylan's proposed label must be truthful and accurate; the proposed label is submitted to the FDA under penalty of perjury. Here, Mylan's counsel has confirmed that "everything we say in the label is true." (Tr. at 316-17) Under the circumstances, it is entirely proper to rely on the statements in Mylan's label, which here provide substantial evidence that Mylan's generic product will not significantly inhibit the growth of bacteria. See Bayer AG v. Elan Pharm. Research Corp., 212 F.3d 1241, 1249-50 (Fed.Cir.2000) ("[A]n ANDA specification defining a proposed generic drug in a manner that directly addresses the issue of infringement will control the infringement inquiry.").
Mylan further insists that the statements in both parties' labels are inaccurate,
Mylan has introduced evidence that seven-day administration of 40 mg of Oracea® or Mylan's generic product results in a mean peak doxycycline serum concentration of 0.6 µg/mL, which is substantially greater than the minimum inhibitory concentration that inhibits visible growth of many common infection-causing bacteria. (D.I. 105 at 4-6; Chambers Decl. (D.I. 106) ¶¶ 23-29)
The problem with Mylan's argument is that the serum concentration levels and minimum inhibitory concentrations that it reports are based solely on in vitro studies. That is, Mylan is relying on laboratory measurements to show that 40 mg of doxycycline has a significant antibiotic effect. The invention disclosed and claimed in the Ashley patents, however, requires administration in a human. Thus, what matters for purposes of the infringement analysis is whether Mylan's proposed generic product will significantly inhibit the growth of bacteria in a human, that is in vivo. As Dr. Webster opines, Mylan's in vitro data does not measure the antibacterial effect of a drug as administered to humans and, therefore, is not relevant to the question of infringement presented here. (D.I. 139 ¶¶ 43-45)
Dr. Webster testified credibly that there is no one-to-one correlation between an in vitro antibiotic effect at a particular amount or concentration of doxycycline and the corresponding effect in vivo of the same amount or concentration. (Tr. at 121-22; see also D.I. 139 ¶¶ 43-58.) According to Dr. Webster, "The MIC [minimum inhibitory concentration
Relatedly, Mylan's other primary argument against infringement turns on the Court's construction of the term "minimum antibiotic serum concentration," also referred to as "MASC."
Mylan's position is wrong for several reasons, including that it is based on a selective reading of the Report and Recommendation and is inconsistent with how Mylan approached claim construction. As an initial matter, Mylan did not at any point during the claim construction process state or suggest that the terms on which its argument relies—"sub-antibacterial amount" and "an amount that ... has substantially no antibiotic activity"—were limited to in vitro amounts. Although the parties initially disputed the proper construction of these terms, their dispute did not involve whether, as Mylan now contends, the "amounts" claimed could not have significant antibiotic effect in vitro, even if they lack such antibiotic effect in vivo. At the Markman hearing. Plaintiffs—unaware of Mylan's undisclosed belief that these "amounts" should be construed as "in vitro amounts"—agreed to Mylan's proposed construction of these terms. The undersigned magistrate judge then recommended that the parties' agreed-upon constructions be accepted, and the Court adopted this recommendation. As Plaintiffs contend, "if Mylan wanted `sub-antibacterial amount' construed to mean `an amount that does not substantially inhibit the growth of microorganisms
Even if Mylan had disclosed its intended construction of the "amount" terms, Mylan's position would have been rejected. This is because the Ashley patents are directed to treatment of humans, from which it follows that the "amounts" claimed are in vivo amounts. This is reflected in the specification's numerous statements to the effect that "[t]he present invention provides a method of treating acne in a human in need thereof" and doing so by "administering ... to the human a tetracycline compound in an amount that is effective to treat acne but has substantially no antibiotic activity." ('267 patent, col. 3 lines 45-49)
Moreover, the portion of the Report and Recommendation on which Mylan relies does not concern claim 1 of either the '267 or '572 patents. Instead, the disputed term "MASC" was construed as it is used in claim 12 of the '267 patent and claim 4 of the '572 patent. (D.I. 134 at 4, 15) Neither of these claims is asserted as a basis for preliminary injunctive relief. The recommended construction—"The term `minimum antibiotic serum concentration,' as used in claim 12 of the Ashley '267 patent and claim 4 of the Ashley '572 patent, be construed as `the lowest concentration known to exert a significant antibiotic effect'"—does not itself state whether MASC is limited to in vitro values or may also refer to in vivo values. (D.I. 134 at 15) It is true that the Report and Recommendation agreed with Mylan that MASC is "the lowest concentration of a given compound known to exert a significant antibiotic effect.... [It] is not a measure of the serum antibiotic level (i.e., the antibiotic level in the blood), but is instead a characteristic of the tetracycline compound. It is a constant; and it is measured in a laboratory, not in a patient's body." (Id. at 13) But it does not follow from this statement that every reference to a "serum concentration" or "amount" in the Ashley patents' claims must be construed to be limited to "serum concentrations" or "amounts" that do not have antibiotic effect in vitro. This issue was simply not before the Court.
To draw the conclusion that Mylan does from the Report and Recommendation requires ignoring other portions of the analysis therein, including that the disputed claim term "the tetracycline compound has substantially no anti-microbial activity" refers to "a functional limitation of the tetracycline compound
Furthermore, even assuming, arguendo, that Mylan is correct that the principle of dependency dictates that the subject matter covered by the narrower dependent claim 12 of the '267 patent is also covered by the broader independent claim 1, it does not follow that claim 1 is limited to amounts that are less than the MASC as measured in vitro. This is because Mylan's comparisons between MIC (minimum inhibitory concentration) values and MASC values are inappropriate. Even Mylan's expert, Dr. Chambers, admitted that at least 82-90% of the doxycycline found in vivo in serum is protein bound, and that protein binding of drugs may mean that a serum concentration 20 times the in vitro MIC value is necessary to have a comparable effect in vivo. (Webster Suppl. Decl. (D.I. 139 ¶¶ 52-53) (citing Chambers Decl. (D.I. 106) ¶ 32)) As Dr. Webster testified, MASC values, measured in vitro, have no necessary relationship to concentrations founds in vivo upon administering the same dose to a human.
Therefore, Plaintiffs have shown a likelihood of success on the merits of establishing that use of Mylan's generic doxycycline product will infringe at least claim 1 of the '267 patent as well as claim 1 of the '572 patent.
"If ... the alleged infringer responds to the preliminary injunction motion by launching an attack on the validity of the patent, the burden is on the challenger
Here, Mylan asserts multiple bases for invalidating claim 1 of the '267 patent and claim 1 of the '572 patent. These are; (i) at least nine prior art references, not considered by the Examiner, anticipate the exemplary claims of the '267 patent; (ii) claim 1 of the '267 patent is also anticipated by U.S. Patent No. 6,455.583 ("Pflugfelder"); (iii) claim 1 of the '572 patent is anticipated by Sneddon; (iv) claim 1 of the '572 patent is rendered obvious by four prior art references (including Sneddon); and (v) claim 1 of the '572 patent is obvious in light of Pflugfelder in combination with either Marmion or Sneddon. (D.I. 105 at 14-22)
None of Mylan's nine prior art references that were not considered by the Examiner disclose that the tetracycline compound be administered in an amount that is sub-antibacterial; that is, that the amount be one that does not significantly inhibit the growth of bacteria in humans. (Tr. at 144-45; Webster Suppl. Decl. (D.I. 139) ¶¶ 76-157) Also, none of the nine prior art references disclose that the beneficial effects of the low dose tetracycline are anti-inflammatory, rather than antibiotic. (Webster Suppl. Decl. (D.I. 139) ¶¶ 76-157) Nor do any of the nine prior art references disclose doxycycline as the specific tetracycline compound to be used. (Tr. at 145, 156; Webster Suppl. Decl. (D.I. 139) ¶ 146) Pflugfelder, which was considered by the Examiner in connection with the '572 patent application, concerns a method for treating meibomian gland disease using tetracycline compounds, not treating acne rosacea. (Webster Suppl. Decl. (D.I. 139) ¶¶ 158, 160, 165) The Examiner understood the distinctions between these two diseases and concluded that Pflugfelder did not teach the methods of the '572 patent. (D.I. 88 Ex. W at 3) ("The closest prior art, Pflugfelder, teaches a method for treating meibomian gland disease associated
Additionally, with respect to obviousness, there is strong evidence of secondary indicia of non-obviousness. This includes evidence of the commercial success of Oracea®, the long-felt need for an oral treatment for rosacea without the side effects caused by antibiotic doses of tetracycline, and industry praise for and acceptance of Oracea®. (D.I. 88 at 19-22) (citing evidence) Another objective indicator of nonobviousness is that at the same time Oracea® was introduced, Medicis Pharmaceutical Corporation launched Solodyn, a new full-dose antibiotic tetracycline treatment for acne. (Webster Decl. (D.I. 91) 1190) As Plaintiffs argue, "[h]ad the prior art shown that acne could be treated with a subantibacterial dose of tetracycline, one would have expected the developers of new acne products such as Solodyn to have attempted to avoid the known disadvantages of administering an antibacterial dose." (D.I. 88 at 20) There is also the fact that at least three generic drag manufacturers, including Mylan, are attempting to copy Oracea®.
Two other Mylan arguments for invalidity are also unpersuasive. First, with reference to claim 1 of the '267 patent, Mylan contends that "[t]he recitation of `
(D.I. 150 at 2-3)
Second, Mylan contends, with respect to claim 1 of the '572 patent, that Plaintiffs cannot distinguish the prior art based on the prior art's failure to disclose that the administered amount "results in no reduction of skin microflora during a six month treatment" because this language appears in a "wherein" clause and merely expresses the intended result of the process step of the claim. (D.I. 146 at 3) However, as the authorities relied on by Mylan demonstrate, determining whether a "wherein" or "whereby" clause is a limitation or instead a recitation of an inherent property of the claimed method requires a fact specific
By separate order issued this same day, the Court has granted Mylan's motion for leave to file an amended answer and counterclaim to assert an affirmative defense and counterclaim that the Ashley patents are unenforceable due to inequitable conduct, by Ashley and a patent attorney, during prosecution of the Ashley patent applications. Thus, the Court must preliminarily evaluate the merits of Mylan's inequitable conduct contentions.
Inequitable conduct occurs when a patent applicant violates his or her "duty of candor and good faith ... which includes a duty to disclose to the Office all information known to that individual to be material to patentability." 37 C.F.R. § 1.56(a) (2007). A court will hold a patent unenforceable due to inequitable conduct if there is clear and convincing evidence that the applicant, while prosecuting the patent at issue, (1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the U.S. Patent and Trademark Office. See Impax Labs., Inc. v. Aventis Pharms. Inc., 468 F.3d 1366, 1374 (Fed.Cir.2006).
To demonstrate a failure to disclose material information, the party asserting inequitable conduct must show: "(1) prior art that was material; (2) knowledge chargeable to an applicant of that prior art and of its materiality; and (3) failure of the applicant to disclose the art resulting from an intent to mislead the PTO." Elk Corp. v. GAF Bldg. Materials Corp., 168 F.3d 28, 30 (Fed.Cir.1999). The patentee may then rebut such proof of inequitable conduct by "a showing that (a) the prior art was not material, (b) if the prior art was material, a showing that the applicant did not know of that art; (c) if the applicant did know of the art, a showing that the applicant did not know of its materiality; or (d) a showing that the applicant's failure to disclose the art did not result from an intent to mislead the PTO." Id. "[A]n otherwise material reference need not be disclosed if it is merely cumulative of or less material than other references already disclosed." Id. at 31.
Information is considered material if there is a substantial likelihood that a reasonable Examiner would consider it important in deciding whether to allow the patent. See Digital Control Inc. v. Charles Mach. Works, 437 F.3d 1309, 1314-16 (Fed.Cir.2006).
Mylan contends that Mr. Ashley committed inequitable conduct by failing to disclose to the PTO Examiner a 2003 FDA Memo regarding Periostat®. (D.I. 110 Ex. 28) The specification explicitly disclosed Periostat®—which it described as "doxycycline hyclate ... administered at a 20 milligram dose twice daily ... for the treatment of periodontal disease"—as "an especially preferred embodiment." ('267 patent, col. 5 lines 63-67) In the course of litigation between CollaGenex, which then held the patent on Periostat, and the FDA. the FDA concluded that Periostat is an "antibiotic drug" as that term is defined under the Federal Food Drug and Cosmetic Act, 21 U.S.C. § 321(jj). To Mylan, the FDA Memo is material to the patentability of the Ashley patents: "the 2003 FDA Report concludes that Periostat does
The Court does not agree that the FDA Memo was material. As has already been noted, the PTO already knew that doxycycline—like all tetracyclines—is an antibiotic in the sense that it has the capacity, at certain amounts or concentrations, to significantly inhibit bacteria. This basic fact is disclosed in the specification. See, e.g., '267 patent, col. 3 lines 17-24 ("Clearly, the state-of-the-art teaching is that the clinical efficacy of systemically-administered tetracyclines in the treatment of acne is due, at least in significant part, to
Moreover, as explained by Dr. Webster, the FDA Memo "only describes the effect that doxycycline may have on certain bacterial strains in vitro ... [T]he in vitro MIC testing results disclosed in the 2003 FDA Memorandum cannot reliably be extrapolated to determine the dosage at which doxycycline inhibits the growth of bacteria in vivo." (Webster Suppl. Decl. (D.I. 139) ¶¶ 59-60) Thus, the FDA Memo would not have been important to the Examiner's decision. (Id. ¶¶ 171-72)
Even if Mylan could adduce clear and convincing evidence that the FDA Memo is material, there is simply no evidence that Mr. Ashley intended to deceive the Examiner by not disclosing it. "Materiality is not evidence of intent, which must be established as a separate factual element of a discretionary ruling of inequitable conduct." Abbott Labs. v. Sandoz, Inc., 544 F.3d 1341, 1356 (Fed.Cir.
Mylan's insistence that the record is devoid of an explanation for the non-disclosure (Tr. at 69) is also wrong— and now outdated. By agreement of the parties (and due to a family illness), Mr. Ashley's deposition was taken following the May 24, 2010 hearing, on June 11, 2010. (Tr. at 102-03) Plaintiffs submitted excerpts of Mr. Ashley's deposition transcript to the Court along with a letter on June 16, 2010. (D.I. 160 Ex. 2) Mylan responded, including by submitting additional excerpts from the Ashley deposition, on June 18, 2010. (D.I. 161 Ex. C) In pertinent part, Mr. Ashley testified that (i) he did not think there was any prior art that showed that Periostat was a sub-antibiotic dose in humans; (ii) "in vitro data on susceptibility, or whatever, of microorganisms is utterly irrelevant in the context of the invention, and of the use in humans of sub-antimicrobial-dose doxycycline. In my opinion." (iii) he did not consider submitting the FDA Memo to the PTO; and (iv) he had no intent to deceive the PTO with respect to any aspect of his invention. (D.I. 160 Ex. 2 at 166, 168, 290, 292-93) Mr. Ashley also explicitly agreed with the proposition that "in vitro data would not be interesting or not be relevant as relates to the inhibition of microorganisms by systemic delivery of doxycycline." (D.I. 161 Ex. C at 187) Mr. Ashley further explained that "doxycycline ... the substance is an antibiotic, yes. There was never any attempt to withhold that. Clearly, it's discussed at great length in all of the documents." (D.I. 161 Ex. C at 293) Although Mylan argues this denial is incomplete— asserting that "Ashley did
This conclusion is bolstered by the findings of the district court in litigation between the FDA and CoUaGenex about the FDA's decision to treat Periostat as an antibiotic drag, which is the subject of the undisclosed FDA Memo. The district court described the FDA Memo as providing two reasons for the FDA's decision to classify Periostat as an antibiotic drug. CollaGenex Pharms., Inc. v. Thompson, 2005 WL 256561, at *6 (D.D.C. Jan. 19, 2005). The court wrote:
Id. The first of these reasons is arguably material to the PTO, but was cumulative. The second was irrelevant to the PTO.
Moreover, under the statute involved in the litigation, 21 U.S.C. § 321(jj), an antibiotic drug is defined (in pertinent part) as "any ... drug intended for human use containing any quantity of any chemical substance which is produced by a microorganism and which has the capacity to inhibit or destroy micro-organisms in dilute solution." (Emphasis added) Hence, the issue considered by the FDA, and the district court, was whether a 40 mg dose of doxycycline has "the capacity to inhibit or destroy micro-organisms" in vitro. The PTO knew that doxycycline has this capacity, an issue that was never in dispute during prosecution of the Ashley patents or in the instant litigation. As the district court observed, "[t]here is really no dispute that doxycycline is an antibiotic drug that was subject to pre-FDAMA approval by FDA." CollaGenex, 2005 WL 256561, at *10.
Finally, the district court expressly "decline[d] to rely on the in vitro tests as these results directly contradict testing performed by CollaGenex and accepted in 1998 by the FDA ... and because the record is unclear as to the reliability of in vitro tests." Id. at *6 n. 14 (internal citations omitted). For the same reasons, again, the FDA Memo would not have been important to the Examiners analysis of the Ashley patent applications, as these
Plaintiffs identify numerous irreparable harms they contend they will suffer in the absence of preliminary relief. These harms are loss of market share (Tr. at 196, 213-22), price erosion (Tr. at 214), loss of research opportunities and community education opportunities (Tr. at 195-96, 202-03), and loss of brand recognition (Tr. at 198).
In support of its contentions. Plaintiffs have placed in the record declarations and testimony of Brian Johnson, Galderma's Vice President of Prescription Marketing, and Dr. Jerry Hausman, Professor of Economics at the Massachusetts Institute of Technology. In particular, Dr. Hausman testified that, typically, branded drugs lose 50-75% of their market share within six months of market entry by a generic competitor. (Tr. at 220-21; see also D.I. 90 ¶ 6.) Dr. Hausman anticipates that something similar will occur upon Mylan's introduction of its generic version of Oracea®. (Tr. at 222) He adds that the impact of Mylan's generic would outlast this litigation, even if Plaintiffs ultimately prevail at trial, in part due to "inventory overhang" and the fact that third-party payers for pharmaceutical products will resist paying the current price for Oracea® once they experience paying a much lower price for Mylan's generic version of it. (Tr. at 222-23)
Mylan responds to Plaintiffs' evidence by providing declarations from Jason Harper, Mylan's Executive Director of Product Portfolio Management, and Dr. Philip B. Nelson, Mylan's damages expert. Mylan contends that the evidence supports the view that "[l]ost sales of Oracea are easily calculable and compensable and, thus, not irreparable." (D.I. 105 at 2) Mylan cites to earlier examples of generic competition with branded pharmaceuticals (Plavix, Solodyn, and OxyContin) as "conclusively demonstrat[ing] that there is no irreparable harm from an interim launch" of a generic that is subsequently removed from the market after trial. (D.I. 105 at 2) Further, "[h]istory demonstrates that the market is likely to return to the status quo ante upon withdrawal of the generic product." (D.I. 105 at 25)
Depending on circumstances, evidence of price erosion, loss of market share, loss of profits, loss of research opportunities, and possible layoffs may constitute irreparable harm. See Altana Pharma AG v. Teva Pharms. USA, Inc., 566 F.3d 999, 1010 (Fed.Cir.2009); Purdue Pharma, 237 F.3d at 1368 (holding that evidence of likelihood of price erosion and loss of market position caused by generic's entry to market may support a finding of irreparable harm); Sanofi-Synthelabo v. Apotex Inc., 488 F.Supp.2d 317, 342 (S.D.N.Y.2006), aff'd 470 F.3d 1368, 1382-83 (Fed.Cir.2006) (granting preliminary injunction
The Federal Circuit has also stated: "The patent statute provides injunctive relief to preserve the legal interests of the parties against future infringement which may have market effects never fully compensable in money." Reebok Int'l Ltd. v. J. Baker, Inc., 32 F.3d 1552, 1557 (Fed.Cir. 1994) (emphasis added). Additionally, "[b]ecause the principal value of a patent is
Here, the Court is persuaded, although just barely, by the evidence of irreparable harm offered by Plaintiffs. It is more likely than not that Plaintiffs would suffer some irreparable harm if Mylan launches its generic version of Oracea® and, thereafter, Plaintiffs prevail on the merits at trial. There is no doubt that Plaintiffs would lose market share; they would also almost certainly experience lost profits and price erosion. While the Court does not believe that measuring these harms would be impossible, it would be very difficult (largely because the market is dominated by third-party payers), and the Court is convinced that not all of the harm would be fully compensable by a monetary payment from Mylan to Plaintiffs.
The Court next considers the harm Mylan would suffer if it is preliminarily enjoined but then, after trial, the Court concludes that the preliminary injunction should not have been granted. Mylan contends that it would be hurt by a preliminary injunction in three ways: from the delay in entering the market, from loss of some portion of its period of exclusivity, and from the possibility that the injunction would give Plaintiffs additional time to pursue strategies to diminish the success Mylan could otherwise expect to enjoy when it introduces its generic product.
Mylan as the first filer of an ANDA relating to Oracea®, is entitled (under the circumstances presented here) to a 180-day period of exclusivity, during which time the FDA is precluded from approving any additional generic version of Oracea®. Hence, although there are two other ANDA filers (Impax and Lupin), it is undisputed that a preliminary injunction would not change Mylan's position relative to Impax and Lupin; that is, Mylan would still have an exclusivity period of 180 days. (D.I. 138 at 10; D.I. 88 at 28; Tr. at 281) (Mylan's counsel admitting there is "no doubt" Mylan will have at least 180 days of exclusivity as non-authorized generic product even if preliminary injunction is granted) Whether Mylan enjoys these 180 days of exclusivity from July to December 2010, in the absence of a preliminary injunction, or sometime in 2011, following trial and a final judgment for Mylan, is neither a substantial nor irreparable harm.
Mylan's second asserted harm is also related to exclusivity. Mylan contends that if it were permitted to begin marketing its generic version of Oracea® on July 1, 2010, Mylan would actually enjoy more than 180 days of exclusivity. In fact, Mylan might have up to 17 months of exclusivity, instead of the typical six months. This is because, due to a statutory amendment, Mylan believes it is not subject to an automatic 30-month stay of FDA approval of its ANDA. (See Tr. at 279-80; D.I. 111 ¶ 68.) Plaintiffs appear to agree. (D.I. 137 at 6) By contrast, the other ANDA filers are subject to such a stay and, evidently, cannot obtain FDA approval of their generic versions of Oracea® until at least December 2011. (Tr. at 280; D.I. 111 ¶ 68) Hence, in Mylan's view, in the absence of a preliminary injunction, Mylan might have the exclusive (unauthorized) generic version of Oracea® on the market from July 2010 to December 2011. (D.I. 161 at 2) ("An injunction will destroy the exclusivity advantage Mylan obtained by not being subject to a 30-month stay, unlike other generic competitors. . . . Mylan will irrevocably lose periods of exclusivity (well beyond 180 days) to which it is otherwise entitled.")
Assuming Mylan is correct, and assuming Mylan obtains FDA approval imminently, the "loss" of up to 11 extra months of exclusivity is not a legally cognizable harm for purposes of a preliminary injunction motion. The careful statutory framework enacted by Congress, balancing the important competing interests of branded pharmaceutical companies and generic pharmaceutical companies, relies on the incentives created by a 180-day period of exclusivity to the first ANDA filer. The additional 11 months Mylan might enjoy in the unusual circumstances presented here are not something to which Mylan has a statutory, or equitable, entitlement. The
The third harm cited by Mylan is that insulating Oracea® from generic competition for another six to nine months or more, until after trial and judgment, will permit Plaintiffs to implement strategies to thwart the impact of impending generic competition. These strategies include Plaintiffs launching an authorized generic product or modifying Oracea® (e.g., introducing a tablet to compete with Mylan's generic capsule) in a way that might shift consumer demand to "new Oracea®" rather than to Mylan's generic version of "old Oracea®." (D.I. 161 at 2) (citing Tr. at 195, 285-87) Plaintiffs are not yet ready to implement either of these "line extension" strategies. (Tr. at 195, 200-01) However, Galderma has done so in the past with respect to other products faced with losing market exclusivity. (D.I. 111 ¶ 72)
Mylan is correct that a preliminary injunction will provide Plaintiffs additional time to pursue such strategies, if Plaintiffs choose to do so. However, Mylan's assertion that "a Galderma line extension would likely render Mylan's ANDA valueless" is not convincing. (D.I. 108 ¶ 3) Plaintiffs have always had the right to pursue such strategies and could have done so over the 15 months this case has been pending. The possibility that Plaintiffs would implement such a strategy has been known to Mylan from the time it chose to prepare its ANDA. If it is as easy as Mylan suggests to render an ANDA utterly devoid of value, it is difficult to fathom how Mylan can have accomplished the success its own witness reports. (See D.I. 108 ¶ 5 (Mylan's Mr. Harper declaring: "Mylan currently offers over 200 generic products in the United States and generated $2.18 billion in revenue from generic drag sales in the North American market. Mylan invested $275 million in 2009 in research and development bringing more affordable drugs to market. Mylan has approximately $10.8 billion in assets and $380 million in cash and equivalents on hand going into 2010.").)
Two other factors are relevant to assessing the harms to Mylan and weighing them against the potential harms to Plaintiffs. First is the fact that the Court will, in connection with granting the preliminary injunction, impose upon Plaintiffs the obligation that they post a sizeable bond. Mylan will have the opportunity to ask the Court to allow it to draw on the value of the bond if it turns out that the preliminary injunction has been improvidently granted. In this way, the bond mitigates the harms that Mylan will suffer. See Glaxo Group, 64 Fed.Appx. at 756 (holding enjoined generic manufacturer's "loss of profit is secured by the issuance of the bond if the ultimate ruling is non-infringement or patent invalidity"). Second, the harms Mylan will suffer are quantifiable, moreso and more easily than the harms Plaintiffs would suffer in the absence of a preliminary injunction. (Hausman Suppl. Decl. (D.I. 140) ¶ 32 ("[T]he only harm to Mylan from a preliminary injunction is lost profits during the pre-trial period. At the time of trial, sales of Oracea® during this period will be known, and hence it will be possible to estimate Mylan's lost profits by estimating what Mylan's sales would have been had a preliminary injunction not issued.")) The Court agrees with Plaintiffs that "Mylan's hardship, if the injunction were granted and Mylan ultimately prevailed at trial, would be `reasonably quantifiable and capable of being protected against by a bond if need be.'" (D.I. 88 at 27) (quoting Sandoz, 500 F.Supp.2d at 844-45)
Thus, on the whole, the balance of harms favors Plaintiffs.
As other courts have recognized in similar cases, "there are competing—and substantial—public interests at stake on both sides of this litigation." Sanofi-Synthelabo, 488 F.Supp.2d at 321. In particular, "the public interest in lower-priced drugs is balanced by a significant public interest in encouraging the massive investment in research and development that is required before a new drug can be developed and brought to market." Id. at 345. In an ANDA case, the Federal Circuit noted: "[T]he public interest includes consideration of whether, by shifting market benefits to the infringer while litigation is pending for patents that are likely to withstand the attack, the incentive for discovery and development of new products is adversely affected. The statutory period of exclusivity reflects the congressional balance of interests, and warrants weight in considering the public interest." Abbott Labs., 544 F.3d at 1362; see also Pfizer Inc. v. Teva Pharms., USA, Inc., 429 F.3d 1364, 1382 (Fed.Cir.2005) ("[W]hile the statutory framework under which [defendant] filed its ANDA does seek to make low cost generic drugs available to the public, it does not do so by entirely eliminating the exclusionary rights conveyed by pharmaceutical patents. Nor does the statutory framework encourage or excuse infringement of valid pharmaceutical patents.").
Here, the Court concludes that the public interest favors Plaintiffs, who hold a patent that the Court has found will likely be proven to be valid, enforceable, and infringed by Mylan's proposed generic product. In the present circumstances— and particularly given that trial is only six months away—the public interest in recognizing Plaintiffs' patent rights, and more generally promoting continued, large-scale investment in research and development of new pharmaceuticals, outweighs the public's interest in promoting generic, low-cost alternatives to branded pharmaceuticals. See Smith Int'l, Inc. v. Hughes Tools Co., 718 F.2d 1573, 1581 (Fed.Cir.1983) ("[P]ublic policy favors the protection of the rights secured by ... valid patents."); King Pharms., 2010 WL 1957640, at *6 ("The Court concludes that the public interest in protecting patent rights outweighs the public interest in low cost generic drugs, and thus this factor favors King [the patentee-branded manufacturer]."); Sanofi-Synthelabo, 488 F.Supp.2d at 321 ("[T]he balance of those competing public interests slightly favors Sanofi [the branded patentee]."); Impax Labs. v. Aventis Pharms., Inc., 235 F.Supp.2d 390, 397 (D.Del.2002) ("[T]here is a strong public interest in protecting valid patents by preventing the premature entry of generic drugs into the marketplace."); Hausman Suppl. Decl. (D.I. 140) ¶ 33 ("A failure to grant a preliminary injunction would reduce the incentives for innovation in new drugs, and thereby cause a substantial reduction in consumer welfare.").
Given that Plaintiffs have satisfied their burden, the Court will enter a preliminary injunction, enjoining Mylan from bringing its generic version of Oracea® to market until after the Court enters a judgment on the merits following trial. Pursuant to Federal Rule of Civil Procedure 65(c), the Court will also require Plaintiffs to give security "in an amount that the court considers proper to pay the costs and damages sustained by any party found to have been wrongfully enjoined" See also Zambelli Fireworks Mfg. Co. v. Wood, 592 F.3d 412, 425 (3d Cir.2010); Frank's GMC Truck Center, Inc. v. General Motors Corp., 847 F.2d 100, 103 (3d Cir.1988).
Plaintiffs propose to post a bond in a "reasonable" amount, (D.I. 138 at 10 n. 9), which they suggest is $4 million (D.I. 147 at 1). This amount is approximately 40% of Plaintiffs' profit on Oracea® for three months. (D.I. 147 at 1) Plaintiffs propose to post this bond within 10 days of receipt of notice from Mylan that it has received FDA approval. (Id.) Mylan, on the other hand, requests a bond of at least [Redacted] (D.I. 149 at 3) According to Mylan, this is what Mylan's gross margin would be on sales of its generic product between June 2010 and February 2011. (Id.; see also D.I. 108 ¶ 3.)
The Court will require Plaintiffs to post a bond in the amount of $26 million. Between July 2010, just after entry of the preliminary injunction, and February 2011, which Mylan identifies as a reasonable estimation of the date judgment will be entered, Plaintiffs expect to make profits of approximately $26 million on sales of Oracea®.
For the reasons provided above. Plaintiffs' motion for a preliminary injunction is
At Wilmington, this 28th day of June 2010, for the reasons discussed in the Memorandum Opinion issued this date;
IT IS HEREBY ORDERED that:
2. The parties shall submit, within three (3) days of this Order, a proposed form of Order consistent with and giving effect to the rulings set forth in the Memorandum Opinion issued this date.
