Kos Pharmaceuticals, Inc. v. Andrx Corp.

• Citation: 369 F.3d 700
• Decision Date: 24 May 2004
• Docket Number: No. 03-3977.,03-3977.
• Parties: KOS PHARMACEUTICALS, INC., Appellant v. ANDRX CORPORATION; Andrx Laboratories, Inc.
• Court: U.S. Court of Appeals — Third Circuit

369 F.3d 700

KOS PHARMACEUTICALS, INC., Appellant v. ANDRX CORPORATION; Andrx Laboratories, Inc.

No. 03-3977.

United States Court of Appeals, Third Circuit.

Argued March 9, 2004.

May 24, 2004.

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Richard W. Young (Argued), Liisa M. Thomas, Nicole M. Murray, Gardner Carton & Douglas LLP, Chicago, Mark S. Olinsky, James M. Hirschhorn, Sills Cummis Radin Tischman Epstein & Gross, P.A., Newark, for Appellant.

Allyn Z. Lite (Argued), Joseph J. DePalma, Michael E. Patunas, Lite DePalma Greenberg & Rivas, LLC, Newark, James V. Costigan, Martin P. Endres, Kathleen A. Costigan, Hedman & Costigan, P.C., New York, for the Appellees.

Before SLOVITER, NYGAARD, Circuit Judges, and OBERDORFER,^* District Judge.

OPINION OF THE COURT

OBERDORFER, Senior District Judge.

This is an appeal from the denial of preliminary relief in a trademark infringement action. Plaintiff-appellant Kos Pharmaceuticals, Inc. ("Kos") owns the mark ADVICOR, which it uses in connection with cholesterol-altering drugs available by prescription. Kos sought a preliminary injunction preventing defendants-appellees Andrx Corporation and Andrx Laboratories, Inc. (collectively, "Andrx") from using the mark ALTOCOR in connection with sales of Andrx's own cholesterol-altering prescription drugs. The district court denied the requested relief, and this appeal followed. Because the denial of the preliminary injunction was premised on legal errors, we reverse. We remand the case to the district court with directions to enter a preliminary injunction on an expedited basis.

I. BACKGROUND

Unless otherwise noted, the following facts are undisputed. On October 3, 2000, Kos filed an application with the United States Patent and Trademark Office (the "PTO") to register ADVICOR as the mark for a new medication designed to improve cholesterol levels. This new drug combines 20 milligrams of lovastatin (which lowers LDL, or "bad" cholesterol) with varying strengths (500, 750, or 1000 milligrams) of an extended-release formulation of niacin (which increases HDL, or "good" cholesterol). Kos has been selling its proprietary extended-release form of niacin under the trade name Niaspan since 1997. In July 2001 Kos began advertising, and in December 2001 began selling, its new combination drug, Advicor.¹

Shortly after Kos began marketing Advicor, it learned that Andrx planned to use the mark ALTOCOR for its own new anticholesterol medication, which would contain only a single active ingredient, an extended-release form of lovastatin, in varying strengths (10, 20, 40 or 60 milligrams). Andrx announced on January 31, 2002 that it had received preliminary marketing approval for Altocor from the United States Food and Drug Administration (the "FDA"). On February 5, 2002, the PTO published for opposition the ALTOCOR mark, which Andrx had applied to register in December 2000.

Kos tried to dissuade or otherwise prevent Andrx from using the ALTOCOR mark several times, both before and after Andrx began selling its new drug. On April 1, 2002, Kos wrote to Andrx that, in its view, the proposed use of the mark ALTOCOR "would constitute trademark infringement and unfair competition." JA at 273. It advised Andrx to "refrain from using ALTOCOR or any other mark which is likely to cause confusion with ADVICOR for pharmaceutical preparations." Id. Kos described its prior use of ADVICOR for its own cholesterol-altering medication and stated further that:

If Andrx were to use the mark ALTOCOR for [the described] pharmaceutical preparations, consumers and medical professionals would inevitably believe that Andrx's product originates with or is authorized by, sponsored by, or in some way connected with Kos and its ADVICOR pharmaceutical products.... The similarity between the marks and the goods may create confusion among health care practitioners in terms of both prescribing and dispensing, resulting in dangerous medication errors.

Id. at 272-73. A similar letter followed on April 15, 2002. Id. at 362. Andrx responded to neither letter.²

Kos also expressed its concerns about potential confusion to the FDA division responsible for reviewing proposed new drug names from a public health perspective, the Office of Drug Safety's Division of Medication Errors and Technical Support (the "Division of Medication Errors"). The Division of Medication Errors had preliminarily approved the name Altocor in November 2001.³ At that time, the Division stated that the "name Advicor looks and sounds similar [to] Altocor," but concluded that the "difference in the written strengths" of the drugs reduced the risk of "error ... between the two products." Id. at 269. After Kos learned of the preliminary approval, it sent a letter to the FDA, dated March 6, 2002, stating that it was "concerned that the similarity in the proprietary names of these two products may create confusion among health care practitioners in terms of both prescribing and dispensing these medications." Id. at 250.

In April 2002, the Division of Medication Errors reiterated its opinion that "the difference in the strengths (combination vs. single) will help ensure that medication errors do not occur between the two products." Id. at 261. At the same time, however, it concluded that "the name, Altocor, [is] no longer acceptable due to the potential for confusion with" a third, unrelated drug. Id. at 258. When Andrx objected to changing the name of its product, the Division of Medication Errors, while "not recommend[ing] the use of the proposed name, Altocor," gave conditional approval to using the name so long as Andrx "commit[ed] to submitting all potential and actual errors involving Altocor ... [and] to changing the proprietary name, Altocor, if two or more reports of actual errors occur." Id. at 256.⁴

Kos next raised its concerns with the PTO. In May 2002, Kos filed an opposition to Andrx's application to register the mark ALTOCOR. Some discovery has been conducted in that proceeding, but no decision has been issued. According to the PTO docket, the opposition is suspended pending disposition of this civil litigation.

In July 2002, Andrx began marketing Altocor. Thereafter, Kos "advised Andrx of the growing number of instances of actual confusion" on multiple occasions. Id. at 75. For example, on January 10, 2003, Kos sent Andrx's counsel a chart "setting forth ... occurrences of actual consumer confusion" reported to it. Id. at 368. On February 20, 2003, Kos sent an updated chart, entitled "Summary of Confusion Involving Advicor and Altocor," that listed 39 discrete instances of purported confusion. Id. at 304-08 (listing incidents between September 2, 2002 and February 12, 2003).

In the meantime, on December 5, 2002, Andrx filed with the FDA a "supplemental new drug application propos[ing] three alternate proprietary names" for Altocor. Id. at 380. On April 11, 2003, Andrx filed an application with the PTO to register the mark ALTOPREV. And Andrx's 2002 Annual Report, issued in the spring of 2003, stated:

Andrx's application for a registered trademark for Altocor has been opposed by Kos Pharmaceuticals, who alleges that there is a likelihood of confusion between Kos' trademark, Advicor, and Altocor. Andrx has requested FDA guidance on other names, and may seek to change the name of Altocor.

Id. at 374. The FDA approved Andrx's supplemental application on August 20, 2003, stating that "the proprietary name, Altoprev, is acceptable." Id. at 380.⁵

By August 2003, Kos had spent more than $ 40 million on promotion and advertising, and Advicor had been prescribed more than 350,000 times, grossing approximately $ 70 million in sales. Andrx had spent more than $ 21 million on promotion and advertising, and Altocor had been prescribed more than 300,000 times, grossing more than $ 27 million.

On August 6, 2003, Kos filed a verified complaint, claiming that Andrx's use of the mark ALTOCOR on its anticholesterol drugs constituted trademark infringement and unfair competition under the federal Lanham Act, and under state and common law equivalents. Kos accompanied the complaint with the application for a preliminary injunction at issue here. Neither party requested an opportunity to adduce oral testimony on the application.

The documentary evidence before the district court included the following:

Evidence Regarding Actual Confusion

Kos submitted the Certification of its Vice President of Marketing, Aaron Berg, dated August 5, 2003 ("Berg Certification"),⁶ which stated, inter alia, that Andrx's use of the mark ALTOCOR has caused confusion. Berg further stated that "over 60 instances of actual confusion between the two drugs have been documented and reported to [him] by [his] staff," including "six patients [who] received the wrong medication, either because they had been given a sample of one drug instead of the other, or because a pharmacist filled a prescription with the wrong drug." Id. at 69. Based on his "personal knowledge or [his] review of the business records of Kos," Berg described "representative ... instances" of the incidents reported to him. Id. at 68, 71. These included, for example, doctors complaining to Kos representatives about the pricing or insurance coverage of Advicor, when their complaints were in fact about Altocor, as well as medical professionals identifying Altocor samples as Advicor samples, Altocor representatives as Advicor representatives, Altocor conferences as Advicor conferences, and vice versa.

Andrx submitted excerpts from Berg's deposition testimony, taken on June 12, 2003 in the PTO opposition proceeding. There, Berg said he had not had "direct contact" with the medical professionals involved in any of the reported incidents of confusion, but had learned of those incidents primarily through voice-mail or e-mail. Id. at 291. Andrx contrasted Berg's characterization of one incident — where, Berg said, a patient whose "condition was improving...