Abbott Laboratories v. Andrx Pharmaceuticals, Inc.

• Citation: 452 F.3d 1331
• Decision Date: 22 June 2006
• Docket Number: No. 05-1433.,05-1433.
• Parties: ABBOTT LABORATORIES, Plaintiff-Appellee, v. ANDRX PHARMACEUTICALS, INC., and ROXANE LABORATORIES, INC., Defendants, and Teva Pharmaceuticals USA, Inc., Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1331

452 F.3d 1331

ABBOTT LABORATORIES, Plaintiff-Appellee, v. ANDRX PHARMACEUTICALS, INC., and ROXANE LABORATORIES, INC., Defendants, and Teva Pharmaceuticals USA, Inc., Defendant-Appellant.

No. 05-1433.

United States Court of Appeals, Federal Circuit.

June 22, 2006.

Jeffrey I. Weinberger, Munger, Tolles & Olson LLP, of Los Angeles, California, argued for plaintiff-appellee. With him on the brief were Ted G. Dane and Andrea Weiss Jeffries. Of counsel on the brief were Jennifer L. Polse and Jason Rantanen, of San Francisco, California. Of counsel were Todd J. Ehlman and R. Mark McCareins, Winston & Strawn LLP, of Chicago, Illinois.

James Galbraith, Kenyon & Kenyon, of New York, New York, argued for defendant-appellant. With him on the brief were Maria Luisa Palmese and Robert V. Cerwinski.

Before NEWMAN, GAJARSA, and PROST, Circuit Judges.

Opinion for the court filed by Circuit Judge PROST.

Dissenting opinion filed by Circuit Judge NEWMAN.

PROST, Circuit Judge.

Abbott Laboratories ("Abbott") brought suit against Teva Pharmaceuticals USA, Inc. ("Teva") alleging infringement of its patents relating to extended release formulations of clarithromycin. Abbott moved for a preliminary injunction against Teva on the grounds that Teva was infringing claims 2, 4, and 6 of U.S. Patent No. 6,010,718 ("'718 patent") and claim 2 of U.S. Patent No. 6,551,616 ("'616 patent"). Teva resisted the motion primarily by arguing that substantial questions existed as to the validity of Abbott's asserted claims under 35 U.S.C. § 103. The district court agreed that Teva had raised a substantial question as to the validity of claim 2 of the '616 patent but it rejected Teva's invalidity arguments as to the asserted claims of the '718 patent. Accordingly, the district court granted Abbott's motion for a preliminary injunction. Teva appealed. We have jurisdiction to review the district court's order under 28 U.S.C. § 1292(c)(1).

On appeal, Teva has raised substantial issues as to the validity of each of the asserted claims relied upon for the preliminary injunction. We vacate the preliminary injunction.

I.

Clarithromycin is a broad spectrum antibiotic from the macrolide family of antibiotics, all of which are derived from erythromycin A. Taisho Pharmaceuticals Ltd. received U.S. Patent No. 4,331,803 ("'803 patent") for clarithromycin in 1982. In 1991, Abbott, the exclusive licensee of the '803 patent, introduced Biaxin, an immediate release dosage form of clarithromycin. The '803 patent expired on May 23, 2005.

In 1997, Abbott filed for a patent claiming an extended release formulation of clarithromycin. The patent describes and claims extended release ("ER") formulations comprising erythromycin derivatives combined with a pharmaceutically acceptable polymer. The resulting drug-polymer matrix leads to the extended release properties of the formulation. The ER formulation enabled patients to take one pill per day rather than twice, as had been required with the immediate release ("IR") formulation. That patent issued on January 4, 2000 as the '718 patent. Further, based on the '718 patent application, Abbott filed a continuation-in-part application that claims a method of reducing adverse gastrointestinal ("GI") side effects of erythromycin-derived drug formulations by using extended release formulations. This continuation-in-part issued as the '616 patent. In 2000, Abbott introduced its ER clarithromycin formulation, Biaxin XL. As of May 2005, Abbott estimated that, as between Biaxin and Biaxin XL, Biaxin XL accounted for 70% of sales in the Biaxin market. As the original patent on clarithromycin expired on May 23, 2005, generic competitors entered the market for immediate release clarithromycin on May 24, 2005.

In December 2002, Teva filed an Abbreviated New Drug Application ("ANDA") seeking approval to market an extended release form of clarithromycin similar to Abbott's ER clarithromycin drug, Biaxin XL. On March 14, 2005, Abbott sued Teva for infringement of the '718 and '616 patents.¹ On May 18, 2005, Abbott moved for a preliminary injunction against Teva.

On May 26 and June 1, 2005, the district court held oral argument on Abbott's motion for the preliminary injunction and thereafter, on June 3, issued its memorandum opinion. It listed the four factor test for the grant of a preliminary injunction, namely that the party seeking the preliminary injunction must show

(1) the movant has some likelihood of success on the merits of the underlying litigation; (2) immediate irreparable harm will result if the relief is not granted; (3) the balance of hardships to the parties weighs in the movant's favor; and (4) the public interest is best served by granting the injunctive relief.

Abbott Labs. v. Andrx Pharms., Inc., No. 05-1433, slip op. at 3 (N.D. Ill. June 3, 2005) (citing Polymer Techs., Inc. v. Bridwell, 103 F.3d 970, 973 (Fed.Cir.1996)). The district court began its analysis and evaluated Abbott's likelihood of success on the merits by considering Abbott's infringement contentions and Teva's invalidity defenses. Teva did not dispute that its generic ER formulation of clarithromycin infringed Abbott's '718 and '616 patent claims. Rather, Teva alleged that the asserted patent claims were invalid for obviousness under 35 U.S.C. § 103. The court focused on Teva's invalidity arguments and concluded that Teva had raised a substantial question as to the validity of claim 2 of the '616 patent but it "ha[d] not established that claims 2, 4, and 6 of the '718 patent are invalid for obviousness." Abbott Labs., slip op. at 32. Thus as to the asserted claims of the '718 patent, Abbott had established a likelihood of success on the merits. As to irreparable harm, the district court first noted that because of its finding that Abbott had proved a likelihood of success on the merits of infringement for the '718 patent claims, there was a presumption of irreparable harm that Teva had to rebut. Furthermore, Abbott contended that it will face "irreversible market share losses [if] . . . it loses its preferred position on pharmacy and insurance formularies." Abbott Labs., slip op. at 25. As a result, the district court concluded that "entry of the generic extended release formulation competitor will likely crush the market" and therefore absent the preliminary injunction Abbott would suffer irreparable harm. Abbott Labs., slip op. at 27. As to the third factor, the district court stated that Teva was "reluctan[t] or inab[le] to quantify the hardship, if any, it will face if an injunction is incorrectly entered" and "there is little choice but to conclude that the balance of hardships favors [Abbott]." Abbott Labs., slip op. at 30-31. Lastly, the district court determined that "[t]o the extent that this court has found that the patents in suit are valid, the public interest is best served by enforcing them." Id. Based on these considerations, the court issued its order entering the preliminary injunction with respect to the asserted claims of the '718 patent.

II.

On appeal, Teva argues that the district court erred in holding that Abbott had demonstrated that Teva's invalidity defense to claims 2, 4 and 6 of the '718 patent lacked substantial merit. Teva also argues that the district court erred in finding that Abbott had established that it would suffer irreparable harm if Teva were not enjoined. As a result of those two errors, Teva alleges that the district court abused its discretion in granting Abbott's motion for preliminary injunction.

In response, Abbott contends that, as to claims 2, 4, and 6 of the '718 patent, it made a clear showing of likelihood of success on the merits and it is entitled to the presumption that it would suffer irreparable harm absent the preliminary injunction. Furthermore, Abbott argues that the preliminary injunction ruling could be affirmed on the alternate grounds that Teva failed to raise a substantial challenge to the validity of claim 2 of the '616 patent.

The grant or denial of a preliminary injunction under 35 U.S.C. § 283 is within the sound discretion of the district court. Amazon.com, Inc. v. Barnesandnoble.com, 239 F.3d 1343, 1350 (Fed.Cir. 2001). As the Supreme Court recently held on the closely related topic of permanent injunctions, "[t]he decision to grant or deny permanent injunctive relief is an act of equitable discretion by the district court, reviewable on appeal for abuse of discretion." eBay, Inc. v. MercExchange, L.L.C., ___ U.S. ___, ___, 126 S.Ct. 1837, 1839, 164 L.Ed.2d 641 (2006). "These familiar principles apply with equal force to disputes arising under the Patent Act. . . . . [T]he Patent Act expressly provides that injunctions `may' issue `in accordance with the principles of equity.'" Id. (quoting 35 U.S.C. § 283). As the moving party, Abbott had to establish its right to a preliminary injunction in light of four factors:

(1) the movant has some likelihood of success on the merits of the underlying litigation; (2) immediate irreparable harm will result if the relief is not granted; (3) the balance of hardships to the parties weighs in the movant's favor; and (4) the public interest is best served by granting the injunctive relief.

Polymer Techs., Inc. v. Bridwell, 103 F.3d 970, 973 (Fed.Cir.1996).

An abuse of discretion in granting or denying a preliminary injunction may be found "by showing that the court made a clear error of judgment in weighing relevant factors or exercised its discretion based upon an error of law or clearly erroneous factual findings." Id. (quoting Novo Nordisk of N. Am., Inc. v. Genentech, Inc., 77 F.3d 1364, 1367 (Fed.Cir. 1996)). We now turn to the factors relevant to a motion for a preliminary injunction.

III.

As to Abbott's likelihood of success on the merits, "Teva does not dispute that its generic clarithromycin extended release formulation infringes Abbott's '718 and '616 patents. Teva asserts that those patents . . . are...