Fresenius Kabi United States, LLC v. Fera Pharms., LLC
| Decision Date | 23 September 2016 |
| Docket Number | No. 15-cv-3654 (KM)(MAH),15-cv-3654 (KM)(MAH) |
| Parties | FRESENIUS KABI USA, LLC, Plaintiff, v. FERA PHARMACEUTICALS, LLC, et al., Defendants. |
| Court | U.S. District Court — District of New Jersey |
CORRECTED OPINION
(Preliminary Injunction and Motion to Dismiss)
:
The plaintiff, Fresenius Kabi USA, LLC, brings two motions against two of the defendants in this suit, Fera Pharmaceuticals, LLC, and Oakwood Laboratories, LLC (collectively, "Fera")1: 1) a motion to dismiss Fera's inequitable conduct counterclaims (ECF No. 89), and 2) a motion for preliminary injunction (ECF NO. 187). Fresenius's underlying suit against Fera is for patent infringement. The patents-in-suit are Patent Nos. 9,006,289 ("the '289 patent"), 9,168,238 ("the '238 patent"), and 9,168,239 ("the '239 patent"). All three describe formulations of levothyroxine, a hormone produced by the thyroid. These patents claim a form of lyophilized (i.e., freeze-dried) levothyroxine that can be reconstituted and injected into patients who lack a properly functioning thyroid. (Pl. Opening 1) Claims 1, 2, 4, 14, 15, and 16 of the '289 patent are the subject of this preliminary injunction motion. (Prel. Inj.Br. 9)2 Simultaneously herewith, I am filing a Markman opinion construing the terms of the patent, which is incorporated herein.
The Food and Drug Administration ("FDA") approved Fresenius's New Drug Application ("NDA") on June 24, 2011. (3AC Fera ¶ 15) The '289 patentwas issued on April 14, 2015, and is due to expire on October 3, 2032. (3AC Fera ¶¶ 10, 16) The '238 and '239 patents were issued on October 27, 2015, and are due to expire on August 29, 2032. (3AC Fera ¶¶ 11-12, 16) Fera filed an Abbreviated New Drug Application ("ANDA") that sought approval to commercially market a generic version of Fresenius's patented levothyroxine formulations. (Fera Answer ¶ 17) This lawsuit followed.3
On July 25, 2016, I convened a hearing on the motion of Fresenius for a preliminary injunction. To shorten the hearing, I directed the parties that I would accept affidavits in lieu of direct testimony, and offered both sides the opportunity to cross-examine the affiants. Both sides declined the opportunity, and opted to rely on their papers. As a result, any facts related herein rest on the persuasiveness, or not, of written representations; there was no opportunity to assess credibility. This opinion is structured primarily as a discussion of the motion for a preliminary injunction. The arguments on the motion to dismiss the inequitable conduct claims are discussed in the context of the likelihood of success on the merits.
A grandfathered version of a levothyroxine injectable, not approved by the FDA, has been available in the United States since 1969. (Prel. Inj. Opp. 4 (citing Def. Ex. 253-6 at 6280)) In the early 2000s, APP Pharmaceuticals marketed that grandfathered version. On December 18, 2006, APP received a warning letter from the United States Food and Drug Administration notifying it that an NDA would be required. (Meachum Decl. ¶ 14) In 2008, Fresenius acquired APP. In 2010, Fresenius filed an NDA on a "more stable formulation of its Levothyroxine product." That NDA was approved on June 24, 2011.(Meachum Decl. ¶¶ 15-17; see also Prel. Inj. Opp. 4) Based on that new, FDA-approved formulation, Fresenius applied for and eventually received the '289, '238, and '239 patents.
Fresenius's newly patented formulations contain levothyroxine, a buffer, and a specific amount of a bulking agent called mannitol. The innovation at the heart of Fresenius's patents is a claim that a lower amount of mannitol, as compared with the grandfathered versions, unexpectedly increased the stability of the formulation. (Prel. Inj. Br. 5)
Fera and InnoPharma filed ANDAs that sought approval to commercially market generic versions of Fresenius's patented levothyroxine injections. Fresenius, claiming that these would infringe its patents, seeks to enjoin them from doing so.
Whether a preliminary injunction is warranted depends on four factors: (1) whether the moving party is likely to succeed on the merits; (2) whether the moving party is likely to suffer irreparable harm in the absence of preliminary relief; (3) whether granting preliminary relief will result in even greater harm to the nonmoving party; and (4) whether an injunction is in the public interest. Trebro Mfg., Inc. v. Firefly Equip., LLC, 748 F.3d 1159, 1165 (Fed. Cir. 2014) (citing Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20, 129 S. Ct. 365 (2008)); accord Columbia Gas Transmission, LLC v. 1.01 Acres, More or Less in Penn Twp., York Cnty., Pa., Located on Tax ID # £440002800150000000 Owned by Brown, 768 F.3d 300, 315 (3d Cir.2014). "These traditional four factors 'apply with equal force to disputes arising under the Patent Act.'" Apple Inc. v. Samsung Elecs. Co., 695 F.3d 1370, 1374 (Fed. Cir. 2012) (quoting eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 126 S. Ct. 1837 (2006)). No individual factor is dispositive. Hybritech Inc. v. Abbott Labs., 849 F.2d 1446, 1451 (Fed. Cir. 1988) However, "a movant must establish the existence of both of the first two factors to be entitled to a preliminary injunction." AltanaPharma AG v. Teva Pharm. USA, Inc., 566 F.3d 999, 1005 (Fed. Cir. 2009); accord Otsuka Pharm. Co. v. Torrent Pharm. Ltd., Inc., 99 F. Supp. 3d 461, 475 (D.N.J. 2015).
Fera's challenge is directed primarily to the first factor: Fresenius's likelihood of success on the merits of its claim of patent infringement.
The United States Court of Appeals for the Federal Circuit, which has appellate jurisdiction over patent cases, applies the law of the regional circuits when reviewing preliminary injunction decisions. Aevoe Corp. v. AE Tech Co., 727 F.3d 1375, 1381 (Fed. Cir. 2013) (citing Abbott Labs. v. Sandoz, Inc., 544 F.3d 1341, 1367 (Fed. Cir. 2008)). However, it applies Federal Circuit law to substantive matters of patent infringement, including the first of the four preliminary injunction factors: the likelihood of success in establishing patent infringement. Revision Military, Inc. v. Balboa Mfg. Co., 700 F.3d 524, 526 (Fed. Cir. 2012). Fed. R. Civ. P. 65, of course, applies regardless.
In Amazon.com, Inc. v. Barnesandnoble.com, Inc., the Federal Circuit announced, or reaffirmed, the standard by which district courts hearing patent cases should review the preliminary injunction factor of likelihood of success on the merits: If the alleged infringer "raises a substantial question concerning either infringement or validity, i.e., asserts an infringement or invalidity defense that the patentee cannot prove lacks substantial merit, the preliminary injunction should not issue." 239 F.3d 1343, 1350-51 (Fed. Cir. 2001) (internal quotation marks omitted) (citing Genentech, Inc. v. Novo Nordisk A/S, 108 F.3d 1361, 1364 (Fed. Cir. 1997)). The Amazon court further explained that, rather than the "clear and convincing" standard for proving patent invalidity at trial, "[v]ulnerability is the issue at the preliminary injunction stage." Id. at 1359.
Amazon's standard may have been cast into doubt, however, by the subsequent Supreme Court case of eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 126 S. Ct. 1837 (2006). In eBay, the Supreme Court reviewed aFederal Circuit post-trial decision to apply a "'general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances.'" 547 U.S. at 391 (quoting MercExchange, LLC v. eBay, Inc., 401 F.3d 1323, 1339 (Fed. Cir. 2005)). The Court reemphasized that "the decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts, and that such discretion must be exercised consistent with traditional principles of equity, in patent disputes no less than in other cases governed by such standards." Id. at 394. In short, the Supreme Court seemed to reemphasize the primacy of the traditional four-factor analysis for injunctive relief, albeit in the context of a permanent, not preliminary, injunction. Id. at 391.
Doubts have thus arisen as to the continuing viability of the Federal Circuit's holding that, for preliminary injunctive relief, the "substantial question" standard requires only a showing of patent "vulnerability." Thus, in the aftermath of eBay, Judge Newman dissented in two Federal Circuit decisions that vacated preliminary injunctions in patent cases. Both times, she objected to the majorities' holdings that a "substantial question" of invalidity suffices to defeat a motion for a preliminary injunction. Erico, 516 F.3d at 1359-60; Andrx Pharm., 452 F.3d at 1349-52. The fullest statement of Judge Newman's views is contained in her opinion in Sandoz, supra. There, although she wrote for the majority, the relevant section of her opinion was not joined by her companion in the majority or by the dissenting Judge Gajarsa. Judge Newman thoroughly reviewed the preliminary injunction standards of all the other circuits and argued that "all refer to the likelihood of the eventual outcome, not whether a substantial question has been raised." 544 F.3d at 1365. In Judge Newman's view, certain panels of the Federal Circuit had departed from the proper standard when they looked only to the alleged infringer's raising of a "substantial question" as to the patent's validity. That approach, in her view, undermined the proper application of the "likelihood of success on the merits" standard. Id. at 1364.
The following year, both Judge Newman and Judge Gajarsa joined an opinion by Judge Plager that attempted to reconcile the "substantial question" standard with the traditional equitable factors. See Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372 (Fed. Cir. 2009). Titan Tire started from the basic principle that "[i]n assessing whether the patentee is entitled to the...
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