Upjohn Co. v. Riahom Corp.

• Decision Date: 06 August 1986
• Docket Number: Civ. A. 86-203 CMW.
• Citation: 641 F. Supp. 1209
• Parties: The UPJOHN COMPANY, Plaintiff, v. RIAHOM CORPORATION and J.P. Utsick, Defendants.
• Court: U.S. District Court — District of Delaware

641 F. Supp. 1209

The UPJOHN COMPANY, Plaintiff, v. RIAHOM CORPORATION and J.P. Utsick, Defendants.

Civ. A. 86-203 CMW.

United States District Court, D. Delaware.

August 6, 1986.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Jeffrey B. Bove of Connolly, Bove, Lodge & Hutz, Wilmington, Del., for plaintiff; Thomas J. Macpeak, Peter D. Olexy, J. Frank Osha, and Cynthia Clarke Dale of Sughrue, Mion, Zinn, Macpeak & Seas, Washington, D.C., Robert A. Armitage, and Lawrence T. Welch, of Upjohn Co., Kalamazoo, Mich., of counsel.

David A. Anderson of Potter, Anderson & Corroon, Wilmington, Del., for defendants; Berj A. Terzian, Brian M. Poissant, and Victor N. Balancia of Pennie & Edmonds, New York City, of counsel.

OPINION

CALEB M. WRIGHT, Senior Judge.

The Upjohn Company filed this lawsuit against Riahom Corp. and its president, J.P. Utsick, asserting patent infringement under 15 U.S.C. § 271, and unfair competition under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), in relation to a hair treatment product defendants market. This Opinion addresses the motion for a preliminary injunction which Upjohn filed simultaneously with its complaint on May 6, 1986.

I. BACKGROUND

A. The Upjohn Patents

This hair-raising saga began in the late 1960's, when Upjohn was conducting clinical investigations of a compound now known generically as minoxidil.¹ At that time, Upjohn owned U.S. Patent No. 3,461,461 ("the '461 patent"), which covered the manufacture, use and sale of minoxidil for any purpose. The '461 patent specifically disclosed the use of minoxidil for the treatment of hypertension (high blood pressure), and Upjohn eventually received approval from the Food & Drug Administration ("FDA") to market LONITEN tablets, a prescription antihypertensive drug product containing minoxidil. The '461 patent expired on May 7, 1985.

In 1968-71, Dr. Charles Chidsey, a cardiologist at the University of Colorado Medical School, conducted clinical investigations relating to the effects of oral administration of LONITEN to treat hypertension. Chidsey was a contract consultant to Upjohn who was obligated under his contract to assign to Upjohn any inventions arising out of experimental work that Upjohn sponsored. During these investigations, Chidsey observed that LONITEN, as a side effect in some patients, caused hirsutism, or the growth of excess facial and body hair. He consulted in April 1971 with two dermatologists at the medical school, Drs. Guinter Kahn and Paul Grant, about the excess hair growth. Shortly thereafter, Kahn proposed to Grant the idea of applying minoxidil topically to promote hair growth. The two obtained a small amount of minoxidil to be used in human experiments. Kahn and Grant applied a minoxidil solution locally to themselves and two other volunteers for roughly two months, at the end of which period three of the four participants showed a marked increase in the thickness of hair at the test site. As a result of these tests, Grant and Kahn concluded that topical application of minoxidil did cause an increase in growth (both length and thickness) in human hair. Chidsey did not know that the experiments were taking place until after their completion. Kahn and Grant disclosed the results of this experimental work to Upjohn and met with Upjohn representatives in Kalamazoo, Michigan, in December 1971 to discuss Upjohn's continuing support for this research and remuneration for informing Upjohn of their observations.² Following the meeting with Grant and Kahn, Upjohn informed the FDA of the experiment to protect its pending New Drug Application for LONITEN. (DA-191).

On December 29, 1971, after getting an assignment from Chidsey, Upjohn filed a patent application naming Chidsey as sole inventor of an invention using the topical application of minoxidil to grow hair. The Patent and Trademark Office ("PTO") rejected all claims for the application under 35 U.S.C. § 101 for failure to demonstrate proof of utility for growing hair. Upjohn filed three continuation applications, each of which was rejected for failure to provide clinical proof of utility. Upjohn presented acceptable clinical evidence in 1978 in a subsequent continuation application, and on February 13, 1979, was issued U.S. Patent No. 4,139,619 ("the '619 patent") covering the topical application of minoxidil compounds to stimulate hair growth. (A-161-70).

The '619 patent makes three categories of claims: (a) product claims to a topical composition of minoxidil free-base or its salts to be applied to mammalian skin (Claims 1-3); (b) process claims for increasing the rate of growth of terminal hair by use of the topical composition (Claims 4-6); and (c) process claims for converting vellus hair to growth as terminal hair through use of the topical composition (Claims 7-9).³ The claims cover a minoxidil compound in association with a topical pharmaceutical carrier from the group consisting of ointments, lotions, pastes, jellies, sprays, aerosols (Claim 1), and included concentrations of the minoxidil compound from about 0.1% to about 20% of the topical composition (Claims 2, 5, 8). The claims also specify that the topical composition must contain "an effective amount" of the minoxidil compound (Claims 1, 4, 7).

In May 1974, Kahn and Grant filed a patent application, U.S. Patent Application No. 181,959, directed to the topical use of minoxidil compounds to stimulate hair growth. After the '619 patent issued, the PTO placed it in interference with the Kahn/Grant application, Interference No. 101,184. Following negotiations, the opposing sides filed sworn statements of pertinent facts from all parties with the PTO to allow resolution of the interference. The parties also took the position that the proper inventorship of the subject matter of the patent should include Kahn as well as Chidsey, and that Grant was not a co-inventor of the subject matter.⁴ The PTO concluded that Chidsey and Kahn were properly designated as inventors of the '619 patent, originally filed solely in Chidsey's name, and that Kahn and Chidsey were joint inventors of the interfering application originally filed in the names of Kahn and Grant. Papers were filed to correct the inventorship for both the '619 patent and the interfering application. The interference was then settled, with Upjohn paying some consideration to each of the putative inventors. (A-1552). U.S. Patent No. 4,596,812 ("the '812 patent"), based on the formerly interfering Kahn/Grant application, issued to Chidsey and Kahn on June 24, 1986. (A-1544-48).⁵

Based on the subject matter of the '619 patent, Upjohn has been preparing to market a prescription drug product called REGAINE, a topical solution for the treatment of baldness. Under the Federal Food, Drug & Cosmetic Act, 21 U.S.C. § 355, no drug product lawfully may be sold in interstate commerce without prior FDA approval. Approval of a new drug or a new indication for a previously approved drug requires submission to the FDA of substantial scientific evidence and detailed clinical evaluations to assure the product's safety and efficacy for the proposed use. FDA approval of a New Drug Application ("NDA") is limited to the company making the application and to the purposes specifically approved by the FDA. Upjohn submitted a NDA for REGAINE on December 19, 1985. The NDA was based on at least eight years of developmental work including human clinical studies, animal studies and related scientific studies; Upjohn spent approximately $25 million over the last three years for clinical studies. (A-17, 32).

Although the FDA has not approved its NDA for REGAINE, Upjohn is now spending $35 million for plant and equipment for its commercial production. The company, as well as outside analysts, expect the market for REGAINE to be very substantial. (A-49, 53-78). Upjohn will satisfy this demand from its own facilities and will not issue licenses under the '619 patent. (A-152).

b. Rivixil and Riahom

Defendants' hair treatment product, RIVIXIL, was developed by Kemyos Bio Medical Research, of Binasco, Italy. Kemyos filed two patent applications in Italy in 1984 covering minoxidil compounds used for the stimulation of hair growth and treatment of baldness. It is unclear whether any patent has issued from either application. (A-371). Kemyos prepares RIVIXIL by adding a salt of minoxidil (iminoxapril carbocysteinate), which it calls "SKM005", to a liquid vehicle of water and propylene glycol.⁶ The concentration of minoxidil in the solution is approximately 0.9%. The product is sold in a package containing sixty vials of the solution and a bottle of special shampoo to be used in conjunction with the solution. Kemyos advertises RIVIXIL as a cosmetic treatment for baldness which attempts to prevent or retard hair loss. (A-1061-66).⁷

Defendant Utsick saw RIVIXIL when travelling in Italy in 1985 and purchased a package of it for more than $100. (A-265-67). Utsick purchased RIVIXIL because the package indicated that it contained "carbocisteine of minoxidil", and he was aware of Upjohn's intention to market a minoxidil product to enhance hair growth. (A-265-66). Utsick used RIVIXIL in hopes that it would grow hair on his head (A-268), but it did not. (A-266). Utsick's hair evidently became thicker and fuller through his use of the shampoo. (A-272-73). Utsick met with Kemyos officials and eventually negotiated an agreement in March 1986 giving defendant Riahom Corp.⁸ the exclusive right to market and sell RIVIXIL in the United States. (A-516-21).

Riahom buys RIVIXIL concentrate from Kemyos in Italy, ships it to New York, and then transfers it to J. Coburn, Inc., an independent custom packager in Florida, which reformulates the concentrate and packages it for sale. Riahom markets RIVIXIL to hair salons and other independent dealers through regional sales managers, who solicit orders. A national sales manager supervises the activities of the regional sales managers. These...