Irreparable Harm of Generic Competition: Federal Circuit Affirms Finding that Generic Entry Does not Cause Irreparable Harm

Altana Pharma & Wyeth v. Teva (Fed. Cir. 2009)

Altana’s Patent No. 4,758,579 claims the proton pump inhibitor pantoprazole – the active ingredient the anti-ulcer drug Protonix®. Of course, PPI’s were known before Altana’s patent and even one of Altana’s own prior patents discusses a “compound 12” that is structurally similar to those claimed in the ‘579 patent.

Teva and Sun filed for permission to begin making generic versions of the drug, and Altana subsequently filed this infringement action. (Altana filed separate actions that were consolidated.)

This appeal stems from the New Jersey district court’s denial of Altana’s motion for a preliminary injunction. The lower court found that the patentee had failed to prove two critical prerequisites of equitable preliminary relief: (1) a likelihood of success on the merits and (2) irreparable harm.

The equitable test for preliminary injunctive relief requires that the requesting party prove:

1. a reasonable likelihood of success on the merits;
2. irreparable harm if an injunction is not granted;
3. a balance of hardships tipping in its favor; and
4. the injunction’s favorable impact on the public interest.

Although the ultimate grant or denial of preliminary relief is within the “sound discretion of the district court,” failure to abide by these four factors would be reversible error. Orders to grant or deny a preliminary injunction are immediately appealable.

Likelihood of Success: The Federal Circuit has held that preliminary relief should be denied if the accused infringer raises a “substantial question” of invalidity of the asserted claims. At the PI stage, the court need not consider the ultimate “clear and convincing” standard. Rather, the focus is on “vulnerability.”

Obviousness of Chemical Compound: When considering the obviousness of a chemical compound, courts ordinarily first look for a “lead compound” known in the prior art and then consider whether a chemist would have had some reason to modify the known compound in the particular manner to achieve the new compound. Courts are not rigidly bound by this ordinary approach – thus, for instance, a court may look to multiple lead compounds:

Moreover, to the extent Altana suggests that the prior art must point to only a single lead compound for further development efforts, that restrictive view of the lead compound test would present a rigid test similar to the teaching-suggestion-motivation test that the Supreme Court explicitly rejected in KSR.

Here, the appellate panel found “ample evidence” that a chemist would have chosen “compound 12” as a natural choice for further PPI research. The particular modification of compound 12 was then suggested in articles by Sachs and Bryson who were researching properties of effective PPIs.

Considering this evidence as a whole, the Federal Circuit found it sufficient to raise a substantial question of obviousness.

Irreparable Harm: The district court could not find any irreparable harm of allowing infringement during the course of the litigation. Often, money damages are seen as insufficient when the defendant does not have cash-on-hand. Here, however, Teva and Sun both have plenty. The court also found that Altana almost certainly has a business plan to deal with the launch of generics. During the litigation, Nycomed purchased Altana — seemingly in the lower court’s view, that purchase also indicates that money damages are adequate (since a price can be placed on the company & its patent rights).

Perhaps most harmful to Altana was that the lower court found the patentee’s statements of harms “exaggerated” and lacking “credibility.” A court sitting in equity righty places a dim light on activities suggestive of unclean hands.

On appeal, the Federal Circuit affirmed without significantly commenting on the merits. Rather, the court made this case about equitable discretion: “the law cited by the district court highlights this court’s deference to a district court’s determination whether a movant has sufficiently shown irreparable harm.”

Denial of Preliminary Injunction Affirmed

Judge Newman wrote a short concurring opinion.

Although the evidence presented to the district court does not, in my view, establish invalidity of the patent on the pharmaceutical product pantoprazole, see, Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 429 (2006) (“the burdens at the preliminary injunction stage track the burdens at trial.”) at this preliminary stage deference is warranted to the district court’s weighing of the conflicting expert opinions interpreting the evidence. On this basis, I concur in sustaining this discretionary action.