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Takeda Pharmaceuticals, U.S.A., Inc. v. West-Ward Pharmaceutical Corp.

United States District Court, D. Delaware

December 12, 2018


          Mary W. Bourke and Daniel M. Attaway, WOMBLE BOND DICKINSON (US) LLP, Wilmington, DE; Jeffrey I. Weinberger, Ted G. Dane (argued), Heather E. Takahashi, Elizabeth L. Laughton, and Hannah L. Dubina, MUNGER, TOLLES & OLSON LLP, Los Angeles, CA; Celia R. Chby, MUNGER, TOLLES & OLSON LLP, Washington, DC; Peter A. Detre, MUNGER, TOLLES & OLSON LLP, San Francisco, CA, attorneys for Plaintiff.

          Dominick T. Gattuso, HEYMAN ENERIO GATTUSO & HIRZEL LLP, Wilmington, DE; Lauren C. Tortorella, WINSTON & STRAWN LLP, Chicago, IL; Charles B. Klein and Han Wurman, WINSTON & STRAWN LLP, Washington, DC; Elaine H. Blais, Robert D. Carroll (argued), Lana S. Shiferman, Robyn R. Schwartz, and Louis L. Lobel, GOODWIN PROCTER LLP, Boston, MA, attorneys for Defendants.



         Currently pending before the Court is Defendants West-Ward Pharmaceuticals, Hikma Americas, and Hikma Pharmaceuticals' Motion for Recovery of Damages on Bond. (D.I. 323). The parties have fully briefed the issues. (D.I. 324; D.I. 339; D.I. 354). The Court heard oral argument on October 16, 2018.. (D.I. 409). For the following reasons, the Court GRANTS Defendants' Motion for Recovery of Damages on the Bond in the amount of $31, 871, 072.09.

         I. Background

         Plaintiff Takeda Pharmaceuticals manufactures and markets Colcrys, a branded 0.6 mg colchicine tablet, for the treatment of gout prophylaxis and acute gout flares. In 2009, Colcrys became the only FDA-authorized colchicine product on the pharmaceutical market when the FDA removed all unauthorized colchicine products from the market. Plaintiff owns two sets of patents claiming methods of administering colchicine. One set of patents ("the Acute Gout Flare Patents") is directed to a method of treating acute gout flares with colchicine by administering 1.2 mg oral colchicine at the onset of an acute flare, followed by 0.6 mg oral colchicine one hour later. U.S. Patent No. 7, 964, 647 cl. 1; U.S. Patent No. 7, 981, 938 cl. 1. The second set of patents ("the DDI Patents") are directed to a method of treating patients by reducing the dose of colchicine when prescribed with certain other medication. U.S. Patent No. 7, 964, 648 abstract; U.S. Patent No. 8, 097, 655 abstract; U.S. Patent No. 8, 440, 722 abstract.

         On September 26, 2014, Defendant Hikma Pharmaceuticals received FDA approval of a paper New Drug Application ("paper NDA") for Mitigare. Mitigare is a 0.6 mg colchicine capsule indicated solely for gout prophylaxis-a non-patented use of colchicine. (D.I. 324 at 8). Defendants were in the process of bringing a branded version and a generic version (Mitigare AG) to the market in early October 2014. (Id. at 10-11). On October 3, 2014, Plaintiff filed suit against Defendants West-Ward Pharmaceuticals, Hikma Americas, and Hikma Pharmaceuticals ("Defendants") alleging that Defendants induced infringement of both the DDI Patents and the Acute Gout Flare Patents based upon Mitigare's label. (D.I. 1). The Complaint asserts United States Patent Nos. 7, 964, 647 ("the '647 Patent"), 7, 964, 648 ("the '648 Patent"), 7, 981, 938 ("the '938 Patent"), 8, 097, 655 ("the '655 Patent"), and 8, 440, 722 ("the '722 Patent"). (Id. ¶ 22).

         Plaintiff filed a Motion for a Temporary Restraining Order and Preliminary Injunction on October 6, 2014, just four days before Defendants planned to launch Mitigare and Mitigare AG. (D.I. 5). Plaintiff alleged that it would be immediately and irreparably harmed if Defendants were allowed to launch their generic colchicine product, Mitigare AG. (D.I. 6 at 16). The Court entered a temporary restraining order ("TRO") on October 9, 2014, prohibiting Defendants from launching or making any preparations for a launch of Mitigare or Mitigare AG. (D.I. 21). The Court also issued an order setting a TRO bond of $13 million, but noted, "The amount of the bond does not currently reflect any harm that [Defendants] may suffer and demonstrate as a result of loss of a first-mover advantage in the marketplace.... [T]he issue will be addressed [at] a later time if necessary." (D.I. 72). On November 4, 2014, thei Court held that the TRO had been improvidently granted and denied Plaintiffs request for a preliminary injunction. (D.I. 79). However, the Court extended the TRO during the pendency of Plaintiff s appeal from the denial of the preliminary injunction. (Id.). The Court also determined that the TRO bond would increase by $500, 000 per day until the preliminary injunction appeal was decided. (Id.). The Federal Circuit affirmed the denial of the preliminary injunction and lifted the TRO on January 9, 2015. Takeda Pharm. U.S.A., Inc. v. West-WardPharm. Corp., 785 F.3d 625, 628 (Fed. Cir. 2015). By that time, the bond had increased to $46 million. (D.I. 324 at 6).

         After the TRO was lifted, the parties engaged in a simultaneous product launch- Defendants launched Mitigare and Mitigare AG and Plaintiff launched Colcrys AG, an authorized generic of Colcrys. (Id. at 10). Defendants now seek recovery under the bond. Specifically, Defendants seek the lost profits they would have achieved if not wrongfully enjoined, including from the loss of a first-mover advantage. (Id. at 7).

         II. Legal Standard

         A party may recover a posted security where the party has "been wrongfully enjoined or restrained." Fed.R.Civ.P. 65(c). Rule 65 requires that a security be posted "to protect the enjoined party in the event the injunction should not have been imposed." Howmedica Osteonics v. Zimmer, Inc., 461 Fed.Appx. 192, 198 (3d Cir. 2012). "[A] party is wrongfully enjoined when it had a right all along to do what is was enjoined from doing." Latuszewski v. VALIC Fin. Advisors, Inc., 393 Fed.Appx. 962, 966 (3d Cir. 2010) (internal quotations omitted).

         A party seeking recovery under the bond "must establish what damages were proximately caused by the erroneously issued injunction in order to recover and the alleged damages cannot be speculative." Va. Plastics Co. v. Biostim Inc., 820 F.2d 76, 80 n.6 (3d Cir. 1987). However, "[g]iven the inherent difficulty of identifying a 'but-for-world,' [the courts] do not require that damages be measured with certainty, but rather that they be demonstrated as 'a matter of just and reasonable inference.'" Behrend v. Comcast Corp., 655 F.3d 182, 203 (3d Cir. 2011), rev 'd on other grounds, 569 U.S. 27, 35 (2013) (requiring that "damages case must be consistent with liability case"); see also Latuszewski, 393 Fed.Appx. at 966-67 ("Although proof of damages on an injunction bond need not be to a mathematical certainty, a damages award cannot be speculative.") (cleaned up).

         III. Discussion

         A. Recovery Under the Bond is not Premature

         The parties dispute whether Defendants' motion is premature. Defendants assert that the motion "is ripe because this Court and the Federal Circuit have determined, through final adjudication, that [Defendants were] wrongfully restrained from selling its colchicine products" by the TRO. (D.I. 324 at 18). Plaintiff asserts that Third Circuit law is clear that "[n]o liability can arise on an injunction bond unless there is a final judgment in favor of the party enjoined." (D.I. 339 at 19 (quoting Am. Bible Soc'y v. Blount, 446 F.2d 588, 594-95 (3d. Cir. 1971))). However, at oral argument, Plaintiff conceded that the only practical reason that recovery under the bond is premature is the potential overlap between the recovery under the bond and potential infringing sales. (D.I. 409 at 45:19-46:1).

         The Court has entered summary judgment in favor of Defendants on Plaintiffs claims of infringement. (D.I. 416). Therefore, "there is a final judgment in favor of the party enjoined," Am. Bible Soc'y, 446 F.2d at ...

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