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Cipla Ltd. v. Amgeninc

United States District Court, D. Delaware

May 3, 2019

CIPLA LTD. and CIPLA USA, INC., Plaintiffs,
v.
AMGENINC, and TEVA PHARMACEUTICALS USA, INC., Defendants. AMGEN INC., and TEVA PHARMACEUTICALS USA, INC., Counterclaim-Plaintiffs
v.
CIPLA LTD. and CIPLA USA, INC., Counterclaim-Defendants.

          Public Version Released May 3, 2019 Sue L. Robinson, Brian E. Farnan, and Michael J. Farnan, FARNAN LLP, Wilmington, DE; James W. Dabney, Patrice P. Jean, Dina Hoffer, Deanne K. Cevasco, David E. Lansky, and Lynn M. Russo, HUGHES HUBBARD & REED LLP, New York, NY Attorneys for Plaintiffs and Counterclaim-Defendants

          Jack B. Blumenfeld and Brian P. Egan, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, DE; M. Sean Royall and Ashley E. Johnson, GIBSON, DUNN & CRUTCHER LLP, Dallas, TX; Jeffrey T. Thomas, Eric J. Stock, and Kate Dominguez, GIBSON, DUNN & CRUTCHER LLP, New York, NY Attorneys for Defendants and Counterclaim-Plaintiffs

          MEMORANDUM OPINION

         This highly contentious case is not yet four months old. In its short life, the Court has held four hearings (two telephonically and two in-person) (see D.I. 24, 109, 173, 181, 182), resolved at least nine motions (see, e.g., D.I. 1, 8, 37, 47, 61, 86, 105, 114, 115), reviewed hundreds of pages of briefing (see D.I. 7, 9, 11, 12, 17, 18, 21, 22, 23, 25, 34, 36, 38, 40, 41, 42, 44, 48, 67, 71, 74, 77, 79, 81, 83, 97, 98, 100, 101, 103, 110, 111, 112, 122, 131, 143, 163, 170, 178), and approved hundreds of pages of redacted filings. Both sides have sought expedited relief (see D.I. 34, 121) and pressed upon the Court the urgency and high-stakes nature of their dispute. (See, e.g., D.I. 24 at 18 (Plaintiffs: "[W]e think this factual scenario cries out for expedition."); D.I. 181 ("Tr.") at 11 (Defendant: "[T]his case is a particularly strong one for the existence of irreparable harm to Amgen."))[1]

         Most simply stated (a more detailed recitation appears below), Plaintiffs Cipla Ltd. and Cipla USA, Inc. ("Cipla") have undertaken an "at-risk" launch of their generic cinacalcet drug product ("Cipla Product"), prior to the expiration of United States Patent No. 9, 375, 405 (the '"405 patent"), which is owned by Defendant Amgen, Inc. ("Amgen"). In earlier litigation, Amgen alleged that the Cipla Product infringes Amgen's '405 patent. (C.A. No. 16-880-MSG D.I. 1) The parties settled the prior case by executing an agreement (see D.I. 73-1 Ex. 1) (the "Amgen-Cipla Agreement"), by which, among other things, Cipla agreed that: (i) the Cipla Product infringes the '405 patent, (ii) the claims of the '405 patent are valid and enforceable, (iii) Cipla will not (except under limited circumstances) begin to market the Cipla Product until 97 days before expiration of the '405 patent, and (iv) the Cipla Product will be licensed from on and after that agreed-upon launch date.

         Thereafter, four other manufacturers of proposed pharmaceutical products that also would allegedly infringe the '405 patent went to trial in this Court. The Honorable Mitchell S. Goldberg, United States District Judge for the Eastern District of Pennsylvania sitting by designation in this District, issued a detailed opinion finding that the products proposed to be marketed by three of those entities - Watson Laboratories, Inc., a wholly-owned subsidiary of Teva, and hereinafter referred to as "Teva";[2] Piramal Healthcare UK Ltd. ("Piramal"); and Amneal Pharmaceuticals LLC ("Amneal") - do not infringe the '405 patent (see C.A. No. 16-853 D.I. 375), while a fourth product - that of Zydus Pharmaceuticals (USA) Inc. (the "Zydus Product") - would infringe that patent. Subsequently, Teva began to sell its product (the "Teva Product"), although several days later Teva entered into a settlement agreement with Amgen, by which it purportedly agreed to stop selling the Teva Product.[3] (See D.I. 73-1 Ex. 3) (the "Amgen-Teva Agreement")

         Shortly after Teva's brief entry and exit from the market, Cipla filed the instant suit, seeking a declaratory judgment that, under the terms of the Amgen-Cipla Agreement, and due to circumstances arising from the launch of the Teva Product, Cipla now had the right to launch the Cipla Product. (D.I. 2) When, soon thereafter, Cipla did begin to sell and offer for sale its Cipla Product, Amgen filed a motion for a preliminary injunction (D.I. 121), which is pending before the Court.

         Having considered the parties' extensive filings (see, e.g., D.I. 122, 163, 170), and having heard lengthy oral argument on April 2 (see D.I. 181 ("Tr."); D.I. 182 ("Sealed Tr.")), the Court will deny Amgen's preliminary injunction motion.

         I. BACKGROUND

         Atngen owns the '405 patent, which claims pharmaceutical compositions of cinacalcet. Cinacalcet can be used to treat hyperparathyroidism, hyperphosphonia, hypercalcemia, and elevated calcium-phosphorus product. ('405 patent 4:15-25) Atngen markets a branded drug, SENSIPAR®, that practices the '405 patent. (D.I. 73 ¶ 46; D.I. 120 ¶ 10)

         Several other drug companies, including Cipla, Teva, and Piramal, filed Abbreviated New Drug Applications ("ANDAs") seeking to market generic bioequivalents to SENISPAR® before the expiration of the '405 patent. (See, e.g., CA. No. 16-880 D.I. 1; CA. No. 16-855 D.I. 1; CA. No. 17-713 D.I. 1) In turn, Atngen sued these companies for infringement of the '405 patent. (See id.) These lawsuits were consolidated into Civil Action No. 16-853 (the "16-853 Action") and assigned to Judge Goldberg.

         In particular, Atngen sued Cipla for infringement of the '405 patent on September 29, 2016. (CA. No. 16-880 D.I. 1) On February 26, 2018, before any trial, these parties executed the Amgen-Cipla Agreement. In doing so, "Cipla conceded that, among other things, the '405 patent is 'valid and enforceable in this and in any other or future causes of action, litigation or proceeding relating to [the Cipla] Product.'" (D.I. 122 at 3) (quoting Amgen-Cipla Agreement § 4.1) In exchange, Amgen licensed Cipla to launch its generic product no later than 97 days before expiration of the '405 patent - and earlier in certain specified circumstances. (Amgen-Cipla Agreement §§ 5.2, 5.3, 5.6) On March 5, 2018, Judge Goldberg entered the Amgen and Cipla's jointly-proposed consent judgment. (CA. No. 16-853 D.I. 320; D.I. 122 at 3)

         Teva and Piramal continued to challenge Amgen's assertions of patent infringement, so those parties (along with Zydus and Amneal) proceeded to trial. On August 24, 2018, following a bench trial, Judge Goldberg entered judgment finding that Teva and Piramal did not infringe any of the asserted claims of the '405 patent. (C.A. No. 16-853 D.I. 386) Amgen appealed these final judgments of non-infringement to the Federal Circuit, where the appeals remain pending. (C.A. No. 16-853 D.I. 397)

         On December 28, 2018, Teva launched its generic cinacalcet product by shipping 409, 128 bottles to wholesalers. (D.I. 164 ¶ 5) An internal Teva email estimates this quantity of cinacalcet constitutes 1.6 to 3.6 months of supply for the United States, depending on the dosage form. (D.I. 171-1 Ex. A, Baeder[4] Dep. at 15; D.I. 171-1 Ex. 3) In an internal email, Brendan O'Grady, Teva's Executive Vice President and Head of North America Commercial, estimated that Teva would realize about $200 million in revenue from this shipment, assuming that no other company launched a competing generic drug - and noting that Teva's revenue would "drastically decreas[e]" if other generics entered the cinacalcet market. (D.I. 171-1 Ex. 4; D.I. 171-1 Ex. A, Baeder Dep. at 24-32) Robert G. Cunard, Cipla's expert on the pharmaceutical industry, provided opinions consistent with Mr. O'Grady's email. (D.I. 164 ¶ 8) Mr. Cunard estimated Teva's revenue from its launch at $212 million, a number which might be reduced due to "shelf stock adjustments" if other generic companies launched their products before Teva's wholesalers resold the Teva Product. (Id.)

         On January 2, 2019, just five days after Teva launched its generic product, Amgen and Teva entered into the Amgen-Teva Agreement. Under this Agreement, and despite having prevailed at trial and obtained a final judgment of non-infringement, Teva stipulated that the Teva Product does infringe the '405 patent, which Teva further stipulated was valid and enforceable. (Amgen-Teva Agreement § 4.1) Teva also agreed to pay Amgen up to $40 million dollars, depending (in part) on how long the cinacalcet market remains free of non-Amgen and non-Teva generic products, and appears to have agreed to stop selling the Teva Product. (See Id. §§3.1, 7.1, 7.3) For its part, Amgen agreed to withdraw its appeal of this Court's judgment of non-infringement by the Teva Product. (Id. § 2.2) Amgen further agreed to release any claims that could be made in connection with the Teva Product that had been sold to that point.[5] (Id. §3.2)

         On January 9, 2019, Amgen and Teva jointly moved this Court for an indicative ruling.[6](C.A. No. 16-853 D.I. 412) Specifically, Amgen and Teva requested that Judge Goldberg enter a ruling "stating that, in the event that the Federal Circuit grants a limited remand under Appellate Rule 12.1, the Court would grant Amgen's and [Teva]'s joint motion under Federal Rule of Civil Procedure 60(b) to vacate the portions of the Orders as to [Teva] and enter" a consent judgment consistent with the Amgen-Teva Agreement, i.e., a judgment of infringement by the Teva Product. (Id.) On March 26, 2019, Judge Goldberg denied the motion, concluding that Amgen and Teva had provided no basis that "would amount to exceptional circumstances permitting grant of vacatur under Federal Rule of Civil Procedure 60(b)." (C.A. No. 16-853 D.I. 439)

         Meanwhile, Cipla had filed the instant lawsuit on January 8, 2019. (D.I. 1) In its original complaint, Cipla sought (among other things) a declaratory judgment that it is entitled to launch its generic product, claiming that the Amgen-Teva Agreement violates the Sherman Act and the California Business and Professions Code. (D.I. 2) After the Court granted Cipla's request for expedited discovery (see D.I. 24 at 50), by which Cipla obtained a copy of the Amgen-Teva Agreement, Cipla amended its complaint to join Teva as a defendant, add a new claim of fraud, and provide greater factual specificity to its allegations. (D.I. 73) ("First Amended Complaint")

         On March 8, at an in-person status conference, Cipla announced that it had launched its generic cinacalcet product. (D.I. 173 at 13-14) The parties appear to agree, and the Court finds, that Cipla's launch of its Cipla Product was an "At Risk Launch" within the meaning of the Amgen-Cipla Agreement. (See D.I. 122 at 5; D.I. 163 at 13; see also Sealed Tr. at 5) That is, Cipla began selling and offering to sell its generic product "without authorization from Amgen (whether directly or indirectly, by way of license, sub license, covenant not to sue, release or by any other means)" and without a "Final Court Decision[7] of non-infringement, unenforceability and/or invalidity of the '405 patent with respect to" the Cipla Product. (Amgen-Cipla Agreement § 5.5)

         Subsequently, on March 11, pursuant to a process the Court had discussed with the parties and expressly approved on March 8, Amgen filed a Partial Answer (D.I. 120) to Cipla's First Amended Complaint, and concurrently moved for a preliminary injunction to stop Cipla from continuing to sell the Cipla Product. (D.I. 121) In its motion, Amgen contends that the launch of the Cipla Product is a breach of Cipla's obligations under the Amgen-Cipla Agreement. (See D.I. 122 at 6-15; see also D.I. 120 ¶¶ 24-48) Amgen further contends that it is being irreparably harmed by sales of the Cipla Product and will continue to be so harmed prior to trial in this matter unless the Court grants preliminary injunctive relief. (See, e.g., D.I. 121)

         II. LEGAL STANDARDS

         As Amgen's preliminary injunction motion is based on its breach of contract counterclaim, the Court must apply the law of the Third Circuit. See Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharmaceuticals Co., 290 F.3d 578 (3d Cir. 2002). A preliminary injunction is "extraordinary" relief. Id. at 586. It may be awarded only after the Court considers whether the moving party is likely to succeed on the merits of its claim, whether the moving party is likely to suffer irreparable harm in the absence of preliminary relief, the balance of equities between the parties, and the public interest. See Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008).

         As the moving party, Amgen must demonstrate both a likelihood of success on the merits of its breach of contract counterclaim and that it will likely suffer irreparable harm (of a type that would be prevented by an immediate grant of relief it could be awarded after prevailing on the merits of its claims at trial). See Bennington Foods LLC v. St. Croix Renaissance, Grp., LLP, 528 F.3d 176, 180 (3d Cir. 2008); see also Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992) (noting that standing to assert claim requires that "it must be likely, as opposed to merely speculative, that [the alleged] injury will be redressed by a favorable decision") (internal quotation marks omitted); Macom Tech. Sols. Holdings, Inc. v. Infineon Techs. AG, 881 F.3d 1323, 1330 (Fed. Cir. 2018). A party that does not meet its burden on either of these first two prongs of the preliminary injunction standard cannot be granted preliminary relief. See Reilly v. City of Harrisburg, 858 F.3d 173, 179-80 (3d Cir. 2017). Provided the first two prongs are satisfied, a preliminary injunction may issue even if the balance of harms and/or the public interest do not favor the moving party. See Id. at 177-80.

         A preliminary injunction is an equitable remedy. See Weinberger v. Romero-Barcelo, 456 U.S. 305, 311 (1982). Therefore, a party with unclean hands, or which has otherwise acted inequitably, should not be granted such relief. See Keystone Driller Co. v. Gen. Excavator Co., 290 U.S. 240, 244 (1933) (stating movant for equitable relief must show "not only has he a good and meritorious cause of action, but he must come into court with clean hands"). Pertinent here is that patent misuse - which Cipla contends Amgen engaged in - is a type of inequitable conduct, and a party engaging in patent misuse should not be rewarded with a preliminary injunction. See, e.g., Dawson Chem. Co. v. Rohm & Haas Co., 448 U.S. 176, 193 (1980) (stating that doctrine of patent misuse is "explicitly linked" to "unclean hands" doctrine); U.S. Philips Corp. v. Int'l Trade Comm 'n, 424 F.3d 1179, 1184 (Fed. Cir. 2005) ("Patent misuse is an equitable defense to patent infringement."); see also generally Hennessey v. Woolworth, 128 U.S. 438, 442 (1888) (noting court always has discretion to deny preliminary injunction).

         The elements of a breach of contract claim under Delaware[8] law are: (1) the existence of a contract; (2) the breach of an obligation imposed by the contract; and (3) resulting damage to the plaintiff. See VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003). "When the claim is based on a breach of contract, irreparable injury may be found in two situations: (1) where the subject matter of the contract is of such a special nature or peculiar value that damages would be inadequate; or (2) where because of some special and practical features of the contract, it is impossible to ascertain the legal measure of loss so that money damages are impracticable." ECRI v. McGraw-Hill, Inc., 809 F.2d 223, 226 (3d Cir. 1987).

         III. DISCUSSION

         As set forth below, Amgen has not met its burden to establish a likelihood of success on the merits of its breach of contract claim. Amgen has met its burden to show that it will likely suffer irreparable harm in the absence of preliminary injunctive relief. The balance of the harms somewhat favors Amgen, even accounting for Cipla's equitable defense of patent misuse. The public interest also somewhat favors granting the requested relief. However, because Amgen has not met its burden to show a likelihood of success, the Court will deny Amgen's motion for a preliminary injunction.

         A. Likelihood of Success on the Merits

         Amgen seeks a preliminary injunction based on its claim that Cipla's launch of the Cipla Product constitutes a breach of the Amgen-Cipla Agreement. (See D.I. 122 at 1) (Amgen contending Cipla's launch is "flagrant breach" of contract) Amgen has failed to show a likelihood of success on the merits of this claim. In order to explain how the Court has reached this conclusion, it will be necessary to discuss and dissect multiple provisions of the Amgen-Cipla Agreement.

         1. Unless otherwise provided, Cipla may not launch prior to the "Entry Date"

         Section 7.1 of the Amgen-Cipla Agreement provides, in relevant part, that "unless otherwise permitted under this Settlement Agreement," Cipla will not market any generic cinacalcet product between the "Effective Date of this Settlement Agreement" and the "Entry Date." (Amgen-Cipla Agreement § 7.1) The "Effective Date" of the Amgen-Cipla Agreement is March 5, 2018. (C.A. No. 16-853 D.I. 320) ("Consent Judgment") The "Entry Date" is defined as the earliest of three events, which are identified Sections 5.2(a), (b), and (c), reproduced below:

5.2 For the purposes of this Settlement Agreement, the "Entry Date" shall mean the earliest to occur of:
a) ninety seven (97) days before the date of expiration or lapse of the last to expire claim of the '405 patent, including any extensions and/or additional periods of exclusivity to which Amgen is or becomes entitled,
b) the Launch of a Generic Cinacalcet Product by a Third Party, Amgen or an Amgen Affiliate, except as provided in Section 5.5, and
c) the date of a Final Court Decision finding all of claims 1-6 and 8-20 of the '405 patent invalid or unenforceable.

(Amgen-Cipla Agreement § 5.2)

         It is undisputed that neither 5.2(a) or (c) have occurred. Thus, the parties' dispute is whether Cipla has obtained the right to launch its generic product pursuant to Section 5.2(b), or some other provision of the Agreement allows Cipla to launch before the Entry Date (i.e., "unless otherwise permitted"). Resolving this dispute requires consideration of Sections 5.6, 5.3, and 5.5, to which the Court now turns.

         a. Section 5.6

         Section 5.6 of the Amgen-Cipla Agreement reads as follows (with emphasis, bracketed numbers, and spacing added for ease of explanation):

5.6 [1] Nothing in Section 5.5 or in this Settlement Agreement shall be construed to prevent Amgen from seeking any relief it is legally entitled to, including but not limited to damages and/or a permanent injunction, provided that Amgen can only seek such relief against the Defendants if Defendants launch Defendants' Product following a Third Party At Risk Launch, and if each Third Party with respect to its respective Third Party At Risk Launch (which At Risk Launch is either before or after an at risk launch by Defendants) is later found to infringe, or admits infringing, a valid and enforceable claim of the '405 patent and each such Third Party is required to pay, or agrees to pay, damages relating to its At Risk Launch.
[2] Notwithstanding anything to the contrary in this Settlement Agreement, if [i] any Third Party that has made an At Risk Launch of a Generic Cinacalcet Product (where such At Risk Launch is before or after an at risk launch by Defendants) is not found to have infringed one or more valid and enforceable claims of the '405 patent or [ii] has not ceased or agreed to cease selling such Generic Cinacalcet Product following an At Risk Launch, then Amgen shall not be entitled to seek or recover any relief 'from Defendants for Defendants' at risk sales, offers for sale, distribution, or importation of Defendants' Product.
[3] Moreover, notwithstanding anything to the contrary in this Settlement Agreement, if any Third Party that has made an At Risk Launch o[f] a Generic Cinacalcet Product (where such At Risk Launch is before or after an at risk launch by Defendants) has agreed to cease selling such Generic Cinacalcet Product, but has not agreed to pay Amgen any damages (or has agreed to pay only nominal damages) pursuant to such agreement, then Amgen shall not be entitled to seek or recover any relief from Defendants for Defendants' at risk sales, offers for sale, distribution, or importation of Defendants' Product.
[4] Finally, Amgen shall only be permitted to seek enhanced damages, increased damages, or any other damages relating to willful infringement against the Defendants if each Third Party with respect to its respective Third Party At Risk Launch (regardless of whether such Third Party's At Risk Launch is before or after Defendants' at risk launch) is later found to infringe a valid and enforceable claim of the '405 patent and each such Third Party is required to pay increased damages, enhanced damages, or any other damages relating to willful infringement.

(Amgen-Cipla Agreement § 5.6) (emphasis, bracketed numbering, and spacing added)

         Amgen, largely relying on the first sentence (marked [1] by the Court) of Section 5.6, contends that "[n]othing" in the Amgen-Cipla Agreement prevents it from seeking "any relief against Cipla, including a preliminary injunction, except that Amgen can seek such relief against Cipla only if a third-party which launched its own product - here, the Teva Product - "is later found to infringe, or admits infringing, a valid and enforceable claim of the '405 patent and ... is required to pay, or agrees to pay, damages relating to its At Risk Launch." (See D.I. 122 at 14-15) To Amgen, this first sentence of Section 5.6 is operative here because Teva, pursuant to the Amgen-Teva Agreement, has admitted infringing the ...


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