Federal Circuit Grants Emergency Stay of Preliminary Injunction for Critical Medical Products

by McDermott Will & Emery
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Edwards Lifesciences AG v. CoreValve, Inc.

Less than one week after a district court granted a preliminary injunction, banning some U.S. sales of some of CoreValve’s heart valve system, the U.S. Court of Appeals for the Federal Circuit granted an emergency stay pending appeal.  Edwards Lifesciences AG v. CoreValve, Inc., Case No. 14-1409 (Fed. Cir., Apr. 21, 2014 (per curiam) (Rader, C.J.) (Newman, J., dissenting).  The decision postponed enforcement of Chief Judge Sleet’s order granting in part Edwards Lifesciences’ motion for a preliminary injunction against CoreValve’s products that allegedly infringe an Edwards Lifesciences catheter patent.  Edwards Lifesciences AG v. CoreValve, Inc., Case No. 08-91 (D. Del., Apr. 15, 2014).

At the district court, Edwards Lifesciences sued CoreValve (a division of Medtronic) for infringement of a patent covering “a prosthetic heart valve to be delivered through the skin to patients’ aortic annuluses and thereby avoids traditional open heart surgery and its accompanying risks.”  A jury awarded Edwards Lifesciences about $75 million in damages for the CoreValve Generation 3 Revalving System, which was ultimately upheld by the Federal Circuit.  Edwards Lifesciences subsequently moved for a preliminary injunction to prevent sales of the CoreValve Generation 3 as soon as it obtained U.S. Food and Drug Administration (FDA) approval.  After an evidentiary hearing on the public interest factor, the district court granted the injunction in part, but ordered the parties to reach a decision to allow a sufficient number of CoreValve Generation 3 to be sold for critically ill patients.

The district court first determined that Edwards Lifesciences would likely succeed on the merits, given that a jury had already found infringement.  Even though the patent had expired on May 2, 2012, Edwards Lifesciences anticipated that under § 156 the U.S. Patent and Trademark office would grant an extension until March 22, 2016.  CoreValve argued that § 156 limits the patent extension exclusion to only copies of Edwards Lifesciences product, the SAPIEN.  But the court rejected that argument because the statute applies to all approved uses of the product: in this case, inserting artificial valves using a catheter.

Next the court found that Edward Lifesciences would be irreparably harmed because CoreValve’s sales of products would likely lead to price erosion and loss of sales, market share and revenue.  In fact, CoreValve’s practices in Europe showed that it undercut prices and attempted to take over hospital contracts from Edwards Lifesciences.  The court also found that the balance of hardships favored Edwards Lifesciences because it would have to compete with products covered by its own patent while CoreValve was already found to be a willful infringer.

As for the public interest, Edwards Lifesciences and CoreValve are the only two companies with products that allow doctors to insert artificial heart valves with a catheter rather than through open heart surgery.  The evidence showed that Edwards Lifesciences’ product cannot be used in all patients, such that a complete ban would prevent some patients from receiving care.  Thus, the court held that while there is a strong public interest in upholding patent rights, a carve-out would allow doctors to make appropriate medical decisions with all available products.  On the record, the district court granted the requested injunction.  CoreValve appealed to the Federal Circuit for a stay of the injunction.

The Federal Circuit, in granting an emergency stay of the injunction, was largely silent on its reasons for doing so.  CoreValve argued that the injunction would prevent critically ill patients from receiving appropriate care.  Edwards Lifesciences countered that CoreValve overstated the need for its product given the availability of Edwards’s own products.  In the end, the Federal Circuit appears to have agreed that the stay would prevent needed products from reaching critically ill patients.

In dissent, Judge Newman would have denied the stay subject to an agreement between the parties that CoreValve could provide its products during appeal.  Indeed, Judge Newman’s view tracked with Judge Sleet’s order balancing the “strong public interest favoring enforcement of patent rights” while providing the best option for patients.

Practice Note:  The Federal Circuit’s decision in this case highlights that it is willing to allow sales of infringing products when there is at least some risk that critically ill patients may not receive needed treatment.  Even the district court’s order granting the injunction in part recognized that at least some products should be sold.  Patent holders with patents covering critical medical equipment should be aware of this risk, especially where equipment options and substitutions are limited.  As Judge Newman’s dissent recognizes, even a stipulation among the parties could not prevent a stay from stopping sales of critical medical equipment.  However, the Federal Circuit will not weigh in again on the appropriateness of such an injunction in this case, as the parties recently settled their dispute.  Patent owners and potential defendants will have to wait for a similar case before the Federal Circuit provides further guidance in this area.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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