Hatch-Waxman Watch - Valeant International (Barbados) SRL v. Watson Pharmaceuticals, Inc.

by McDonnell Boehnen Hulbert & Berghoff LLP
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[author: Andrew Williams]

Valeant Pharmaceuticals InternationalOn Monday, the Southern District of Florida denied Valeant International (Barbados) SRL's motion for a permanent injunction to prevent Watson Pharmaceuticals, Inc. from commercially manufacturing or selling its generic version of Aplenzin® (see Order Denying Motion for Injunctive Relief).  Valeant had been successful in the District Court in fending off Watson's validity challenges of four Orange Book-listed patents related to bupropion hydrobromide, the active ingredient of Aplenzin®, after Watson had filed its ANDA and conceded infringement in the subsequently filed 35 U.S.C. § 271(e)(2) action.  After final judgment was entered, Valeant filed a motion to amend the judgment to, among other things, enjoin Watson from any commercial activity before the expiration of the patents.  The Court found that Valeant had not met the standard for injunctive relief because it didn't establish irreparable harm, and injunctive relief would be unnecessary (because the entered judgment prohibits Watson from marketing its generic version prior to the expiration of the patents).

Watson PharmaceuticalsTo understand Valeant's motion, it is important to note that in addition to allowing a court to delay the approval of a generic drug until the date of expiration of any infringed patent, the Hatch-Waxman statute also provides that injunctive relief may be granted.  See 35 U.S.C. § 271(e)(4)(B).  The Court's order in this case does not explain why Valeant was seeking a permanent injunction, but it did point out that violation of an injunction can result in contempt proceedings against the infringer.  The standard for injunctive relief in a patent case was established by the Supreme Court in eBay, Inc. v. MercExchange, LLC, 547 U.S. 388 (2006):

A plaintiff must demonstrate: (1) that it has suffered irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.

Id. at 391.  Valeant argued that all Hatch-Waxman cases involve direct competition that attempt to take market share from the NDA holder, which always results in irreparable harm.  However, the Court noted that the Federal Circuit has repeatedly required that such evidence to be presented before an injunction can issue, including pharmaceutical cases, citing Abbott v. Labs. v. Andrx Pharms., Inc., 452 F.3d 1331 (Fed. Cir. 2006).  The Abbott case did indicate that generic competition "alone does not establish that [the patent holder's] harm will be irreparable, id. at 1348, but Abbott was seeking a preliminary injunction and was more importantly unable to show a likelihood of success on the merits sufficient to meet that prong of the analysis.  Nevertheless, the important point that the District Court took from the Abbott case was that the insufficiency of monetary damages needs to be established.  It is not clear whether Valeant presented any such evidence.

Moreover, the Court pointed out that even if there was evidence of irreparable harm, Valeant still did not meet the standard for injunctive relief, because the entered judgment prevents Watson from marketing its generic bupropion hydrobromide before the expiration of the patents at issue, and thus Watson is prevented from competing directly with Valeant.  This is true, however, in every 271(e)(2) action, and yet Congress provided for injunctive relief.  It is possible that the District Court could have been persuaded by the procedural posture of this case, and that if Valeant were not seeking an amendment to the final judgment, the outcome may have been different.  Or the Court could have been making clear that, after eBay, if you want injunctive relief, you better provide evidence to support it.  Finally, the Court did note that if Watson violated the final judgment, another case could be filed in the Southern District of Florida (which presumably would satisfy any concern over the inability to seek sanctions).

Importantly, the Court relied on the Delaware case of Alcon, Inc. v. TEVA Pharms. USA, Inc. (D. Del. Aug. 5 2010) in reaching its decision.  In that case, the court also denied Alcon's request for a permanent injunction because, in part, it failed to prove that it had suffered irreparable harm.  Alcon had argued that any deprivation of its right to exclude other constitutes irreparable harm.  However, similar to the present case, the Delaware court found that because Teva would be unable to market its generic product before the expiration of the product, it was necessarily prevented from "usurping any market share or goodwill from Alcon."

 

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