Abbott Laboratories v. Sandoz, Inc.
89 U.S.P.Q. 2d (BNA) 1161, 544 F.3d 1341, 2008 U.S. App. LEXIS 21880 (2008)
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Rule of Law:
The grant of a preliminary injunction is reviewed for abuse of discretion and requires the moving party to demonstrate a likelihood of success on the merits, irreparable harm, a favorable balance of hardships, and that the injunction serves the public interest. An alleged infringer's defense that merely raises a 'substantial question' of patent invalidity is insufficient to defeat a preliminary injunction if the patentee still demonstrates a likelihood of success on the merits.
Facts:
- Abbott Laboratories held U.S. Patent Nos. 6,010,718 and 6,551,616 for an extended-release formulation of the antibiotic drug clarithromycin, which it sold under the brand name Biaxin®XL.
- The purpose of Abbott's extended-release formulation was to extend the drug's effectiveness, reduce the required dosage frequency, and improve its taste profile and gastrointestinal side effects compared to immediate-release versions.
- The patents claimed a pharmaceutical composition containing an erythromycin derivative (like clarithromycin) and a pharmaceutically acceptable polymer, which achieved specific pharmacokinetic parameters in the body after ingestion.
- Sandoz, Inc., a generic drug manufacturer, developed its own extended-release formulation of clarithromycin.
- Sandoz filed an Abbreviated New Drug Application (ANDA) with the Food and Drug Administration (FDA) to obtain approval to market its generic version of the drug.
Procedural Posture:
- Sandoz, Inc. filed an Abbreviated New Drug Application (ANDA) with the FDA, which was approved on August 25, 2005.
- On September 16, 2005, Abbott Laboratories sued Sandoz, Inc. in the U.S. District Court for the Northern District of Illinois for patent infringement.
- Abbott moved for a preliminary injunction to prevent Sandoz from marketing its generic drug pending the outcome of the litigation.
- The district court granted Abbott's motion for a preliminary injunction.
- Sandoz, Inc., as appellant, appealed the district court's order to the U.S. Court of Appeals for the Federal Circuit.
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Issue:
Did the district court abuse its discretion by granting a preliminary injunction to Abbott Laboratories after finding it was likely to succeed on the merits of its patent validity, enforceability, and infringement claims against Sandoz, Inc.?
Opinions:
Majority - Newman, J.
No. The district court did not abuse its discretion in granting the preliminary injunction. To obtain a preliminary injunction, a party must show a likelihood of success on the merits, irreparable harm, a favorable balance of hardships, and that an injunction serves the public interest. The district court did not commit clear error in finding Abbott was likely to succeed on the merits. Regarding validity, the court properly found that Sandoz was unlikely to prove the patents were anticipated or obvious under the KSR standard, as the prior art did not teach or suggest Abbott's specific formulation with its predictable pharmacokinetic results. On the issue of inequitable conduct, Sandoz failed to provide clear and convincing evidence of both materiality and intent to deceive the Patent and Trademark Office. The district court's claim construction and finding of likely infringement were also correct. Finally, the court properly weighed the equitable factors—irreparable harm to Abbott from price erosion and market loss, the balance of hardships, and the public interest in enforcing valid patents—all of which favored granting the injunction to preserve the status quo.
Dissenting - Gajarsa, J.
Yes. The district court abused its discretion because it applied the wrong legal standard and its findings were erroneous. A preliminary injunction should not issue if the alleged infringer raises a 'substantial question' concerning the patent's validity or infringement, as that negates the patentee's likelihood of success on the merits. Sandoz clearly raised substantial questions of both invalidity and unenforceability. The patent was likely obvious because prior art disclosed the key structural components and the claimed pharmacokinetic parameters were well-known goals in drug formulation, making the invention an obvious combination to try with a reasonable expectation of success. Furthermore, Abbott's submission of a false declaration to the patent examiner and its failure to disclose unfavorable study results raised a substantial question of inequitable conduct, making the patents vulnerable to being found unenforceable. Because Abbott failed to show a likelihood of success on the merits, the injunction should have been denied.
Analysis:
This case highlights the deferential 'abuse of discretion' standard for reviewing preliminary injunctions, making them difficult to overturn on appeal. It provides a key application of the Supreme Court's 'KSR v. Teleflex' obviousness standard to the unpredictable art of pharmaceutical formulation, clarifying that 'obvious to try' does not automatically invalidate a patent where the results are not reasonably predictable. The sharp disagreement between the majority and dissent exposes a significant jurisprudential rift within the Federal Circuit on the threshold for defeating a preliminary injunction—whether a defendant must merely raise a 'substantial question' of invalidity or if the plaintiff must still demonstrate an overall 'likelihood of success.' This conflict creates uncertainty for litigants regarding the standard that will be applied in patent disputes.
