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PAR Pharmaceuticals, Inc. v. TWI Pharmaceuticals, Inc.

United States District Court, D. Maryland

August 12, 2014

PAR PHARMACEUTICALS, INC. and ALKERMES PHARMA IRELAND LTD.
v.
TWI PHARMACEUTICALS, INC.

MEMORANDUM

CATHERINE C. BLAKE, District Judge.

Plaintiffs Par Pharmaceuticals, Inc. and Alkermes Pharma Ireland, Limited (collectively, "Par") filed this action against TWi Pharmaceuticals, Inc. ("TWi") alleging infringement of U.S. Patent 7, 101, 576 ("the 576 patent"). The patent relates to Par's Megace ES medication, a nanoparticulate formulation of megestrol acetate used to treat anorexia, cachexia, and unexplained weight loss in patients with HIV and AIDS. After the parties stipulated that TWi's generic version of Megace ES would infringe the asserted claims of the 576 patent, a five-day bench trial was held in October 2013 on TWi's invalidity defense and challenge to Par Pharmaceuticals Inc.'s standing. After trial, and prior to the issuance of the judgment, the parties stipulated to a preliminary injunction barring TWi from marketing or selling its generic version of Megace ES until the court issued its decision on the merits. The court ultimately concluded the 576 patent was invalid as obvious and issued its judgment on February 21, 2014. Par filed a notice of appeal to the Federal Circuit on March 18, 2014. Pursuant to Federal Rule of Civil Procedure 62(c), Par now moves for an injunction barring TWi from marketing or selling its generic version of Megace ES until the appeal is resolved. Its motion will be granted on the condition that it posts a bond and moves to expedite its appeal in the Federal Circuit.

STANDARD OF REVIEW

Rule 62(c) provides that "[w]hile an appeal is pending from an interlocutory order or final judgment that grants, dissolves, or denies an injunction, the court may suspend, modify, restore, or grant an injunction...." Fed.R.Civ.P. 62(c). In determining whether to grant an injunction pending appeal, the court considers four factors: (1) whether the applicant has made a strong showing he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent an injunction; (3) whether an injunction will substantially injure the other party; and (4) the public interest. Hilton v. Braunskill, 481 U.S. 770, 776 (1987); Standard Havens Prods., Inc. v. Gencor Indus., Inc., 897 F.2d 511, 513 (Fed. Cir. 1990).[1] "Each factor... need not be given equal weight." Standard Havens, 897 F.2d at 512. Instead, the court "assesses [the] movant's chances for success on appeal and weighs the equities as they affect the parties and the public." Id. at 513 (quoting E.I. Dupont de Nemours & Co. v. Phillips Petroleum, 835 F.2d 277, 278 (Fed. Cir. 1987)) (internal quotation marks omitted); see also Hilton, 481 U.S. at 777 ("[T]he traditional stay factors contemplate individualized judgments in each case, the formula cannot be reduced to a set of rigid rules."); MicroStrategy, Inc. v. Business Objects, S.A., 661 F.Supp.2d 548, 558 (E.D. Va. 2009) ("Many courts view the first two factors as a sliding scale, with the greater the harm to the movant requiring a lesser showing of the likelihood of success on appeal.").

ANALYSIS

I. Laches

As a preliminary matter, TWi claims Par should be barred from relief under the doctrine of laches. To succeed on the defense of laches, TWi must demonstrate that Par was not diligent in protecting its rights and that TWi was prejudiced by Par's delay in bringing the present motion. See Costello v. United States, 365 U.S. 265, 282 (1961).

TWi has failed to demonstrate that it was sufficiently prejudiced by any unjustified delay. In its July 24, 2014, letter to the court, TWi claims prejudice because it "invest[ed] millions of dollars in preparation for its ANDA launch" after the initial injunction expired in February of this year. (TWi Letter, ECF No. 237, at 2.) TWi offers no evidence of its investments. Further, as Par points out, TWi claimed in January that it was ready to launch its product as soon as it received FDA approval. The court then imposed an injunction pending its decision. With no evidence proffered, the court fails to understand, therefore, what additional investments TWi has made since January. In addition, any prejudice to TWi is somewhat of its own making as it apparently continued to prepare its product for launch despite the pending appeal in which the Federal Circuit may ultimately decide Par's patent is valid.

The cases on which TWi relies to support its laches defense do not require a different conclusion. In both Graceway and Uniroyal, the defendants had already launched their allegedly infringing products when the patent holders first filed suit and first gave notice that they would bring any kind of legal action. Graceway Pharm., LLC v. Perrigo Co., 697 F.Supp.2d 600, 603 (D.N.J. 2010); Uniroyal, Inc. v. Daly-Herring Co., 294 F.Supp. 754, 756, 759-60 (E.D. N.C. 1968). In Graceway, the delay put at risk the generic manufacturer's 180-day exclusivity period because it had already started running. 697 F.Supp.2d at 607. TWi has not demonstrated that it has suffered any kind of similar prejudice and Par is not barred from seeking an injunction pending appeal under the doctrine of laches. The court will thus turn to the four factors courts consider under Rule 62(c).

II. Likelihood of Success on the Merits

"Where [a party] establishes that it has a strong likelihood of success on appeal, or where, failing that, it can nonetheless demonstrate a substantial case on the merits, " provided the other factors also militate in the applicant's favor, then an injunction pending appeal is appropriate. Hilton, 481 U.S. at 778. To succeed, Par thus does not need to demonstrate that it will certainly win on appeal or that there is a mathematical probability of success. See Standard Havens, 897 F.3d at 512-13. At a minimum, it must demonstrate a substantial case.[2]

Here, Par claims that it will succeed on the merits because this court erred in its application of the law with respect to motivations to combine the prior art and inherency.[3] (Pl.'s Mem., ECF No. 229, at 5-11.) Although the court stands by its judgment, it recognizes that the case presents a close call. Further, the Federal Circuit will conduct a de novo review of whether the 576 patent is obvious, including whether this court properly interpreted the law regarding motivation and inherency. See Ecolochem, Inc. v. S. Cal. Edison Co., 227 F.3d 1361, 1370 (Fed. Cir. 2000) (stating the standard of review). The court is not persuaded Par has demonstrated a "strong" likelihood of success on appeal-especially given that most of its dispute with this court's earlier decision is only rehashing the legal arguments it has already made. Par has, however, made a showing of a substantial case. Because, as discussed below, the balance of hardships tips strongly in its favor as well, this showing is sufficient. See Butamax Advanced Biofuels LLC v. Gevo, Inc., 2012 WL 2675232, at *2 & n.2 (D. Del. July 6, 2012) (finding that a strong showing of irreparable harm and the Federal Circuit's de novo review can merit a stay of a preliminary injunction pending appeal); In re Cyclobenzaprine, 2011 WL 1980610, at *3 (D. Del. May 20, 2011) (finding the likelihood of success factor to marginally support a temporary restraining order pending appeal of the court's invalidity finding where "plaintiffs' success on appeal is just as likely as not").

III. Irreparable Harm to Par

Before addressing the harm to Par, the court addresses TWi's claim that Par Pharmaceuticals, Inc. does not have standing. According to TWi, because Par Pharmaceuticals does not have standing, but is the only entity claiming harm, the plaintiffs have not met their burden. Par does have standing. A party that holds exclusionary rights to a patent, even if it does not hold all substantial rights, meets constitutional standing requirements to bring suit against an infringer and meets prudential standing requirements when it brings suit as a coplaintiff with the patentee. Morrow v. Microsoft Corp., 499 ...


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