United States District Court, D. Maryland
PAR PHARMACEUTICAL. INC. and ALKERMES PHARMA IRELAND LTD.
TWI PHARMACEUTICALS, INC.
Catherine C. Blake United States District Judge
Par Pharmaceutical. Inc. and Alkermes Pharma Ireland Limited
(collectively. "Par") filed suit in September 2011
against TWi Pharmaceuticals. Inc. ("'TWi")
alleging infringement of U.S. Patent 7.101.576
("'the "576 patent"). After a bench trial,
the court ruled on February 21. 2014. that the "576
patent was invalid as obvious. Par requested, and this court
granted, an injunction pending resolution of the case on
appeal. On August 12. 2014. the court ordered Par to post a $
10 million bond as security against any losses TWi might
suffer over a six-month period. (Memorandum & Order. ECF
Nos. 257. 258.) The FDA granted final approval to TWi's
generic on August 28, 2014. On appeal, the federal Circuit
vacated this court's judgment and remanded the case
"for further analysis of the food effect limitation
consistent with [the Federal Circuit's! precedent on
inherency." Par Pharm.. Inc. v. TWi Pharms..
Inc.. 773 F.3d 1186. 1200 (Fed. Cir. 2014). On March
9. 2015. this court granted another injunction while
it considered the case on remand, and ordered Par to post an
additional $6 million bond. (Memorandum & Order. ECF Nos.
279. 280.) On remand, and after oral argument, the court
ruled (again) on July 28. 2015. that the '576 patent was
invalid as obvious. and also ruled that it was invalid for
lack of enablement. (Memorandum & Order. ECF Nos. 304,
305.) That same day. Par noted an appeal to the Federal
Circuit and moved for an injunction pending appeal. The court
denied Par's motion, and the Federal Circuit affirmed
this court's decision on December 15, 2015. Par
Pharm.. Inc. v.TWi Pharms.. Inc.. 624 Fed.App'x 756
(led. Cir. 2015) (mem.). The matter presently before the
court is TWi's motion to execute the injunction bonds
(ECF No. 320). For the reasons that follow. TWi may
recover $10 million on the first bond: $2, 720, 966 on the
second bond; and post-judgment interest as applicable.
Rule of Civil Procedure 65(c) authorizes a court to
"issue a preliminary injunction or a temporary
restraining order only if the movant gives security in an
amount that the court considers proper to pay the costs and
damages sustained by any party found to have been wrongfully
enjoined or restrained." When a party is found to have
been wrongfully enjoined, that party may recover proven
damages, up to the full amount of the bond, that naturally
and proximately resulted from the wrongful injunction.
See Glaxo Grp. Ltd. v. Leavitt. 481 F.Supp.2d 434.
437 (D. Md. 2007). Recoverable damages are those that were
suffered during the period in which the bond was in effect,
and those damages must be proven by a reasonable certainty.
Id. (quoting 11A Wright & Miller, Federal
Practice & Procedure § 2973 and
(:niv. Lite Disi.. Inc. v. Northwest Indus..
Inc.. 602 F.2d 1173. I 175 (4th Cir. 1979)).
seeks to recover the full $16 million from both bonds, plus
interest, claiming its proven damages far exceed this amount.
Par disputes the assumptions and calculations underlying
TWi's damages estimate, asserting that TWi is entitled to
recover no more than $3, 787, 759. While the parties dispute
a number of factors in calculating their damage estimates,
two primary points of contention emerge: (1) whether Par
would have launched its authorized generic if its injunction
requests had been denied and TWi had proceeded with an
at-risk launch. and (2) the size of the market had TWi been
able to launch its generic at the time of the courts*
injunctions. The court also must evaluate what price, costs
per unit produced, and market share TWi has established by a
the first point of dispute. TWi offers a damages estimate
that assumes it would have been the only generic player in
the market during the pendency of the injunction
period. Par vigorously disputes this point,
arguing that it certainly would have launched its authorized
generic in 2014 had TWi proceeded with its at-risk launch. In
support of its position. Par points to the fact that it did
indeed launch an authorized generic on July 28. 2015. the
same day TWi launched its generic product after this court
issued a second opinion finding the "576 patent invalid.
Additionally, it points to contemporaneous documents showing
that Par had the capability of launching an authorized
generic in September 2014. and it offers affidavits from Par
personnel stating that it would have launched the authorized
generic had TWi proceeded with its launch.
the evidence offered by Par establishing its capability of
launching an authorized generic in 2014. TWi has pointed to
sufficient evidence to establish by a reasonable certainty
that Par would not have launched an authorized generic in
September 2014 had this court denied its request for
injunctive relief pending appeal. First. Par represented in
its briefing that, had the court denied its initial request
for injunctive relief. "Par expects that the generic
product will capture virtually the entire market for branded
Megace® ES sales in a matter of days or weeks."
(Mem. Supp. Mot. I'RO 13. ECF No. 229.) Par made no
mention of the mitigating effects of launching an authorized
generic in its arguments regarding irreparable harm, further.
Par offered the expert declaration of Dr. Walter Vandaele in
support of its motion for a Temporary Restraining Order, in
which Dr. Vandaele states that "the vast majority of
MegaceR1 ES sales would be lost to competition from TWi's
generic megestrol ES within a few months or even weeks of
TWi's market entry, and essentially all Mcgace® ES
sales would be lost to the generic thereafter." (Decl.
Vandaele Supp. Mot. TRO 3. ECF No. 235.) Dr. Vandaele made no
mention of an authorized generic when considering the impact
of a "premature" TWi launch. Indeed, the only
contemporaneous statement to the court acknowledging even the
possibility of an authorized generic launch was contained in
Par's reply brief in support of its TRO motion,
addressing the appropriate amount for an injunction bond:
"further, TWi's bond calculations fail to address
the economic reality that Par would need to compete on price
to retain market share, including potentially by launching
its own generic product through the normal generic channels
of trade." (Reply Supp. Mot. TRO 20, ECF No. 255.) The
court sees no reason to credit this single, hedged statement
over Par's affirmative representations of what would
happen in the case of a premature TWi launch, finally, while
these statements alone might not be sufficient to establish a
reasonable certainty, the litigation posture in August 2014
was significantly different from July 2015. when Par actually
launched its authorized generic. Namely, in August 2014. Par
was appealing this court's finding of invalidity, and
expressed great certainty that it would prevail at the
federal Circuit: "Plaintiffs have a substantial chance
of reversing this case on appeal .... Plaintiffs have shown
that they are likely to succeed on the merits on
appeal." (Reply Supp. Mot. TRO 2, ECF No. 255.) Given
this apparent certainty, it is not likely that Par would have
launched its own generic and accepted the inevitable and
irreversible price erosion that would follow. Taken together.
Par's contemporaneous statements to this court establish
by a reasonable certainty that it would not have launched an
authorized generic while its appeal was pending.
different scenario existed, however, at the time of the
court's second injunction in March 2015. The Federal
Circuit had remanded the case to this court, but only on one
limited issue that did not portend the court reaching a new
finding on the issue of invalidity. At this point. Par
reasonably could have expected that TWi ultimately might
succeed on its claims. Thus. Par's conduct in July
2015-launching its authorized generic alongside TWi's
generic launch -is illustrative of the conduct Par likely
would have taken had the court denied its second request for
injunctive relief in light of its impending reconsideration
of the case. Accordingly. while TWi has established by a
reasonable certainty that it would have been the only generic
player on the market from August 28. 2014. until March 9.
2015. there is a much higher likelihood that Par would have
launched its authorized generic had the court denied its
request for injunctive relief on March 9. 2015.
"but for" market, then, for the purposes of
calculating recoverable damages on the injunction bonds,
contemplates TWi being the only generic on the market from
August 28. 2014. until March 8. 2015. and Par launching its
authorized generic on March 9. 2015 (at the start of the time
period covered by the second bond).
Market Share, and Costs per Unit
calculate recoverable damages, the court must ascertain the
price at which TWi could have sold its generic product, and
the share of the market TWi would have enjoyed had the
injunctions not been issued. TWi contends that it would have
charged $ __ per Bper unit, which is approximately __ % of
the $777.51 sale price of Par's Megace® LS product.
Par does not offer evidence to contradict that TWi would have
charged this amount if it had offered the only generic on the
market, and that price is consistent with estimates of
generic drug pricing provided by the Federal Trade Commission
and cited by Par's expert. Dr. Vandaele. (Suppl. Decl.
Vandaele Supp. Mot. TRO 4, ECF No. 277-1.) Accordingly. TWi
has established by a reasonable certainty that it would have
charged $ __ per unit during the pendency of the first
injunctive bond. TWi's expert. Craig Elson. assumed TWi
would capture 88% of the market upon entry, which is
consistent both with Par's predictions in its request for
injunctive relief and reflective of the combined market share
actually garnered by TWi's generic and Par's
authorized generic after launching last year. The court will
accept Mr. F.lson's calculations of market share for the
period covered by the first injunctive bond.
the time period covered by the second bond, the best evidence
of the price per unit is what actually happened after the
simultaneous launch of TWi's generic and Par's
authorized generic on July 28, 2015. Having to compete with
Par's authorized generic on pricing. TWi only has been
able to charge an average of $ __ per unit. Thus, for the
time period covered by the second bond. TWi's damages
will be calculated using a price of $ __ per unit. A closer
question is what market share TWi would have enjoyed during
the time period of the second bond in this but-for world.
While TWi has enjoyed less than 40% of the market share since
launching alongside Par's authorized generic, in the
but-for world governing the court's analysis. TWi would
have launched its product several months before Par launched
its authorized generic. While TWi certainlv would have lost
market share due to competition from the authorized generic,
the amount of that loss has not been considered or quantified
by the parties' experts. Without expert testimony on this
matter, the court cannot say with reasonable certainly that
TWi would have maintained its 88% market share. Accordingly,
the court will look to the best evidence in front of it. the
market share split after the actual launch of the two
generics. Considering this split, ...