Federal Circuit grants Immediate and Temporary Stay of an Injunction Against Mylan Pharmaceuticals Inc. and Mylan Inc.

June 28, 2011 – Blog Post

On May 25th, the Federal Circuit granted an immediate and temporary stay of an injunction against Mylan Pharmaceuticals Inc. and Mylan Inc. (Mylan) in their proceedings with Eurand, Inc., Cephalon Inc., and Anesta AG (Plaintiffs). Plaintiffs market extended release cyclobenzaprine products under US Patents 7,387,793 and 7,544,372. They brought an infringement suit under 35 U.S.C. §271(e)(2)(A) against Mylan, who had filed an ANDA for a generic version of the product with the FDA. On May 12, 2011, the District Court for the District of Delawarefound that Mylan infringed the patents and that the patents were invalid for obviousness.

Despite the invalidity finding, Plaintiffs subsequently filed a motion for a temporary restraining order (TRO) to prevent Mylan from entering the market with their own generic drug. Plaintiffs cited “five substantial errors” made by the Court that would lead to the Court’s opinion being reversed on appeal.

On May 20th, the Court issued its Memorandum Order, granting Plaintiff’s TRO motion. Largely dismissing the arguments that the Court made “five substantial errors,” the Court still held that a balancing of factors favored granting the TRO. In particular, the Court held that: (1) Plaintiffs’ success on appeal was “just as likely as not;” (2) Plaintiffs, as the name brand manufacturer, faced irreparable harm from incoming generics; (3) Mylan, facing a substantial loss of time on their 180-day Paragraph IV marketing exclusivity, did not face a greater harm than the Plaintiffs; and (4) the Public interest was neutral to the TRO.

Later the same day, Mylan filed an Emergency Motion for Reconsideration of the Memorandum Order, in view of “fundamental, material errors of law.” First, citing the Court’s own recognition that “‘[f]ailure to establish any element in [plaintiffs’] favor renders a preliminary injunction inappropriate,’” Mylan pointed out that the Court’s “just as likely as not” assessment, bolstered by the Court’s earlier finding of invalidity, was insufficient to establish the likelihood of success needed for the TRO. Second, Mylan noted that it had launched its generic product, triggering its 180 day exclusivity period. Mylan criticized the Court’s characterization of their loss of exclusivity as “minimal,” stressing the goodwill and monetary losses that would result from a permanent loss of all or a part of its exclusivity period. Mylan then highlighted the unfairness of being penalized for entering the market after the patents at issue were held invalid by a “clear and convincing” standard.

In their Supplemental Memorandum, Mylan cited various Federal Circuit case law hoping to establish that the Court’s earlier holding of invalidity cast enough doubt on the patents to avoid the TRO. As Mylan noted, not only did the Court’s actual invalidity determination meet and surpass the “substantial question of invalidity” standard that is normally used, but the standard should be lowered at their advanced stage of litigation.

On the issue of irreparable harm, Mylan sought to establish that the harm they faced, which could potentially consume the entirety of the 180-day exclusivity period, would be inconsistent with the very objectives sought by the Hatch-Waxman Act. While the 180-day exclusivity period should incentivize and reward generics for assuming the risks of challenging a patent, Mylan argued that the TRO would effectively reverse and irrecoverably remove any benefit that they had earned the right to, especially in light of the Court’s invalidity decision. In contrast, Mylan characterized the Plaintiffs’ harm as the “natural and logical consequence from the invalidation of its asserted patent claims.”

In its May 24th Memorandum Order, the Court responded negatively to Mylan’s Motion for Reconsideration and entered an Injunction Order. In its response, the Court explained that the “likelihood of success on the merits” TRO factor did not weigh any more heavily than the other factors. Furthermore, at the post-trial appeal-pending stage of litigation, all that a movant needed to show, absent a “strong likelihood of success,” was a “substantial case on the merits provided that the harm factors militate in its favor.” In regard to those harm factors, the Court again weighed in favor of Plaintiffs. Referencing the statutory provision in 21 U.S.C. §355(j)(5)(D)(i)(I)(bb)(A), the Court noted that Mylan was under no obligation to launch its generic drug immediately and that Mylan’s right to its 180-day exclusivity period would have been preserved through the appeal process. Mylan assumed the risk of prolonged litigation and “brought the harm on itself.”

Mylan immediately filed two motions to stay the injunction and appealed to the Federal Circuit.

The District Court denied both of Mylan’s motions to stay, but the Federal Circuit took the opposite course of action and granted an immediate and temporary stay of the injunction, pending the its consideration of Plaintiffs’ response.

The Federal Circuit did not elaborate on why the stay was ordered, but Mylan’s arguments have focused on the substantial question of invalidity presented by the District Court’s actual finding of invalidity and also on the substantial harm that would result from the loss of marketing exclusivity. The Federal Circuit’s future decision should help clarify when a district court may issue an injunction prohibiting the launch of a generic pharmaceutical product despite a favorable ruling for a generic manufacturer. Specifically, the Federal Circuit’s decision should provide guidance for lower court’s to determine the circumstances under which a litigant might be considered to have a likelihood of success on appeal despite losing on that same issue before the lower court. The Federal Circuit’s stay of the injunction may indicate that it believes that, when balancing factors to determine whether an injunction should issue pending appeal, greater weight should be accorded to the potential harm to generic manufacturers from the loss of part or all of the exclusivity period than to a finding that a patentee is as equally likely to succeed on appeal as to lose on appeal.