On June 29, 2012, the U.S. District Court for the Middle District of Georgia, Athens Division, in an opinion and order authored by Judge Clay D. Land, granted a Motion for Preliminary Injunction barring the manufacture, sale, and offering for sale in, and importation into, the United States of “PetArmor Plus” parasiticide, pending further order of the court.
Judge Land began his 40-page order with the introduction: “This Order constitutes the latest chapter in the intellectual property saga that may ultimately conclude with a determination of who has the legal right to an apparently magical formulation for ridding our dogs and cats of fleas and ticks.”
Plaintiffs Merial Limited and Merial SAS (collectively “Merial”) are the exclusive licensees of U.S. Patent No. 6,096,329 (“the ‘329 Patent”), directed to parasiticides comprised of the chemical compounds fipronil and methoprene, for veterinary treatment of dogs and cats. The court observed that the commercial embodiment of those compositions, sold under the trademark Frontline Plus®, is the leading flea and tick treatment in the United States. Before the court was a motion brought against defendants Velcera, Inc. and FidoPharm Inc. (collectively “Velcera”) to preliminarily enjoin Velcera from marketing a similar product called “PetArmor Plus.”
In separate action initiated in 2007, Merial had sued a Mumbai, India-based company known as Cipla, Ltd. (“Cipla”), along with some Internet retailers, in the same district court for infringement of the ‘329 Patent and another Merial patent (“the 2007 lawsuit”). Cipla sold the accused veterinary pesticide products in the United States under the marks “Cipla Protektor” and “Cipla Protektor Plus.” Neither Cipla nor any of the other defendants responded to Merial’s complaint. The court thus held the asserted patents to have been infringed and not proven invalid. This resulted in the entry of a default judgment and a permanent injunction in March 2008, barring the manufacture, sale, and offering for sale in, and importation into, the United States of any product that infringed Merial’s patents, including “Cipla Protektor” and “Cipla Protektor Plus.” The permanent injunction applied not only to Cipla, but also to “those persons and entities in active concert with [Cipla]” who have notice of that order.
Meanwhile, through a series of transactions initiated in February 2008, Velcera (led by former Merial executives) engaged with Cipla to develop, test, manufacture, and distribute products that would directly compete with Frontline Plus® at much lower prices. Cipla was to be an offshore manufacterer of such a product, to be called “PetArmor Plus,” which would then be shipped to Velcera for sale within the United States. The first shipments of that product (“the 2011 Pet Armor Plus”) arrived in the United States in March 2011.
Merial, however, became aware of the impending launch of the 2011 PetArmor Plus and of Cipla’s involvement in it, and on March 28, 2011, brought contempt proceedings against Cipla in the U.S. District Court for the Middle District of Georgia, asserting that the 2011 PetArmor Plus “was no more than a rebranded version of Cipla’s enjoined Protektor Plus product and that the importation and sale of PetArmor Plus within the United States therefore violated the injunction.” Velcera moved to intervene in the contempt proceedings and was then made a party defendant. The district court, after a hearing, found that “Velcera acted in concert with Cipla to violate the injunction,” and that the 2011 PetArmor Plus infringed at least one claim of the ‘329 Patent. On June 21, 2011, “[t]he Court entered an injunction against Velcera prohibiting Velcera from selling a veterinary product containing fipronil and methoprene if Cipla participated in the development, manufacture and/or packaging of the product.” In an opinion that issued on May 31, 2012, the U.S. Court of Appeals for the Federal Circuit affirmed the district court’s order.
One would think the story would end there – but this is a “saga,” no mere story. Velcera pressed on with a new version of its product, bringing us to this “latest chapter.”
Following the district court’s June 2011 contempt order, “Velcera severed ties with Cipla and reformulated the PetArmor Plus product with a minor formula amendment,” resulting in “PetArmor Plus for Cats” and “PetArmor Plus for Dogs” (collectively, “the 2012 PetArmor Plus”). Merial sought to prevent the launch of the 2012 PetArmor Plus and brought contempt proceedings solely against Velcera, contending that the proposed launch of the 2012 PetArmor Plus violated the 2011 injunction. The district court denied Merial’s motion for contempt because the 2011 injunction only applied to infringing products that Cipla had helped to develop, package, and/or manufacture. Merial then filed a new infringement lawsuit against Velcera based on the ‘329 Patent, and also filed its motion for preliminary injunction. On this motion, Merial succeeded.
The district court prefaced its analysis by acknowledging the legal standard applicable to preliminary injunctions, namely:
“‘A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.'” Apple, Inc. v. Samsung Elecs. Co., 678 F.3d 1314, 1323 (Fed. Cir. 2012) (quoting Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)).
Regarding likelihood of success on the merits, a plaintiff must not only show a likelihood of infringement, but also, if the defendant presents evidence in support of its position that the patent is invalid, show that it will likely withstand such an invalidity challenge. The district court recognized that the plaintiff in such an instance must show that the invalidity defense “lacks substantial merit.”
Before delving into the substance of Velcera’s invalidity defenses, the court rejected Merial’s argument that Velcera was collaterally estopped from contesting infringement because of the infringement findings in the June 2011 contempt order. The court reasoned that those findings were “based, at least in part, on factual findings that were established due to Cipla’s default,” and that as a nonparty to the 2007 lawsuit, Velcera had no opportunity to contest those findings.
Sequentially addressing each of Velcera’s defenses in detail, the court held that Merial was likely to withstand all of Velcera’s asserted invalidity defenses, namely, that the ‘329 Patent was indefinite, that it was not enabling, and that it failed to contain an adequate written description of the invention, all required by 35 U.S.C. § 112, and also that the ‘329 Patent is invalid for obviousness based upon prior art under 35 U.S.C. § 103(a). As to the § 112 defenses, the court accorded substantially greater credence to Merial’s expert testimony over that from Velcera’s expert, noting in one instance that Velcera’s expert “was effectively impeached through the use of a patent which he authored,” and that the expert’s patent “was broader, more indefinite, and less enabling than the ‘329 Patent, yet Velcera’s expert criticized the ‘329 Patent for deficiencies that were glaringly more pervasive in the patent which he authored.”
The court observed that, while not dispositive of validity, the fact that the ‘329 Patent had emerged from a USPTO reexamination proceeding intact suggested that it was not invalid under any of the grounds advanced by Velcera. This was particularly applicable to Velcera’s § 103(a) defense because Velcera in the present litigation asserted the same prior art that had been considered during the reexamination proceeding. The court further credited testimony from Merial’s expert that the prior art actually taught away from the patented composition. Finally, the court found that Merial presented “significant objective evidence of nonobviousness” – commercial success, long-felt industry need, and industry praise – regarding Merial’s Frontline® products.
On the question of infringement, Merial’s experts testified persuasively that the 2011 PetArmor Plus contained “fipronil and methoprene in synergistically effective amounts,” and that the 2012 reformulation did not affect the synergy of those ingredients, the latter conclusion also being supported by prior testimony of Velcera’s own VP of Research and Development and Regulatory Affairs, as well as a representation to the U.S. Environmental Protection Agency.
As to the remaining preliminary injunction factors, the court cited its prior findings concerning Merial’s proof of irreparable harm in the absence of injunctive relief (i.e., threatened loss of market share, price erosion, and negative attitudes of veterinarians concerning Frontline Plus®), the balance of hardships in Merial’s favor, and the public interest favoring issuance of the injunction. Its assessment as to balance of hardships was also influenced by the fact that Velcera had not yet launched the 2012 PetArmor Plus, so an injunction would be less burdensome on Velcera than it would have been had that product already been on the market.
On the basis of all of these findings, the district court preliminarily enjoined Velcera from launching the 2012 PetArmor Plus in the United States, pending further order.
The order and opinion summarized above is Merial Ltd. and Merial SAS v. Velcera, Inc. and FidoPharm, Inc., Case No. 3:12-CV-75 (CDL) (M.D. Ga. June 29, 2012).