Abbott Labs won a ruling preventing Andrx Pharmaceuticals from selling generic versions of the antibiotic Biaxin XL until a patent suit is resolved. Abbott Laboratories v. Andrx Pharmaceuticals et al. (06-1101)

The suit involves three cases related to Abbott’s patents related to its extended release clarithromycin product, Biaxin XL® — against Teva, Ranbaxy, and Andrx – each of which sought approval to manufacture and market a generic version of Biaxin XL® and accordingly filed abbreviated new drug applications (“ANDAs”) with the Food and Drug Administration.

Biaxin generated $580 million in global sales in the first nine months of this year, including $95 million in the U.S.

After Abbott sued Andrx for infringement of its patents relating to extended release formulations of clarithromycin, Abbott moved for a preliminary injunction based on U.S. Pat. Nos. 6,010,718, 6,551,616, and 6,872,407.

The district court granted the injunction deciding that Abbott had shown a likelihood of proving infringement under the doctrine of equivalents as well as literal infringement, and that Andrx had not shown a likelihood of proving that any of the patents are invalid.

Andrx appealed arguing (1) that Abbott is collaterally estopped from asserting certain claims in the three patents because of findings of invalidity and unenforceability of the patents in proceedings against other defendants; and (2) that the district court erred in finding that Abbott is likely to succeed in proving infringement with respect to any of the asserted claims of the three patents.

The Federal Circuit disagreed and shot down the appeal stating that collateral estoppel does not apply and the district court did not abuse its discretion in finding Abbott is likely to succeed on the merits.

The ’718 patent describes and claims extended release formulations comprising erythromycin derivatives combined with a pharmaceutically acceptable polymer. The extended release formulations enable patients to take one pill per day rather than twice, as had been required with the immediate release formulation. The ’616 is a continuation-in-part of the ’718 patent and claims a method of reducing adverse gastrointestinal side effects, relative to immediate release formulations of erythromycin-derived drug formulations, by using extended release formulations. The ’407 patent is a continuation patent of the ’616 patent and claims erythromycin derivative formulations with certain specified pharmacokinetic properties.

Earlier, in the district court’s order resolving Abbott’s motion for a preliminary injunction against Ranbaxy, the court held that Ranbaxy had shown that it was likely to succeed in proving that the ’616 and ’407 patents are unenforceable due to inequitable conduct. Also, the district court held, in an order resolving Abbott’s preliminary injunction motion against Teva, that Teva had raised a substantial question that claim 2 of the ’616 patent was obvious under 35 U.S.C. § 103, and therefore Teva was likely to succeed in proving invalidity of that claim.

After Abbott moved to block Andrx from marketing its generic version of extended release clarithromycin, Andrx argued that it does not infringe any of the asserted patents, either literally or under the doctrine of equivalents and appealed.

Andrx asserted that Abbott should be collaterally estopped from seeking a preliminary injunction based on holdings in the preliminary injunction proceedings against Teva and Ranbaxy that all of the asserted claims are invalid or unenforceable.

Andrx’s contentions regarding collateral estoppel involve the district court decisions in preliminary injunction proceedings regarding defendants Ranbaxy and Teva and this court’s decision in Teva’s appeal from those proceedings.

Andrx argued that the Supreme Court’s decision in Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313 (1971), requires that Abbott cannot assert patents against one party which have been found to be invalid or unenforceable against another party.

In Blonder-Tongue, the Supreme Court permitted accused infringers to plead collateral estoppel, also known as issue preclusion, when facing an infringement claim on a patent already declared invalid in a proceeding against another defendant, i.e., after decisions in Ranbaxy-Andrx, Teva I, and Teva II finding that those defendants had shown a likelihood of proving invalidity or unenforceability of Abbott’s patents, Abbott should not have been permitted to continue to assert the patents in preliminary injunction proceedings against Andrx.

In Blonder-Tongue, the Supreme Court discussed the importance of a final determination on the merits to application of collateral estoppel. Blonder-Tongue permitted the use of defensive collateral estoppel when the accused infringer shows 1) that a patent was found invalid in a prior case that had proceeded through final judgment and in which all procedural opportunities were available to the patentee; 2) that the issues litigated were identical; and 3) that the party against whom estoppel is applied had a full and fair opportunity to litigate.

Abbott argued that the earlier decisions were not final judgments for purposes of estoppel because they resulted from preliminary injunction proceedings in which either the district court or this court found only that the defendants had shown a likelihood of proving invalidity or unenforceability.

The Federal Circuit held:

On the question of whether the prior preliminary invalidity finding constituted a final judgment, the court expressly held that a judgment need not be final in the sense of 28 U.S.C. § 1291. Id. at 996. Rather, “‘[f]inality’ in the context here relevant may mean little more than that the litigation of a particular issue has reached such a stage that a court sees no really good reason for permitting it to be litigated again.” Id. The decision should be “sufficiently firm to be accorded conclusive effect.” Factors to consider in determining whether a decision was adequately deliberated and firm include whether the parties were fully heard, the court supported its decision with a reasoned opinion, and the decision was subject to appeal. Id. But preclusion should be refused, the court held, if the decision was “avowedly tentative.” Id. In Miller, the court held that the generic status of the “Lite” mark had been so thoroughly litigated in the first preliminary injunction proceeding that, as to that issue, there was a sufficient final judgment. Id.
Applying the principles of Canfield and Miller to the instant appeal, we conclude that the determinations made in proceedings against defendants Teva and Ranbaxy were not “full litigation and decision on the merits for purposes of issue preclusion.” Andrx argues that there has been a final resolution of the limited issue of whether there is a substantial question of invalidity of Abbott’s patents, but Seventh Circuit law does not support this view. A determination that there is merely a likelihood of proving invalidity is a determination made solely in terms of “probabilities, not certainties” and is therefore not “full litigation and decision on the merits for purposes of issue preclusion.” Id.
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