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Abbott Laboratories v. Sandoz

May 24, 2007

ABBOTT LABORATORIES, PLAINTIFF,
v.
SANDOZ, INC., DEFENDANT.



The opinion of the court was delivered by: Honorable David H. Coar

MEMORANDUM OPINION AND ORDER

Sandoz, Inc. ("Sandoz") brings before this Court a Motion to Stay Preliminary Injunction Pending Appeal pursuant to Federal Rule of Civil Procedure 62(c). Sandoz asks this Court to stay enforcement of a preliminary injunction and vacate the order it issued on April 16, 2007. Abbott Laboratories ("Abbott") sought to enjoin Sandoz from marketing a generic extended release form of the antibiotic drug, clarithromycin, that allegedly infringes Abbott's U.S. Patent Nos. 6,010,718 (the "'718 patent"), 6,551,616 (the "'616 patent") and 6,872,407 (the "'407 patent") relating to its Biaxin (r) XL product. After an evidentiary hearing and reviewing the evidentiary submissions by the parties, this Court concluded that Abbott had clearly demonstrated a likelihood of success on the merits of its infringement and validity claims, that it would suffer irreparable injury if Sandoz's market intrusion were not enjoined, that the balance of the hardships favored Abbott and that the public interest would best be served by issuing the injunction. Therefore, this Court issued a preliminary injunction order. Sandoz now seeks to stay enforcement of the Court's order pending an appeal to the Federal Circuit. For the reasons stated below, Sandoz's motion is DENIED.

I. BACKGROUND

The facts underlying this action have been discussed at length in this Court's previous preliminary injunction opinion and do not need to be repeated here. See Abbott Labs. v. Sandoz, Inc., 2007 WL 1141635 (N.D. Ill. Apr. 16, 2007).

II. STANDARD OF REVIEW

Whether to issue a stay of enforcement of a preliminary injunction pending appeal is within the sound discretion of the Court. Fed. R. Civ. P. 62(c). In determining whether a stay of enforcement is warranted, a district court will examine whether the party seeking a stay has demonstrated (1) a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured should the stay be denied; (3) whether the stay would substantially injure the other parties; and (4) where the public interest lies. Hilton v. Braunskill, 481 U.S. 770, 776 (1987); Hinrichs v. Bosma, 440 F.3d 393, 396 (7th Cir. 2006).

III. ANALYSIS

A. Strong Showing of Success on the Merits of Appeal

A party seeking a stay of enforcement pending appeal must demonstrate a strong showing of success on the merits. Hilton, 481 U.S. at 776. That requires something less than a fifty percent chance of success. Thomas v. City of Evanston, 636 F.Supp. 587, 590 (N.D.Ill. 1986). Also, the strong showing relates to the success of the appeal, not the ultimate outcome of the litigation. See Glick v. Koenig, 766 F.2d 265, 269 (7th Cir. 1985). This distinction is important because this Court will only now consider those matters that properly will be before the Federal Circuit on appeal of the preliminary injunction order in determining whether Sandoz has made a strong showing of success on the merits of an appeal.

1. Whether the Previous Conflicting Federal Circuit Opinions Establish a Substantial Legal Question

Sandoz cites E.I. DuPont de Nemours & Co. v. Phillips Petroleum Co. for the proposition that the very existence of a conflict between the United States Patent and Trademark Office Examiner's rejection of a patentee's claims as invalid in view of prior art and the district court's subsequent ruling of validity supports the alleged infringer's argument that substantial legal questions concerning claim interpretation existed. 835 F.2d 277, 279 (Fed. Cir. 1987). That is an accurate citation, however, the holding is inapposite to the facts presented in this case. Here, the conflicting opinions are between two panels of the Federal Circuit, not the patent examiner and the district court as in DuPont. Id.

The Federal Circuit was presumably aware of its first opinion in 2006 when it drafted the second opinion in 2007. Contrary to Sandoz' contention, the fact that the Federal Circuit rejected this Court's initial claim construction upon a second look is a fact that militates against a showing of success on appeal on this issue. In the 2006 opinion, the Federal Circuit did not hold that this Court erred in relying on Markush language in the '718 patent specification. But in the 2007 opinion, it reached a different conclusion. The only rational assumption is that the Federal Circuit either relied on something different in the record for the 2007 opinion or recognized something that it had previously missed, which would lead one to predict that the Federal Circuit would not retreat from its 2007 holding in favor of its 2006 holding on the instant appeal.

Likewise, Sandoz's assertion that the broadened claim construction makes the claims more susceptible to an invalidity challenge is unavailing. Stating that the broadened claims are more susceptible to challenge in the abstract does not in itself make the claims invalid or establish a substantial question of invalidity. A challenger must still utilize the available evidence to persuade the Court that there was a substantial question of validity. Sandoz did not and has not persuaded this Court that a substantial question of invalidity existed.

This Court found that Sandoz's obviousness argument based on the combination of the WO '422 publication and the '190 patent did not amount to a substantial question because there was no indication that either prior art disclosed the pharmacokinetic ("PK") limitations of claim 1 and 4; and there was no indication that either prior art would motivate a person of ordinary skill in the art to combine their teachings to arrive at the '718 patented invention. So rather than relying on the TSM test, this Court based its analysis on the finding that Sandoz did not ...


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