Cipla Ltd. v. Amgen Inc.

Case Name: Cipla Ltd. v. Amgen Inc., No. 19-44-LPS, 2019 U.S. Dist. LEXIS 74970 (D. Del. May 2, 2019) (Stark, J.) 

Drug Product and Patent(s)-in-Suit: Sensipar® (cinacalcet HCl); U.S. Patent No. 9,375,405 (“the ’405 patent”)

Nature of the Case and Issue(s) Presented: In an earlier patent litigation, Amgen sued Cipla, among other defendants, for infringement of the ’405 patent after each filed ANDAs to market generic cinacalcet products before the expiration of the ’405 patent. Amgen and Cipla settled before trial. That agreement stated, among other things, that the Cipla product infringed the ’405 patent, the ’405 patent was valid and enforceable, and that Cipla would not (except under limited circumstances) market the Cipla product until 97 days before the expiration of the ’405 patent. Four defendants proceeded to trial and the court found that three of them, Watson (Teva), Amneal, and Piramal, did not infringe the ’405 patent, and that the fourth defendant, Zydus, did infringe. After the trial, Teva launched at risk and then immediately settled with Amgen, withdrawing its generic product from the market. In the Amgen-Teva Agreement, Teva stipulated that its generic did infringe the ’405 patent, the ’405 patent was valid and enforceable, and that Teva would pay Amgen up to $40 million dollars, depending on how long the cinacalcet market remained free of non-Amgen and non-Teva generic products. Amgen and Teva then jointly moved to vacate the judgment of non-infringement and to enter a judgment of infringement by the Teva product. The court denied this motion for lack of a necessary basis to vacate the judgment.

Cipla, believing that Teva’s launch satisfied the acceleration terms of its agreement with Amgen, launched its product. Cipla also sued Amgen seeking a declaratory judgment that, among other things, Cipla was entitled to launch under the terms of the agreement. Cipla also asserted antitrust claims against Amgen and Teva. Amgen moved for a preliminary injunction to stop the sale of the Cipla product, contending that: (i) the launch of the Cipla Product breached the Amgen-Cipla agreement; and (ii) that Amgen was irreparably harmed by the sale of the Cipla product. The court denied Amgen’s motion.

Why Cipla Prevailed: Cipla prevailed because Amgen did not meet its burden of showing a likelihood of success on the merits of its breach of contract claim, even though Amgen met its burden of showing irreparable harm. In Delaware, the elements of a breach of contract claim are: (i) the existence of a contract; (ii) the breach of an obligation imposed by the contract; and (iii) resulting damage to the plaintiff. For the court to grant Amgen’s motion for a preliminary injunction, Amgen needed to show a likelihood of success on the merits of its breach of contract claim and that it would suffer irreparable harm without the preliminary injunction. The court also found that public interest and the balance of the harms somewhat favored Amgen, despite Cipla’s equitable defense of Amgen’s patent misuse.

Amgen did not meet its burden of showing a likelihood of success on the merits that Cipla’s sale of the Cipla product breached the Amgen-Cipla agreement. Because Section 5.6 of the Amgen-Cipla agreement was controlling and the conditions of sentence [2] were satisfied, Amgen was precluded from relief.

Section 5.6 provides that:

[1] nothing in Section 5.5 or in the Agreement prevents Amgen from seeking relief, including injunctive, if the defendants launch their product at risk and are found to infringe the ’405 patent.

[2] Notwithstanding anything to the contrary in this Settlement Agreement, if [i] any Third Party that has made an At Risk Launch of a Generic Cinacalcet Product (where such At Risk Launch is before or after an at risk launch by Defendants [Cipla]) is not found to have infringed … the ’405 patent or [ii] has ceased or agreed to cease selling such Generic Cinacalcet Product following an At Risk Launch, then Amgen is not entitled to relief.

Amgen argued that because of Section 5.6[1], nothing in the Amgen-Cipla agreement prevented Amgen from seeking relief against Cipla. Amgen could seek relief against Cipla if a third party (here, Teva) launched its own product and was later found to infringe the ’405 patent and required to pay damages. This was operative to Amgen because Teva had admitted infringing the ’405 patent and agreed to pay damages. The court held that Section 5.6[2] was controlling, if satisfied. The court disagreed with Amgen’s interpretation that sentence [1] should be read separately from sentence [2]. Although sentence [1] provided a route for Amgen to seek relief, if [2] was satisfied, then Amgen was precluded from relief.

Amgen also argued that Cipla’s reading of the second sentence as dispositive rendered the rest of the Agreement, including Section 5.5 (conditions for Amgen to prevail on a preliminary injunction), superfluous. The court held that Section 5.5 was another condition that was necessary but not sufficient for Amgen to get relief. 

The court held that only one of the two conditions in Section 5.6[2] needed to be satisfied to preclude Amgen from seeking relief. Condition [i] would be satisfied if a third party made an at risk launch and was found not to infringe the ’405 patent. Condition [i] was satisfied because Teva had been found to not infringe the ’405 patent. Section 5.6 did not require a “Final Court Decision.” The court rejected Amgen’s argument that condition [i] was not satisfied because the finding of non-infringement predated both Teva and Cipla’s at-risk launches. Rather, the court held that Section 5.6 did not dictate the timing of a finding of non-infringement. The court also rejected Amgen’s argument that the conditions of Section 5.6 were not satisfied if a third party did not infringe the ’405 patent or had not ceased or agreed to cease selling its product following an at risk launch. The court held that “following an At Risk Launch” modified only the phrase “to cease selling” the product. The court also rejected Amgen’s argument that sentence [2] of Section 5.6 only restricted Amgen from permanent injunctive relief. The court held that the sentence precluded Amgen from seeking “any relief.” Because condition [i] of Section 5.6[2] was satisfied, the restriction on Amgen’s ability to seek relief was triggered and the court held that it must deny Amgen’s preliminary injunction. Thus, because Section 5.6 precluded Amgen from relief, Amgen could not show a likelihood of success on its breach of contract claim, and the preliminary injunction was denied.

The court, nonetheless, addressed the other prerequisites to granting injunctive relief. The court found that Amgen demonstrated that it would suffer irreparable harm without a preliminary injunction. Between the filing of the preliminary injunction motion and trial, Amgen would suffer steep irreversible price erosion and loss of market share, harm to goodwill, and potential layoffs of experienced staff. Not all of Amgen’s harms could be remedied by monetary damages, and the harms could be traced to Cipla. These harms included the quantities of the generic product that Cipla sold and the length of time before a judgment on the merits. The court balanced the harms to Cipla against the harms to Amgen and found that the balance favored Amgen, albeit not by much. Cipla argued that it had a unique opportunity as the sole major generic on the cinacalcet market, where prices were relatively high. The court held that it was unclear whether or not Cipla actually has a unique opportunity or whether, instead, other generics will follow into the market shortly. The court noted that Cipla voluntarily agreed to forego being the first generic in the cinacalcet marketplace in the Amgen-Cipla agreement. The court also noted that Cipla could not show that Amgen engaged in patent misuse. To demonstrate patent misuse, Cipla needed to show that the Amgen-Teva agreement “impose[d] an unreasonable restraint on competition, taking into account a variety of factors, including specific information about the relevant business, its condition before and after the restraint was imposed, and the restraint’s history, nature, and effect.” Finally, the court held that public interest slightly favored granting the preliminary injunction. The interest in protecting valid patent rights slightly outweighed the public interest in enforcing contractual rights and encouraging widespread distribution of pharmaceuticals. The court also considered the public interest in promoting settlement, and did not believe that its denial of the preliminary injunction would make settlement more difficult.