By Robert B. Barnett Jr., J.D.
Amgen was not likely to succeed on its claim that rival Cipla’s launch of the generic drug breached a settlement agreement in a patent dispute between the parties.
The U.S. Court of Appeals in Philadelphia has affirmed a Delaware district court’s refusal to grant Amgen a preliminary injunction stopping Cipla from launching a generic version of Amgen’s SENSIPAR parathyroid treatment medication because Amgen could not establish that it was likely to prevail on the merits of its claim that Cipla breached the terms of their settlement agreement. Because the settlement agreement permitted Cipla to make an at-risk launch of the generic if a court had found that a third parry’s launch of a similar generic did not infringe Amgen’s patent—and a court had made such a determination—the Third Circuit agreed with the lower court that Amgen was not entitled to a preliminary injunction stopping the at-risk launch in the absence of proof that it was likely to prevail on the merits of its claim (Cipla Ltd. v. Amgen Inc., July 15, 2019, Shwartz, P.).
Amgen owns U.S. Patent No. 9,375,405 for cinacalcet for treatment of hyperparathyroidism, hypercalcemia, and related conditions, which it markets under the brand name SENSIPAR. Amgen sued Cipla, Teva, and other generic manufacturers in Delaware federal court, alleging that their announced plans to release generic cinacalcet products infringed its patent. Amgen and Cipla reached a settlement of all claims, in which Cipla acknowledged the validity of Amgen’s patent and agreed not to launch a generic unless certain conditions existed. With the Cipla claims settled, Amgen proceeded to trial against Teva, where it lost, with the court ruling that Teva did not infringe the patent. While Amgen’s appeal of that decision to the Federal Circuit was pending, Teva received FDA approval of its generic and released it to the market. Within days, Amgen and Teva reached their own agreement, without affecting the appealed case, in which Teva acknowledged an infringement, agreed to stop selling the generic, and paid Amgen $40 million.
Cipla then sued Amgen, also in Delaware federal court, seeking a declaratory judgment that it had the right to launch its generic version because Teva had launched a generic version. Amgen counterclaimed for breach of the settlement agreement and moved for a preliminary injunction stopping Cipla’s generic launch. The Delaware trial court denied the motion for the injunction, even though it agreed that Amgen might suffer irreparable harm and that the balance of equities slightly favored Amgen, because Amgen could not establish a likelihood of success on the merits of its breach of contract counterclaim. Amgen appealed that decision to the Third Circuit.
Preliminary injunctions. Amgen contended that the launch breached the settlement agreement, while Cipla argued that the settlement agreement barred Amgen from obtaining relief, if conditions were met, because those conditions had occurred. The court agreed with the general principle that the settlement agreement barred Amgen from seeking relief, if certain conditions were met, because the provisions outlining those conditions began with the word "Notwithstanding," which implied that these provisions overrode any other provisions limiting Cipla’s right to launch.
But were those conditions met? The agreement created two situations in which Cipla could launch its product: (1) a third party has been found not to infringe the patent or (2) a third party has not agreed to stop selling a generic version. Amgen argued that the settlement agreement should be interpreted to say "and" rather than "or," thus requiring that both conditions be met before Amgen would be barred from relief. The Third Circuit, however, rejected that argument, noting that the agreement intentionally used the word "or" rather than the word "and." Agreements must be interpreted as they are, not as one party wishes they were, the court said. As a result, the Third Circuit agreed with Cipla’s interpretation of the agreement and ruled that Amgen was not authorized to seek relief against Cipla for its launch because one of the alternative conditions was met. In the absence of a demonstration that Amgen was likely to prevail on its breach of the settlement agreement claim, the Third Circuit concluded that the lower court was correct to deny Amgen’s request for a preliminary injunction.
This case is No. 19-2017.
Attorneys: Deanne Cevasco, (Hughes Hubbard & Reed) for Cipla Ltd. and Cipla USA Inc. Jack B. Blumenfeld (Morris Nichols Arsht & Tunnell) for Amgen Inc. David M. Fry (Shaw Keller LLP) for Teva Pharmaceuticals USA Inc.
Companies: Cipla Ltd.; Cipla USA Inc.; Amgen Inc.; Teva Pharmaceuticals USA Inc.
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