Federal Circuit Affirms Injunction Against Apotex in Depakote Case, But Finds Apotex Was Not in Contempt

Federal Circuit Affirms Injunction Against Apotex in Depakote Case, But Finds Apotex Was Not in Contempt

Abbott Labs v. Torpharm and Apotex, No. 2007-1019 (Fed. Cir. 2007)

In 1997, Apotex filed an ANDA for generic Depakote (divalproex sodium), Abbott's blockbuster treatment for bipolar disorder, migraine headaches, and epilepsy. Abbott responded by filing suit against Apotex for infringement of U.S. Patent Nos. 4,988,731 and 5,212,326, which claim an oligomer containing about 4 to 6 repeating units of divalproex sodium. In 2001, the district court granted summary judgment of validity and infringement. However, in 2002, the Federal Circuit remanded for a trial on infringement. On remand in 2004, Judge Posner, sitting by designation in the Northern District of Illinois, found that Apotex infringed Abbott's patents and enjoined Apotex from making, using or selling "divalproex sodium which the Court has found to be infringing" until Abbott's patents expire (January 29, 2008).
Not content to sit around and wait four years, Apotex attempted to design around Abbott's patents, and allegedly developed divalproex sodium in the form of a polymer that is composed of much more than about 4 to 6 repeating units of divalproex sodium. Rather than file a new ANDA, however, Apotex struck a deal with Nu-Pharm, Inc. (a former sister company of Apotex) whereby Apotex would pay for the costs of preparing the ANDA and Nu-Pharm would take on the "litigation risks" arising from the filing.
Nu-Pharm filed the ANDA in 2005 and Abbott responded by filing suit against Nu-Pharm. In March 2006, Nu-Pharm filed an amended ANDA, seeking approval for additional dosage strengths of the product, and Apotex filed a second lawsuit--this time naming both Nu-Pharm and Apotex as defendants. The two cases were consolidated before Judge Pallmeyer in the Northern District of Illinois. On August 15, 2006, Abbott filed a "Motion to Enforce Its Injunction Order" before Judge Posner and a motion to stay the proceedings before Judge Pallmeyer.
On October 6, 2006, Judge Posner found Apotex in contempt for violating the injunction he issued two years earlier. He characterized the injunction as extending to "any generic divalproex sodium manufactured by Apotex that has been found to be infringing." He then found that there was no difference between Apotex's old product and its new product, and that, based upon the evidence presented by the parties, Apotex's new product would infringe Abbott's patents. Accordingly, Judge Posner extended the injunction to cover Nu-Pharm's ANDA. Apotex then appealed to the Federal Circuit.
Apotex raised two issues on appeal: (1) whether the contempt proceeding was beyond the district court's statutory authority because the Hatch-Waxman Act does not itself grant a district court subject matter jurisdiction to conduct such contempt proceedings; and (2) whether the contempt proceeding was improper in any event because the infringement inquiry was amenable only to trial under the Federal Rules of Civil Procedure.
In a decision released today, the Federal Circuit upheld the district court's decision to hold a contempt proceeding as well within its discretionary authority, notwithstanding any provisions in (or not in) the Hatch-Waxman Act, and affirmed the revised injunction against Apotex. The Federal Circuit observed that "Apotex has failed to provide any authority, be it statute, case law, or legislative history of the Hatch-Waxman Act, suggesting that suits commenced under the provisions of the Act are to be treated any differently than patent infringement suits under 35 U.S.C. 271(a)." Moreover, the Federal Circuit affirmed Judge Posner's finding that clear and convincing evidence proved that the Nu-Pharm drug would infringe the claims of Abbott's patents. Such evidence was found in documents showing no difference between the new drug and the old, and expert testimony showing the Nu-Pharm drug is in fact an oligomer. Accordingly, the Federal Circuit affirmed that Judge Posner acted entirely within his authority to extend the injunction to prohibit the FDA from approving the Nu-Pharm ANDA, and refused to vacate the revised injunction. Thus, it appears that Apotex will have to wait until 2008, after all, before it can market its generic version of Depakote.
As minor consolation to Apotex, the Federal Circuit also held that the district court erred in finding Apotex in contempt. Here, the Federal Circuit held that the district court made an error of law in interpreting its original injunction to preclude the filing of the Nu-Pharm ANDA. It was undisputed that Apotex's actions in attempting to design around Abbott's patents occurred outside the United States. Thus, since Apotex did not make, use, sell, offer to sell in the U.S. or import into the U.S. generic divalproex sodium, the Federal Circuit found that Apotex did not violate the original injunction.