By Kevin E. Noonan —

Obtaining an injunction against an adjudged infringer has become much more difficult for patentees since the Supreme Court’s decision in eBay Inc. v. MercExchange, L.L.C.  This was to be expected, of course, since the Supreme Court mandated that district courts take into account the same factors (adequacy of money damages as a remedy, whether the patentee would suffer irreparable harm without the injunction, the balance of the hardships between the parties, and the public interest) applied in other civil actions, which was in sharp contrast to the routine nature of granting permanent injunctions to prevailing plaintiffs under the Federal Circuit’s jurisprudence (see, e.g., Smith Int’l Inc. v. Hughes Tool Co., 718 F.2d 1573 (Fed. Cir. 1983)).

Nowhere, perhaps, is this difficulty illustrated more starkly than in the U.S. District Court for the District of Massachusetts (Judge William G. Young, presiding) concerning Amgen’s motion for permanent injunction to prevent Roche from launching its Mircera® drug product.  Amgen procured a jury judgment on October 23, 2007 that Mircera® infringed several Amgen patents.  That verdict found Roche’s Mircera® infringed claims 3, 7, and 8 of Amgen’s U.S. Patent No. 5,547,933 (claim 12 was found not to be literally infringed but infringed under the Doctrine of Equivalents); claims 1 and 2 of U.S. Patent No. 5,441,868; and claims 6 through 9 of U.S. Patent No. 5,618,698.  Amgen’s infringed claims were directed to recombinant methods and recombinant EPO protein, and Roche’s Mircera® drug product is a form of recombinant EPO that has been covalently linked to polyethylene glycol.  In addition, the jury found that Roche had not sustained its burden of establishing that any of Amgen’s asserted claims were invalid (see "Amgen Survives Another EPO Challenge").

The District Court entered a preliminary injunction on February 28, 2008 foreclosing Roche from launching Mircera®; Roche had been granted approval by the U.S. Food and Drug Administration to market Mircera® last November (it has already been approved in Europe and is sold in Austria, Sweden, Germany, the United Kingdom, and Norway).  However, Judge Williams left open the possibility that he would modify his order under certain circumstances.  He assessed whether Amgen was entitled to an injunction using the four-factor test set forth by the Supreme Court in eBay, expressly finding that Amgen satisfied three of the four requirements (Amgen’s asserted claims were infringed and not invalid; Amgen’s injury would not be adequately compensated merely with money damages; and the balance of the hardships weighed in favor of granting the injunction).  However, the District Court did not decide in Amgen’s favor as to the fourth prong, the public interest, particularly in view of Roche’s representations of the advantages of its Mircera® product over Amgen’s version of EPO (including inter alia less frequent dosing; see "Long-Acting Drug for Dialysis Anemia Equivalent to Weekly Agent").

Indeed, the District Court did not decide at all, rather putting the parties on notice that, in the absence of appellate jurisdiction by the Federal Circuit, it was inclined to at least consider modifying the injunction within 30 days (i.e., by March 30th), provided that Roche was willing to agree to the following conditions.  First, Roche would pay Amgen a royalty of 22.5% (Amgen having already rejected an offer for a 20% royalty from Roche (see "Amgen Rejects Roche’s Micera [sic] License Payment Offer").  Second, Roche could be introduced to the Medicare patient population at a cost no more than the average sales price of Amgen’s EPO products (sold under the names Epogen® and Aranesp®) — a requirement that would prevent Roche from passing its royalty obligations onto patients, but would not prevent Roche from selling Mircera® at a bargain price relative to Epogen®.  Third, Roche would have to provide clinical evidence to permit the District Court to determine a "dosage conversion factor" between Mircera® and Epogen®.  Fourth, Roche would pay for an independent agency to monitor sales and determine royalty payments owed to Amgen.  Finally, Roche would agree to supply Mircera® to any patient needing it, at or below the authorized price (presumably, this is a provision that would prevent Roche from abandoning the Medicare market once it has entered it).

Roche agreed to these conditions in its court filing last week (see "Roche Agrees to Court’s Conditions for Modifying Preliminary Injunction"), arguing that first, Mircera® was not simply a generic version of Epogen® but rather was an independently developed (and patented) "new molecule" having significant advantages over Amgen’s products.  Second, Roche argued that Mircera® had dosing and cost advantages that should be considered to be in the public interest, including a better dosing schedule (according to Roche, the difference between 12 (for Mircera®) and 156 (for Epogen®) injunctions per year for dialysis patients), concomitant reduced Medicare and Medicaid costs, and fewer adverse effects as well as satisfying unmet medical needs (relating to Amgen’s failure to secure FDA approval for monthly dosing for certain indications).  Third, Roche argued that Amgen had enjoyed an effective patent life of 28 years from its earliest filing date, and that this term was contrary to current public policy that limited patent term to 20 years from the earliest filing date.  Roche also took the occasion to argue that Amgen had "unclean hands" and thus was not entitled to the equitable remedy of an injunction, based on commercial activities in promoting its erythropoiesis-stimulating agents (ESAs).

For its part, Amgen countered by casting the proposed modification as a compulsory license in favor of Roche.  Amgen argued that it would be inequitable to "reward" Roche, an adjudged infringer, with such a license.  Moreover, Amgen argued that compulsory licensing was not within the province or the power of the District Court to impose, but that it could either grant or deny the injunction and nothing more.  Congress, Amgen argued, had several times considered introducing compulsory licensing provisions into the patent statute but had not, and Amgen argued that the District Court did not have the power to impose such a license in the face of Congressional disapproval, citing in support of this argument the Federal Circuit’s decision in Biotechnology Indus. Org. v. District of Columbia, which struck down restrictions on drug pricing as being contrary to the balancing of consumer costs and patent incentives that were Congress’s prerogative to make.  Amgen argued that the District Court must also consider as part of the public harm the harm to innovation that would be caused by the precedent of having an infringer rewarded with a compulsory license, and contrasted this harm with what it termed the speculative medical and financial benefits (which it proffered evidence from the trial record to refute) that Roche used in support of its public interest argument.  Amgen countered these claims with argument citing harm to the American economy, jobs, and tax base that would be occasioned by permitting Roche to produce Mircera® overseas and import it into the U.S. for sale in competition with Amgen’s ESA products.  (In a related action, the Federal Circuit held last week that the International Trade Commission should consider the extent to which Roche’s importation of Mircera® was not within the scope of the "safe harbor" provisions of 35 U.S.C. § 271(e)(1); see Patent Docs report.)  Amgen supported its argument with evidence from "secondary sources," including economic analyses, academic studies, Congressional Budget Office data, and policy papers, all to the effect that innovator drug companies rely on market exclusivity provided by patenting to support research and development of blockbuster drugs, and that the compulsory license occasioned by the District Court’s proposed modification of its injunction would endanger Amgen’s ability to obtain the financing required for new drug discovery.

It seems that these arguments did nothing to help the District Court come to a decision on whether it should modify its preliminary injunction.  Instead, in an order entered today, the Court decided it needed to appoint a special master to consider the question of how dosing and pricing of Amgen’s and Roche’s products should be compared.  This question is not related to the public interest directly, but should further inform the Court of whether it will be practicable for the Court to conform its injunction (or compulsory license) to the economic realities of the marketplace for ESAs.  The Court gave the parties fifteen days to submit a list of "agreed" candidates to be appointed special master, and then the Court intends to give that candidate another sixty days to make the inquiries necessary to provide his or her findings to the Court.  Presumably, the Court will then make its ruling.

By again delaying the Court’s ultimate decision, today’s order keeps Mircera® off the market for at least another 75 days.  Moreover, Amgen has informed the Court that it intended to pursue its right to a jury determination of the money damages it is entitled to should Roche launch under a modified injunction, stating that the Court did not have the power to deny Amgen its statutorily-defined profits (which were 2-4 fold higher than the Court’s proposed 22.5% royalty), and that Amgen would also seek treble damages for any Roche sales made pursuant to the Court’s order as constituting willful infringement.  Amgen also stated it intends to ask the Court to stay any modification of the injunction to permit it time to appeal the injunction to the Federal Circuit.

It is difficult to understand the Supreme Court’s eBay decision as intending (or anticipating) that a District Court would undertake setting out the type of modified "injunction" that Judge Williams is contemplating here, as being in the nature of a compulsory license.  Importantly, of course, all the District Court’s ruling will do is to refuse to prohibit Roche from marketing Mircera® provided that it complies with the pricing and other affirmative provisions of the Court’s order.  This is not a license, however, but simply the limits to which the Court is willing to enjoin Roche (i.e., it will not enjoin Roche under the terms of the injunction).  But whatever Judge Williams does, Amgen’s intention to press its damages and willful infringement claims are certain to place before the Federal Circuit (and perhaps ultimately the Supreme Court) the issue of how far a District Court may go in fashioning a remedy having the properties of a compulsory license.  There is some poetic justice in the possibility that the Supreme Court may have to address, and right soon, the consequences of eBay and its philosophical inclination to be parsimonious with regard to patent rights.  In view of the Supreme Court’s recent track record, however, any such thirst for justice should be strongly tempered with trepidation about how much further the Supreme Court may be willing to restrict a patentee’s right to exclude.

For additional information regarding this topic, please see:

• "Amgen Inc. v. International Trade Commission (Fed. Cir. 2008)," March 20, 2008
• "Roche Agrees to Court’s Conditions for Modifying Preliminary Injunction," March 20, 2008
• "Roche’s Mircera® Remains Off the Market (For Now)," March 2, 2008
• "Amgen Survives Another EPO Challenge," October 28, 2007