Last Friday, the Federal Circuit filed opinions in two related cases that attracted amicus briefs, Takeda Pharmaceuticals U.S.A. v. Mylan Pharmaceuticals Inc. and Takeda Pharmaceuticals U.S.A. v. Alkem Laboratories Limited. In both cases, Judges Prost and Hughes affirmed the district court’s decision denying Takeda’s request for a preliminary injunction. Judge Newman dissented in both cases. Here is a summary of the opinions.
As explained in our argument preview and argument recap, in these cases, the court confronted breach of contract and patent infringement claims against two different alleged infringers, Mylan and Alkem. Takeda argues in both cases that Section 1.2(d) of license agreements with the accused infringers does not allow for the production of generic versions of Takeda’s patented product at this time. These cases came to the Federal Circuit after the district court denied Takeda’s requests for preliminary injunctions against Mylan and Alkem. In both cases, the parties make almost identical arguments, and the Federal Circuit consolidated the cases for argument purposes.
In 2-1 split decisions, the Federal Circuit affirmed the district court’s denials of the motions for preliminary injunctions. Chief Judge Prost wrote the opinions in both cases. In the introduction of the opinion for Takeda Pharmaceuticals U.S.A. v. Mylan Pharmaceuticals Inc., she summarized the relevant facts as follows:
The License Agreement allows Mylan to sell a generic colchicine product on a specified date, or in the event of certain circumstances defined in Section 1.2, on an earlier date. Relevant to this appeal, Section 1.2(d) of the License Agreement defines one such circumstance, providing that Mylan is entitled to launch a generic product . . . “after the date of a Final Court Decision (as defined in Exhibit A) holding that all unexpired claims of the Licensed Patents that were asserted and adjudicated against a Third Party are either (i) not infringed, or (ii) any combination of not infringed and invalid or unenforceable[.]“
. . . .
In October 2019, Mylan notified Takeda that it planned to “immediately start selling” a generic colchicine product pursuant to Section 1.2(d) of the License Agreement. Mylan asserted that the provision had been triggered by a “judgment of noninfringement in favor of West-Ward Pharmaceutical Corp. et al.,” which “Takeda did not appeal.” . . . Takeda responded with a letter, which declined to indicate whether Takeda would pursue legal action. . . . Shortly after Mylan launched its product, on December 2, 2019, Takeda filed a complaint in the United States District Court for the District of Delaware. . . . After full briefing and oral argument, the district court issued an order denying Takeda’s motion for preliminary injunction. . . . The district court held that Takeda “failed to show it is likely to succeed on the merits or that it will suffer irreparable harm.”
The primary issue on appeal was whether the district court abused its discretion in denying Takeda’s motion for a preliminary injunction and in its finding that there was no irreparable harm caused to Takeda.
The Federal Circuit ultimately affirmed the district court’s decision denying injunctive relief.
The court set forth the relevant test as follows: “A plaintiff seeking a preliminary injunction must establish [1] that he is likely to succeed on the merits, [2] that he is likely to suffer irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in his favor, and [4] that injunction is in the public interest.”
First, the court considered whether the district court correctly determined that Takeda was unlikely to succeed on the merits. Takeda argued that the district court erred in determining its likelihood to succeed because it misinterpreted Section 1.2(d) of the License Agreement. Specifically, Takeda argued that the West-Ward Litigation did not trigger Section 1.2(d) because “not all the claims that were asserted in that case were held to be not infringed.”
The court rejected Takeda’s argument that Section 1.2(d) required “a Final Court Decision for all claims that have merely been asserted during the course of the litigation.” According to the court, Takeda’s interpretation renders the “adjudication” requirement meaningless, and could lead to “the absurd result that Takeda could prevent Mylan from ever relying on the clause by simply asserting and then withdrawing a claim from a proceeding.” Instead, the court found the plain language of Section 1.2(d) to require that “‘all’ claims relevant to the clause meet two conditions: namely ‘all claims must be ‘asserted and adjudicated.’” In other words, “[a] claim that was asserted but not adjudicated, or adjudicated but not asserted, is not relevant to Section 1.2(d).”
Second, the court addressed whether the district court correctly determined that Takeda failed to show that it would be irreparably harmed without a preliminary injunction. Takeda in its argument relied on Section 1.10 of the License Agreement, which stipulates that Takeda would be irreparably harmed in the event that Mylan breached Section 1.2. Because the court concluded that it is unlikely that Takeda can show that Mylan breached the Licensing Agreement, it found no credible assertion that Takeda could not be compensated by monetary damages.
Because the court agreed with the district court on the relevant issues, it concluded that the district court did not abuse its discretion in denying Takeda’s request for a preliminary injunction. Thus, the court affirmed the lower court’s judgment.
In Takeda Pharmaceuticals U.S.A. v. Alkem Laboratories Limited, the court filed a short nonprecedential opinion referring to the reasoning set forth in the other case. In short, the court also affirmed the district court’s denial of Takeda’s request for a preliminary injunction.
Judge Newman dissented in both cases. She argued that “judicial refusal to enforce settlement terms violates fundamental principles of contract law and commerce, and negates the strong public policy favoring settlement of litigation on agreed terms.” In her dissent, Judge Newman first pointed to the fact that the Licensing Agreement in question was a result of a litigation settlement between the parties. Further, she noted that “Mylan had conceded infringement and validity, and as a condition of the settlement and the license-assured generic entry, Mylan had agreed that irreparable harm would result from breach of specified agreement provisions, and that specific enforcement is appropriate, as set forth in [Section] 1.10.”
Additionally, Judge Newman criticized the court’s interpretation of Section 1.2 of the agreement. She argued that “[i}t is not reasonable to hold that Takeda would have agreed to the spin that [her] colleagues place on [Section] 1.2(d).” And she argued that the role of the court in contract interpretation is to effectuate the parties’ intent.