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Federal Circuit Vacates Preliminary Injunction Again in Shionogi v. Lupin


On July 2, 2012, the US Court of Appeals for the Federal Circuit issued a decision in the case Sciele Pharma Inc. et al. (now “Shionogi”) v. Lupin Ltd. et al. (“Lupin).  In the decision, the Federal Circuit, for a second time, vacated a preliminary injunction issued by the District Court for the District of Delaware, which blocked Lupin’s sale of a generic form of the drug Fortamet, an extended-release tablet of metaformin hydrochloride.

This case involved U.S. patent No. 6,866,866 (“Patent ‘866”), owned by Sciele Pharma.  Patent ‘866 has a unique prosecution history in that several of Sciele’s claims issued despite Shionogi’s attempt to cancel them after the USPTO examiner concluded that they were obvious in light of WO99/47125 (Cheng) in view of U.S. Patent No. 3,845,770 (Theeuwes).

Shionogi requested a preliminary injunction after Lupin sent a request to the US FDA seeking approval to market a generic version of the tablet.  The district court granted Shionogi’s request, concluding that the claims of Patent ‘866 were not improperly issued and that Shionagi was likely to prevail on its infringement claim.

Lupin appealed the Federal Circuit, who vacated the district court’s findings because the “district court’s order imposing preliminary injunction failed to even address Lupin’s obviousness arguments.”

On remand, the district court considered Lupin’s obviousness argument, concluding: (1) that it was required to defer to the USPTO, notwithstanding the odd sequence of events that gave rise to Patent ‘866; (2) that KSR was not directly applicable because the prior art cited by Lupin was already considered by the USPTO when it approved Patent ‘866; and (3) that Lupin could not rely on statements from the prosecution of Patent ‘866 as proof of obviousness.  The district court then reinstated the preliminary injunction.

Lupin, once again, appealed the preliminary injunction to the Federal Circuit.  In the appeal, Lupin argued that the presumption of the validity of Patent ‘866 should not attach because of the erroneous issuance of the cancelled claims.  Shionagi argued that there should be a higher presumption of validity because the prior art references relied upon by Lupin were considered by the USPTO during prosecution.

The Federal Circuit determined that the arguments of both parties were wrong, concluding that the “presumption of validity attaches to all issued patents and the clear and convincing evidence burden applies to all issued patents.”   Citing the Supreme Court case Microsoft Corp. v. i4i Ltd. P’ship, the Federal circuit reiterated that the USPTO’s consideration of a prior reference does not alter the burden of proof for obviousness.  New evidence not considered by the USPTO, however, may carry more weight and “go further toward sustaining the attacker’s unchanging burden.”  Also, while the Federal Circuit refused to reject the issued claims of Patent ‘866, the court indicated that it should consider the entire prosecution history of Patent ‘866, including the bizarre history under which the claims were issued.

The Federal Circuit then considered whether Shionagi’s request for a preliminary injunction should have been granted.  The Federal Circuit concluded that Lupin’s obviousness argument raises a substantial question of invalidity and, therefore, the district court’s granting the preliminary injunction was improper.  Accordingly, the Federal Circuit vacated the preliminary injunction and remanded the case to the district court.

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