Court Grants Preliminary Injunction Against Willful Infringer but Tailors Injunction to Protect Public's Interest in Having Access to Effective Medical Treatment

Authored by D. Brian Kacedon, John C. Paul, and Daniel F. Roland

Abstract

A Delaware court recently enjoined a willful infringer from freely selling its medical devices, finding that the infringer was the patent owner's only competitor and that further sales of infringing medical devices created a likelihood the plaintiffs would not only lose market share and sales to the infringer, but also suffer erosion of the price of its medical devices. Although the court acknowledged the need to enforce the patent owner's rights against its competitor, it also recognized that a category of high-risk patients could not be served by patent owner's medical devices; they could only be helped by the infringer's devices. Thus, to protect both the patent owner's rights and the public interest, the court tailored the injunction to allow the infringer to continue to sell its devices to patients who could not be helped by the patent owner's products.

Granting a preliminary injunction is considered an extraordinary remedy, over which courts have full discretion. A recent case from the United States District Court for the District of Delaware illustrates how courts can tailor preliminary injunctions to balance harm to the patent holder with the public's interest. In Edwards Lifesciences AG v. CoreValve, Inc.,¹ the court granted a preliminary injunction against a medical-device company, which had already been found to infringe the plaintiff's patent. The court balanced the need to enforce the plaintiff's patent rights and the irreparable harm that the plaintiff would likely suffer because of the infringer's actions against the public's interest in providing medical treatment to all patients in need. Because the plaintiff's device could not serve the entire market, the court tailored the injunction to allow the infringer to continue to sell its medical devices to patients who could not be helped by the plaintiff's products.

Background

Edwards and Medtronic both make and sell transcatheter heart valves ("THVs"). Although each sells a different THV system—Edwards the SAPIEN and Medtronic the CoreValve—Medtronic is Edwards's only competitor in the United States. Edwards is the assignee of U.S. Patent No. 5,411,552, which covers technology for implanting prosthetic valves into patients' aortic annuluses by a catheter to avoid traditional open-heart surgery. Edwards previously sued Medtronic for infringement of the '552 patent, which resulted in a jury verdict that Medtronic's CoreValve THV system (the "Gen 3") infringed the patent and that Medtronic's infringement was willful.

Following the jury's verdict in 2010, Medtronic continued to make the Gen 3. Because Medtronic did not have FDA approval to sell the Gen 3 on the market, it was able to provide the Gen 3 only to high-risk patients through an FDA-sanctioned clinical trial. In anticipation of the FDA's approval of the Gen 3, Edwards moved to enjoin Medtronic from being able to begin selling the Gen 3 when it obtained full FDA approval. In January 2014, a few months after Edwards filed its motion, the FDA approved the Gen 3 for commercial sale in the U.S., but it no longer allowed Medtronic to provide the Gen 3 to high-risk patients through clinical trials. At the same time, Edwards was on the verge of gaining FDA approval to replace the SAPIEN with a next-generation product—the SAPIEN XT. As a result the Gen 3 and the SAPIEN XT could foreseeably enter the commercial market at the same time.

The Edwards Decision

In assessing Edwards's motion for a preliminary injunction, the court considered the following four factors: (1) the likelihood of success on the merits of the underlying litigation; (2) the balance of hardships between the parties; (3) whether irreparable harm is likely if the injunction was not granted; and (4) the public's interest.

Regarding the first factor, because Edwards already prevailed in the earlier litigation on the '552 patent and the appeals ended, the court concluded that Edwards had more than established a likelihood of success on the merits.

The second factor—balance of hardships—also favored Edwards, because Edwards's right to exclude would be effectively meaningless without a preliminary injunction and because any harm to Medtronic would result from its willful infringement in the face of the jury verdict against it.

Evaluating the third factor, the irreparable harm inquiry, the court analyzed Edwards's potential loss of sales, market share, and revenue. In doing so, it was particularly persuaded by three arguments. First, because Medtronic would be Edwards's sole competitor if it entered the market with the Gen 3, the court deemed it likely that any sales for Medtronic would be lost sales for Edwards. Second, in competing against Edwards in Europe, Medtronic had already proven its ability to quickly enter and capture a significant portion of the market. Third, Medtronic's Vice President, in her own declaration, wrote that Medtronic would try to sell its product to Edwards's customers who are already qualified to use THVs. This evidence alone, the court reasoned, demonstrated that Edwards would suffer irreparable harm.

Additionally, the court found, the likelihood of price erosion also indicated Edwards would suffer irreparable harm. Pointing to Medtronic's history of undercutting Edwards's prices in Europe, Edwards argued that similar erosion would occur in the United States. This erosion could not be ameliorated by a later injunction, Edwards argued, because its customers would be disgruntled if Edwards tried to restore the original price. Recognizing Medtronic's efforts in Europe and the fact that undercutting one's competitor makes good business sense, the court agreed with Edwards.

On the final factor, the public's interest, while the parties agreed that there is a strong policy in favor of enforcing patent rights, they disagreed about whether patients would receive inferior care or no care should Medtronic not be allowed to sell the Gen 3. Much of the dispute centered on the effectiveness of treating high-risk patients with two specific conditions. Regarding one of the conditions, even though Edwards's SAPIEN could not be used to treat these patients by the safest means possible, the SAPIEN XT could. Thus, according to the court, high-risk patients would be well served without the Gen 3 because the SAPIEN XT would be available soon. Regarding the second condition, however, as acknowledged by both parties, neither the SAPIEN nor the SAPIEN XT could be used for effective treatment; only the Gen 3 would work for these patients. Other evidence also suggested that the Gen 3 may be the safer, better option for most patients.

Even though three factors favored an injunction, the court concluded that the public interest required permitting some Gen 3 devices to remain available in the market for high-risk patients. Although Edwards proposed a carve-out to allow Medtronic to sell a certain number of units per month solely to help the high-risk patients, the court believed it would be premature to adopt Edwards's proposed cap. The court did, however, find enforcing patent rights particularly important here reasoning that it would reward Medtronic and motivate others to act similarly if it permitted Medtronic to freely sell the Gen 3. Thus, the court found that the public interest weighed in favor of granting an injunction, albeit with an accommodation for Medtronic to sell its devices to patients who could not be served by Edwards's devices.

Accordingly, having concluded that the factors weighed in Edwards's favor for a tailored injunction, the court granted in part and denied in part Edwards's motion.

Strategy and Conclusion

This case illustrates the factors courts consider in determining whether to grant a preliminary injunction, the important role the public's interest can play, and the consequences of continuing to infringe after an unfavorable verdict.

Endnotes

¹ The Edwards Lifesciences AG v. CoreValve, Inc. decision can be found at http://www.finnegan.com/files/Publication/8a444d06-5c85-4281-b5f2-389d312b7b59/Presentation/PublicationAttachment/50c89df2-ea49-4b72-b88a-3b91d89351fe/11-1215%2011-13-12.pdf.

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