The opinion of the court was delivered by: Hon. William J. Martini
This patent action is brought by Plaintiffs Graceway, LLC ("Graceway") founded in 2006, and Plaintiff 3M Innovative Products Co. ("3M IPC") against Defendant Nycomed U.S. Inc. ("Nycomed") for allegedly infringing Graceway's '672 Patent (Patent No. 7,655,672) which was approved on February 2, 2010. Suit was filed February 23, 2010. Nycomed launched its allegedly infringing product on February 25, 2010, and a temporary restraining order ("TRO") was sought by Plaintiffs on February 28, 2010 based on a limited evidentiary record. On March 8, 2010, this Court denied Plaintiffs' motion for a temporary restraining order.
Plaintiffs have now sought a preliminary injunction after limited discovery. For the reasons elaborated below, the Court will DENY the motion for a preliminary injunction.
II. FACTS AND PROCEDURAL POSTURE
As the facts are well known to the parties, the Court refers the reader to the facts as developed in this Court's March 8, 2010 opinion. See Doc. No. 40. Since that time Defendants Perrigo Company and Perrigo Israel Pharmaceuticals Ltd. have been dismissed from this suit; Nycomed has filed a Motion to Dismiss Pursuant to Rule 11, and Graceway has filed the instant motion for a preliminary injunction. The Court will address Nycomed's Rule 11 motion to dismiss in a separate opinion and order, which will follow in short order. This opinion responds to Graceway's motion for a preliminary injunction.
The legal standard for granting a preliminary injunction is well-settled. See Fed. R. Civ. P. 65(a). "The four factors relevant to the district court's decision to grant or deny a preliminary injunction are (1) the likelihood of the patentee's success on the merits; (2) irreparable harm if the injunction is not granted; (3) the balance of hardships between the parties; and (4) the public interest." Abbott Labs. v. Andrx Pharms., Inc., 473 F.3d 1196, 1200-01 (Fed. Cir. 2007). The adequacy of money damages is a factor to be considered in deciding whether or not harm is irreparable. Furthermore, in reaching a determination under this standard, the Court applies well-established equitable principles and standards. Cf. eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 393 (2006) (precluding, in the permanent injunction context, the use of "expansive principles" to "broad swath[es] of cases" or the use of "general rule[s]... unique to patent disputes," apart from the four-factor test).
This opinion discusses the four factor test for granting a preliminary injunction and certain threshold defenses.
A. Threshold Defense: Dilatory Conduct
A legal right against infringement, even where established, does not, without more, establish a right to injunctive relief. Injunctive relief, particularly where a party seeks preliminary relief, based on a limited record, is, as all authorities acknowledge, not a matter of mere legal right, that is, injunctive relief is not a "standard remedy;" rather it is a form of "extraordinary" relief. Eli Lilly & Co. v. Am. Cyanamid Co., 82 F.3d 1568, 1578 (Fed. Cir. 1996). Such a remedy will not be granted "whenever the plaintiff has shown a likelihood of success on the merits," id., nor will it be granted in the face of a movant's inequitable conduct, including unjustified delay or dilatory conduct. See, e.g., Intirtool, Ltd. v. Texar Corp., 369 F.3d 1289, 1290 (Fed. Cir. 2004). An otherwise valid infringement claim seeking injunctive relief may not succeed in the face of plaintiff's unjustified, unreasonable, or unexplained delay. A.C. Aukerman Co. v. R.L. Chaides Const. Co., 960 F.2d 1020, 1033 (Fed. Cir. 1992) ("Economic prejudice may arise where a defendant and possibly others will suffer the loss of monetary investments or incur damages which likely would have been prevented by earlier suit." (emphasis added)).
In 2007, Defendant Nycomed sent Plaintiff Graceway a notice letter in regard to Nycomed's ANDA application for its product, a proposed bioequivalent to Graceway's Aldara. Graceway received this notice letter after Graceway had applied for the '672 Patent. At that time, Graceway took no concrete action putting Nycomed on notice of litigation risk and, again, took no such action, including filing a complaint, in immediate consequence of actual approval of the '672 Patent on February 2, 2010. Instead, Plaintiff filed its complaint on February 23, 2010, and the TRO was filed on February 28, 2010. Plaintiffs' TRO briefing was void of substantial explanation in regard to Plaintiffs' failure to contact Nycomed and in regard to why Plaintiffs' failed to put Nycomed on express notice of its litigation risk prior to February 23, i.e., that Graceway would sue to enjoin exploitation of the '672 Patent, a patent that Graceway does not practice. Nor did the TRO briefing account for the delay in the period between February 2 and February 23. Given the lack of explanation, and the Court's preliminary determination based, on the limited record at the TRO stage, that damages to Nycomed were likely and could have been minimized by earlier suit (or, even by earlier letter communications from Graceway to Nycomed), A.C. Aukerman Co., 960 F.2d at 1033, the Court found Plaintiffs' conduct dilatory.
On further reflection, in view of a better developed record, it is clear that both parties could have acted more diligently. It is also reasonable to conclude that Nycomed knew of the '672 Patent not only prior to its launch, but also prior to Plaintiffs' filing this suit. Each party knew or had substantial knowledge of what the other party was doing in terms of the ANDA filing and the '672 Patent. And although each party could have exercised more caution, by putting the other party on express notice of the concrete litigation risks involved, the parties here are sophisticated and knew or should have known of those risks. The equities here are close and the Court is now unwilling to conclude that Plaintiffs' conduct was dilatory. Moreover, in order to establish laches, a defendant must make a showing in regard to material prejudice. Intirtool, Ltd. v. Texar Corp., 369 F.3d 1289, 1290 (Fed. Cir. 2004) ("The laches defense has two underlying elements: first, the patentee's delay in bringing suit must be unreasonable and inexcusable, and second, the alleged infringer must have suffered material prejudice attributable to the delay." (quotation marks omitted)). At this preliminary injunction stage, Plaintiff now presses the argument that Defendant Nycomed was not substantially prejudiced by Plaintiffs' delay. Nycomed's opposition filings do not meaningfully respond to this argument with substantial supporting evidence (as opposed to mere attorney argument appearing in its brief). Thus, even if this Court were to conclude that Plaintiffs' conduct had been dilatory, this by itself is insufficient to establish a laches defense. Based on the post-discovery expanded record in these proceedings, the fact that Graceway brought suit (although not its TRO motion) prior to Nycomed's launch, and, most importantly, Nycomed's failure to meaningfully respond to Plaintiffs' argument with evidence, the Court determines that Nycomed's argument for laches (and, likewise, estoppel*fn1 ) fails.
B. Nycomed's License Defense
Nycomed argues that because Plaintiff 3M recently granted (former Defendant) Perrigo a license under the '672 Patent, Graceway no longer holds an exclusive license and therefore lacks standing to sue. Graceway responds that the licensing agreement is between Graceway and Perrigo, with the latter as sublicensee of the former. Graceway therefore holds an exclusive license from 3M and it (Graceway) has sublicensed to Perrigo. This is a factor militating in favor of Graceway as an exclusive licensee, which therefore continues to have standing. See Sicom Sys., Ltd. v. Agilent Techs., Inc., 427 F.3d 971, 977 (Fed. Cir. 2005) ("We are further troubled by the fact that the agreement gives Prima Tek I virtually no control over the ability to sub-license the patents.").
Moreover, the Court notes that neither party has put forward the license agreement at issue. See Sicom Sys., 427 F.3d at 976 ("Each license and assignment is unique, therefore this court must ascertain the intention of the parties and examine the substance of what [the licensing agreement] granted to determine if it conveys all of the substantial rights in the patent and is sufficient to grant standing to the licensee."). Because Nycomed has had access to discovery, and it has, nevertheless, failed to put forward the agreement, it appears that Nycomed's defense fails.
C. Nycomed's Remaining Defenses
Nycomed argues that Graceway has taken inconsistent positions in these proceedings and before the FDA in regard to Nycomed's Product. Nycomed's position -- apparently akin to judicial estoppel -- comes absent any supporting legal authority. Arguments absent substantial development are waived. See Conroy v. Leone, 316 Fed. Appx. 140, 144 n. 5 (3d Cir. Mar. 9, 2009) ("We find this undeveloped argument has been waived."); Clay v. Holy Cross Hosp., 253 F.3d 1000, 1002 n.1 (7th Cir. 2001).
Likewise, Nycomed argues that Graceway refused to provide it with the procedures Graceway followed to duplicate or test its (Nycomed's) product. But what particular information Nycomed lacked is left unexplained. Nycomed has had access to discovery. If it had an entitlement to such information during these proceedings, there was (and yet remains) in place a process by which it could seek this information. If Graceway failed to produce such sought after information, Nycomed could move to compel. No such motion has ...