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Contempt proceedings proper, but filing ANDA not within scope of injunction, so no contempt
October 12, 2007

In a decision yesterday, the Federal Circuit affirmed a district court's decision to hold a contempt proceeding for a defendant's alleged violation of an injunction "barring it from commercially manufacturing, using, selling, offering to sell, or importing into the United States generic divalproex sodium infringing" two patents.

The court also affirmed the district court's decision to enlarge the scope of the injunction to include actions taken by a third party on behalf of the original defendant. However, the court reversed the district court's finding of contempt because the challenged conduct, filing a new ANDA seeking to sell another generic version of divalproex, was not within the literal scope of the original injunction, as it was not one of the enumerated actions.

In 1997, Apotex filed an Abbreviated New Drug Application (ANDA) seeking FDA approval for a generic version of the drug Depakote®. Abbot, owner of two patents directed to the active ingredient of Depakote®, filed suit against Apotex. Abbott was granted summary judgment of both infringement and validity. The Federal Circuit affirmed the finding of validity but remanded the case for a trial on infringement. The district court (Judge Posner, sitting by designation), after a bench trial, concluded that "Apotex's filing of the Apotex ANDA infringed the claims of the Abbott patents because Abbott's claims read on the product that was the subject of the Apotex ANDA." The district court then entered the injunction which Abbott presently alleges Apotex is in contempt of. That injunction was affirmed on appeal.Apotex, attempting to design around Abbott's patent claims, allegedly developed a different form of divalproex sodium. Apotex then entered into an informal agreement with Nu-Pharm, Inc., whereby Nu-Pharm filed a new ANDA. Abbott then filed a motion before Judge Posner seeking to enforce the original injunction order. The district court found Apotex to be in contempt of the injunction, stating that injunction extended to "any 'generic divalproex sodium' manufactured by Apotex that has been 'found to be infringing'" and that there "was no difference between Apotex's old product and its new product" and that "Apotex's 'new' product would infringe the claims of the Apotex patents." Judge Posner also enlarged the scope of the injunction to include ANDAs filed by Nu-Pharm. Apotex appealed. The Federal Circuit initially noted that it has previously held prior to entering a judgment of contempt in a patent infringement context, a district court must first "address whether a contempt hearing is an appropriate forum for adjudging whether an allegedly redesigned product is infringing. . . . In doing so, the district court must compare the accused product with the original infringing product." Secondly, "if contempt proceedings are appropriate, the district court must address whether the accused product infringes the claims of the asserted patent." The Federal Circuit upheld the district court's decision to hold contempt proceedings, noting that clear and convincing evidence existed that there was no more than a colorable difference between the original and redesigned product, and that the redesigned product would infringe the claims of the Abbott patents.With respect to the finding of contempt, however, the Federal Circuit noted that there was no evidence that Apotex actually manufactured generic divalproex sodium in the United States. Instead, it was undisputed that Apotex's attempt to design around the Abbott patents occurred outside the United States. Accordingly, Apotex did not violate the express terms of the injunction. Moreover, while the filing of the ANDA was an act of infringement, it was not an act that "actually violated the original injunction." The Federal Circuit noted that injunctions are construed narrowly "where, as here, they failed to give adequate notice that particular conduct was enjoined" and that "[t]he injunction contains no 'explicit notice' to Apotex that the filing of a new ANDA, by itself or a straw party, was forbidden". Judge Dyk dissented-in-part from the majority's holding. Specifically, Judge Dyk stated that "since there was a 'fair ground of doubt' from the outset as to whether the injunction applied, it necessarily follows that contempt proceedings were inappropriate."

To read the full decision in Abbott Labs. v. Torpharm, Inc., click here.

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