AstraZeneca AB et al v. Camber Pharmaceuticals, Inc.

Filing 38

MEMORANDUM. Signed by Judge Sue L. Robinson on 11/19/2015. (nmfn)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

ASTRAZENECA AB, ASTRAZENECA LP,
and ASTRAZENECA PHARMACEUTICALS
LP,
Plaintiffs,

v.

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CAMBER PHARMACEUTICALS, INC.,
Defendant.

Civ. No. 15-927-SLR

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MEMORANDUM
At Wilmington this 19th day of November, 2015, having reviewed the papers filed
in connection with plaintiffs' motion for a preliminary injunction, and having heard oral
argument on same, the court issues its decision to grant the motion, for the reasons
that follow:
1. Background. 1 Since 1989, the AstraZeneca plaintiffs ("AZ") have used the
color purple to brand their gastrointestinal ("GI") products2 for treating severe heartburn
and acid reflux. The U.S. Patent and Trademark Office has confirmed the brand status
of AZ's purple color by awarding AZ three federal trademark registrations covering the
color purple for GI pharmaceuticals and one covering the phrase "THE PURPLE
PILL®" for the same goods ("the Purple Marks"). (D.I. 4 at 10) None of AZ's

1

The facts related to AZ are taken from the verified complaint filed in this
litigation, and/or have not been disputed by defendant Camber Pharmaceuticals, Inc.
("Camber'').
2

Prilosec® and Nexium®.

competitors have challenged those registrations.
2. AZ has sold more than 7.1 billion purple Prilosec® capsules in the U.S. from
1989-2014, and more than 15.5 billion purple Nexium® capsules in the U.S. from 20012014, for a total of more than 22.6 billion purple capsules. On an average annual basis
since 2001, AZ has sold over $3 billion of Prilosec® and Nexium® in purple capsules in
the U.S. AZ has also provided hundreds of millions of purple Nexium® capsules as free
samples over the years to doctors who, in turn, provide them to their patients at no cost.
3. The color purple has been used prominently by AZ in all of its efforts to
promote Prilosec® and Nexium®, from the AZ website ("PURPLEPILL.COM") to
advertising in many consumer publications that are widely distributed to the general
U.S. public, to advertising on network and cable television, radio, and popular and
highly trafficked websites. 3 According to AZ, such promotional materials have reached
tens of millions of people each year. Between 1995 and 2014, AZ spent an average of
over $250 million per year to build its purple brand as described above.
4. As a result of such promotional efforts, there is undisputed evidence that the
media and the public associate the color purple with AZ and its Prilosec® and Nexium®
products. (D.I. 4 at 8-9) Indeed, the FDA recognized the trademark significance of
AZ's purple color as early as 2001 as part of an advertising review, finding that a
television advertisement for Prilosec® (that did not mention Prilosec® by name) was
nevertheless a "product-specific advertisement" because it discussed acid-reflux
disease in conjunction with "the purple pill," and AZ's Prilosec® "[was] the only purple

3

Many examples of such are provided in D.I. 4 at 4-7.

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pill that treats heartburn due to acid-reflux disease." (Id. at 7)
5. Nexium® is sold only in prescription form. In May 2014, Pfizer, under license
from AZ, began selling an over-the-counter ("OTC") non-prescription 20 mg version of
Nexium® called "Nexium24HR." Pfizer promotes the product on a predominantly
purple website that prominently displays purple Nexium® capsules and AZ's trademark
'The Purple Pill®." According to AZ, Pfizer paid an up-front fee of $250 million to gain
access to exclusive global rights to sell OTC Nexium® and a license to use some of
AZ's Purple Marks. Pfizer also agreed to pay AZ milestone and royalty payments
based on product launches and sales. (D.I. 4 at 3)
6. Several companies have recently entered the market with generic versions of
AZ's Nexium® esomeprazole magnesium compound. The first two companies
permitted by the FDA to do so - Teva and Mylan - have used blue or white capsules.
The second wave of generic companies entering the market have been more
aggressive, choosing purple capsules for their generic Nexium®. More specifically,
defendant Camber, a maker of generic drugs, launched its generic GI pharmaceutical
(esomeprazole) in October 2015. All of the different iterations of the products at issue
are shown below, in order to better illustrate the dispute at bar.

Prilosec® capsules

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7. AZ filed its verified complaint and motion for a temporary restraining order on
October 13, 2015. (D.I. 1 and 3) The court granted the requested relief, and issued an
order to that effect on October 20, 2015. (D.I. 20) The parties thereafter briefed the
issues and the court conducted oral argument on November 6, 2015. Jurisdiction is
proper pursuant to 28 U.S.C. § 1331. Venue is proper pursuant to 28 U.S.C. § 1391.

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8. Standard of review. As explained by the United States Court of Appeals for
the Third Circuit,
[p]reliminary injunctive relief is an "extraordinary remedy, which should be
granted only in limited circumstances." ... "A plaintiff seeking a
preliminary injunction must establish that he is likely to succeed on the
merits, that he is likely to suffer irreparable harm in the absence of
preliminary relief, that the balance of equities tips in his favor, and that an
injunction is in the public interest." ... The "failure to establish any
element ... renders a preliminary injunction inappropriate." ... The movant
bears the burden of showing that these four factors weigh in favor of
granting the injunction.
Ferring Pharms., Inc. v. Watson Pharmaceuticals, Inc., 765 F.3d 205, 210 (3d Cir.

2014) (citations omitted). "'[O]ne of the goals of the preliminary injunction analysis is to
maintain the status quo, defined as the last, peaceable, noncontested status of the
parties."' Kos Pharms., Inc. v. Andrx Corp, 369 F.3d 700, 708 (3d Cir. 2004) (citation
omitted). In a trademark case, for example, "[it] is the situation prior to the time the
junior user began use of its contested mark." Id. (citation omitted). "[T]he decision
whether to grant or deny injunctive relief rests within the equitable discretion of the
district courts, and ... such discretion must be exercised consistent with traditional
principles of equity." eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 394 (2006).
9. Likelihood of success on the merits - trademark infringement. The
Lanham Act defines trademark infringement as use of a mark so similar to that of a
prior user as to be "likely to cause confusion, or to cause mistake, or to deceive." 15
U.S.C. § 1114(1 ). "Likelihood of confusion under the Lanham Act is not limited to
confusion of products[; c]onfusion as to source is also actionable." Kos Pharms., 369
F.3d at 711. The Third Circuit has identified a number of factors to aid in determining

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likelihood of confusion. Those factors include:
(1) the degree of similarity between the owner's mark and the alleged
infringing mark; (2) the strength of the owner's mark; (3) the price of the
goods and other factors indicative of the care and attention expected of
consumers when making a purchase; (4) the length of time the defendant
has used the mark without evidence of actual confusion arising; (5) the
intent of the defendant in adopting the mark; (6) the evidence of actual
confusion; (7) whether the goods, [even if] not competing, are marketed
through the same channels of trade and advertised through the same
media; (8) the extent to which the targets of the parties' sales efforts are
the same; (9) the relationship of the goods in the minds of consumers
because of the similarity of function; (10) other facts suggesting that the
consuming public might expect the prior owner to manufacture a product
in the defendant's market, or that he is unlikely to expand into that market.
Interpace Corp. v. Lapp, Inc., 721 F.2d 460, 463 (3d Cir. 1983) ("the Lapp factors").
"'None of these factors is determinative in the likelihood of confusion analysis and each
factor must be weighed and balanced one against the other.' . .. '[T]he different factors
may properly be accorded different weights depending on the particular factual setting.
A district court should utilize the factors that seem appropriate to a given situation.' ... "
Kos Pharms., 369 F.3d at 709 (citations omitted). Where the marks are identical and/or
used for competing goods, "the court need rarely look beyond the mark itself."
Opticians Ass'n of Am. v. lndep. Opticians of Am., 920 F.2d 187, 195 (3d Cir. 1990).
"The Lapp factors are best understood as 'tools to guide a qualitative decision."' Kos
Pharms., 369 F .3d at 709 (citation omitted).
10. Degree of similarity (Lapp #1). There can be no dispute that the
appearance of Camber's generic capsule is nearly identical to that of AZ's branded
capsule, as can be instantly discerned from the photo below, which shows both AZ's

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and Camber’s products.4 Clearly, Camber’s generic product satisfies the description of

the mark, "purple." It has been recognized that a registration for a color covers all
shades of that color. See, e.g., Wolf Appliances, Inc. v. Viking Range Corp., 686 F.
Supp. 2d 878 (W.D. Wis. 2010). It should be noted as well that the presence or
absence of markings on DRL's capsules do not avoid a likelihood of confusion. As
explained by the court in Ciba-Geigy Corp. v. Bolar Pharm. Co., 54 7 F. Supp. 1095
(D.N.J. 1982), aff'd, 719 F.2d 56 (3d Cir. 1983), "[r]ealistically, the likelihood of
confusion cannot be assessed by a side-by-side comparison of the plaintiff's and
defendant's products. It is the overall physical appearance of defendant's trade dress
which is critical. The vast majority of patients who take this type of medication do not or
cannot identify their medication, or its source, by reference to the matter imprinted on

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Camber makes much of the fact that AZ’s trade dress also includes gold bands,
characterized as “prominant,” which encircle the branded product. (D.I. 23 at 2) W hen
viewing the image of the products, it is a stretch to call out the gold bands as
distinguishing AZ’s branded products from Camber’s generic products.
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the drug capsule of tablet." Id. at 1103. 5 See also Fisons Horticulture, Inc. v. Vigoro
Indus., Inc., 30 F.3d 466, 477 (3d Cir. 1994) (the test for likelihood of confusion is
whether the marks create the same overall impression when viewed separately). This
factor weighs strongly in favor of AZ.
11 . Strength of AZ mark (Lapp #2). AZ has presented credible evidence that
its Purple Marks branding is of long duration, of value, and strong. 6 This factor weighs
strongly in favor of AZ.
12. Consumer care in purchase (Lapp #3). Given that the products in dispute
are prescription (not OTC) drugs, the consumers are not necessarily involved in the
decision to purchase one drug over another. Therefore, this factor weighs in favor of
Camber.
13. Defendant's use of mark (Lapp #4). Camber introduced its generic
product in October 2015. There has been no evidence presented of actual confusion.
The court would not necessarily expect such, however, given the mere weeks that

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The court recognizes that the Supreme Court, in the early 1980's when the
generic market was in its infancy, characterized the similar shape and color of the
generic drugs as "functional." See Inwood Laboratories, Inc. v. Ives Laboratories, Inc.,
456 U.S. 844, 853 (1982). Given the ubiquitous nature of generics generally and in this
market particularly, the reasoning of the Court is not helpful to the analysis at bar.
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ln this regard, the court notes the following discussion in Kos Pharmaceuticals
relating to the admissibility of a declaration (called a "certification") that contained
hearsay: "It is well established that 'a preliminary injunction is customarily granted on
the basis of procedures that are less formal and evidence that is less complete than in
a trial on the merits.' ... District courts must exercise their discretion in 'weighing all the
attendant factors, including the need for expedition,' to assess whether, and to what
extent, affidavits or other hearsay materials are 'appropriate given the character and
objectives of the injunctive proceeding."' 369 F.3d at 718-19.

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Camber's generic has been on the market; i.e., there has not been a meaningful
opportunity for confusion. This factor is neutral.
14. Defendant's intent (Lapp #5). Given the totality of the circumstances,
especially the appearance of its generic capsule and the fact that Camber is a second
wave generic in this market (and perhaps has to be more aggressive to get market
share), the court concludes that Camber intended to test AZ's trademark, rather than
honor it. This factor weighs strongly in favor of AZ.
15. Evidence of actual confusion (Lapp #6). There is no evidence of record
of actual confusion. Consistent with the discussion of Lapp factor #4, however, this
factor is neutral.
16. Competition and overlap (Lapp# 7-10). Despite the fact that Nexium® is
a branded product and Camber's generic is not, the court finds that AZ and Camber are
still competing in the same market for the same consumers in the first instance, even if
Camber is ultimately competing against other generics once the decision to buy a
generic has been made. These factors weigh in favor of AZ.
17. The above analysis of the Lapp factors directs the conclusion that AZ has
carried its burden to prove likelihood of success on the merits of its trademark
infringement claim. For completeness, however, the court will address the remaining
issues raised by the parties.
18. Likelihood of success on the merits - dilution. Liability for dilution occurs
if, "at any time after the owner's mark has become famous, [defendant] commences
use of a mark or trade name in commerce that is likely to cause dilution by blurring [ ... ]

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regardless of the presence or absence of actual or likely confusion, of competition, or of
actual economic injury." 15 U.S. C. § 1125(c )( 1). Blurring "is association arising from
the similarity [ ... ] that impairs the distinctiveness of the famous mark." Id. §
1125(c)(2)(8). The statute characterizes a "famous" mark as one that is "widely
recognized by the general consuming public of the United States as a designation of
source." Id.§ 1125(c)(2)(A). The Supreme Court has held that single-color marks are
entitled to trademark protection, see Qualitex Co. v. Jacobson Prods. Co., 514 U.S.
159, 163-64, 174 (1995), and also have been recognized as "famous" marks, see, e.g.,
Binney & Smith v. Rose Art Indus., 2001 WL 910943 (E.D. Pa. Aug. 9, 2001) (finding

Crayola's yellow and green color scheme famous).
19. AZ has provided sufficient evidence to demonstrate that its trademarks are
"famous." And, indeed, it is not unreasonable to infer that Camber choose to market its
generic capsule with identical coloring to AZ's branded product because AZ's
trademarks are famous. Such use is likely to dilute AZ's Purple Marks.
20. Camber's contract defense. In its response to AZ's motion for injunctive
relief, Camber raises several defenses, including a contract defense based on a
settlement agreement ("the Agreement") entered into by, among others, Camber's
parent corporation (Hetero USA, Inc.) and AZ in April 2012. (D.I. 25, ex. F) The
Agreement explains that AZ and Hetero "are involved in litigation ... concerning, inter
alia, the validity of the [AZ Patents], as well as the alleged infringement by Hetero of the
[AZ Patents] resulting from Hetero's requesting approval from the [FDA] for the
distribution and sale of the Hetero Product (as defined ... ) prior to expiry of the [AZ

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Patents]." (Id., ex. Fat 2) The "Hetero Product" was defined as "a Generic
Esomeprazole product sold, offered for sale or distributed pursuant to ANDA No. 202784, including any supplements or amendments to ANDA No. 202-784 after the Signing
Date, except for any supplements or amendments that change the mode of
administration or active ingredient(s)." (Id., ex. Fat 4) Among the "Mutual Releases"
included in the Agreement was the following: "In settlement of the disputed claims in
the Actions," AZ released Hetero "from any and all claims, demands, damages,
liabilities, obligations, and causes of action known or unknown, suspected or
unsuspected, in law or equity, .. that were asserted, or that could have been asserted,
by" AZ "in connection with the Hetero Product ... arising before the Effective Date of this
Settlement Agreement." (Id., ex. Fat 7) In ANDA litigation, of course, the only claims
that are allowed to be presented before market entry of the generic in the artificial
environment created by Congress under the Hatch-Waxman Act are those relating to
patent infringement and validity. 7 The only context in which AZ's trademark rights are
mentioned in the Agreement is in § 9.12, in which Hetero agrees that it "shall have no
right, title or interest in or to (a) any trademark, trade dress, brand mark, service mark,
trade name, brand name, logo or other similar business symbol of [AZ] ... , including the

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Camber argues in this regard that the Agreement covered its right to use a
purple capsule because its generic product was described as "purple" in its ANDA
submission. (D.I. 23 at 7; D.I. 25, ex. C) From the court's extensive ANDA litigation
experience, however, the court takes judicial notice of the fact that such submissions
are voluminous by nature, and that the focus of ANDA litigation is on the formulation of
the generic product for infringement purposes (not on the color of the proposed
commercial product, which generally has not been approved by the FDA, let alone
launched).

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trademark Nexium® or any trade dress of any Nexium® product .... " (Id., ex. Fat 22)
21. In Delaware, the interpretation of contracts is a matter of law for the court to
determine. See Rhone-Poulenc Basic Chems. Co. v. Am. Motorists, Ins. Co., 616 A.2d
1192, 1195 (Del. 1992). A court's interpretation of a contract "will give priority to the
parties' intentions as reflected in the four corners of the agreement." GMG Capial lnvs.,
LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776, 779 (Del. 2012) (citing Paul v.
Deloitte & Touche, LLP, 97 4 A.2d 140, 145 (Del. 2009)). "In upholding the intentions of
the parties, a court must construe the agreement as a whole, giving effect to all
provisions therein." E.I. du Pont de Nemours and Co. v. Shell Oil Co., 498 A.2d 1108,
1113 (Del. 1985) (citations omitted). "[T]he meaning which arises from a particular
portion of an agreement cannot control the meaning of the entire agreement where
such inference runs counter to the agreement's overall scheme or plan." Id.

22. The court concludes that the plain meaning of the Agreement, especially
when viewed in the context of the ANDA litigation resolved by the Agreement, did not
release Hetero or Camber from any liability for selling its purple-colored generic
product. If anything, the language of the Agreement specifically preserved AZ's
trademark rights against the very conduct in which DRL has engaged. 8
23. Irreparable harm. "Grounds for irreparable injury include loss of control of
reputation, loss of trade, and loss of good will," intangible harms for which "it is virtually

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For Camber to assert that§ 6.2(c) of the Agreement protects it against AZ's
claims of trademark infringement is nonsensical in the context of the entire Agreement
read against the background of the ANDA litigation with a reasonable eye. In essence,
Camber is reading this provision as a free-pass to conduct itself as it will. The court
declines to interpret the language so broadly. (See D.I. 25, ex. Fat 14)
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impossible to ascertain the precise economic consequences." Kos Pharms., 369 F.3d
at 726 (citation omitted); Ferring Pharms., 765 F.3d at 211 (citation omitted). By using
AZ's Purple Marks, it is likely that Camber will create (and intended to create) the false
impression that its generic esomeprazole magnesium capsules are identical to
Nexium®, not merely bioequivalent, and may be an "authorized generic," that is, a
generic drug made or authorized by the brand name company, i.e., by AZ. Such
identity of source, sponsorship or affiliation with AZ not only dilutes AZ's Purple Marks,
but puts at risk AZ's reputation in the event of quality or safety issues with Camber's
generic. The court concludes that AZ has demonstrated a likelihood of irreparable
harm.
24. Balance of harms. The question to be addressed is whether, and to what
extent, Camber will suffer irreparable harm if injunctive relief is granted. Such
irreparable harm "must be of a peculiar nature, so that compensation in money alone
cannot atone for it." Kos Pharms., 369 F.3d at 727. As noted by the Third Circuit in this
regard, "[i]njury to goodwill does constitute irreparable harm .... But, when the potential
harm to each party is weighed, a party 'can hardly claim to be harmed [where] it brought
any and all difficulties occasioned by the issuance of an injunction upon itself."' Id. at
728 (citation omitted). The court recognizes that imposing injunctive relief on Camber
(i.e., forcing Camber to take its generic off the market) will be costly, both monetarily
(see D. I. 24) and in terms of such intangibles as market share and loss of good will.
The court nevertheless concludes that Camber engaged in the conduct at issue fully
aware of such consequences and, therefore, cannot be heard to complain that the risks

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it took did not pay off.
25. Public interest. "The most basic public interest at stake in all Lanham Act
cases [is] the interest in prevention of confusion, particularly as it affects the public
interest in truth and accuracy." Kos Pharms., 369 F.3d at 730. Although the public
certainly has an interest in having access to less expensive drugs, there are other
generics on the market that did not test AZ's trademarks, a risk that Camber took and
lost (at least momentarily).
26. Conclusion. Weighing all of the factors discussed above in the "totality of
the circumstances," Kos Pharms., 369 F.3d at 711, the court concludes that AZ has
carried its burden to prove that it is likely to succeed on the merits of its case, that it is
likely to suffer irreparable harm if the requested relief is not granted, and that the
balance of hardships and the public interest weigh in its favor. If Camber's arguments
were carried to their logical end, the loss of a branded company's patent monopoly
would inevitably result in a loss of its trademark rights, a result not consistent with the
law or the market place. Moreover, so long as injunctive relief is available to prevent
harm, the court declines to force plaintiffs such as AZ to actually incur harm that is
likely, but not provable, at the outset. Therefore, AZ's motion for injunctive relief will be
granted. An order shall issue.

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