BASF AGRO B.V. et al v. CIPLA Limited et al

Filing 235

ORDER terminating 209 Motion; finding as moot 213 Motion for Leave to File; finding as moot 214 Motion in Limine; denying 176 Motion; denying 177 Motion for Order to Show Cause. Ordered by Judge Clay D. Land on 06/05/2012 (ajp)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
ATHENS DIVISION
BASF AGRO B.V.,
MERIAL LIMITED, and
MERIAL SAS,

*
*

Plaintiffs,

*

vs.

*

CIPLA LIMITED, et al.,

*

Defendants,

*

VELCERA, INC. and
FIDOPHARM, INC.,

CASE NO. 3:07-CV-125 (CDL)

*
*

Intervenors.
*
O R D E R
Plaintiffs Merial Limited and Merial SAS (“Merial”) contend
that Velcera, Inc. and FidoPharm, Inc.’s (“Velcera”) intended
launch of a new product violates this Court’s June 21, 2011
Injunction.

Merial seeks to have the Court hold Velcera in

contempt and enjoin the sale of the new product.

Based on the

evidence presented at the hearing on May 21-23, 2012, the Court
finds that Merial has not carried its burden of proving by clear
and

convincing

evidence

that

the

sale

of

the

new

product

violates the Court’s June 21, 2011 Injunction, and therefore,

Merial’s motions for contempt and injunctive relief (ECF Nos.
176 & 177) are denied.1
FINDINGS OF FACT AND CONCLUSIONS OF LAW
I.

Standard for Contempt
Merial has the substantial burden of showing by clear and

convincing evidence that Velcera has violated the Court’s June
21, 2011 Injunction.

See TiVo Inc. v. EchoStar Corp., 646 F.3d

869, 883 (Fed. Cir. 2011); Riccard v. Prudential Ins. Co., 307
F.3d 1277, 1296 (11th Cir. 2002).

To carry that burden, Merial

must

to

“that

present
the

probable.’”

sufficient

truth

of

evidence

[the]

factual

persuade

the

contentions

factfinder

are

‘highly

Colorado v. New Mexico, 467 U.S. 310, 316 (1984)

(quoting C. McCormick, Law of Evidence § 320, p. 679 (1954)).
The Court, as the factfinder, must determine whether Merial has
established that it is highly probable that Velcera’s sale of
its new product will violate the Court’s injunction.

1

Merial’s motion for injunctive relief (ECF No. 176) seeks a temporary
restraining order.
Prior to the hearing on the motion, the Court
notified the parties that it was contemplating treating the hearing on
the contempt issues as a hearing on the merits for any type of
injunctive relief, whether it be preliminary or permanent in nature.
Now that the hearing has been completed, the Court finds that the
record has been sufficiently developed, and therefore, it treats the
hearing held on May 21-23, 2012 as a trial on the merits for any
injunctive relief regarding Merial’s current contempt allegations. As
explained in the remainder of this Order, that relief is denied.

2

II.

The June 21, 2011 Injunction
The June 21, 2011 Injunction, which Merial claims Velcera

intends to violate with the imminent launch of a veterinary
product, enjoined Velcera from:
selling, causing to be sold, offering for sale, and
causing to be offered for sale in the United States
veterinary products for which Cipla participated in
the development, manufacture, and/or packaging, which
products contain fipronil and methoprene, regardless
of brand name, including but not limited to the
veterinary products Protektor Plus, PetArmor Plus,
TrustGard Plus, and Velcera Fipronil Plus.
Merial

Ltd.

v.

Cipla

Ltd.,

No.

3:07-CV-125

(CDL),

2011

WL

2489753, at *17 (M.D. Ga. June 21, 2011).2
The

parties

have

spent

Court’s June 21, 2011 Order.
clear.

It

prevents

substantial

effort

parsing

the

The Court finds its meaning to be

Velcera

from

selling

(1)

a

veterinary

product in the United States that (2) contains fipronil and
methoprene

if

(3)

Cipla

participated

in

manufacture and/or packaging of the product.

the

development,

It is undisputed

that Velcera’s new product will be sold in the United States and

2

This injunction arose from the Court’s finding that Velcera had acted
in concert with Cipla Limited (“Cipla”) to violate a previous
injunction of the Court, which prohibited Cipla and anyone acting in
concert with it from infringing Merial’s patent for veterinary flea
and tick treatment products containing the active ingredients fipronil
and methoprene (“the ‘329 Patent”). Although the mandate has not yet
been returned from the Federal Circuit Court of Appeals, the Court is
aware that the Federal Circuit has recently affirmed the Court’s
previous finding of contempt against Velcera. See generally Merial
Ltd. v. Cipla Ltd., Nos. 2011-1471, 2011-1472, 2012 WL 1948879 (Fed.
Cir. May 31, 2012).

3

that it contains the active ingredients fipronil and methoprene.
The

disputed

issue

is

whether

Cipla

participated

in

the

development, manufacture or packaging of the product.
III. Cipla’s Participation
Velcera intends to sell two new veterinary products in the
United States which have been approved by the U.S. Environmental
Protection Agency (“EPA”) and have product registration names
LC-2010-3

Fipronil

Fipronil

&

&

S-Methoprene

S-Methoprene

for

for

Cats

For

purposes

Dogs.

and

LC-2010-4
of

today’s

Order, these products will be referred to collectively as the
“New PetArmor Plus.”

No evidence was presented that Cipla has

been, or will be, involved in the manufacture, packaging or sale
of

the

New

PetArmor

Plus.

Instead,

Merial

contends

that

Velcera’s sale of the New PetArmor Plus will violate the June
21,

2011

Injunction

because

Cipla

development” of the new product.

“participated

in

the

To prevail, Merial must prove

this contention by clear and convincing evidence.
“Participated in the development,” as that phrase is used
in the Court’s June 21, 2011 Injunction, is not a phrase of art.
Its plain meaning is easily discernible.
development

of

the

product

means

that

To participate in the
Cipla

must

have

been

involved in a material way in the creation of the product that
Velcera now intends to sell.
involvement

must

have

been

“Material” means that
significant,

4

substantial,

Cipla’s
and/or

essential.

Merriam-Webster’s

Online

webster.com/dictionary/material
(defining

material

as

Dictionary,

(last

“having

visited

real

www.merriam-

June

2012)

or

importance

4,

great

consequences”).
Merial

produced

no

persuasive

evidence

(and

does

not

seriously contend) that Velcera colluded with Cipla to develop
the New PetArmor Plus.

The evidence presented at the hearing

demonstrated that the New PetArmor Plus was developed after the
Court enjoined the sale of the old product in its June 21, 2011
Order,

and

no

evidence

was

presented

that

Velcera

had

any

involvement with Cipla in developing any products after that
date.

The evidence does establish (and is largely undisputed)

that Cipla was actively involved in developing the “Old PetArmor
Plus” that the Court enjoined in its June 21, 2011 Order, and
that the Old PetArmor Plus is similar to the New PetArmor Plus.
Based on this development activity and the close similarities in
the two products, Merial argues that the Court should find that
Cipla participated in the development of the New PetArmor Plus.
Merial asserts two theories in support of this argument.
it

suggests

product,

that

provided

Cipla,
the

through

“building

its

development

blocks”

upon

First,

of

the

old

which

the

new

product was developed, and thus, it should be deemed to have
participated in the development of the new product.

Second,

Merial maintains that Velcera merely “tweaked” the old Cipla-

5

developed product, which Merial argues is essentially the same
as

the

New

PetArmor

Plus;

and

therefore,

the

Court

should

conclude that Cipla participated in the development of the New
PetArmor Plus.
A.

The Court addresses each theory in turn.

The “Building Blocks” Theory

Velcera clearly used some of what it learned during its
relationship with Cipla prior to the issuance of the June 21,
2011

Injunction

to

develop

the

issuance of the injunction.

New

PetArmor

Plus

after

the

While the previous relationship

with Cipla certainly established a foundation on which the new
product

was

injunction
Drawing

created,

to

reach

arbitrary

the
only

lines

as

Court

must

conduct
to

narrowly

construe

its

clearly

violates

it.

that

how

many

building

blocks

are

sufficient to constitute “development” of the new product runs
afoul of the fundamental principle that before a person can be
held in contempt, the line that the person cannot cross must be
clear and the person must have clearly crossed the line.

The

Court does not find that Velcera should be held in contempt
because the old Cipla-developed product provided part of the
foundation

for

the

New

PetArmor

Plus.

However,

if

the

two

products are essentially the same products, such circumstantial
evidence would be a persuasive indicator that Cipla participated
in the development of the new product.

6

B.

The “Tweak” Theory

Merial argues that Velcera merely “tweaked” the old Cipladeveloped product in its development of the New PetArmor Plus,
and

that

the

Court

should

find

that

the

two

products

are

essentially the same.

The New PetArmor Plus is not identical to

the Old PetArmor Plus.

Although they have the same exact active

ingredient

formulations,

different.

The

old

the

inert

product

ingredient

consists

of

the

formulation

is

following:

(1)

Fipronil (9.8%), (2) S-Methoprene (11.8%), (3) Ethanol (5%), (4)
Butylhydroxyanisole

(0.02%),

(5)

Butylhydroxytoluene

(0.01%),

(6) NIKKOL HCO-60 (5%), (7) PEG 1000 (5%), and (8) Transcutol P
(62.56%).

See

e.g.,

Confidential

Statement

Pl.’s
of

Tr.

Ex.

Formula

302

at

(submitting

VEL009372,
Confidential

Statement of Formula for Old PetArmor Plus product for cats in
support of EPA Minor Formulation Amendment application).3
New

PetArmor

Plus

eliminated

two

of

the

inert

The

ingredients,

NIKKOL HCO-60 and PEG 1000, and replaced the volume from these
two ingredients with a corresponding increase in Transcutol P,

3

The Court notes that the Confidential Statement of Formula lists
alternative names for several ingredients in the formulation, but the
Court will refer to the names of the ingredients as they are
referenced above. Further, it is undisputed that the correct name for
the ingredient denominated PEG 100 in the Confidential Statement of
Formula is actually PEG 1000. The Court compares the changes made in
the PetArmor Plus product for cats, but notes that its analysis
similarly applies to the changes made to PetArmor Plus for dogs.

7

which was included in a lesser concentration in the old product.
The

new

(9.8%),

product
(2)

has

the

following

S-Methoprene

Butyhydroxyanisole

composition:

(11.8%),

(0.02%),

(5)

(3)

(1)

Ethanol

Butylated

Fipronil

(5%),

(4)

hydroxyltoluene

(0.01%), and (6) Transcutol P (72.56%).

See e.g., Pl.’s Tr. Ex.

302

Statement

at

VEL009373-74,

Confidential

of

Formula

(submitting Confidential Statement of Formula for New PetArmor
Plus

product

for

cats

in

support

of

EPA

Minor

Formulation

Amendment application).
Merial
ingredients

argues

that

and

corresponding

a

the

elimination
increase

of
in

the

two

inert

another

inert

ingredient was an insignificant change that did not make the new
product materially different from the old product.
of

this

argument,

Merial

points

to

evidence

In support
that

the

manufacturer for the new product was well aware of the old Cipla
formula and used it as a standard or control in developing the
new

formula.

Merial

also

points

to

Velcera’s

own

EPA

registration filings to support its contention that the formula
change was insignificant.

Specifically, Merial notes that to

obtain accelerated regulatory approval, Velcera represented to
the EPA that its new product was “identical or substantially
similar to” the old product, and that it also convinced the EPA
in its application for a Minor Formulation Amendment that the
change in the inert ingredients was inconsequential.

8

Velcera
evaluation

responds

of

the

that

it

similarities

is
of

unreliable
two

to

chemically

base

an

formulated

products on generalized labels attached to the products during
the EPA regulatory process.

Instead, Velcera argues that such

an evaluation requires rigorous scientific analysis.

In support

of that position, Velcera presented the testimony of Dr. Wesley
Shoop.
Court

Based on the evidence presented at the hearing, the
found

Dr.

Shoop

well

qualified

parasitology

and

formulations.

Dr. Shoop received a bachelor’s degree in biology

veterinary

in

pesticidal

the

areas

applications

of
and

and zoology from the University of Nebraska, a master’s degree
from

Louisiana

State

University,

and

a

doctorate

parasitology from Louisiana State University.

degree

in

Intervenor’s Tr.

Ex. 198 at 1, Curriculum Vitae for Dr. Wesley L. Shoop.

He

worked as an assistant professor at Murray State University for
two years and also served as an adjunct professor at Rutgers
University

for

ten

years.

Id.

Employed

by

Merck

Research

Laboratories as a parasitologist for almost twenty years, Dr.
Shoop’s service included working as Director of Parasitology and
as a Distinguished Senior Scientist.
Dr.

Shoop

2012,

and

worked

for

he

currently

is

Delaware Parasitology.

DuPont

Id.

Id.

After leaving Merck,

Stine-Haskell
the

Chief

Laboratories

Executive

until

Officer

for

During his employment with Merck

and DuPont, Dr. Shoop formulated spot on applications and pour

9

on applications for molecules he discovered.

He has authored

approximately one hundred publications in peer-reviewed journals
in the area of parasitology, id. at 2-10, and he is credited as
an inventor on five U.S. Patents in the area, id. at 16.

Merial

did not object to Dr. Shoop’s qualifications or testimony as an
expert in the field of veterinary pesticidal applications and
formulations.4
According
discredited
inert

ingredients

ingredients

Dr.

through

crystallization

without

to

Shoop’s

other

contrary

that

were

inhibiting

allow

testimony,

the

crystallization

eliminated

ingredients
an

extended

was

testimony,
have

characteristics.

active
for

expert

which

to

the

two

significant

The
remain

period

not

so

two

inert

dissolved
that

the

product remains effective for thirty days, thus allowing for
applications of the product every thirty days.

By eliminating

those crystallization inhibitors and replacing their volume with

4

Merial did file a Motion in Limine to Strike Expert Reports and
Exclude Evidence and Testimony Related to the Validity of the ‘329
Patent (ECF Nos. 214 & 215), including Dr. Shoop’s testimony and
expert report. The Court allowed Dr. Shoop to testify at the hearing
on the issue of the differences in the formulations of the PetArmor
Plus products, and did not consider any testimony by Dr. Shoop
relating to the validity of the ‘329 Patent or whether the New
PetArmor Plus product infringed the ‘329 Patent, as the Court ruled
validity of the ‘329 Patent and infringement were not issues to be
decided in this contempt action.
Merial’s motions (ECF Nos. 213 &
214) are therefore terminated as moot.

10

an increase in Transcutol P, the formula would have a different
delivery mechanism.
Merial’s response to this testimony is two-fold.

First,

Merial suggests that because Velcera previously described the
two

eliminated

inert

ingredients

as

solvents

and

not

“crystallization inhibitors” in its EPA regulatory filings, then
it should not now be allowed to describe them as crystallization
inhibitors.
that

Dr. Shoop, however, provided a rational explanation

crystallization

inhibitors,

product, can also be solvents.
characteristics.

They

help

such

as

those

in

the

old

In other words, they have both

dissolve

the

active

ingredients,

while also allowing them to remain dissolved for a longer period
of time, due to their crystallization inhibiting qualities.
Court

found

credible

this

reconciliation

of

the

The

perceived

contradiction between listing the inert ingredients as solvents
and

the

current

inhibitors.
these

two

position

that

they

are

crystallization

Second, Merial maintains that if the elimination of
inert

ingredients

makes

the

New

PetArmor

Plus

as

different from the old product as suggested by Dr. Shoop, then
Velcera

made

misrepresentations

approval of the new product as
previously

approved

product

to

the

EPA

when

it

sought

substantially similar to the

with

a

minor

formula

amendment.

The Court does have concerns about the accuracy of some of the
representations

made

to

the

EPA

11

in

light

of

Dr.

Shoop’s

testimony.
that

But the Court does not find it appropriate to ignore

expert

testimony

just

because

it

may

be

somewhat

inconsistent with the representations Velcera made to the EPA,
particularly given the fact that the standard for EPA regulatory
approval is not the same as what the Court must decide regarding
contempt.
In addition to the difference in the formulations of the
two

products,

processes

evidence

for

the

was

two

presented

products

that

are

the

manufacturing

different

elimination of two of the inert ingredients.

due

to

the

Without those

crystallization inhibitors, Velcera concluded that it no longer
needs

to

use

testified
significant
Merial

heat

that

in

the

that

manufacturing

elimination

difference

responds

the

in

the

such

a

of
two

that

process.
step

Dr.

constitutes

manufacturing

conclusion

is

Shoop
a

processes.

inconsistent

with

Velcera’s representations to the EPA during the approval process
when it represented to the EPA that the manufacturing process
for the New PetArmor Plus was substantially the same as the
process for the old product.

Thus, we have yet another conflict

in the evidence.
Weighing all of the evidence as the factfinder, the Court
is

conflicted.

On

the

one

hand,

it

appears

that

Velcera

considered its New PetArmor Plus to be very close to the old
product, and it made representations to that effect to the EPA

12

because it was in Velcera’s best interest to do so to get the
new product approved.
scientific

testimony

On the other hand, the Court found the
from

Velcera’s

parasitology

formulation

expert to be persuasive as to the differences in the chemistry
between the old and the new formula.5
has

had

attempting

to

reconcile

The difficulty the Court

these

seemingly

conflicting

positions leads the Court to the inescapable conclusion that the
evidence is not clear and convincing that the two products are
substantially the same with no material differences.

And if the

Court cannot find, under the applicable legal standard, that the
two products have no material differences, then the Court cannot
infer that Cipla participated in the development of the new
product.6
CONCLUSION
Although
proceeding

today’s

with

the

Order
launch

does
of

not

its

prohibit
new

Velcera

product,

the

from
Court

5

The Court hastens to add that part of the reason the testimony was
persuasive is that it was essentially uncontested scientifically, and
the Court must make its factual findings based upon the current
record. Although the Court also found Merial’s EPA regulatory expert
credible, he acknowledged that his expertise did not include
formulation. The Court expresses no opinion as to whether Dr. Shoop’s
testimony would retain its persuasive value in a future patent
infringement action when compared to comparable expert scientific
testimony.
6

The Court emphasizes that just as it cannot find from the present
record that the old and new products are materially the same as a
factual matter, it also is not finding that the two products are
materially different. The Court simply concludes that in light of the
conflicting evidence in the present record, Merial has not carried its
heavy burden of proof to support a finding of contempt.

13

observes Merial is not left without a remedy.

Merial has the

full opportunity to protect its intellectual property, the ‘329
Patent, by filing an infringement action against Velcera if it
believes

the

new

product

violates

its

patent.

And

quite

frankly, from this Court’s perspective, that is the preferred
mechanism

for

resolving

the

bottom of this controversy.

important

issue

that

is

at

the

While this Court would not hesitate

to make a finding of contempt if it concluded that its Order had
been clearly violated, the exercise of that awesome contempt
power should be used sparingly, and only in those cases where
the evidence establishes clearly contumacious conduct.
not such a case based upon the present record.

This is

Merial’s motions

are denied (ECF No. 176 & 177).7
IT IS SO ORDERED, this 5th day of June, 2012.
S/Clay D. Land
CLAY D. LAND
UNITED STATES DISTRICT JUDGE

7

The Court expresses no opinion as to whether Merial would prevail in
a patent infringement action.
However, the Court does note that
today’s ruling should have no preclusive effect on any such action
given that the issue the Court decides today is not the same issue
that would be decided in a patent infringement action and given the
fact that Merial was prevented by the Court’s rulings from putting up
evidence of patent infringement.

14