Momenta Pharmaceuticals, Inc. et al v. Amphastar Pharmaceuticals, Inc. et al

Filing 602

Judge Nathaniel M. Gorton: ORDER entered. MEMORANDUM AND ORDER:" In accordance with the foregoing,1) Defendants' motion to enforce liability on bonds for damages arising from wrongfully-issued TRO and preliminary injunction (Docket No. [52 1]) is DENIED WITHOUT PREJUDICE; 2) Plaintiffs' motion to defer consideration of motion to enforce liability on the bonds (Docket No. 530 ) is ALLOWED; and 3) Defendants' renewed motion to enforce liability on the bonds (Docket No. 594 ) is DENIED.So ordered." (Moore, Kellyann)

United States District Court
District of Massachusetts
)
)
)
)
Plaintiffs,
)
)
v.
)
)
AMPHASTAR PHARMACEUTICALS, INC., )
INTERNATIONAL MEDICATION
)
SYSTEMS, LTD., ACTAVIS, INC. AND )
WATSON PHARMA, INC.,
)
)
Defendants.
)
)
MOMENTA PHARMACEUTICALS, INC.
AND SANDOZ INC.,

Civil Action No.
11-11681-NMG

MEMORANDUM AND ORDER
GORTON, J.
Pending before the Court are three motions arising out of
the patent infringement suit filed by plaintiffs Momenta
Pharmaceuticals, Inc. and Sandoz Inc. (collectively, and for
simplicity, “Momenta”) against defendants Amphastar
Pharmaceuticals, Inc., International Medication Systems, Ltd.,
Actavis, Inc. and Watson Pharma, Inc. (collectively, and for
simplicity “Amphastar”).

Momenta alleges that Amphastar

infringes U.S. Patent No. 7,575,886 (“the ‘886 patent”) but has
abandoned its claim that Amphastar infringes U.S. Patent No.
7,790,466 (“the ‘466 patent”).
The instant dispute involves the surety bond posted by
Momenta to cover Amphastar’s damages arising from an October 7,
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2011 Temporary Restraining Order and an October 28, 2011
preliminary injunction (“the injunctions”).

Amphastar has moved

to enforce the bond and Momenta urges the Court to defer
consideration of that motion until the United States Court of
Appeals for the Federal Circuit reviews the entry of summary
judgment in favor of Amphastar.

Amphastar also seeks an order

requiring Momenta to post an additional surety to account for
interest on the bond and other damages caused by the delay.
I.

Background and Procedural History
The dispute concerns a generic version of Lovenox

(otherwise known as enoxaparin), an anticoagulant used to
prevent blood clots.

The ‘886 patent, which issued in 2009 and

has been assigned to Momenta, is directed at a set of
manufacturing control processes that ensure that each batch of
generic enoxaparin includes the individual sugar chains
characteristic of Lovenox.
The Food and Drug Administration (“FDA”) approved Momenta’s
application to market generic enoxaparin in July, 2010 and
approved Amphastar’s application to market its own generic
enoxaparin in September, 2011.

Two days after Amphastar

received FDA approval, Momenta moved for a temporary restraining
order and preliminary injunction to prevent Amphastar from
marketing its product on the grounds that Amphastar used

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Momenta’s patented tests as part of its process for
manufacturing generic enoxaparin.
In October, 2011, the Court entered a temporary restraining
order against Amphastar and, shortly thereafter, allowed
Momenta’s motion for a preliminary injunction.

The Court found

that Momenta had established that it was likely to succeed on
the merits of its infringement claim.

Moreover, it rejected

Amphastar’s argument that the allegedly infringing activity fell
within the safe harbor provision of the Hatch-Waxman Act, 35
U.S.C. § 271(e)(1), which provides that
It shall not be an act of infringement to make, use,
offer to sell or sell...a patented invention...solely
for uses reasonably related to the development and
submission of information under a federal law which
regulates the manufacture, use or sale of drugs....
35 U.S.C. § 271(e)(1).

The Court found the safe harbor

provision inapplicable based upon a contemporaneous Federal
Circuit opinion that held that § 271(e)(1) does not apply to
information that “may be routinely reported the FDA, long after
marketing approval has been obtained.” Classen Immunotherapies,
Inc. v. Biogen IDEC, 659 F.3d 1057, 1070 (Fed. Cir. 2011).

It

reasoned that because Amphastar had already received FDA
approval to market the drug, its alleged continuing use of the
patented method did not fall within the safe harbor.
The Court’s Order enjoined Amphastar from advertising,
offering for sale or selling in the United States any generic
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enoxaparin product alleged to infringe the ‘886 patent.

As a

condition for the injunctive relief, the Court required Momenta
to post two surety bonds in the amounts of $50,000 and
$100,000,000 for the temporary restraining order and the
preliminary injunction, respectively.

The Court subsequently

denied two motions to stay or dissolve the preliminary
injunction filed by Amphastar.
Amphastar filed an interlocutory appeal of the Order
entering the preliminary injunction and the denial of its
motions to stay or dissolve the injunction to the Federal
Circuit.

The Federal Circuit stayed the preliminary injunction

in January, 2012 and vacated it in August, 2012, finding this
Court’s interpretation of the safe harbor provision to be unduly
narrow.

It reasoned that Momenta was unlikely to prevail on its

infringement case because Amphastar’s “release testing” likely
fell under the Patent Act’s safe harbor provision.

The court

specifically explained that
Momenta concedes that Amphastar’s tests “are conducted
in order to satisfy the FDA’s requirements that each
batch of enoxaparin that is sold commercially after
FDA approval is actually the same as the brand name
drug.” Under a proper construction of 35 U.S.C. §
271(e)(1), the fact that Amphastar’s testing is
carried out to “satisfy the FDA’s requirements” means
that it falls within the safe harbor, even though the
activity occurs after approval.... The district
court’s interpretation of § 271(e)(1) was erroneous.
Under the correct interpretation, Momenta cannot
establish a likelihood of success on infringement and
the preliminary injunction must be vacated.
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Momenta Pharms., Inc. v. Amphastar Pharms., Inc., 686 F.3d 1348,
1359 (Fed. Cir. 2012) (internal citations omitted).
The Federal Circuit denied Momenta’s petition for an en
banc hearing in November, 2012.

The Supreme Court denied a

petition for certiorari in June, 2013.
After the case was remanded and the parties took further
discovery, Amphastar moved for summary judgment.

Momenta argued

in its opposition to that motion that evidence developed
subsequent to the preliminary injunction proceedings revealed
that 1) Amphastar sold generic enoxaparin made using the process
claimed in the ‘886 patent that rendered Amphastar liable for
infringement under 35 U.S.C. § 271(g) and 2) Amphastar used the
patented methods in ways that were not required by the FDA and
did not keep records of such uses.
In July, 2013, this Court entered summary judgment in
Amphastar’s favor, finding that its accused tests fell under the
safe harbor provision and therefore did not infringe.

It

rejected Momenta’s argument that the FDA did not require the
particular test at issue because the Federal Circuit had
explicitly held in its opinion vacating the preliminary
injunction that the safe harbor “does not mandate the use of a
noninfringing alternative when one exists.” Momenta, 686 F.3d at
1359.

It also found Momenta’s § 271(g) argument inapplicable

because the Federal Circuit has interpreted that provision to
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require importation or sale of a product manufactured through
the practice of a patented process abroad.

The Court entered

final judgment on Momenta’s infringement claims in January, 2014
and the parties’ cross-appeals are pending before the Federal
Circuit.
In December, 2013, Amphastar moved to enforce liability on
the surety bonds (“the bond motion”).

Shortly thereafter,

before its responsive pleading was due, Momenta filed an
emergency motion to defer consideration of Amphastar’s motion
pending exhaustion of Momenta’s appeal (“the motion to defer”).
This Court heard argument on those motions at a January, 2014
hearing and took the matter under advisement.

It later informed

the parties the deadline for Momenta to respond to Amphastar’s
bond motion was suspended pending resolution of Momenta’s motion
to defer.
In February, 2014, Amphastar filed a renewed motion to
enforce liability on the bonds in which it requests that the
Court order Momenta to post an additional bond to compensate
Amphastar for interest and other damages attributable to the
delay (“the renewed bond motion”).
II.

Motions with respect to Momenta’s liability on the bonds
Momenta submits that the bond motion will not be ripe for

resolution until the Federal Circuit decides Momenta’s appeal
and, even if the issue is ripe, the Court should exercise its
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discretion and defer its consideration until the Federal Circuit
resolves the matters currently on appeal.

It also maintains

that it is entitled to conduct discovery on damages before it
can be required to respond to Amphastar’s bond motion.
A.

Jurisdiction over the bond motion
1.

Legal standard

The bond at issue in this case was provided pursuant to
Fed. R. Civ. P. 65(c) which states, in relevant part, that
The court may issue a preliminary injunction or a
temporary restraining order only if the movant gives
security in an amount that the court considers proper
to pay the costs and damages sustained by any party
found to have been wrongfully enjoined or restrained.
Fed. R. Civ. P. 65(c) (emphasis added).

The United States Court

of Appeals for the First Circuit has held that a party is
wrongfully enjoined when it had the right to do all along what
it was enjoined from doing. Global NAPs, Inc. v. Verizon New
England, Inc., 489 F.3d 13, 22 (1st Cir. 2007).
Fed. R. Civ. P. 65.1, in turn, governs proceedings against
a surety bond and provides that “[t]he surety’s liability may be
enforced on motion without an independent action.” Fed. R. Civ.
P. 65.1.

The First Circuit has described Fed. R. Civ. P. 65.1

as providing a “summary procedure for the enforcement of
liability against a surety.” Id. at 20.

Moreover, the surety

requirement and the summary procedure for enforcing liability on
the surety are generally understood to serve the purpose of
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assur[ing] the enjoined party that it may readily
collect damages from the funds posted or the surety
provided in the event that it was wrongfully enjoined,
without further litigation and without regard to the
possible insolvency of the assured ....
Id. at 21 (quoting Continuum Co. v. Incepts, Inc., 873 F.2d 801,
803 (5th Cir. 1989)).
2.

Application

Momenta argues that the bond motion is not ripe for
consideration at this time because Momenta’s appeal of this
Court’s decision to award summary judgment to Amphastar is
pending before Federal Circuit.

It maintains that a decision by

the Federal Circuit on the merits in favor of Momenta would mean
that Amphastar was not “wrongfully enjoined” in the first place.
Amphastar responds that the Federal Circuit resolved the
question of whether Amphastar was “wrongfully enjoined” when it
vacated the preliminary injunction in August, 2012 on the
grounds that it was based on an incorrect interpretation of the
§ 271(e)(1) safe harbor provision.

It adds that even if the

initial order vacating the injunction was insufficient, rulings
subsequent to that order were more than sufficient, namely, 1)
the Federal Circuit’s denial of the request to rehear the case
en banc, 2) the Supreme Court’s denial of certiorari and 3) this
Court’s entry of summary judgment in favor of Amphastar.
The parties appear to agree that the controlling precedent
is Global NAPs, Inc. v. Verizon New England, Inc., 489 F.3d 13
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(1st Cir. 2007), but they disagree about the nature of that
precedent and its bearing upon this case.
a.

Global NAPs

Global NAPs arose out of the failure of Global NAPs to make
required payments to Verizon and Verizon’s threats to terminate
its services as a result.

In 2005, following an initial merits

appeal to the First Circuit, the district court entered a
preliminary injunction, conditioned on the posting of a surety
bond, to prevent Verizon from disconnecting services to Global
NAPs until the court resolved the merits of the parties’ claims.
Id. at 16.

The court ultimately entered summary judgment in

favor of Verizon and against Global NAPs and later confirmed
that the ruling on summary judgment dissolved the preliminary
injunction. Id.

It allowed a motion by Global NAPs for an

injunction pending appeal, however, and Global NAPs posted an
additional security. Id. at 16-17.
In April, 2006, the First Circuit affirmed the district
court’s award of summary judgment to Verizon (Global NAPs II).
Id. at 17.

Shortly thereafter, the First Circuit vacated the

injunction that had been entered pending appeal and later denied
Global NAPs’ motion to reconsider the motion to vacate the
injunction. Id.

On the same day that the injunction was

vacated, Verizon moved the district court to release the
security. Id. at 18.

One week later, the First Circuit denied
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Global NAPs’ petition for rehearing and rehearing en banc. Id.
at 17 n.2.

In May, 2006, the First Circuit issued its mandate.

Id. at 18.

The district court allowed Verizon’s motion the

following day and released the full $16 million security to
Verizon.

Global NAPs appealed both rulings. Id.

On appeal, the First Circuit first clarified that a party
is wrongfully enjoined when “it had a right all along to do what
it was enjoined from doing.” Id. at 22.

In so ruling, it

rejected the argument that a party is wrongfully enjoined only
if the court that entered the injunction abused its discretion
in doing so. Id.

Applying that rule to the injunction at issue,

the court found that
the issue of whether Verizon was wrongfully enjoined
was determined when we issued our opinion in [Global
NAPs II] and rejected [Global NAPs’] arguments on the
merits of its position. We then vacated the
injunction because Verizon was entitled, and had been
entitled all along, to cut off services to [Global
NAPs].
Id. at 23 (emphasis added).

The First Circuit also rejected

Global NAPs’ argument that the district court erred in releasing
the entire $16 million security to Verizon before the First
Circuit addressed, on appeal, whether Verizon was in fact
entitled to $16 million in damages based on the wrongful
injunction.

It explained that

[d]issolution of an injunction is itself a final
determination which permits a party to seek security
posted with respect to the injunction.
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Id. at 22 n.6.
b.

Arguments

Momenta argues that Global NAPs held that a party is deemed
to be “wrongfully enjoined” only when all issues relating to the
merits of the case have been decided on appeal.

It relies upon

the First Circuit’s statement that the issue of whether Verizon
was wrongfully enjoined was
determined when we issued our opinion in [Global NAPs
II] and rejected [Global NAPs’] arguments on the
merits of its position.
Id. at 23.

Momenta adds that the posture of this case requires

the Federal Circuit to reach the merits of this Court’s summary
judgment ruling.

First, it notes that the Federal Circuit’s

ruling that vacated the preliminary injunction 1) was made on an
interlocutory appeal, 2) was based on an incomplete record and
3) did not resolve all issues in the case.

Furthermore, it

notes that it raised new factual and legal arguments on summary
judgment that were not previously considered by the Federal
Circuit and that, if resolved in Momenta’s favor, would show
that Amphastar was not wrongfully enjoined from selling its
generic enoxaparin product in the first place.
Amphastar responds that Fed. R. Civ. P. 65(c) and 65.1 do
not require a party to exhaust all potential appeals on the
merits before enforcing a security bond and Global NAPs does not

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require otherwise.

Instead, it suggests, Global NAPs should be

read as requiring only that the injunction be dissolved,
regardless of whether the injunction is dissolved by an adverse
decision on the merits, as in Global NAPs, or by a ruling
vacating the injunction as improvidently granted, as in this
case.

In support of its position, it points to the First

Circuit’s explanation that dissolving an injunction is a “final
determination” that permits a party to enforce liability on the
bond that secured the injunction. Id. at 22 n.6.
c.

Analysis

This case presents a close call where 1) the Federal
Circuit held in no uncertain terms that Momenta was not entitled
to the preliminary injunction awarded by this Court, 2)
Momenta’s requests for further review were denied by the Federal
Circuit and the Supreme Court and 3) this Court awarded summary
judgment in favor of Amphastar based on the Federal Circuit’s
interpretation of the safe harbor provision.

Nevertheless, the

Court agrees with Momenta that it lacks jurisdiction to consider
Amphastar’s motion until the Federal Circuit resolves Momenta’s
appeal on the merits.

Momenta raised new factual and legal

arguments on remand that, if decided in its favor, would
establish that it was entitled to the injunction in the first
place because Amphastar never had a right to do what it was
enjoined from doing.

Thus, the ruling vacating the injunction
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was, on these facts, not decisive of whether Amphastar was
“wrongfully enjoined.”
The Court is not persuaded by Amphastar’s argument that the
Federal Circuit’s ruling vacating the injunction was dispositive
of whether the injunction was wrongfully entered.

It disagrees

with Amphastar that Global NAPs established that “dissolution of
an injunction is itself a final determination” permitting a
district court to release a security posted to secure the
injunction. See id.

That language must be read in its proper

context which is the First Circuit’s rejection of Global NAPs’
argument that the security could not be released until the First
Circuit considered on appeal whether Verizon was in fact
entitled to the full amount in damages.

It does not establish

that a dissolved injunction was necessarily wrongfully issued.
Nor is the Court convinced that its subsequent entry of
judgment on the merits in favor of Amphastar resolved the
matter.

Global NAPs suggests that the issue was ripe only after

the First Circuit upheld the district court’s merits ruling.
Other decisions from outside of the First Circuit do not
persuade the Court that its interpretations of Global NAPs and
Fed. R. Civ. P. 65(c) and 65.1 are incorrect. See, e.g., Nokia
Corp. v. InterDigital, Inc., 645 F.3d 553, 559 (2d Cir. 2011)
(explaining that “[n]either party seems to dispute that
InterDigital was wrongfully enjoined” in appeal from district
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court’s release of the surety after dismissing the case on
remand where Second Circuit had previously vacated an injunction
and the record was unchanged on remand to the district court);
Blumenthal v. Merrill Lynch, 910 F.2d 1049, 1054-55 (2d Cir.
1990) (holding that arbitrators’ decision to vacate injunction
entered by district court was an “ultimate decision on the
merits” that compelled the conclusion that the preliminary
injunction was “wrongful”); Pro Edge L.P. v. Gue, 451 F. Supp.
2d 1026, 1023 & n.3 (N.D. Iowa 2006) (noting that conclusion
that bond motion was ripe was bolstered by the Eighth Circuit’s
“succinct denial of the plaintiff’s petition for permission to
file an interlocutory appeal”); but see Pabst Brewing Co. v.
Corrao, 999 F. Supp. 1242, 1243-44 (E.D. Wis. 1998) (declining
to release surety as matter of discretion but finding
jurisdiction over the matter despite pending appeal of order
vacating injunction).
To be clear, in so holding, the Court declines to adopt a
per se rule that a party cannot be said to have been “wrongfully
enjoined” under Fed. R. Civ. P. 65(c) until the party that
posted the security has exhausted all of its appeals on the
merits of the case.

It holds only that, on these facts, the

issue of whether Amphastar was wrongfully enjoined is not ripe.
Furthermore, even if this Court had jurisdiction over the
bond motion at this time, it would be inclined to defer
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consideration to the extent that it had the discretion to do so.
See Pabst Brewing Co. v. Corrao, 999 F. Supp. 1242, 1243-44
(E.D. Wis. 1998) (declining to release surety as matter of
discretion in light of pending appeal of order vacating
injunction).

Given the possibility that this Court’s Order of

summary judgment could be reversed on appeal, which would
obviate the need to litigate the pending motion to enforce
liability, the Court believes that it would be appropriate to
avoid the time and expense involved by deferring consideration
until the Federal Circuit decides Momenta’s appeal.
B.

Conclusion

Because the Court finds that Amphastar’s motion is not ripe
for consideration and declines to exercise jurisdiction in any
event, it forgoes the issue of whether Momenta is entitled to
additional discovery before it can be required to file a
responsive pleading.

Momenta’s motion to defer consideration

will be allowed and Amphastar’s motion to enforce liability on
the bonds will be denied without prejudice.

Amphastar may renew

its motion after the Federal Circuit resolves Momenta’s appeal
from this Court’s entry of final judgment.
III. Amphastar’s request for an additional bond
In a subsequent “renewed motion” to enforce Momenta’s
liability on the bonds, Amphastar requests that the Court order
Momenta to post an additional security “to account for the lost
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interest and delay damages” that continue to accrue.

The Court

declines to do so, because:
1) Local Rule 62.2 is inapplicable in that the bond has yet
to be reduced to a money judgment and
2) modification of the bond or security pursuant to Local
Rules 67.1(h) and 67.1(i) is unwarranted.

The Court concludes

that requiring an additional bond would not be in keeping with
the purpose of Fed. R. Civ. P. 65(c) to “provide the plaintiff
with notice of the maximum extent of its potential liability.”
Global NAPs, 489 F.3d at 21 (citing Continuum, 873 F.2d at 803).

ORDER
In accordance with the foregoing,
1)

Defendants’ motion to enforce liability on bonds for
damages arising from wrongfully-issued TRO and
preliminary injunction (Docket No. 521) is DENIED
WITHOUT PREJUDICE;

2)

Plaintiffs’ motion to defer consideration of motion to
enforce liability on the bonds (Docket No. 530) is
ALLOWED; and

3)

Defendants’ renewed motion to enforce liability on the
bonds (Docket No. 594) is DENIED.

So ordered.
/s/ Nathaniel M. Gorton
Nathaniel M. Gorton
United States District Judge
Dated March 12, 2014

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