So, facing "regulatory denial," litigation resumed. Following the unapproved settlement script, Apotex launched its generic, triggering a move by Sanofi for a preliminary injunction, and requesting an Apotex product recall. After a two-day evidentiary hearing, the district court said okay to the preliminary injunction, no to the recall. In that short window between generic launch and injunction, Apotex had shipped a six-month supply to U.S. distributors.

Sanofi, as the moving party, may be entitled to a preliminary injunction if it establishes four factors: “(1) a reasonable likelihood of its success on the merits; (2) irreparable harm if an injunction is not granted; (3) a balance of hardships tipping in its favor; and (4) the injunction’s . . . impact on the public interest.” Amazon.com, 239 F.3d at 1350.

In reaching its decision, the district court applied the established four-factor test for preliminary injunctive relief, and found that the factors weighed in favor of an injunction. Regarding the likelihood of success on the merits, the court noted that Apotex conceded that its accused products infringe claim 3 of the ’265 patent. The court then found that Apotex failed to establish a likelihood of proving invalidity at trial—rejecting its anticipation, obviousness, and obviousness-type double patenting invalidity defenses. The court also determined that Apotex failed to raise a substantial question as to whether the ’265 patent is unenforceable due to inequitable conduct. Additionally, the court found that the remaining three factors of the test favored issuance of a preliminary injunction. As for Apotex’s other defenses, the court concluded that the doctrine of laches was inapplicable, and it rejected Apotex’s unclean hands defense.

Apotex moved for stay; denied; so Apotex appealed (CAFC 06-1613).

As to Apotex having "a reasonable likelihood of its success on the merits," its invalidity arguments had to hold credence.

[I]n light of the deferential standard we apply in reviewing grants or denials of preliminary injunctions, and mindful that “a patent is presumed valid, and this presumption exists at every stage of the litigation,” Canon Computer Sys., Inc. v. Nu-Kote Int’l., Inc., 134 F.3d 1085, 1088 (Fed. Cir. 1998), we conclude that the district court did not clearly err in finding that Apotex’s anticipation defense lacks substantial merit.

Moving on to "the remaining elements of the preliminary injunction test..."

The district court applied a presumption of irreparable harm in light of its conclusion that Sanofi established a likelihood of success on the merits. The court also found that Sanofi proffered substantial evidence establishing other forms of irreparable harm, including irreversible price erosion, loss of good will, potential lay-offs of Sanofi employees, and the discontinuance of clinical trials that are devoted to other medical uses for Plavix®.

As to the third factor of the test, Apotex argues that the court erred in balancing the hardships because it ignored the harm Apotex would face if an injunction were granted, particularly in light of the settlement agreement which, according to Apotex, demonstrates that the harms Sanofi would suffer are a result of its own conduct. Sanofi responds that the court did not abuse its discretion in finding that that factor favored Sanofi, particularly because it was Apotex’s own decision to engage in an at-risk launch that would trigger its 180-day exclusivity period before reaching the merits of the case. Based on the record on appeal, we conclude that the court did not clearly err in finding that Apotex’s harms were “almost entirely preventable” and were the result of its own calculated risk to launch its product pre-judgment.

The fourth factor we consider is the public interest, which the court found tips in favor of Sanofi, albeit slightly... Sanofi responds that the court did not clearly err in finding that the interest in encouraging pharmaceutical research and development outweighed the public interest advanced by Apotex... We have long acknowledged the importance of the patent system in encouraging innovation. Indeed, the “encouragement of investment-based risk is the fundamental purpose of the patent grant, and is based directly on the right to exclude.” Patlex Corp. v. Mossinghoff, 758 F.2d 594, 599 (Fed. Cir. 1985). The district court relied on the testimony of Dr. Hausman in finding that the average cost of developing a blockbuster drug is $800 million. Importantly, the patent system provides incentive to the innovative drug companies to continue costly development efforts.

In agreeing with the district court across the board, a big question pops: Does the nature of the patented technology affect legal judgment? Injunctive relief took a big knock from the Supreme Court eBay v. MercExchange decision, but here we get the appearance of a pendulum swing in re-recognizing the original hoary concept of patents: "encouragement of investment-based risk is the fundamental purpose of the patent grant, and is based directly on the right to exclude." By contrast to pharmaceuticals, software is dime-store invention. Is this the continuation of legal bifurcation based upon economic calculation; "principles of equity," where equity translates to "money talks," not equitability. You bet it is.