Cipla Ltd. v. Amgen Inc.

CIPLA LTD.; CIPLA USA, INC. v. AMGEN INC; TEVA PHARMACEUTICALS USA, INC.Amgen Inc., Appellant

No. 19-2017

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Submitted: July 15, 2019

July 16, 2019

NOT PRECEDENTIAL

Appeal from the United States District Court for the District of Delaware

(D.C. No. 1-19-cv-00044)

District Judge: Hon. Leonard P. Stark

Submitted Under Third Circuit L.A.R. 34.1(a)

July 15, 2019

Before: SHWARTZ, KRAUSE, and RESTREPO, Circuit Judges.

OPINION^*

SHWARTZ, Circuit Judge.

Amgen Inc. appeals the District Court's order denying its motion to preliminarily enjoin Cipla Ltd. and Cipla USA, Inc. ("Cipla") from selling Cipla's generic version of one of Amgen's products. Amgen asserts that Cipla's launch breaches their settlement agreement. Because the Court correctly determined that Amgen fails to establish a likelihood of success on the merits of its breach of contract claim, we will affirm.

I

A

Amgen developed cinacalcet hydrochloride, known under the brand name SENSIPAR, to treat hyperparathydoirdism, hypercalcemia, and elevated calcium-phosphorous product. Amgen owns the patent for cinacalcet under U.S. Patent Number 9,375,405 ("the '405 patent"). Cipla, Teva Pharmaceuticals, and other generic drug manufacturers filed Abbreviated New Drug Applications ("ANDA") to produce generic equivalents of SENSIPAR before the '405 patent expired. Amgen sued Cipla, Teva, and other generic manufacturers in the District of Delaware, asserting that their generic cinacalcet products infringed the '405 patent.

Amgen and Cipla settled their patent infringement dispute. In their Settlement Agreement, Cipla conceded that the '405 patent is valid and enforceable and agreed not to launch¹ a generic cinacalcet until one of the following entry dates: ninety-seven daysbefore the expiration of the '405 patent; the launch of generic cinacalcet by an entity other than Cipla or Amgen, except as provided in § 5.5 of the Settlement Agreement; or a "Final Court Decision" finding the '405 patent unenforceable. The Settlement Agreement defines a "Final Court Decision," in relevant part, as a federal district court's final judgment on the merits from which no timely appeal was taken or a mandate with respect to an appeal from such a judgment. Section 5.5 authorizes Cipla's launch of generic cinacalcet under specific circumstances based upon Amgen's response to a third party's launch. Section 5.6 lists circumstances under which Amgen may not seek relief if Cipla makes an at risk launch.²

Although Amgen settled its suit with Cipla, its claims against Teva proceeded to trial. Teva prevailed. The district court held that Teva did not infringe the '405 patent. Amgen Inc. v. Amneal Pharm. LLC, 328 F. Supp. 3d 373, 399 (D. Del. 2018). Amgen appealed to the Federal Circuit. While the appeal was pending, Teva received FDA approval and launched its generic cinacalcet. Less than a week later, Amgen and Teva entered into an agreement, in which Teva agreed that it had infringed the '405 patent, would stop selling its generic cinacalcet, and would pay Amgen up to $40 million. The district court declined to amend its noninfringement judgment.

B

Cipla then filed suit against Amgen in the District of Delaware, seeking, among other things, a declaratory judgment that it could launch its generic cinacalcet. Cipla also notified Amgen that it planned to launch its generic cinacalcet based on Teva's launch, and quickly thereafter launched its generic cinacalcet. Amgen filed a breach of contract counterclaim, asserting that Cipla's launch breached the Settlement Agreement, and moved to preliminarily enjoin Cipla's at risk launch.

In a thoughtful and thorough decision, the District Court denied Amgen's motion for a preliminary injunction. See generally Cipla Ltd. v. Amgen Inc., No. 19-44-LPS, 2019 WL 1970780 (D. Del. May 2, 2019). The Court held that Amgen did not establish a likelihood of success on the merits because, among other reasons, Cipla's at risk launch was authorized and Amgen was prevented from seeking relief under § 5.6 of the Settlement Agreement. Id. at *6-12. Even though the Court found that Cipla's sales would cause Amgen irreparable harm, id. at *14, and the balance of equities and public interest in protecting its patent narrowly favored Amgen, id. at *17-18, the Court denied the motion. Amgen appeals.

After the District Court denied Amgen's motion for an injunction pending appeal, Amgen renewed its request before this Court and, alternatively, sought an expedited briefing schedule. This Court granted Amgen's alternative request, scheduling its appeal for the first possible sitting and has considered the parties' comprehensive briefs.

II³

A

The decision to grant or deny a preliminary injunction is within the sound discretion of the district court.⁴ Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 24, 33 (2008). To obtain a preliminary injunction, the movants must demonstrate,

(1) that they are reasonably likely to prevail eventually in the litigation and (2) that they are likely to suffer irreparable injury without relief. If these two threshold showings are made the District Court then considers, to the extent relevant, (3) whether an injunction would harm the [nonmovant] more than denying relief would harm the [movant] and (4) whether granting relief would serve the public interest.

K.A. ex rel. Ayers v. Pocono Mountain Sch. Dist., 710 F.3d 99, 105 (3d Cir. 2013) (quoting Tenafly Eruv Ass'n v. Borough of Tenafly, 309 F.3d 144, 157 (3d Cir. 2002)); see Fed. R. Civ. P. 65. To establish a likelihood of success, a party must show "a reasonable chance, or probability, of winning."⁵ In re Revel AC, Inc., 802 F.3d 558, 568 (3d Cir. 2015) (quoting Singer Mgmt. Consultants, Inc. v. Milgram, 650 F.3d 223, 229 (3d Cir. 2011) (en banc)).

B

We first consider whether Amgen has established a likelihood of success on its claim that Cipla breached the Settlement Agreement. A breach of contract claim under Delaware law⁶ requires proof of (1) a contract, (2) "breach of an obligation imposed by that contract," and (3) damage to the non-breaching party. VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003). To determine whether Cipla breached the Settlement Agreement, we must analyze the language as it would "be understood by an objective, reasonable third party. If a contract is unambiguous, extrinsic evidence may not be used to interpret the intent of the parties, to vary the terms of the contract, or to create an ambiguity."⁷ Exelon Generation Acquisitions, LLC v. Deere & Co., 176 A.3d 1262, 1267 (Del. 2017) (internal quotation marks, footnotes, and citations omitted). When reviewing contractual language, we "must read the specific provisions of the contract in light of the entire contract," Chi. Bridge & Iron Co. N.V. v. Westinghouse Elec. Co., 166 A.3d 912, 913-14 (Del. 2017), "and, if possible, reconcile all the provisions of the instrument." Alta Berkeley VI C.V. v. Omneon, Inc., 41 A.3d 381, 386 (Del. 2012) (citation omitted).

Amgen contends that Cipla's launch breached the Settlement Agreement, while Cipla asserts that § 5.6 of the Agreement bars Amgen from obtaining relief and,therefore, that the launch does not constitute a breach. The second sentence of § 5.6 provides

[n]otwithstanding anything to the contrary in this Settlement Agreement, if any Third Party that has made an At Risk Launch of a Generic Cinacalcet Product (where such At Risk Launch is before or after an at risk launch by [Cipla]) is not found to have infringed one or more valid and enforceable claims of the [']405 patent or has not ceased or agreed to cease selling such Generic Cinacalcet Product following an At Risk Launch, then Amgen shall not be entitled to seek or recover any relief from [Cipla] for [Cipla's] at risk sales, offers for sale, distribution, or importation of [Cipla's] product.

JA 469. The Settlement Agreement therefore makes clear that under certain circumstances, Amgen is not entitled to seek relief against Cipla for the launch.

The second sentence of § 5.6 has two components that inform our analysis of Cipla and Amgen's rights under the Settlement Agreement: (1) the second sentence's "notwithstanding" clause and (2) the use of "or" between the two circumstances that prohibit Amgen from obtaining relief from Cipla for its launch.

First, "[t]he use of . . . a 'notwithstanding' clause clearly signals the drafter's intention that the provisions of the 'notwithstanding' section override conflicting provisions of any other section." In re Estate of Crist, 863 A.2d 255, 258 (Del. Ch. 2004) (quoting Cisneros v. Alpine Ridge Grp., 508 U.S. 10, 18 (1993)); see NLRB v. SW Gen., Inc., 137 S. Ct. 929, 940 (2017) ("A 'notwithstanding' clause . . . shows which of two or more provisions prevails in the event of a conflict."). Therefore, although we must read a contract as a whole and in accordance with other provisions, the notwithstanding clause clearly signals precedence. It sets the second sentence of § 5.6 apart from the remainingprovisions and authorizes Cipla's launch free from Amgen's interference, despite other provisions in § 5.5 that limit Cipla's activities.⁸

It is clear that the parties intentionally included the notwithstanding clause. The agreement before us is different from the other settlement agreements Amgen entered with generic manufactures because it includes the second sentence of § 5.6, where the others do not. The intentional inclusion of the second sentence here is thus dispositive and binding. Delaware law holds sophisticated parties like Cipla and Amgen to the bargain they actually struck, rather than the one in hindsight they realize they should have made. See NAF Holdings, LLC v. Li & Fung (Trading) Ltd., 118 A.3d 175, 181 & n.14 (Del. 2015).

Second, the use of "'or' is almost always disjunctive." Encino Motorcars, LLC v. Navarro, 138 S. Ct. 1134, 1141 (2018) (internal quotation marks omitted) (quoting United States v. Woods, 571 U.S....