Last Friday, Judge Sue Robinson issued a temporary restraining order prohibiting Dr. Reddy’s Laboratories (DRL) from selling a generic esomeprazole product due to its likelihood of confusion with plaintiff AstraZeneca’s Prilosec® and Nexium® tablets. AstraZeneca AB, et al. v. Dr. Reddy’s Laboratories, Inc., C.A. No. 15-988-SLR, Memo. at 13-14 (D. Del. Nov. 6, 2015).
AstraZeneca holds three federal trademark registrations covering the color purple for gastrointestinal pharmaceuticals as well as one registration for the phrase “THE PURPLE PILL®.” It has used the color purple in branding gastrointestinal drugs, including Prilosec® and Nexium®, since 1989 and has sold approximately 22.6 billion purple capsules in that time. Approximately six years ago, DRL began selling a generic version of Prilosec®, which used a half-purple, half-yellow-or-grey capsule. In recent years, several generic versions of Nexium® have also been marketed by other companies, each of which used blue or white capsules. Most recently, in September 2015, DRL launched its generic version of Nexium® using a capsule that is entirely purple, although in two different shades. In late October 2015, AstraZeneca responded with a trademark infringement lawsuit and a request for injunctive relief. Id. at 1-4.
Judge Robinson concluded that AstraZeneca “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, that the balance of hardships and the public interest weigh in its favor.” Id. at 13-14. Her Honor continued: “If DRL’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 such plaintiffs such as AZ to actually incur harm that is likely, but not provable, at the outset. Therefore, AZ’s motion for a temporary restraining order will be granted.” Id.
In support of this conclusion, Judge Robinson found that AstraZeneca was likely to succeed on the merits of its Lanham Act claims. Among other factors considered, Judge Robinson found that:
(1) the products were very similar because “DRL’s generic capsule is purple, albeit two shades of purple. Although not identical to AZ’s branded capsule, it does fit the description of the mark, “purple.” It has been recognized that a registration for a color covers all shades of that color”;
(2) “AZ has presented credible evidence that its Purple Marks branding is of long duration, of value, and strong”;
(3) Given the totality of the circumstances, including the physical appearance of DRL’s other generics (distinctive), the fact that DRL is a second wave generic in this market (and perhaps has to be more aggressive to get market share), and DRL’s explanations for adopting an all-purple pill . . . the court concludes that DRL intended to test AZ’s trademark, rather than honor it”; and
(4) “Despite the fact that Nexium® is a branded product and DRL’s generic is not, the court finds that AZ and DRL are still competing in the same market for the same consumers in the first instance, even if DRL is ultimately competing against other generics once the decision to buy a generic has been made.”
Id. at 5-9.
Judge Robinson also concluded that there was sufficient evidence of dilution of AstraZeneca’s marks because those marks are sufficiently “famous” and because “it is evident that DRL, in its marketing of its GI generics, has progressed from using colors in its two-tone capsules that are not at all similar to AZ’s purple pills, to a two-tone capsule that is (1) all purple and (2) uses AZ’s shade of purple.” Id. at 9. Moreover, Judge Robinson found that AstraZeneca had not acquiesced to DRL’s conduct by the “sale of the half-purple Prilosec generic capsules since 2005 [and the resulting] ‘market history of overlap between’ the products” and that such a history did not undermine an argument of irreparable harm. Id. at 12.
Judge Robinson also rejected a contract defense based on the agreement settling prior Hatch-Waxman litigation between AstraZeneca and DRL and releasing “any and all claims . . . in connection with the DRL Product . . . arising before the Effective Date of this Settlement Agreement.” Her Honor explained that although DRL’s ANDA product was described in its ANDA as “purple opaque,” this characterization was of little consequence because “[f]rom 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 is not on the market as not even approved by the FDA yet).” Id. at 10 n.6. Further, Her Honor noted that Hatch-Waxman litigation allows only for consideration of patent issues, and that the settlement agreement at issue, “[i]f anything . . . specifically preserved AZ’s trademark rights against the very conduct in which DRL has engaged.” Id. at 10-12.
Having found a likelihood of success, Judge Robinson found a likelihood of irreparable harm because “[b]y using AZ’s Purple Marks, it is likely that DRL 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.” Id. at 12. In balancing the harms, Her Honor “recognize[d] that imposing injunctive relief on DRL (i.e., forcing DRL to take its generic off the market) will be costly, both monetarily and in terms of such intangibles as market share and loss of good will. The court nevertheless concludes that DRL engaged in the conduct at issue fully aware of such consequences and, therefore, cannot be heard to complain that the risks it took did not pay off.” Id. at 13.