treatment exists-so-called "me-too" products (96 Tr. 741, Whiting; 95 Tr. 326, Whiting). Genentech scientists are encouraged to engage in so-called curiosity projects (96 Tr. 742-43, Whiting; 95 Tr. 321-322, Whiting), which have led to the discovery of potential products, the most notable example of which is Pulmozyme (95 Tr. 321-322; Whiting).
119. In 1995, Genentech spent approximately $ 363 million on research and development, or 40% of its total revenues (96 Tr. 739, Whiting, GNE 266, 267; 95 Tr. 322, Whiting), and it plans to increase research and development spending (GNE 249, p. 30).
120. At Genentech, the level of research and development expenditures has been directly related to revenues and, historically, changes in anticipated revenues have resulted in [TEXT REDACTED BY THE COURT]
121. A decline of [TEXT REDACTED BY THE COURT] in Genentech's hGH revenues would have a significant impact on the funds available for research (96 Tr. 643-645, Matlock; 748, Whiting). Since timing is critical to research, an opportunity missed because of a lack of funds cannot be recaptured if the funds are made available later in the form of damages (96 Tr. 769-770, Whiting). Moreover, Genentech's funding of things such as curiosity projects, post-doctoral programs and university collaborations makes Genentech's claim of lost funding for research and development distinct from claims that could be made by any company with a research and development program, and distinguishes this case from Eli Lilly & Co. As Novo's economic expert testified, in most cases a company can select which projects to continue and which do not make financial sense (96 Tr. 999, Bell). The projects most likely to be cut are those which are the most theoretical -- like "curiosity projects" -- and it is therefore impossible to know what results those projects would have produced.
3. Genentech's Relationship With Roche Holdings
122. Although Roche Holdings currently owns 64% of Genentech's stock, the independent public shareholders of Genentech (i.e., the non-Roche shareholders) retain the power to elect 11 of Genentech's 13 board members, and Genentech continues to operate independently of Roche (96 Tr. 1098-01, Bell; GNE 282, p. 9). Genentech has stated its desire to continue independent operations (96 Tr. 1099, Bell; GNE 249, p.2).
123. Pursuant to an agreement between Genentech and Roche, Roche has an option to purchase all of the outstanding stock of Genentech not presently owned by Roche at a substantial premium over the present market price of approximately $ 52 per share (96 Tr. 746-47, Whiting; GNE 249; GNE 282). Roche has the option to purchase the stock at prices which increase quarterly, rising to $ 82 per share in 1999 (96 Tr. 746-47, Whiting; GNE 249, p. 33; GNE 282, p. i). If Roche does not exercise its option, then the public shareholders have the right, exercisable in 1999, to require Roche to purchase their shares for $ 60 per share (Id.). Thus, if Genentech's stock is trading for less than $ 60 per share in 1999, the public shareholders will be effectively compelled to sell their shares to Roche, and Genentech will likely cease independent operations (96 Tr. 747, Whiting; 96 Tr. 1006-08, Bell).
124. In order to give public shareholders the opportunity and incentive to opt for continued independent operations by holding on to their shares, Genentech has adopted several new strategic objectives, including increasing research and development spending over the short term in order to move products in development through the "pipeline" to commercial sale as quickly as possible, and to steadily increase earnings prior to 1999 (96 Tr. 747, Whiting). Both of these objectives require that present revenue levels be sustained and increased, which would be frustrated by a decrease in earnings resulting from Novo's premature entry into the market (Id.).
125. This court disagrees with Novo that Genentech's liquid assets of approximately $ 1 billion could be used to fund research and development without causing irreparable harm to Genentech because a decrease in those funds would result in an increase in expense and a resulting, decrease in earnings, adversely affecting the share value (96 Tr. 748-49, Whiting). If Novo is allowed to infringe pending trial, and is compelled to pay damages after 1999, there is a substantial possibility that such damages would be paid to a different company than the present Genentech (Id.). The harm which Genentech may sustain by being unable to increase earnings and preserve its independent operations cannot be compensated by money damages alone and is akin to cases in which irreparable harm stems from a hostile tender offer, or where lost sales threaten the viability of a business. See Consolidated Gold Fields PLC v. Minorco, S.A., 871 F.2d 252, 261 (2d Cir.), cert. denied, 492 U.S. 939, 106 L. Ed. 2d 639, 110 S. Ct. 29 (1989) ("once the tender offer has been consummated it becomes difficult, and sometimes virtually impossible, for a court to 'unscramble the eggs'") (citations omitted); Petereit v. S.B. Thomas, Inc., 63 F.3d 1169, 1186 (2d Cir. 1995), cert. denied, U.S. , 134 L. Ed. 2d 520, 116 S. Ct. 1351 (1996) (lost profits may threaten the viability of plaintiffs' businesses). Accordingly, the court finds that future money damages are an inadequate remedy for infringement.
V. THE BALANCE OF EQUITIES TIPS DECIDEDLY IN GENENTECH'S FAVOR
126. Genentech's pioneering invention and its vast expenditures on research and development created hGH technology and the United States market for hGH. Genentech's '199 patent expires in 2003. By the time this case is finally decided, Genentech will have five years or less of remaining patent protection. See Robertson, 820 F.2d at 391 (granting preliminary injunction where patent did not have many years to run); Sensormatic Electronics Corp. v. Minnesota Mining and Manufacturing Co., 1988 U.S. Dist. LEXIS 16478, 10 U.S.P.Q.2D (BNA) 1467, 1470 (S.D. Fla. 1988) (granting preliminary injunction where remaining two years of patent were "critical" to the industry).
127. In contrast, Novo has not yet entered into the United States market and accordingly does not stand to lose goodwill or comparable expenditures from a preliminary injunction maintaining the status quo. As the Federal Circuit has recognized, "when the movant has shown the likelihood that the acts complained of are unlawful, the preliminary injunction 'preserves the status quo if it prevents future trespass' but does not undertake to assess the pecuniary or other consequences of past trespasses . . ." Robertson, 820 F.2d at 390-391 (citation omitted) (affirming grant of preliminary injunction). [TEXT REDACTED BY THE COURT] *fn6"
128. Accordingly, the court finds that the balance of equities weigh in favor of Genentech.
VI. THE PUBLIC INTEREST FAVORS THE GRANTING OF A PRELIMINARY INJUNCTION
129. The Federal Circuit has held that public interest favors the grant of injunctions, including preliminary injunctions, to stop patent infringement. Smith International, Inc. v. Hughes Tool Co., 718 F.2d 1573, 1578 (Fed. Cir. 1983) ('Without the right to obtain an injunction, the right to exclude granted to the patentee would have only a fraction of the value it was intended to have and would no longer be as great an incentive to engage in the toils of scientific and technological research"), cert. denied, 464 U.S. 996, 78 L. Ed. 2d 687, 104 S. Ct. 493 (1983). Indeed, the "protection of patents furthers a strong public policy . . . advanced by granting preliminary injunctive relief when it appears that, absent such relief, patent rights will be flagrantly violated." Robertson, 820 F.2d at 391. Moreover, patent grants inspire researchers to explore, at their own risk and expense, uncharted territory in the quest for knowledge. See Eli Lilly and Co. v. Premo Pharmaceutical Labs., 630 F.2d 120, 137 (3d Cir.), cert. denied, 449 U.S. 1014, 66 L. Ed. 2d 473, 101 S. Ct. 573 (1980); Ortho Pharmaceutical Corp. v. Smith, 1990 U.S. Dist. LEXIS 10878, 18 U.S.P.Q.2D (BNA) 1977, 1989 (E.D.Pa. 1990), aff'd 959 F.2d 936 (Fed. Cir. 1992) ("the policy rationales behind the patent statutes generally apply with even greater strength in the case of drug patents. It is in the public interest to protect the pharmaceutical industry's investment into the discovery of new drugs"). Novo's own policy statement on biotechnology patents concedes that because this industry involves high inventive costs and low production costs, it is sensitive to copying and piracy, making patents essential (GNE 276).
130. In addition, it is in the public interest to minimize disruption in customers' product usage with the issuance of a preliminary injunction which precludes long-term utilization of and reliance on an allegedly infringing product. Critikon, 28 U.S.P.Q.2D (BNA) at 1371.
Genentech has demonstrated a likelihood of success on the merits of its infringement claim and has shown that it will suffer irreparable injury in the absence of a preliminary injunction. Accordingly, Genentech's motion for a preliminary injunction is granted and Novo's motion to dismiss Genentech's complaint is denied.
Dated: June 26, 1996
New York, New York
CONSTANCE BAKER MOTLEY
United States District Judge
ORDER OF PRELIMINARY INJUNCTION
This cause came on to be heard on Genentech's motion for a preliminary injunction in the above-titled consolidated actions and the court having considered the pleadings, the affidavits submitted in support of said motion and in opposition thereto, and having heard oral evidence and received exhibits in open court, and the court having made and filed its findings of fact and conclusions of law, it is
NOW ORDERED, ADJUDGED, and DECREED that
Novo Nordisk of North America Inc., Novo Nordisk Pharmaceuticals, Inc., and Novo Nordisk A/S, and their parents, subsidiaries, agents, employees, attorneys and all those acting in concert with each of them who receive actual notice of this injunction order are hereby enjoined, pending the final determination of this action, from importing, making, using, selling, offering for sale or distributing in the United States, Novo's Norditropin (R), Human Growth Hormone product, except for current bona fide continuing Food & Drug Administration (FDA) approved clinical dosing trials.
This order shall be effective immediately upon payment by Genentech of cash or a surety bond that meets the satisfaction of the Clerk of the Court in the amount of [TEXT REDACTED BY THE COURT] pursuant to Federal Rule of Civil Procedure 65(c) or upon Genentech providing a letter by an officer with appropriate authority within thirty (30) days of the date of this order, guaranteeing payment by Genentech up to [TEXT REDACTED BY THE COURT]
Dated: June 27, 1996
New York, New York
CONSTANCE BAKER MOTLEY