United States District Court, E.D. New York
June 15, 2005.
CollaGenex Pharmaceuticals, Inc. et al., Plaintiffs,
IVAX Corporation, et al., Defendants.
The opinion of the court was delivered by: SANDRA TOWNES, District Judge
MEMORANDUM & ORDER
By order dated January 21, 2005, this Court referred this
matter to Magistrate Judge Viktor Pohorelsky for a Report and
Recommendation on the Plaintiffs' motions for a temporary
restraining order and a preliminary injunction.
A district court judge may designate a magistrate to hear and
determine certain motions pending before the Court and to submit
to the Court proposed findings of fact and a recommendation as to
the disposition of the motion. See 28 U.S.C. § 636(b)(1).
Within ten days of service of the recommendation, any party may
file written objections to the magistrate's report. See id.
Upon de novo review of those portions of the record to which
objections were made, the district court judge may affirm or
reject the recommendations. See id. The Court is not required
to review the factual or legal conclusions of the magistrate
judge as to those portions of the report and recommendation to
which no objections are addressed. See Thomas v. Arn,
474 U.S. 140, 150, 106 S. Ct. 466, 88 L. Ed. 2d 435 (1985).
Judge Pohorelsky has recommended that this Court deny the Plaintiffs'
motions for a temporary restraining order and preliminary injunctive relief.
Plaintiffs filed timely objection to the magistrate's report and the defendants IVAX Corporation and
IVAX Pharmaceuticals, Inc. filed a timely response in opposition
to Plaintiffs' objections.
The Court has carefully reviewed all papers in connection with:
(1) all submissions by the parties in support of and opposition
to the grant of Plaintiffs' motions; (2) the transcript of the
proceedings held before Judge Pohorelsky on January 31, 2005; and
(3) the instant objections to the Report and Recommendation and
response thereto. In addition, this Court reviewed additional
submissions by the parties on the issue of irreparable harm and
heard proof and futher argument regarding this issue on May 23, 2005.
Applying the de novo standard of review, the Court adopts and
affirms the Report and Recommendation.
"A preliminary injunction is a drastic and extraordinary remedy
that is not to be routinely granted." Intel Corp. v. ULSI Sys.
Tech. Inc., 995 F.2d 1566, 1568 (Fed. Cir. 1993). While "grant
or denial of a preliminary injunction pursuant to 35 U.S.C. § 283
is within the discretion of the district court," Novo Nordisk of
N. Am., Inc. v. Genentech, Inc., 77 F.3d 1364, 1367 (Fed. Cir.
1996), the burden is always on the movant to make a clear showing
of entitlement to such relief. Intel, 995 F.2d at 1568. To
obtain preliminary injunctive relief, the movant must show four
factors: (1) reasonable likelihood of success on the merits; (2)
irreparable harm if preliminary injunction is not granted; (3)
that the balance of hardships tips in its favor; and (4) the
impact of the injunction on the public interest. Reebok Int'l,
Ltd. v. Baker, 32 F.3d 1552, 1555 (Fed. Cir. 1994); Hybritech,
Inc. v. Abbott Labs., 849 F.2d 1446, 1451 (Fed. Cir. 1988). Upon a patentee's failure to make a clear showing of any one of
the four factors, a trial court may deny the motion. Polymer
Techs., Inc. v. Bridwell, 103 F.3d 970, 973-4 (Fed. Cir. 1996).
Likelihood of Success on the Merits
To show a reasonable likelihood of success on the merits, the
movant must show infringement and validity of the patent.
Reebok, 32 F.3d at 1555. In his Report and Recommendation,
Judge Pohorelsky concluded that the Plaintiffs failed to satisfy
their burden of proving that either of the Defendants'
non-infringing and invalidity arguments lack substantial merit.
The Plaintiffs object and argue that the recommendation as to
each issue is clearly erroneous. This Court agrees with the sound
logic employed by Judge Pohorelsky and adopts the findings made
and the analysis performed by him.
Serious issues are raised by the Defendants as to whether the
Plaintiffs' claims fail under prior art or the doctrine of double
patenting. It is premature on this incomplete record to make
findings in that regard, but since the Plaintiffs have failed to
meet their burden of establishing that these issues are lacking
in merit, a preliminary injunction should not issue.
Having failed at showing a likelihood of success on the merits,
Plaintiffs are not entitled to the presumption of irreparable
harm. Eli Lilly and Co. v. American Cyanamid Co., 82 F.3d 1568,
1578 (Fed Cir. 1996). Judge Pohorelsky determined that Plaintiffs
failed to make a showing of irreparable harm based on the
following factors: (1) "most of [the harms alleged] emanate from
an expected sharp drop in revenue," which can be compensated with
money damages, particularly when the defendant would be able to
satisfy any judgment that may be entered against it; (2) loss of
the opportunity to develop other drugs is insufficient to constitute irreparable harm; (3) Plaintiffs failed to allege loss of a
business; (4) Plaintiffs' decision to bargain away its rights to
Mutual did not weigh in favor of Plaintiffs; and (5) Plaintiffs'
failure to disclose in its January 20, 2005, SEC Form 8-K that
its viability was in danger. (Report and Recommendation at 13-16.)
In their objections to Judge Pohorelsky's Report and
Recommendation (the "Objections"), Plaintiffs ask the Court to
consider that monetary damages do not preclude a finding of
irreparable harm; that there is a short period of time remaining
on the patent; that loss of research and development constitutes
irreparable harm; and that the Court ignored a nonbinding opinion
granting an injunction to CollaGenex on what it describes as
"almost identical" circumstances.
Plaintiffs argue that Judge Pohorelsky determined there was no
irreparable harm "solely on a determination that the alleged
infringer can pay money damages." (Objections at 5.) However,
Judge Pohorelsky found a lack of irreparable harm not only
because Plaintiffs' damages are quantifiable, but also because
Plaintiffs have not made a persuasive argument that CollaGenex
will not recover from the harm that would result should the Court
deny its request for an injunction. Quantifiable monetary damages
on their own cannot constitute irreparable harm, Eli Lilly,
82 F.3d 1578, but Judge Pohorelsky found that Plaintiffs showed
little more than potential monetary damages. His Report and
Recommendation found Plaintiffs' arguments that CollaGenex would
be in financial ruin if the injunction does not issue
unconvincing, particularly in light of both its SEC filings and
voluntarily bargained-for agreement with Mutual. In its moving papers and accompanying affidavits from Brian
Gallagher, former Chief Executive Officer ("CEO") of CollaGenex
and Colin Stewart, current CEO, Plaintiffs repeat that in the
absence of an injunction, CollaGenex faces the possibility of
economic collapse. (Gallagher Decl. ¶ 49 (sales by Defendants
"will cause immediate and irreparable injury to CollaGenex and
threaten its viability"); Stewart Decl. ¶ 31, 41 (sales by
Defendants "threaten? its viability as a pharmaceutical company"
and "would destroy the value of CollaGenex"); Pl. Mem. of Law in
Support of Mot. for T.R.O. at 16 ("CollaGenex will lose its
ability to continue as a viable pharmaceutical company."); Pl.
Mem. of Law in Support Em. Mot. for Prelim. Inj. at 38 ("This
scale of harm is not compensable by monetary damages alone
because it represents the loss of a business."); Id. at 41
("With Periostat® being CollaGenex's only major source of
revenue, it would be unlikely to survive."))
Plaintiffs also argued that CollaGenex is a "one-product
Company," Id. at 39, that "Collagenex cannot yet finance its
research and development program from sources other than
Periostat®," Stewart Decl. ¶ 6, and that "severely diminishing
revenues [which would result without an injunction] . . . would
force CollaGenex to abandon development work underway . . .
including its work on treating acne, rosacea, and Kaposi's
Sarcoma, and its plans to explore new indications and other
technologies." Id. at ¶ 33.
Subsequent to Judge Pohorelsky's Report and Recommendation, the
parties submitted additional evidence on the issue of irreparable
harm. The letters and declarations submitted by the parties, and
the exhibits attached thereto, negate Plaintiffs' allegation that
CollaGenex would suffer catastrophic loss and therefore be unable to develop other
products if the injunction is not issued.
On May 16, 2005, Defendants submitted a copy of CollaGenex's
April 22, 2005 letter to its shareholders. (Letter from Wepner to
Court of 5/16/05.) In it, Plaintiffs opined that, in the absence
of the injunction requested of this court, CollaGenex
"anticipates that Periostat® will be subject to generic
competition sometime during 2005, which will cause our sales of
Periostat® and Mutual's branded version of Periostat® to decline
significantly. When this occurs, we will execute plans to reduce
our cost base. None of these actions will affect our commitment
to develop Oracea and our dermatology franchise." (Shapiro Decl.
Ex. A at 3) (emphasis added).
On May 5, 2005, CollaGenex held a First Quarter 2005 Earnings
Conference Call in which CEO Stewart stated: "we believe it is
more likely than not that the generic form of Periostat® will be
approved by the FDA and launched sometime in the near future."
(Id. Ex. B at 2.) Stewart goes on to describe the actions taken
by CollaGenex "to manage the impact of the launch which generic
form [sic] of Periostat® will have on our business." (Id.)
Included in these actions are the reduction of the level of
inventories held by Plaintiffs' wholesale customers, and
Plaintiffs' decision to write off some of its inventory. (Id.)
Stewart concluded his prepared statement with the following: "We
are . . . well prepared for an eventual entry [of generic
competition] and remain very focused on the significant
opportunity that lies ahead in dermatology." (Id. at 3)
Plaintiffs responded to Defendants' May 16 submission with a
letter dated May 17, 2005, attaching an article from the
Philadelphia Inquirer, a copy of CollaGenex's Form 8-K, filed on
May 16, 2005 and the transcript of May 16, 2005 conference call
held by CollaGenex "to Announce Restructuring." (Letter from Sack to Court of 5/17/05,
Exs. D-F.) Each document confirms CollaGenex's plan to cut 63 of
135 employees if the injunction was not ordered by May 20, 2005.
(Letter from Sack to Court of 5/17/05, Exs. D-F.) The 8-K quoted
Stewart as stating: "While we are clearly disappointed with the
generic approval, we remain confident in our ability to build
CollaGenex's dermatology franchise." (Letter from Sack to Court
of 5/17/05, Ex. E at 5.) And, in the conference call, Stewart
announced that "[f]or the past 18 months, we at CollaGenex have
stressed our strategy of building CollaGenex into a more broadly
based speciality pharmaceutical company initially concentrating
on dermatology and launching products from our own development
pipeline." (Letter from Sack to Court of 5/17/05, Ex. F at 2.)
Stewart said this after announcing the layoffs and budget cuts
that Collagenex, by this point, had already contemplated. (See
Defendants submitted a letter pointing out Plaintiffs' failure
to reconcile the statements made in their moving papers with
those made to their shareholders and on their conference calls.
(Letter from Mentlik to Court of 5/18/05.) With oral argument on
this issue scheduled for May 23, 2005, Plaintiffs submitted an
additional Declaration on Sunday May 22 at 11:23 p.m. (See
Supplemental Stewart Decl.) In it, Stewart now says, inter
alia, that "the confidence of CollaGenex's employees, customers,
strategic partners and investors in CollaGenex's ability to
continue as an innovative growing presence in the dental
market" has been undermined. (Id. at ¶ 6) (emphasis added).
Indeed, the irreparable harm alleged by CollaGenex, in this
declaration, is largely related to its position in the dental
market. (Id. at ¶ 12 ("In the dental area the following
programs will be abandoned or postponed . . ."); ¶ 13 ("[I]f
CollaGenex loses its established presence in the dental market
. . ."); ¶ 14 ("Our strategic partners in the dental business . . .
have also voiced concerns that their relationships with CollaGenex may not
be viable in light of the uncertainty surrounding the future of
CollaGenex's dental business"); ¶ 19 (CollaGenex "would not be
able to resurrect its dental business"); ¶ 20 ("With an
injunction, CollaGenex . . . [will be able to] maintain the
goodwill it has built as a pioneer in the dental market
place."); ¶ 21 ("With an injunction, CollaGenex will also have
the revenues to be able to continue the development of Periostat
MR and successor IMPACS compounds that have shown promise in the
dental area.")) (emphases added). Prior declarations and
memoranda made no such distinction.
The Stewart declaration also alleged that the restructuring
plan formulated by CollaGenex "contemplates abandonment or
postponement of various research and development initiatives
which previously have been disclosed as targeted for completion
or significant progression in the period between now and
mid-2007," Supplemental Stewart Decl. at ¶ 11, and that certain
non-dental research and development projects would be impossible
without Periostat® revenues, including "dry eye," Restoraderm,
COL-3, and IMPACS. Id. at ¶¶ 15-18. Outside funding for COL-3,
Plaintiffs argue, would become difficult to obtain in light of
the "depressed level of CollaGenex share price," and "[s]trategic
partners in the non-dental business have voiced their concerns
that their relationships may need to be reviewed." (Id. at ¶¶
The Court scheduled an oral argument in order to direct the
parties to address a limited number of documents bearing on the
issue of irreparable harm: the CollaGenex April 22, 2005 Annual
Report to its shareholders, the transcript of the May 5, 2005
conference call and the exhibits attached to Plaintiffs' May 17, 2005 letter to the
court.*fn1 (Transcript of 5/23/05 Oral Argument ("Tr.") at
Again, Plaintiffs focused on the distinction, absent prior to
the Report and Recommendation, between loss of its entire
business and loss of its dental business:
Plaintiffs' Counsel: [B]y the time this Court finally
decides with the assistance of a jury whether this
patent is infringed and what the damages are, this
company will have been irreparably harmed, even if it
still exists. It won't exist, it won't be viable in
the form in which it exists today, a dental company.
[. . .]
The Court: Let me ask you this. You are confusing me
because you are saying on the one hand that they may
be able to survive.
Plaintiffs' Counsel: Yes, Your Honor.
The Court: On the other hand that the viability of
the company as it exists . . .
Plaintiffs' Counsel: The viability of the company.
Periostat® has always been known in the marketplace
The Court: But if it can be replaced with something
Plaintiffs' Counsel: If it can be replaced with
something else then they may survive, but their
survival does not negate the irreparable harm they
(Tr. 10-11.) Plaintiffs then argued that irreparable harm exists
because of loss of market share, loss of employees, loss of
opportunity to pursue dental products, loss of research and development, loss of shareholder value, loss of reputation in the
marketplace and loss of licensing revenues to SUNY.
The Court then asked Plaintiffs' counsel about the contingency
plans stated in the documents at issue:
Plaintiffs' Counsel: What this company has said, Your
Honor, is no more than this: With $36 million in the
bank, if we suffer the devastating loss of our
patented product, which cuts off irrevocably the last
two years of our patent's life, we are not simply
going to go out of business. We are going to take
that $36 million and try to become a successful
The Court: That is not what has been argued here.
What has been argued here is that the loss of profit
from Periostat® will result in an inability to fund
any other, including the dermatological.
Plaintiffs' Counsel: With respect, Your Honor, that
statement Your Honor just made is absolutely correct
with the single exception of the word "any other."
The plaintiff has alleged . . . that many of the
research and development and other research programs
will have to be eliminated, and indeed, many have
been eliminated within the last two weeks . . . The
annual report concluded by saying that this is going
to be an exciting new phase of the company's
development, which I think, Your Honor, calls to mind
the old curse, may you live in exciting times. I
think it may be, but that doesn't mean that it is
going to be pleasant for either CollaGenex or its
(Tr. 13-14.) Plaintiffs did not say that it "is going to be
pleasant" but did optimistically declare that "[n]one of these
actions will affect our commitment to develop Oracea and our
dermatology franchise," that CollaGenex is "well prepared for
an eventual entry [of generic competition] and remain[s] very
focused on the significant opportunity that lies ahead in
dermatology;" and that CollaGenex has "a strong balance sheet;"
"no debt" and "expect[s] to increase [its] dermatology sales
force significantly in early 2006 for the Oracea launch."
(Shapiro Decl. Ex A at 3; Ex. B at 3) (emphases added).
Plaintiffs now ask the Court to read "exciting" as being
ambiguous in the face of these positive statements. On cross-examination, Stewart was presented with his
declaration, submitted on January 20, 2005, in support of the
instant motions, in which he declared, multiple times and under
oath, that the viability of CollaGenex as a company was
threatened by the prospect of generic competition with
Periostat®. (Tr. 40-41.) When asked to reconcile the statements
as to CollaGenex's overall viability with Plaintiffs' new
argument that it is CollaGenex's dental business that was
described as possibly ceasing to exist, the following colloquy
Defense Counsel: Again, no qualification [in your
declaration] that you were only concerned about your
dental business, you were talking about the whole
company there, weren't you?
Stewart: Yes, I was talking about the whole company.
Defense Counsel: Again, despite the fact that you had
plans to expand your business into the dermatology
field and were in the throes of actually doing so, is
Defense counsel then asked about the statement in Stewart's
declaration that development of "its current work on treating
acne, rosacea, and sarcoma" would have to be abandoned in the
absence of an injunction. (Tr. 41.) Stewart replied, "No. We have
discontinued work on sarcoma. We said with regard to acne, we
couldn't afford to develop that all the way through, without
having Periostat®." (Tr. 41-42.) Therefore, the statement as to
rosacea (the condition for which Plaintiffs are currently
developing Oracea) is inaccurate and it remains funded.
Defense counsel moved on to the statements bearing on
Plaintiffs' viability that were contained in the memoranda
submitted in support of the instant motions: Defense Counsel: Did you consider that perhaps
counsel was overstating the potential harm to the
company in those briefs?
Stewart: It didn't touch me at the time.
Defense Counsel: It didn't touch you at the time.
Does it touch you know?
Defense Counsel: So you think it was overstated to
Stewart: It could be.
Defense Counsel: For example, when it was stated to
the Court that the loss of revenue would lead to the
destruction of CollaGenex as a viable small
pharmaceutical company, at the time that didn't
strike you but it does today, is that what you are
Stewart: I still believe the viability of CollaGenex
Defense Counsel: Can you show me where . . . in the
submissions to the SEC, where in your call to
investors, where in the letters to the shareholders
you qualify any of your statements about the
continued viability of the company as to them as you
have done to the Court here?
Stewart: I made no statements to them about continued
Defense Counsel: None at all . . . What you did was
you told them we are continuing, we are selling, we
are getting approvals, and we expect to do really
well in the future. Isn't that what you told them?
Stewart: That is correct.
Defense Counsel: You testified in response to your
counsel's questions that it is possible that you will
be able to continue to survive. Could you show me
where you told the investors you only thought it was
possible as opposed to painting a picture for them
and to the SEC that you will indeed survive?
Stewart: I have not.
Defense Counsel: You have not done that. But here in
court it is only `possible,' here in court the fate
of CollaGenex is in the hands of the Court. It didn't
strike you when these statements were made back in
January that they were overstated, is that a fair
summary? Stewart: Yes.
On redirect, Stewart then testified that he does believe the
viability of CollaGenex "may" be threatened in the absence of an
Stewart: We have no idea and no indication as to what
the clinical results are in the two Oracea studies.
We do not know whether the FDA will approve the drug
on the basis of the documents we submit. We don't
know how long it will take the FDA to do their
review. We have made an estimate that it would be 12
months. That it may be 18 months or longer. All of
these steps are unknown to us.
The Court: But don't you I'm sorry. The concern to
me as I sit here when I am reading something else on
the page . . . There is a statement allegedly here by
Mr. Stewart [from the May 16 conference call] that
says, "Despite the changes caused by recent events
the management team remains confident that we have
the resources and the skill to build CollaGenex into
a broadly based speciality pharmaceutical company
which sustains the focus of the vision we have been
promoting for the last 18 months and this remains our
focus. We believe that we will be successful." Now he
says there is some doubt to that. There is no doubt
Plaintiffs' Counsel: What resources were you
referring to there, Mr. Stewart?
Stewart: The resources that we have with R and D, and
the resources we have with the management.
(Tr. 45-46.) Therefore, Plaintiffs ask the Court to believe that
CollaGenex did not contemplate the feasibility or likelihood of
FDA approval when it made the statement, "we have the resources
and the skill to build CollaGenex into a broadly based speciality
pharmaceutical company." Plaintiffs appear to be arguing both
that the viability of CollaGenex as a whole is threatened, and
that the viability of CollaGenex's dental business is threatened
even though, in its earlier filings, Plaintiffs focused on the
viability of CollaGenex as a whole. Only after being called upon
by Defendants, and then this Court, to reconcile the statements
do Plaintiffs argue both theories with only the slightest acknowledgment that the statements made in the
original moving papers were overstatements. (Tr. 42-44)
In short, Plaintiffs argue (both then and now) that CollaGenex,
as a whole, will be irreparably harmed, and that it is unsure
whether it will be unable to cultivate its dermatological
practice. Additionally, Plaintiffs now argue that loss of its
dental practice alone constitutes irreparable harm.
To its shareholders and the public, Plaintiffs paint an
optimistic picture of its potentially Periostat®-less future. To
the Court, CollaGenex will "try" to "hopefully" recover from
generic competition for Periostat® and "there is a chance" they
will be profitable. (Tr. 15, 46) To the Court, "exciting" means
unpleasant, perhaps catastrophic, and "calls to mind the old
curse," while shareholders are told that CollaGenex "expect[s] to
do really well in the future." (Tr. 43.) And, in its May 5
conference call, Stewart stated CollaGenex was "well prepare[d]
for an eventual entry [of generic competition] and remain very
focused on the significant opportunity that lies ahead in
dermatology." (Tr. 3.) Though Plaintiffs have presented evidence
of layoffs and discontinuances in relation to its dental market,
it has failed to satisfactorily reconcile the statements about
its dermatological endeavors given to this Court with those given
in the May 5 conference call and Annual Letter, leading this
Court to believe that Plaintiffs have been less than candid in
its submissions hereto.
As a result, the Court is not persuaded that irreparable harm
will result if CollaGenex continues, as planned, to develop its
presence in the market for dermatological pharmaceuticals. The
evidence and testimony presented, in conjunction with the
relevant precedent of Eli Lilly, compel the Court to agree with Judge Pohorelsky in finding that
the significance of the harms that CollaGenex alleges it will
suffer are not compelling:
Lilly contends that the loss of profits on sales . . .
because of competition . . . will result in
irreparable injury to Lilly's overall pharmaceutical
research efforts . . . [T]hat claim of injury is not
materially different from any claim of injury by a
business that is deprived of funds that it could
usefully reinvest. If a claim of lost opportunity to
conduct research were sufficient to compel a finding
of irreparable harm, it is hard to imagine any
manufacturer with a research and development program
that could not make the same claim and thus be
equally entitled to preliminary injunctive relief.
Such a rule would convert the `extraordinary' relief
of a preliminary injunction into a standby remedy,
available whenever the plaintiff has shown likelihood
of success on the merits. For that reasons, adopting
the principle that Lilly proposes would `disservice
the patent system.'
82 F.3d at 1578. Plaintiffs distinguished Eli Lilly solely on
the ground that it is a large company for which "loss of one
revenue generating product . . . has almost no impact."
(Objection at 9 n. 11.) However, the court in Eli Lilly did not
condition the applicability of the principles of patent law on
the size of the company. It cautioned against finding irreparable
harm based on factors that are likely to be present in any patent
In Plaintiffs' Objections, they also argued that "[i]t [was]
legal error to ignore precedent and not weigh evidence of the
irreparable harm CollaGenex will suffer." In arguing that a
plaintiff holding a patent on which little time remains has shown
irreparable harm, Plaintiffs again cite only to cases in which
the party requesting the injunction has shown a likelihood of
success on the merits, triggering a presumption of irreparable
harm that Plaintiffs have not earned in this case. See
Hybritech Inc. v. Abbott Labs., 849 F.2d 1446, 1451-7 (Fed.
Cir. 1988) (affirming injunction where, inter alia, district
court found irreparable harm based on nine factors and plaintiff showed likelihood of success on the merits
of validity of patent and patent infringement); Pharmacia &
Upjohn Co v. Ranbaxy Pharm., Inc., 274 F. Supp. 2d 597, 614
(D.N.J. 2003) (injunction granted where presumption of
irreparable harm given to plaintiff and, inter alia, damages
speculative, potential for significant damage award if defendant
found liable and difficulty pursuing collection overseas
considered); Ortho Pharm. Corp. v. Smith, 1990 WL 18681, *9, 15
U.S.P.Q.2d 1856 (E.D. Pa. Feb. 23, 1990) (granting defendant's
motion for preliminary injunction where defendant showed
likelihood of success on the merits, irreparable harm presumed
and court looked to "several factors which add too the
irreparable harm") (emphasis added).
Indeed, many of the cases cited by Plaintiffs in support of
their argument that they have established irreparable harm are
ones in which the plaintiff has the presumption of irreparable
harm either (A) based on an earlier showing of likelihood of
success on the merits and/or (B) are appeals, in which the court
evaluates whether the district court committed an abuse of
discretion, factors that significantly change the persuasiveness
of those cases. See, e.g., Purdue Pharma L.P. v. Boehringer
Ingelheim GMBH, 237 F.3d 1359, 1363 (Fed. Cir. 2001). In Purdue
Pharma, a case Plaintiffs cite for the proposition that price
erosion is sufficient to show irreparable harm, the plaintiff
made a "clear" showing of likelihood of success on the merits,
was given the presumption of irreparable harm, which, in turn,
placed the burden on the defendant to show the plaintiff would
not be irreparably harmed. Id. at 1367-8. Defendant argued that
the testimony of plaintiffs' expert regarding price erosion and
market position was speculative. Id. "Given the testimony of
the likelihood of price erosion and loss of market position
without corresponding market expansion from [defendant's]
product, [the court] saw no deficiency in the district court's finding of irreparable harm." Id. at 1368. This is not the
same, as Plaintiffs here argue, as finding "price erosion
sufficient." Plaintiffs here have neither the presumption of
irreparable harm nor the standard of review in their favor and
without either, the isolated factors to which it points are not
persuasive, particularly in light of the evidence discussed and
presented at the May 23 oral argument that seriously undercuts
Plaintiffs' argument that CollaGenex's viability is at skate.
Similarly, the persuasiveness of Bio-Technology v. Genentech,
80 F.3d 1553, 1565-6 (Fed. Cir. 1996) (cited by Plaintiffs in
support of their argument that loss of research and development
is sufficient to constitute irreparable harm), is also severely
mitigated by its posture. There, the Court first acknowledged
that the nonmoving party failed to rebut the presumption of
irreparable harm. Id. The court then went on: "In addition
[to the presumption of irreparable harm], the district court
determined that Genentech would be harmed if BTG were allowed to
enter the market because Genentech would lose revenues and good
will and would be required to reduce its research and development
activities." Id. at 1566 (emphasis added). It did not hold that
loss of research and development were sufficient to establish
irreparable harm. See also Hybritech, 849 F.2d at 1456;
Atlas, 773 F.2d 1230 (finding defendant's argument that the
availability of money damages precluded injunction insufficient
to show abuse of discretion of district court).
The cases cited by Plaintiffs that are distinguishable on
significant grounds are many. Plaintiffs cite inapposite cases
for their statement that "loss of business opportunity . . . is
as significant . . . as substantial loss profits." Compare
Objection at 7 with Canon Computer Sys., Inc. v. Nu-Kote
Int'l, Inc., 134 F.3d 1085, 1090 (Fed. Cir. 1988) (no clear
error by district court where plaintiff entitled to presumption of irreparable harm and
defendant failed to rebut that presumption due to nature of
patent and loss of market share); and Cordis Corp. v.
Medtronic, Inc., 835 F.2d 859, 864 (Fed. Cir. 1987) (affirming
grant of injunction and finding pacemaker industry in particular
to be "highly competitive" based on precedent indicating that
irreparable harm likely without injunction). Neither case equates
loss of business opportunity with substantial lost profits.
Plaintiffs are correct that loss of a business needn't be total
"so long as it is so great as to seriously compromise the
company's ability to continue in its current form." Galvin v.
New York Racing Assoc., 70 F. Supp. 2d 163, 170 (E.D.N.Y. 1988)
(Ross, J.). However, Galvin involved a professional equine
thoroughbred racehorse veterinarian who sought an injunction to
continue practicing during the pendency of investigations. Id.
at 168. Without the injunction, the plaintiff would not have been
able to practice in any of defendant's establishments, leaving
him without an opportunity to practice his trade in the New York
area. CollaGenex does not face a similar fate. Its lot is more
comparable to the plaintiff in P.J. Grady, Inc. v. General
Motors Corp., 472 F. Supp. 35, 37 (E.D.N.Y. 1979) (no
irreparable harm where defendant terminated Buick dealership and
plaintiff also maintained Chevrolet dealership), than the
plaintiffs in cases where the one item sold by a plaintiff is
taken away. See generally Roso-Lino Beverages Distrib., Inc.
v. Coca-Cola Bottling Co. of New York, 749 F.2d 124 (2d Cir.
1984) (irreparable harm where Coca-Cola bottler had no other
products); Semmes Motors, Inc. v. Ford Motor Co.,
429 F.2d 1197, 1205 (2d Cir. 1970) (irreparable harm where arrangement
terminated, leaving Ford-only company without any vehicles for
sale). For these same reasons, CollaGenex's argument that it is a
"one-product" company is also unpersuasive. Though the Court
acknowledges that, in 2004, Periostat® was source of a 80% of Plaintiffs' revenues, there is
substantial evidence to indicate that there is more than one
successful product in CollaGenex's portfolio.
Additionally, Plaintiffs' argument that loss of licensing
revenues to SUNY will result in irreparable harm is without
merit. High Tech Med. Instrumentation, Inc. v. New Image Indus.,
Inc., 49 F.3d 1551, 1557 (Fed. Cir. 1995) (grant of license
shows that owner "is willing to forego its patent rights for
The decision in CollaGenex Pharmaceuticals v. Thompson, 2003
WL 21697344 (D.D.C. Aug. 6, 2003) is not binding on this Court.
However, Plaintiffs ask that the Court find irreparable harm
because Judge Collyer found irreparable harm when considering the
impact had the Food and Drug Administration ("FDA") approved a
generic version of Periostat® at that time. However, not only did
Judge Collyer, in a subsequent opinion, dismiss Plaintiffs'
complaint and dissolve the injunction, 2005 WL 256561, *1 (D.D.C.
Jan. 19, 2005), but, the United States Court of Appeals for the
District of Columbia denied Plaintiffs' emergency petition for
injunctive relief pending appeal for failure to meet the
"stringent standards required for injunctive relief." 2005 U.S.
LEXIS 1520 (D.C. Cir. 2005).
In light of the foregoing, this Court agrees with Judge
Pohorelsky's finding that, of the host of harms Plaintiffs claim
they will suffer, "most . . . emanate from an expected sharp drop
in revenue" which can be quantified and, without the presumption
of irreparable harm that accompanies the court's finding of
likelihood of success on the merits, the harms alleged are
insufficient to warrant an injunction. The Court also agrees with
Judge Pohorelsky that any harm caused by Plaintiffs' agreement with Mutual is harm that was
bargained-for and not proper for consideration of the instant
motion. Furthermore, it is significant that CollaGenex stopped
supporting Periostat® before a decision on whether a preliminary
injunction would issue and has no intention of attempting to
compete with the generic version of Periostat®, but appears to
prefer shutting down that portion of its business.*fn2 For
these reasons, the Court finds that Plaintiffs have not made a
showing of irreparable harm sufficient to warrant either a
preliminary injunction or a temporary restraining order. CONCLUSION
After reviewing Magistrate Judge Pohorelsky's Report and
Recommendation and Plaintiffs' Objections thereto, the Court
adopts and affirms the Report and Recommendation. Plaintiffs'
motions for a temporary restraining order and preliminary
injunctive relief are denied.