Summary
The U.S. Court of Appeals for the Third Circuit affirmed the denial of Johnson & Johnson and Janssen Biotech’s motion for a preliminary injunction against Samsung Bioepis. The court held that Janssen had not established irreparable harm from Samsung’s alleged breach of a settlement agreement governing sublicensing of a ustekinumab biosimilar. In particular, alleged losses of market share and negotiating leverage were either compensable through monetary damages or too speculative to support preliminary relief.
Topics
Practice areas
Questions Presented
- Whether loss of market share in the biologics market categorically establishes irreparable harm supporting a preliminary injunction in a breach-of-contract action.
- Whether a plaintiff seeking a preliminary injunction for breach of contract must show that damages are impossible or impracticable to calculate, rather than merely difficult to calculate.
- Whether Janssen established that its alleged loss of negotiating leverage was actual and imminent rather than speculative.
- Whether the District Court improperly imposed a severity threshold in evaluating Janssen's alleged market-share losses.
- Whether the District Court abused its discretion in denying Janssen's motion for a preliminary injunction.
Holdings
- Loss of market share does not categorically constitute irreparable harm in a breach-of-contract action. Requests for equitable relief require a case-by-case assessment, and the presumption historically associated with certain Lanham Act, patent, or antitrust contexts does not apply here.
- For preliminary injunctive relief based on breach of contract, irreparable injury may exist where the contract concerns subject matter of special or peculiar value, or where special and practical features make the legal measure of loss impracticable to ascertain. Mere difficulty in calculating damages does not suffice for the lost-sales and market-share injuries alleged here.
- Janssen failed to establish that its alleged loss of negotiating leverage was actual and imminent rather than remote or speculative; therefore, that alleged harm did not support a preliminary injunction.
- The District Court did not impose a fixed percentage or severity threshold for market-share loss. Its reference to whether the private-label biosimilar would 'crush the market' merely distinguished another case on its facts.
- Janssen failed to establish irreparable harm, a necessary preliminary-injunction factor, and the District Court therefore properly denied its motion.
Key quotations
“Because we agree with the District Court that Janssen failed to establish irreparable harm, we will affirm its denial of relief.” (at 8)
“it is considered “an extraordinary remedy never awarded as of right,”” (at 8)
“Because we use a sliding scale approach, even where there is a significant likelihood of success, there still must be some showing of irreparable harm.” (at 9)
“irreparable injury may be found in two situations: (1) where the subject matter of the contract is of such a special nature of peculiar value that damages would be inadequate; or (2) where because of some special and practical features of the contract, it is impossible to ascertain the legal measure of loss so that money damages are impracticable.” (at 16)
“Because Janssen failed to meet its burden to satisfy that “gateway factor[],” Reilly, 858 F.3d at 179, we will affirm the District Court’s denial of Janssen’s motion for preliminary injunctive relief.” (at 22)
Factual background
Janssen developed and patented ustekinumab, marketed as Stelara, and entered a settlement agreement with Samsung concerning Samsung's ustekinumab biosimilar, SB17. The agreement generally prohibited Samsung from sublicensing its patent rights but permitted sublicenses to commercialization partners to import, sell, and offer SB17 for sale on Samsung's behalf. Samsung and Sandoz entered agreements involving SB17, and Samsung and Quallent, a Cigna subsidiary, entered agreements allowing Quallent to distribute SB17 under Quallent's own private label. Janssen contended that the Quallent sublicense violated the settlement agreement and would cause irreparable losses in market share, competition, and negotiating leverage.
Procedural history
Janssen sued Samsung, alleging that Samsung breached a settlement agreement by sublicensing rights to Quallent Pharmaceuticals Health LLC, a Cigna subsidiary, for distribution of a private-label ustekinumab biosimilar. Janssen moved for a preliminary injunction preventing Samsung from supplying or authorizing Quallent to distribute the product. The District Court for the District of New Jersey found that Janssen was likely to succeed on its breach-of-contract and implied-covenant claims but denied preliminary relief because Janssen failed to establish irreparable harm. The Third Circuit affirmed.