IGEN International v. Roche Diagnostics ( 1999 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
IGEN INTERNATIONAL, INCORPORATED,
a Delaware Corporation,
Plaintiff-Appellee,
v.
ROCHE DIAGNOSTICS GMBH,
No. 99-1465
Defendant-Appellant,
and
BOEHRINGER MANNHEIM GMBH, a
German Limited Liability Company,
Defendant.
Appeal from the United States District Court
for the District of Maryland, at Greenbelt.
Peter J. Messite, District Judge.
(CA-97-3461-PJM)
Argued: October 27, 1999
Decided: December 30, 1999
Before WILKINSON, Chief Judge, and WILKINS and
MICHAEL, Circuit Judges.
_________________________________________________________________
Affirmed by unpublished per curiam opinion.
_________________________________________________________________
COUNSEL
ARGUED: John Robert Dawson, Milwaukee, Wisconsin, for Appel-
lant. Howard M. Shapiro, WILMER, CUTLER & PICKERING,
Washington, D.C., for Appellee. ON BRIEF: Michael A. Bowen,
Michael J. Aprahamian, Milwaukee, Wisconsin; Joseph D. Edmond-
son, Jr., FOLEY & LARDNER, Washington, D.C., for Appellant.
Stephen H. Sachs, Denise Esposito, Amy T. Kreiger, Heather A.
Wydra, WILMER, CUTLER & PICKERING, Washington, D.C., for
Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
Roche Diagnostics GmbH (Roche) appeals an order of the district
court granting a preliminary injunction to IGEN International, Inc.
(IGEN) in IGEN's suit alleging that Roche was violating a licensing
agreement. Roche also appeals the denial of its motion to alter or
amend the injunction. Finding no error, we affirm.
I.
IGEN is a biotechnology firm that is incorporated in Delaware with
its principal place of business in Gaithersburg, Maryland. IGEN
develops and markets technologies for use in medical diagnosis,
including a diagnostic process based on electrochemiluminescence
("ECL"). In 1992, IGEN entered into a licensing agreement regarding
the ECL technology with Roche. Pursuant to the agreement, Roche
was to develop, manufacture, and market applications of the ECL
("instruments") and the tests and supplies used with the instruments.
The agreement limited Roche to marketing its instruments within a
"field" defined in the agreement. The agreement defined the field as
the use of any Instrument to perform Assays, solely for use
in hospitals (except where the performance of the Assay
takes place at the side of the patient), blood banks and clini-
2
cal reference laboratories. "Field" does not include, among
other things, use of any Instrument or Assay in the presence
or the proximity of the patient, e.g., for home, patient bed-
side, ambulance or physician office uses.
J.A. 616. The agreement also contained a provision explicitly reserv-
ing rights in all non-field applications of the ECL technology to
IGEN:
[Roche] agrees and acknowledges that IGEN retains for
itself and its licensees the rights to any and all fields of use
other than the Field and to any and all instruments other
than those falling within the definition of Instruments
herein, including, without limitation, the exclusive right to
develop ... and sell or license an instrument for use in inten-
sive care, emergency room, and other hospital patient bed-
side settings where the assay is performed at the patient's
side, as well as home and physician office applications.
Id. at 622.
Pursuant to the agreement, Roche developed and, in 1996, began
marketing two instruments using the ECL technology, the Elecsys
1010 and the Elecsys 2010. Each instrument weighs between 150 and
250 pounds and is intended for use in a laboratory, rather than at the
side of the patient. Roche has marketed both instruments to non-
hospital laboratories, including laboratories located within the office
of a physician or group of physicians.
Since 1992, IGEN has been attempting to develop an instrument
based on the ECL technology for application in the point-of-care
diagnostic market. IGEN envisions a miniaturized instrument employ-
ing the ECL technology (an "ECLM") that can be used at the side of
a patient and that will provide accurate results within 15 minutes,
allowing physicians to make immediate decisions about patient care.
Although IGEN thus far has been unsuccessful in developing such an
instrument, it has been attempting to engage a corporate partner to
invest in the development of the ECLM.
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In the summer or fall of 1997, a Roche representative visited the
office of Dr. Daniel Cohen, a shareholder of IGEN, for the purpose
of selling Dr. Cohen and his partner an Elecsys instrument for use in
their in-office laboratory. In October, Dr. Cohen mentioned the poten-
tial sale to IGEN's chief financial officer, who asked Dr. Cohen to
learn more about Roche's sales of the Elecsys to other doctors'
offices. In March 1998, Dr. Cohen sent IGEN a letter summarizing
his findings that five practices had purchased an Elecsys instrument
for use in their in-office laboratories.
Shortly thereafter, IGEN moved in the district court for a prelimi-
nary injunction preventing Roche from making further sales of Elec-
sys instruments to physicians' offices for use in in-house laboratories.
IGEN asserted that Roche was marketing the Elecsys instruments to
physicians' offices in violation of the licensing agreement and that
Roche's marketing activities were deterring potential partners from
investing in IGEN's attempts to develop the ECLM. After nearly
three months of discovery, Roche filed an opposition to the motion
for preliminary injunction claiming, inter alia , that injunctive relief
was improper because IGEN had failed to comply with dispute reso-
lution procedures outlined in the licensing agreement.
The district court granted the preliminary injunction after consider-
ing evidence obtained during discovery and hearing arguments from
the parties. First, the court rejected Roche's argument that IGEN
should be required to pursue contractual dispute resolution proce-
dures, reasoning that Roche waived the argument by failing to raise
it before discovery was conducted. With respect to IGEN's request
for preliminary injunctive relief, the court concluded that IGEN had
demonstrated that the denial of a preliminary injunction would cause
it irreparable harm in that IGEN was losing a potential market for the
ECLM and was having difficulty attracting corporate partners to
invest in the ECLM technology. The court further found that Roche
faced only a loss of sales during the course of the litigation. Based on
these determinations, the court ruled that the balance of hardships
favored IGEN. The court also concluded that IGEN had shown a sub-
stantial likelihood of success on the merits, reasoning that the plain
language of the agreement indicated that the field in which Roche
could market its instruments did not include any physician's office,
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irrespective of whether the instrument would be used in an in-office
laboratory or at a patient's side.
The district court directed the parties to negotiate the specific terms
of the injunction, which they did over the course of the next several
months. IGEN and Roche were unable to agree to all of the details
of the injunction and accordingly submitted proposals to the district
court, which then drafted an order. As relevant to this appeal, the
injunction prohibits Roche from marketing Elecsys instruments and
"any products and accessories that can be used only with the Elecsys
system" to "physicians' offices or physicians' office laboratories." Id.
at 572. The injunction defines "physicians' office laboratories" as:
(a) laboratories that are located within the office suites of
physicians' practices and
(b) laboratories that are located outside of physicians'
offices but that are operated by or under the control of one
or more treating physicians.
This definition of physicians' office laboratories expressly
includes all laboratories that are operated by or under the
control of physicians with practices of all types and sizes,
including large group practices and conglomerations of such
group practices, no matter where located. This definition
excludes physician-controlled or operated laboratories that
have no relationship with and are not operated as part of the
practice or practices of the controlling or operating physi-
cians. That is, physician ownership or operation in and of
itself does not define a "physicians' office laboratory";
rather, to be considered a physicians' office laboratory
(1) the owning, operating, or controlling physicians must
send a significant portion of their patient samples to that lab-
oratory or (2) the laboratory must conduct a significant por-
tion of its overall testing on samples from patients of the
owning, operating, or controlling physicians.
Id. Shortly thereafter, Roche moved to alter or amend the judgment,
arguing that the definition of "physicians' office laboratories" did not
account for the manner in which diagnostic laboratories are operated
5
in Germany, and thus might preclude Roche from marketing its prod-
uct to those laboratories even though they were clinical reference lab-
oratories as contemplated in the licensing agreement. The district
court denied the motion to alter or amend.
II.
When ruling on a request for a preliminary injunction, a district
court must consider four factors originally set forth in Blackwelder
Furniture Co. v. Seilig Manufacturing Co., 550 F.2d 189 (4th Cir.
1977). Those factors are:
(1) the likelihood of irreparable harm to the plaintiff if the
preliminary injunction is denied,
(2) the likelihood of harm to the defendant if the requested
relief is granted,
(3) the likelihood that the plaintiff will succeed on the mer-
its, and
(4) the public interest.
Rum Creek Coal Sales, Inc. v. Caperton, 926 F.2d 353, 359 (4th Cir.
1991) (internal quotation marks omitted). After deciding whether the
plaintiff will suffer irreparable harm if an injunction is denied and
determining the nature of the harm, if any, that defendant will suffer
if the injunction is granted, the district court must balance these hard-
ships against one another. See Direx Israel, Ltd. v. Breakthrough
Med. Corp., 952 F.2d 802, 812-13 (4th Cir. 1991). The result of this
balancing determines the degree to which the plaintiff must establish
a likelihood of success on the merits. If the balance of harms "tips
decidedly in favor of the plaintiff," it is only necessary for the plain-
tiff to "raise[] questions going to the merits so serious, substantial,
difficult and doubtful, as to make them fair ground for litigation and
thus for more deliberate investigation." Id. at 813 (internal quotation
marks omitted). If, however, the balance of harms is in equipoise or
does not favor the plaintiff, the plaintiff must make a correspondingly
higher showing of the likelihood of success. See id. We review a deci-
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sion of the district court granting or denying preliminary injunctive
relief for abuse of discretion, and we review underlying factual find-
ings for clear error. See Rum Creek Coal Sales , 926 F.2d at 358. We
review the grant or denial of a motion to alter or amend for abuse of
discretion. See Pacific Ins. Co. v. American Nat'l Fire Ins. Co., 148
F.3d 396, 402 (4th Cir. 1998), cert. denied, 119 S. Ct. 869 (1999).
Having reviewed the record and the parties' briefs, and having had
the benefit of oral argument, we conclude that the district court cor-
rectly decided the issues before it. Accordingly, we affirm.
AFFIRMED
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