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Eli Lilly and Co. v. American Cyanamid Co., 82 F.3d 1568, 38 U.S.P.Q.2d 1705

Facts

Eli Lilly and Company, the holder of a patent defining a method for producing enol cephem compounds, including compound 6, sued several companies for patent infringement after they began importing and selling cefaclor, an antibiotic produced using compound 6. The United States District Court for the Southern District of Indiana denied Lilly's motion for a preliminary injunction, concluding that compound 6 was likely materially changed in the process of converting it to cefaclor, and that Lilly failed to demonstrate a likelihood of irreparable harm. Lilly appealed the decision.

Holder of patent that defined method of producing enol cephem compounds, including compound 6, failed to show that it would suffer irreparable harm if it was not granted a preliminary injunction against importation and sale of cefaclor, a broad-spectrum antibiotic that was produced through use of compound 6; calculation of lost profits would be a relatively simple task, and alleged infringers appeared to be able to satisfy a monetary judgment against them if holder were to prevail on merits.

Issue

Did the defendants' importation and sale of cefaclor, produced using compound 6, infringe Lilly's patent, and did Lilly demonstrate a likelihood of irreparable harm to warrant a preliminary injunction?

Did the defendants' importation and sale of cefaclor, produced using compound 6, infringe Lilly's patent, and did Lilly demonstrate a likelihood of irreparable harm to warrant a preliminary injunction?

Rule

Under the Process Patent Amendments Act of 1988, it is an act of infringement to import, sell, or use a product made by a patented process unless the product has been materially changed by subsequent processes before importation. A product is considered materially changed if the processing steps alter its physical or chemical properties in a way that changes its basic utility.

Under the Process Patent Amendments Act of 1988, it is an act of infringement to import, sell, or use a product made by a patented process unless the product has been materially changed by subsequent processes before importation. A product is considered materially changed if the processing steps alter its physical or chemical properties in a way that changes its basic utility.

Analysis

The court analyzed whether cefaclor, produced from compound 6, was materially changed during its conversion. It found that the differences in structure and properties between compound 6 and cefaclor were significant enough to conclude that cefaclor was not merely a trivial derivative of compound 6. Additionally, the court determined that Lilly had not shown a strong likelihood of success on the merits of its infringement claim, nor had it established that it would suffer irreparable harm without the injunction.

The district court found that compound 6 and cefaclor differ significantly in their structure and properties, including their biological activity. Citing the Senate Report on the Process Patent Amendments Act, the district court found that, because the processing steps necessary to convert compound 6 to cefaclor 'change the physical or chemical properties of the product in a manner which changes the basic utility of the product,' Lilly was not likely to succeed on its claim that the defendants infringed Lilly's rights under claim 5 of the '085 patent by importing and selling cefaclor.

Conclusion

The court affirmed the district court's decision, concluding that the defendants' actions did not infringe Lilly's patent and that Lilly failed to prove irreparable harm.

Because Lilly has failed to overcome the substantial hurdle faced by a party seeking to overturn the denial of a preliminary injunction, we affirm.

Who won?

The defendants, including Zenith Laboratories, American Cyanamid Company, and Biocraft Laboratories, prevailed in this case. The court found that the process of converting compound 6 into cefaclor resulted in a material change, thus exempting the defendants from infringement under the Process Patent Amendments Act. Additionally, Lilly's inability to demonstrate a likelihood of irreparable harm further supported the court's decision to deny the preliminary injunction.

The defendants, including Zenith Laboratories, Inc., and American Cyanamid Company, prevailed in this case. The court found that the process of converting compound 6 into cefaclor resulted in a material change, thus exempting the defendants from infringement under the Process Patent Amendments Act.

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