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Alfasigma USA, Inc. v. Nivagen Pharmaceuticals, Inc.

United States District Court, E.D. California

March 30, 2018

ALFASIGMA USA, INC.; BRECKENRIDGE PHARMACEUTICAL, INC., Plaintiffs,
v.
NIVAGEN PHARMACEUTICALS, Inc., Defendant.

          MEMORANDUM AND ORDER

          MORRISON C. ENGLAND, JR.UNITED STATES DISTRLCT JUDGE

         By way of this action, Plaintiffs Alfasigma USA, Inc. (“Alfasigma”) and Breckenridge Pharmaceutical, Inc. (“Breckenridge”) (collectively, “Plaintiffs”) seek an injunction and damages arising from Defendant Nivagen Pharmaceuticals, Inc.'s (“Defendant” or “Nivagen”) allegedly misleading advertising associated with its product, Niva-Fol. Plaintiffs allege the following causes of action: (1) false advertising in violation of the Lanham Act, 15 U.S.C. § 1125(a); (2) fraud; (3) unfair competition in violation of Cal. Bus. & Prof. Code § 17200, et seq., and (4) false advertising in violation of Cal. Bus. & Prof. Code § 17500, et seq. Presently before the Court are Plaintiffs' Motion for Preliminary Injunction and Defendant's Motion for an Extension of Time (“EOT”) to Complete Rule 26(f) Conference. An order addressing Defendant's Motion to Dismiss, ECF No. 13, is forthcoming. For the reasons set forth below, Plaintiffs' Motion for Preliminary Injunction, ECF No. 11, is DENIED and Defendant's Motion for EOT, ECF No. 31, is GRANTED.

         BACKGROUND[1]

         Alfasigma produces “medical foods, ” which are consumables subject to medical supervision, but distinct from both prescription drugs and dietary supplements. Medical foods do not require a prescription, but, because they are intended to be used under a doctor's supervision, subscriptions for their use are common. Even so, they are not eligible for reimbursement by Medicaid, Medicare, or many private insurers. As is relevant to this action, Alfasigma formulated one of its medical foods, Foltx, “to meet the distinct nutritional requirements of persons with certain diseases and medical conditions that may benefit from administration of vitamins B6, B12, and folic acid . . . .” Pls' Mot. at 3-4.

         Breckenridge is a pharmaceutical company that produces a generic version of Foltx called Folbic. According to Plaintiffs, the pharmaceutical industry maintains a database in which generic foods can be linked to their name brand equivalent. This linking is done by way of an honor system in which the pharmaceutical company itself represents that it is the generic equivalent of a certain branded product and is not verified by any independent source or agency. As a result, if a generic company represents to industry databases that its generic medical food contains the same active ingredients in the same amounts as a certain branded product, the databases will link the generic to the brand. No outside testing or sampling is done to verify; the databases simply compare the claims made on the products labels to see that they contain the same active ingredients in the same amounts.

         Nivagen produces generics, and in 2015 began marketing a generic that it represented was equivalent to Alfasigma's branded product and Breckenridge's generic, causing it to be linked to those products on industry databases. But Nivagen also characterized its product as a prescription drug that requires an “Rx” on the label, thereby entitling users to reimbursement. Nivagen additionally caused Niva-Fol to be shown as having a National Drug Code or National Health Related Items Code number, which identifiers are provided for approved drugs and medical devices only, of which Niva-Fol is neither. Those identifiers also qualify Niva-Fol for federal reimbursement. Plaintiffs allege that this conduct has given Nivagen a competitive advantage over nonreimbursable products offered by Plaintiffs, and has allowed it to capture market share.

         STANDARDS

         A. Motion for Preliminary Injunction

         “A preliminary injunction is an extraordinary and drastic remedy.” Munaf v. Geren, 553 U.S. 674, 690 (2008). “[T]he purpose of a preliminary injunction is to preserve the status quo between the parties pending a resolution of a case on the merits.” McCormack v. Hiedeman, 694 F.3d 1004, 1019 (9th Cir. 2012). A plaintiff seeking a preliminary injunction must establish that he is (1) “likely to succeed on the merits;” (2) “likely to suffer irreparable harm in the absence of preliminary relief;” (3) “the balance of equities tips in his favor;” and (4) “an injunction is in the public interest.” Winter v. Natural Res. Defense Council, 555 U.S. 7, 20 (2008). “If a plaintiff fails to meet its burden on any of the four requirements for injunctive relief, its request must be denied.” Sierra Forest Legacy v. Rey, 691 F.Supp.2d 1204, 1207 (E.D. Cal. 2010) (citing Winter, 555 U.S. at 22). “In each case, courts ‘must balance the competing claims of injury and must consider the effect on each party of the granting or withholding of the requested relief.'” Winter, 555 U.S. at 24 (quoting Amoco Prod. Co. v. Gambell, 480 U.S. 531, 542 (1987)). A district court should enter a preliminary injunction only “upon a clear showing that the plaintiff is entitled to such relief.” Winter, 555 U.S. at 22 (citing Mazurek v. Armstrong, 520 U.S. 968, 972 (1997)).

         Alternatively, under the so-called sliding scale approach, as long as the plaintiff demonstrates the requisite likelihood of irreparable harm and shows that an injunction is in the public interest, a preliminary injunction can still issue so long as serious questions going to the merits are raised and the balance of hardships tips sharply in the plaintiffs' favor. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1134-35 (9th Cir. 2011) (concluding that the “serious questions” version of the sliding scale test for preliminary injunctions remains viable after Winter).

         When the moving party seeks a preliminary injunction that is mandatory, rather than prohibitory, the moving party must meet an even higher standard; no injunction should issue unless the facts and law clearly favor the moving party. As the Ninth Circuit explains:

Mandatory preliminary relief, which goes well beyond simply maintaining the status quo Pendente lite, is particularly disfavored, and should not be issued unless the facts and law clearly favor the moving party.... Courts are more reluctant to grant a mandatory injunction than a prohibitory one and ... generally an injunction will not lie except in prohibitory form. Such mandatory injunctions, however, are not granted unless extreme or very serious damage will result and are not issued in doubtful cases.

         Anderson v. United States, 612 F.2d 1112, 1114-15 (9th Cir. 1980) (internal citations omitted); see also Stanley v. Univ. of S. Cal., 13 F.3d 1313, 1319 (9th Cir. 1994) (“In cases such as the one before us in which a party seeks mandatory preliminary relief that goes well beyond maintaining the status quo pendente lite, courts should be extremely cautious about issuing a preliminary injunction.”).

         B. Motion for ...


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