Opinion ID: 2620291
Heading Depth: 2
Heading Rank: 5

Heading: Bond Amount

Text: Apotex contends that the amount of the bond required when the preliminary injunction was granted is no longer sufficient, given the greater than anticipated time that transpired between the date of the injunction and trial. The district court issued the preliminary injunction on May 22, 2009 against Apotex predicated on the ’603 patent. More than three years later, on August 31, 2012, Apotex filed a motion to increase the amount of bond posted by AstraZeneca. Apotex sought an increase in the amount of the bond both going forward and to cover the period between issuance and the time the motion was filed. The district court granted the motion with respect to the amount going forward but denied it with respect to the amount before the motion was filed. Apotex contends that this is reversible error. Apotex concedes that, in the Third Circuit, there is a general prohibition on retroactive increases in the bond 2 Notwithstanding the fact that this court concludes that the district court did not abuse its discretion in declining jurisdiction, this court observes that broader claims are necessarily invalid where narrower claims have been found to be obvious. See Ormco Corp. v. Align Tech., Inc., 498 F.3d 1307, 1319 (Fed. Cir. 2007) (“Because claims 10 and 17 were found to have been obvious, the broader claims 1 and 11 must also have been obvious.”). Here, it is self-evident that each of the dismissed claims is broader than a claim the district court has already invalidated. Compare ’603 Patent claims 6 to 7, 11 to 8, 18 and 22 to 24, and 21 and 23 to 25. 22 ASTRAZENECA LP v. BREATH LIMITED amount, see Sprint Commc’n Co. v. Cat Commc’n Int’l, 335 F.3d 235, 240–42 (3d Cir. 2003), but argues that this prohibition applies only after an injunction has been dissolved. The parties do not cite a Third Circuit decision directly addressing the present issue of whether a bond may be retroactively increased when it is still in effect. “Where the regional circuit court has not spoken, we need to predict how that regional circuit would have decided the issue in light of the decisions of that circuit’s various district courts, public policy, etc.” Panduit Corp. v. All States Plastic Mfg. Co., Inc., 744 F.2d 1564, 1575 (Fed. Cir. 1984) disapproved of on other grounds by RichardsonMerrell, Inc. v. Koller, 472 U.S. 424 (1985). Apotex does direct this court’s attention to Daiichi Pharma. Co., Ltd. v. Apotex, Inc., Civ. No. 03-937(WGB) (D.N.J. June 7, 2006), an unpublished decision in which a district court, during the pendency of a preliminary injunction, appears to have agreed to increase a bond amount to cover higher-than-expected losses by the accused infringer. The amount of the bond increase appears to apply to the period that already had passed. The district court in that case concluded that Sprint was distinguishable because, as argued by Apotex, the accused infringer had an opportunity to decide whether to accept the injunction, at least going forward. Daiichi, however, is a singular district court case, and the reasoning in Sprint and public policy caution against following it. Based on Sprint, this court believes that the Third Circuit would consider improper an increase to cover past damages even in the present circumstances. “[T]he bond generally limits the liability of the applicant and informs the applicant of the price it can expect to pay if the injunction was wrongfully issued.” Sprint, 335 F.3d at 240 (internal quotation marks and alteration marks omitted). ASTRAZENECA LP v. BREATH LIMITED 23 When a court grants an applicant’s request for a preliminary injunction, it will generally condition this grant on the applicant’s posting a bond. The applicant then decides whether to accept the pre- liminary relief by posting the bond or to withdraw its request. The applicant may base its decision on whether it wants to expose itself to liability up to the bond amount. Id. at 240. “If a retroactive increase is permissible, the injunction bond is no longer cabined; the bond no longer fixes exposure nor caps liability. A retroactive increase subjects the successful applicant to an unexpected and unanticipated liability.” Id. at 241. Apotex argues that when, as here, the injunction is still in effect, the applicant for an injunction has notice and the opportunity to decline the additional bond amount or decline the continuation of the injunction. However, the Third Circuit focused in Sprint on the function of the bond in informing the applicant of its liability. AstraZeneca expected that its liability would be limited to the bond amount before Apotex’s motion. AstraZeneca cannot be fairly informed after it obtained the benefit of the injunction that it must later pay more for the benefit it already obtained in order to obtain the benefit of a continued injunction. The bond would no longer serve to cabin or fix liability, and that would result in an unexpected liability, which Sprint sought to prohibit. It is immaterial whether the injunction has been dissolved, as in Sprint, or continues, as it does here. Either way: the party securing the injunction decided to accept the preliminary relief by posting the bond required at the time. Later requiring that party to post a higher bond for a period that already has passed results in a situation where that bond no longer fixes exposure or caps liability. The party no longer simply could withdraw its 24 ASTRAZENECA LP v. BREATH LIMITED request for an injunction over that period because that period already would have passed. Apotex also argues that an exception to Sprint’s general prohibition on retroactive increases exists where the injunction holder always will choose to accept the injunction and pay a bond based on the accused infringer’s damages. Apotex contends that here, because of the price structure of the drugs at issue, AstraZeneca always would stand to benefit from the injunction because its profits (in a market from which Apotex is excluded) will always exceed the damages to Apotex caused by a wrongful injunction. At the district court, Apotex did not raise this argument but instead argued that AstraZeneca would not be prejudiced by an increase to the bond because of its large profits. Because the argument was not raised at the district court, we decline to address it in the first instance. Sage Prods., Inc. v. Devon Indus., Inc., 126 F.3d 1420, 1426 (Fed. Cir. 1997) (“[A]ppellate courts do not consider a party’s new theories, lodged first on appeal . . . . In short, this court does not ‘review’ that which was not presented to the district court.”). Apotex also argues that it should be able to seek damages from AstraZeneca in excess of the bond amount because it would be inequitable to limit Apotex’s recovery to that amount. Apotex points out that the Third Circuit has recognized that there are “rare exceptions” to the rule that “a defendant wrongfully enjoined has recourse only against the bond.” Instant Air Freight Co. v. C.F. Air Freight, Inc., 882 F.2d 797, 804 (3d Cir. 1989). However, Apotex does not argue that it fits into an exception previously recognized by the Third Circuit. Apotex cites only a case involving a finding of fraud. See Hartford-Empire Co. v. Shawkee Mfg. Co., 163 F.2d 474, 477 (3d Cir. 1947). Rather than alleging fraud, Apotex instead merely argues that it would be unjust to limit its recovery to the ASTRAZENECA LP v. BREATH LIMITED 25 bond because it will have suffered significantly more damages. However, Apotex identifies no circumstances that could have impeded it from moving well before August 31, 2012 to increase the amount of the bond. Though it appears undisputed that the trial occurred approximately two years after the parties anticipated it would occur, Apotex certainly was aware of the delay as it was happening. If this situation were considered an exception, the exception would swallow the rule. Any party that delays moving to increase a bond amount could move years later to recover damages in excess of the bond, defeating the intended purpose of the bond in the first instance. We decline to hold that the Third Circuit would invite such a result. Lastly, Apotex argues that it should be able to use damages incurred from the earlier time period (i.e., damages from the time between May 22, 2009 and August 31, 2012) to prove up the additional bond amount that AstraZeneca posted in response to Apotex’s August 31, 2012 motion. This is essentially the same issue discussed above in connection with Sprint. AstraZeneca agreed to post the original bond amount, understanding that— absent “rare exceptions”—its liability during that time period would be limited to that amount. Allowing Apotex to use damages incurred during an earlier period to prove up to the bond amount in a later period still violates Sprint’s general prohibition against retroactive increases. Accordingly, this court affirms the district court’s conclusion on the bond amount.