This dispute arises from a settlement agreement between Johnson & Johnson's Janssen Biotech and Samsung Bioepis regarding the biosimilar ustekinumab-ttwe (SB17). While the agreement permitted Samsung to sublicense to commercialization partners to sell the product on its behalf, it prohibited downstream sublicensing. Samsung entered into a sublicense with Quallent Pharmaceuticals, a subsidiary of the Cigna Group, to sell the biosimilar under Quallent's private label. Janssen argued this breached the settlement because Quallent would not be selling on Samsung's behalf, and that the entry of a private-label biosimilar by a vertically integrated healthcare conglomerate would cause irreparable harm by steering patients away from Stelara, eroding Janssen's market share and negotiating leverage. Janssen sought a preliminary injunction to stop the distribution, but the district court denied the motion, finding that any financial loss was quantifiable and that the alleged harm to negotiating power was speculative.
Writing for the panel, Circuit Judge Krause explained that preliminary injunctions are an extraordinary remedy requiring a showing of irreparable harm, which is defined as harm that cannot be adequately compensated by monetary damages. The court addressed Janssen's argument that loss of market share in complex biologics markets is categorically irreparable. The court distinguished the precedent in Novartis Consumer Health, noting that case involved trademark and false advertising claims where a presumption of irreparable harm once existed, a presumption that was later rejected by the Supreme Court in eBay and Winter. In contract cases, the court reaffirmed that damages are the default remedy. The court held that the standard for irreparable harm is not merely that damages are difficult to calculate, but that they are 'impracticable' or 'incapable of calculation.' The court found that Janssen failed to meet this standard because its expert's testimony regarding market share loss was contradicted by Samsung's expert, who argued the losses were measurable. Furthermore, the court rejected the claim that loss of negotiating leverage constituted irreparable harm, citing precedent that such assertions must be supported by clear evidence of immediate injury rather than bald assertions or speculative 'domino effects.' The court concluded that Janssen had not shown that the alleged harm was anything other than financial loss, which could be addressed at trial.
Janssen must proceed to trial on the merits of its breach of contract claims. The decision limits the ability of pharmaceutical companies to obtain preliminary injunctions in contract disputes based solely on arguments about market share loss or potential loss of negotiating leverage. It reinforces that plaintiffs in contract cases must prove that damages are practically impossible to calculate, not just difficult, to qualify for equitable relief before a final judgment.
Podcast (federal-narrative-summaries): Play in new window | Download