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U.S. District Court Issues TRO in Fipronil Case

National News

Judge William L. Osteen recently granted a Temporary Restraining Order (TRO) preventing Makhteshim from “using, importing, marketing, offering to sell, or selling” any fipronil-related product that infringes on BASF’s ’010 and ’743 patents.

Dan Moreland | April 21, 2011

GREENSBORO, N.C. – The ongoing patent infringement litigation between BASF and Makhteshim Agan of North America and its U.S. subsidiary Control Solutions, Inc., took a dramatic turn recently when Judge William L. Osteen, Jr. granted a Temporary Restraining Order (TRO) preventing Makhteshim from “using, importing, marketing, offering to sell, or selling” any fipronil-related product that infringes on BASF’s ’010 and ’743 patents. 

The patents at the center of the recent action are BASF’s “perimeter use patents” owned by Bayer S.A.S. and exclusively licensed by BASF Agro. According to court documents, the TRO will remain in effect “until further order” of the U.S. District Court for the Middle District of North Carolina, where the case is being tried.

The TRO, executed on April 4, is the latest chapter in legal proceedings that began more than a year ago when BASF filed two separate patent-infringement lawsuits in U.S. District Court. Since the original court filings on April 8, 2010, more than 110 different motions, court orders and other related legal actions have taken place as the parties – BASF Agro, Cheminova A/S and Makhteshim Agan of North America, along with its U.S. subsidiary, Control Solutions, Inc. – jockey for position in the high-stakes litigation that will have wide-ranging implications for the pest management industry, whatever the ultimate outcome.

Termidor, BASF’s flagship termiticide, generates more than $75 million in annual revenues, representing about 35 percent of the U.S. termite control market and approximately 65 percent of the liquid termiticide market. More than 4 million structures have been treated with the non-repellent termiticide since it was introduced to the industry 10 years ago. As a result, there’s a lot at stake in any litigation relating to the future of fipronil.

At the center of the proceedings are several fipronil-related patents, the broad-spectrum phenylpyrazole insecticide found in Termidor, the most widely used liquid termiticide in the United States. One of those patents (’940), covering the fipronil molecule itself, expired on Aug. 3, 2010. Two additional manufacturing process patents (’943 and ’945) will expire in 2023 and 2025, respectively, while the method-of-use patents – sometimes referred to as “perimeter use patents” – will expire in 2017. Joining BASF as a plaintiff in the lawsuits is Bayer CropSciences, which exclusively licenses two of the patents to BASF.

In October, Makhteshim Agan of North America and Cheminova agreed not to introduce any fipronil-related products that would infringe on BASF’s “process patents.” At the time, Jan Buberl, head of BASF's Specialty Products Division, called it a “major milestone for defending our intellectual property.”

He said the action indicated that BASF’s intellectual property “is respected by the competition” and “awarded certain protections” by the courts. “It means we’ll be able to continue to offer new technology long-term for this industry,” Buberl said, as evidenced by the company’s introduction of TermidorDRY earlier this year, the first brand extension of the Termidor line. 

While BASF continues to invest in creative ways to enhance and expand the use sites for its flagship product, the company’s patent for technical fipronil expired in August 2010, increasing the likelihood a generic fipronil-based technology would one day enter the pest control marketplace. While Makhteshim has secured a technical registration for fipronil, Buberl says it has a “narrow spectrum” of uses. “They cannot sell it into the PerimeterPlus market, which is our protected technology,” he said.

Mark Boyd, president of Control Solutions, said Makhteshim’s “legal team is working to resolve the disputes,” but the Temporary Restraining Order “will not keep CSI from launching” its fipronil-based termiticide in late May or early June. “The only issue being disputed is some of the language on the label,” Boyd said, and “the outcome of legal battles and opinions will determine the language on the label for the short-term.”

BASF requested the TRO when it became apparent Makhteshim Agan had “taken concrete steps” and “made meaningful preparation” to introduce a fipronil-based termiticide that would potentially infringe it patents. BASF claimed such actions would cause “irreparable harm” in the absence of preliminary relief, according to court documents.

While the court recognized “the record in this case is not yet fully developed,” it granted the TRO based on four key criteria, which represent the “legal standard” for issuing a Temporary Restraining Order. They include:

• Plaintiffs are likely to succeed on the merits – In order to satisfy the first prong of the test for preliminary relief, BASF had to show that Makhteshim would infringe on at least one valid and enforceable patent claim. The court concluded that BASF had “sufficiently demonstrated, for purposes of obtaining a TRO, that their patent claims are valid” and Makhteshim’s master label for its termiticide “will induce infringement of the ’010 patent and the ’743 patent,” the so-called perimeter use patents.

• Plaintiffs are likely to suffer irreparable harm in the absence of preliminary relief – The court ruled that BASF had “made the requisite showing of patent validity and infringement,” and Makhteshim had “to this point offered very little evidence to rebut the presumption of irreparable harm.”

• The balance of equities tips in Plaintiffs’ favor – The court ruled that in the absence of preliminary relief, BASF would lose the value of their patent(s), whereas a TRO would “merely deprive” Makhteshim of “the ability to go on to the market and begin earning profits earlier. Court documents state, “For these reasons, this court concludes that, for TRO purposes, the balance of equities weighs in the Plaintiffs’ favor.”

• A TRO is in the public interest – The court ruled BASF had “adequately demonstrated that their patents are likely to be valid” and that Makhteshim is “likely to infringe those patents.” Therefore, the court concluded that a TRO preventing such infringement is “in the public interest.”

In addition to issuing the TRO, the court required BASF to secure a $1 million bond to pay Makhteshim’s court costs and damages in the event – at the conclusion of the litigation – the company is found to have been wrongfully restrained.

The next critical phase of the litigation is what is known as a “Markman hearing” (see related story below), which currently is scheduled for May 2. A Markman hearing – also known as a “claim construction hearing” – is a pretrial hearing in patent infringement cases where a judge examines evidence from all the parties on relevant key words used in a particular patent claim.

Based on court documents, some of the key words and phrases at issue in the litigation are “compound,” “in the presence of,” “corrosion inhibiting compound,” “knock down effect,” “around or under/around and under,” “treated locations/untreated locations” and “total perimeter of the building.”

Interestingly, all of the parties involved in the lawsuit at one time or another during the past year have filed motions for summary judgment, a procedural device used during civil litigation to promptly and expeditiously dispose of a case without a trial. It is used when there is no dispute as to the material facts of the case and a party is entitled to judgment as a matter of law. Up to this point, the Court has not acted upon those requests, allowing the litigation to proceed. A trial date is currently set for July 5.

Whatever the ultimate outcome of the litigation, it’s clear that with so much at stake all of the parties are in it for the long haul. “It’s fair to say that BASF hasn’t changed its attitude to vigorously defend its intellectual property to the ultimate end,” Buberl said. “IP is the backbone of BASF’s innovation strategy, and we will continue to aggressively protect our investments in new technology, research and development, and existing products.”

Boyd said, “This is the way corporate battle is done these days. The dispute is over some of the language with how a post construction application might be made and the latitude which the operator can apply. CSI/MAI will move aggressively to the market within the limitations the courts decide. The 'rodeo’ continues.”

For ongoing coverage of this case, including the upcoming Markman hearing, visit www.pctonline.com. – Dan Moreland

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Fipronil Litigation Timeline
April 8, 2010
BASF files two separate patent-infringement lawsuits against Cheminova A/S and Makhteshim Agan of North America, along with its U.S. subsidiary Control Solutions, in U.S. District Court in North Carolina.

April 16, 2010
BASF files preliminary injunctions in both lawsuits seeking to prevent the sale and application of fipronil-based products the company claims infringe on BASF’s patented technologies.

August 3, 2010
Fipronil chemical patent (’940) expires.

April 6, 2011
Court suggests the possibility of consolidating the Markman hearings in the two cases. The parties are directed to determine whether consolidation would be practical and then to contact the case manager to set up a further status conference.

April 13, 2011
Court grants Temporary Restraining Order (TRO).

April 14, 2011
BASF posts $1 million bond.

April 19, 2011
Judge William L. Osteen, Jr., orders consolidated Markman hearing. Plaintiffs and Defendants in both cases instructed to confer and prepare a single, joint pre-hearing statement, which shall address Markman issues in both cases as to the ’010 patent and ’743 patent.

May 2, 2011
Markman hearing scheduled to begin.

July 5, 2011
Trial scheduled to begin on patent liability issues.

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More on Markman Hearings
A Markman hearing – also known as a “claim construction hearing” – is a pretrial hearing in patent infringement cases where a judge examines evidence from all the parties on relevant key words used in a particular patent claim. Markman hearings have been common practice since the Supreme Court ruled in Markman v. Westview Instruments, Inc. that the language of a patent/interpretation of patent claims is a matter of law for a judge to decide, not a matter of fact for a jury to decide. Previously, claim construction issues were routinely given to juries for decision, usually with the aid of testimony. For additional insights about the role of Markman hearings in patent law, check out the following links:

 
 

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