The full text of the judge's ruling in Quigley's motion for a preliminary injunction against Zicam can be found at paed.uscourts.gov
One can also download a WordPerfect file from paed.uscourts.gov
I summarized the ruling into bulleted outline form (Microsoft Word), but unfortunately the format doesn't transfer to the SI editor. If anyone wants the summary, please PM me your email address and I'll send it to you. I summarized some of the main points in this post but the outline contains more detail.
A preliminary injunction requires the assessment of four factors: likelihood of success on the merits, irreparable harm absent an injunction, balance of hardships, and demands of the public interest.
Gum Tech pleaded that Quigley would fail on the merits by raising three primary issues (standing, unenforceability due to inequitable conduct by the Patentee, and validity of the '465 patent). Gum Tech argued that Quigley didn't have "standing" to bring the suit against Gum Tech without the patent holder, George Eby, at least as a co-plaintiff. Gum Tech challenged the validity of the '465 patent by raising several issues (prior art, non-criticality of application to the oral mucosa, and new matter). Based on the evidence presented at the preliminary injunction hearing, the judge sided with Quigley on each of these issues.
On the issue of irreparable harm, the judge sided with Gum Tech and this is the primary reason that he didn't grant Quigley a preliminary injunction.
The judge defined three important terms during this and other hearings. He even suggested that due to the importance of the definitions and lack of precedent available to the court, that "either party or both of the parties could elect to" file an appeal. It is clear that he was referring to Gum Tech since I can't find any issues that Quigley would care to appeal. Gum Tech said in their press release that they intend to appeal the judge's decisions, and I'm sure that this includes the definitions. If they don't appeal this and the case goes to trial, the definitions would stand during the trial. The three terms that he defined are "oral mucosa", "saturate", and "apply".
He defined the term "oral mucosa" to mean "the lining of the mouth, tongue, and throat".
He defined "saturate" to mean "to bathe or soak".
He defined the term "apply" to mean "any means by which the zinc gluconate gets to the mucosa in question".
The bottom line is that the judge sided with Quigley on some issues and with Gum Tech on other issues. It is important to note that Gum Tech did not present its full case at the preliminary injunction hearing, and it would be wrong for one to conclude anything about the outcome of a trial if it gets that far based on the judge's comments during the injunction hearing. Gum Tech developed their case only so far as to persuade the judge not to grant Quigley a temporary injunction, and they succeeded in that regard.
Let's assume that Gum Tech appeals and fails to persuade the appellate court to change any decisions from the lower court, including the definitions and scope of the '465 patent. Under those circumstances, Quigley would most likely be able to show during a trial that Zicam is applied to the oral mucosa. That's the bad news; however, the judge also said:
"Two other claim elements that are not as clearly in Quigley's favor: it must show that Zicam "saturates" the mucosa, and also that Zicam applies an "effective dose" of zinc gluconate."
"Even more problematic is the question of the effective dosage. It appears that Zicam contains much less zinc gluconate than the tested lozenges; thus, to the extent that the lozenges were effective, this does not mean that the portion of a Zicam dose that reaches the throat is necessarily effective."
"It is therefore far from certain, as a matter of fact, that Zicam delivers an "effective dosage" of zinc gluconate, even given that it is applied to the throat."
"Dr. Riley stated that while the studies undertaken by Quigley to prove the utility of zinc gluconate lozenges involved lozenges containing 25 or 13.3 milligrams each of zinc gluconate, a dose of Zicam contains but 0.2 milligrams of zinc gluconate."
Therefore, even if Quigley can show that Zicam is applied to the oral mucosa, I don't think that they will be able to show that Zicam "saturates" the oral mucosa, or delivers an "effective dosage" of zinc gluconate to the oral mucosa. These issues would have to be proven in Quigley's favor for them to prevail in a patent infringement trial.
Finally, even in the unlikely event that Quigley would prevail if this case goes to trial, they would have a hard time showing damages because their sales were already plummeting well before Zicam came into the picture. As the judge noted in his opinion:
"According to Quigley's 1999 SEC Form 10-K, 1997 sales were $70,172,563. The same Quigley 10-K shows the effect of these copycats. Sales in 1998 dropped to $36,354,155, and in 1999 sales revenue fell to $24,819,942."
"In Item 7 of the 1999 10-K, which was filed with the Securities and Exchange Commission on March 20, 2000, in "Management's Discussion and Analysis of Financial Condition and Results of Operations", Quigley told the public and the Securities and Exchange Commission that: The decrease in sales in 1999 is attributable to increased competition with the additional of herbal and zinc remedies that have not been clinically proven to counteract the symptoms of the common cold."
"It does not escape our attention that Quigley in this section of its March 20, 2000 10-K fails to mention Zicam."
"Most pertinent to the instant motion, none of this decline could be attributable to Zicam until, at the earliest, October of 1999. While it is certainly true that the record confirms Zicam's quick acceptance in the marketplace by this time Quigley had long suffered from the market confusion forty new "zinc" products had wrought."
"The truth of the matter, at least to date, is that Quigley is the victim of its own explosive success, and not the victim of GumTech's conduct."
Therefore, even given the worse case scenario, where Quigley somehow overcomes the saturation and dosage issues, it is doubtful that they would be able to show that they were harmed much, if any, by Zicam. It is possible then, that even if Quigley wins the patent infringement suit, that their damages would be minimal.
This is my honest and unbiased interpretation of the judge's opinion. If anyone has a different interpretation after reading the judge's opinion, please post it.
Thanks,
Dan |
