Nonparty Acting In Concert With Enjoined Party May Be Held In Contempt Of Injunction

Last Month at the Federal Circuit - June 2012

Judges: Lourie (author), Schall (dissenting), Reyna [Appealed from M.D. Ga., Judge Land]

In Merial Ltd. v. Cipla Ltd., Nos. 11-1471, -1472 (Fed. Cir. May 31, 2012), the Federal Circuit affirmed the district court's judgment holding Cipla Ltd. ("Cipla") and other defendants in contempt of an earlier injunction.

Merial Ltd. ("Merial") is the owner of U.S. Patent No. 6,096,329 ("the '329 patent"), directed to dual-acting pest control compositions for dogs and cats, comprising fipronil. Merial was also the exclusive licensee of expired U.S. Patent No. 5,232,940 ("the '940 patent"), which claimed fipronil. Merial sells and markets Frontline, a fipronil-containing pest control composition, and Frontline Plus, a dual-acting composition containing fipronil and methoprene.

In 2007, Merial sued Cipla in the Middle District of Georgia for infringement of the '940 and '329 patents, based on the sale and marketing of pest-control formulations known as Cipla Protektor and Cipla Protektor Plus. Cipla did not respond to Merial's complaint or enter an appearance. The district court granted Merial a default judgment, finding that the '940 and '329 patents were infringed and not invalid, and entering a permanent injunction against Cipla.

Earlier, in 2004, former Merial executives led the formation of Velcera, Inc. ("Velcera") in order to develop veterinary products for companion animals, such as dogs and cats. Through a British intermediary, Omnipharm Ltd. ("Omnipharm"), Velcera engaged Cipla to develop and manufacture dual-acting pest control compositions known as PetArmor Plus and Velcera Fipronil Plus (collectively "PetArmor Plus") to compete with Merial's Frontline products. In March 2011, the first shipments of PetArmor Plus arrived in the United States.

Having become aware of Cipla's role in the impending commercial launch of PetArmor Plus, Merial filed a motion for contempt of the 2008 permanent injunction against Cipla. Velcera moved to intercede in the contempt proceedings. The district court joined Velcera as a defendant and ordered it to show why it should not be held in contempt for acting in concert with Cipla. Meanwhile, Velcera had filed a DJ action against Merial in the District of Delaware, alleging noninfringement and invalidity of the '329 patent.

In the contempt proceedings, Cipla contended that the district court lacked personal jurisdiction when it issued the 2008 default judgment. Cipla and...