By Michael J. Sacopulos, JD
Earlier this week a Federal Court Judge in Santa Ana, California entered into an injunction against Merz. The injunction stopped Merz from marketing Xeomin to the facial aesthetic community. This injunction came at the request of Allergan whose Botox product would directly compete with Xeomin. The judge sided with Allergan in finding that former Allergan employees had blatantly misappropriated Allergan’s proprietary information when they switched employment to Merz. The judge next indicated the full extent of the injunctive order as the scope, terms and duration would be released Friday March 9th.
While the court has not yet issued the full injunctive order, it is becoming clearer what the terms of the order might include. Thursday saw a flurry of documents being filed with the court by Allergan and Merz as to proposed permanent injunctive orders. Merz proposed that they perform an electronic search by “using industry standards and forensic tools” to find all of Allergan trade secrets which may be in the electronic file of Merz and its employees. Once located, these trade secrets would be “permanently removed.” Allergan proposed that the electronic search and destroy mission be performed by a third party. Merz also proposed that for six months (or a period specified by the court), “Merz Aesthetics and its officers, directors, agents, representative and employees shall be enjoined from providing selling or soliciting the sale of Xeomin in the facial aesthetics market.”
Allergan responded by saying that this proposed time frame was insufficient to eliminate the commercial advantage gained by Merz misappropriation of Allergan information. Interestingly, Allergan does not seem to indicate what would be a sufficient amount of time. This leads me to believe that Allergan is asking the court to permanently enjoin Merz from ever marketing Xeomin. This seems to indicate Xeomin will not be marketed to the facial aesthetic community for at least the next six months, unless a financial agreement can be made between the two companies.
Merz also reports that it has taken “a number of aggressive actions voluntarily” to address the court’s concern announced during its ruling on March 6th, 2012.
Ø Placing the former Allergan employees on administrative leave until further notice
Ø Suspension of sale of Xeomin in the facial aesthetic market
Ø Limitation of sales derma fillers and Xeomin in the therapeutic market
Ø Modification of various websites to comply with Merz proposed injunction
Finally, since the March 6th ruling, the judge has ordered the parties to discuss terms of settlement. This is a not so subtle message to both sides that this is a matter best resolved by them privately.
Clearly mistakes have been made by Merz and its employees. This type of corporate piracy should be punished. That said, Allergan seems to have gleefully taken on the role of the victim. No punishment seems severe enough. One gets the feeling that Allergan longs for the Elizabethan days of heads on pikes. While we wait a judge’s final order, we cannot help but think of how the medical community and general public are treated as an afterthought in this litigation. I join with the federal judge in telling both Allergan and Merz to work out a settlement.
Michael J. Sacopulos is a partner with Sacopulos, Johnson & Sacopulos in Terre Haute, Indiana. He also serves as legal analyst for Plastic Surgery Practice. His practice focuses on assisting healthcare professionals develop strategies and techniques to avoid medical liability claims. He may be reached at Mike_Sacopulos@Sacopulos.com.