Allergan Wins U.S. Court Order Blocking Sales of Merz’s Botox Competitor

Allergan Inc. (AGN), the maker of Botox injections for frown lines, won a court order blocking Merz Pharma GmbH from selling a rival cosmetic product after Allergan claimed its trade secrets were stolen.

U.S. District Judge Andrew J. Guilford in Santa Ana, California, yesterday issued an injunction against Merz following a trial without a jury. Guilford, in a ruling from a bench, said his written findings and conclusions will be released March 9 with an order that will specify the length and terms of the injunction.

Guilford cited “dramatic examples of misappropriation” of Allergan’s proprietary information, saying he was troubled that some Allergan employees signed contracts with Merz and then delayed giving final notice to begin e-mailing company data to themselves.

Allergan, based in Irvine, California, alleges that Merz, as it prepared to sell Xeomin for the treatment of certain muscle spasms in 2010, in competition with Botox, targeted Allergan sales representatives who brought along confidential materials, including sales figures and customer lists.

Allergan said in a statement that it was pleased with the immediate injunction.

“For more than 20 years, we have invested millions of dollars in the research, clinical development and marketing of Botox and we are pleased that our intellectual property has been protected by today’s decision,” spokeswoman Heather Katt said in the statement. “We await the exact details of the injunction later this week and have no additional comment at this time.”

Trade Secrets

Allergan in 2010 sued the German drugmaker and its U.S. units as well as former Allergan sales representatives who were hired by Merz. The commercial introduction of Xeomin for cosmetic use is scheduled for March 12 at the annual meeting of the American Academy of Dermatology in San Diego.

Lawyers for Allergan sought a court order blocking the sale by Merz of any product competing with Botox for one year and barring the sale of Xeomin to anyone who has been an Allergan customer. Allergan also seeks the return of trade secrets.

Rick McKnight, an attorney for Merz, said that the judge’s bench ruling appears to be “encouraging settlement.”

Merz contended in the trial that the materials Allergan alleges were misappropriated were either not trade secrets, weren’t confidential, or were never seen or used by Merz employees.

In his closing argument yesterday, McKnight said the proposed 12-month ban on Xeomin sales “puts the companies out of business.”

The case is Allergan v. Merz, 11-00446, U.S. District Court, Central District of California (Santa Ana).

To contact the reporters on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net; Maurice Possley in federal court in Santa Ana, California, at mauricepossley@gmail.com

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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