Full opinion text
MEMORANDUM DECISION AND ORDER MATHY, United States Magistrate Judge. Pursuant to the consent of the parties to disposition before a United States Magistrate Judge and consistent with the authority vested in United States Magistrate Judges under the provisions of 28 U.S.C. § 636(c) and rule l(i) of the Local Rules for the Assignment of Duties to United States Magistrates, effective January 1, 1994, in the Western District of Texas, the following Memorandum Decision and Order is entered regarding the parties’ cross motions for preliminary injunction. I. JURISDICTION The Court has jurisdiction pursuant to 28 U.S.C. §§ 1331, 1332, 1338, and 1367 and 15 U.S.C. §§ 1116 and 1121. II. PROCEDURAL HISTORY By way of introduction, this lawsuit concerns competing enzymatic wound ointments, Aceuzyme and Panafil made by Healthpoint Ltd. (“Healthpoint”) and Ko-via and Ziox made by Stratus Corporation (“Stratus”). Each of the ointments is available by prescription only. Health-point began marketing Aceuzyme in 1996 after reverse-engineering Panafil White, a papain-urea debridement ointment then marketed by Rystan. Thereafter, Health-point spent millions of dollars promoting Aceuzyme, creating brand awareness and market acceptance. Prior to the filing of this lawsuit, Healthpoint acquired the rights to Panafil White. In April 2000, Stratus began marketing both Kovia, a papain-urea wound debridement ointment, which Stratus created by attempting to replicate Aceuzyme, and Ziox, a wound care ointment which Stratus created by attempting to duplicate Panafil White. When introducing the products, Stratus promoted Kovia and Ziox as a “generic to Aceuzyme ointment” and Kovia as “generic to Panafil ointment.” Stratus distributed a wholesale price list that referred to Kovia and Ziox as “branded prescription generic products.” Using and industry form called a “wholesaler new item fact sheet,” Stratus filled out the section of the form “for generic drug products,” indicating, among other things, that the “brand name equivalent” for Ko-via was Aceuzyme and the “brand name equivalent” for Ziox was Panafil. Stratus provided these forms to data collection agencies such as First Data Bank (which then “linked” Aceuzyme and Kovia and “linked” Ziox and Panafil White in its computer data base to which pharmacists and others subscribe), to drug wholesalers and to others. Stratus also submitted similar information to the Texas Department of Health when Stratus applied for Kovia and Ziox to be included in the Texas state medicaid formulary and to Alabama when seeking the inclusion of Kovia into the Alabama state medicaid formulary. Stratus represented Kovia to be “a generic of Aceuzyme ointment” when bidding for a contract with Cook County Hospital in Illinois. At some point in the spring of 2001, well after the filing of this case, Stratus voluntarily stopped referring to Kovia and Ziox as “branded prescription generic products” and stopped promoting Kovia and Ziox as “generic” to Aecuzyme and Panafil. Rather, its current promotional materials contain the following statements: Kovia “contains same active ingredients as Ae-cuzyme” or “contains same ingredients as Aecuzyme;” Ziox “contains same active ingredients as Panafil” or “contains same ingredients as Panafil;” and both Kovia and Ziox are “quality economical alternatives” in promotional materials that also mention Aecuzyme and Panafil, respectfully. This case began on or about July 28, 2000 when Healthpoint filed its original complaint seeking damages and preliminary and permanent injunctive relief against Stratus for unfair competition, dilution, and false advertising in violation of the Trademark Act of 1946, 15 U.S.C. §§ 1051, et seq., and for unfair competition, palming off, false advertising, misappropriation and dilution under Texas law. Healthpoint’s third amended complaint, its “live” pleading in this case, alleges eight causes of action. Five of the causes of action allege: federal false designation of origin, false description and false representations of fact in violation of § 1125(a)(1)(B) of the Lanham Act; common law false advertising; federal unfair competition in violation of § 1125(a) of the Lanham Act; common law unfair competition; common law palming off. These causes of action are based on false representations that: Kovia and Ziox are “generic” to Aecuzyme and Panafil; Kovia and Ziox can be substituted for prescriptions of Aecuzyme and Panafil; Kovia and Ziox “deliver the same amount of active ingredient in the same time frame and have the same quality, strength, purity and stability as Healthpoint’s debridement agents;” Ko-via and Ziox “have undergone clinical testing to confirm that it is equivalent to” Healthpoint’s two ointments; and Kovia contains “papain in sufficient quantities to debride” when not all of Kovia contains papain and some of Kovia contains “little or no papain.” Additional causes of action allege: misappropriation “of Healthpoint’s reputation and good will;” tortious interference “with the business of Healthpoint;” and civil conspiracy “to wrongfully and unfairly misappropriate Healthpoint’s goodwill and business.” Healthpoint demands a jury and requests, on certain of its claims as specified, damages, an accounting of profits, treble damages, punitive damages, a recall of Stratus’ debridement products, attorney’s fees, costs, prejudgment interest, and permanent and preliminary injunctive relief. On January 31, 2001, after initially contesting the Court’s personal jurisdiction, Stratus consented to personal jurisdiction and filed a counterclaim alleging five causes of action alleging claims of: false advertising in violation of § 1125(a) of the Lanham Act in connection with allegedly false statements which Healthpoint made about Kovia that Kovia is “not an alternative” to Accuzyme, that Kovia is “inferior” and is “not safe,” that “under federal law manufacturers must seek approval to market a generic drug by submitting data demonstrating that one drug product is therapeutically equivalent to the other,” and that “the amount of papain in Kovia is an inefficient and ineffective quantity;” both false advertising and unfair competition in violation of § 1125 of the Lanham Act in connection with the alleged mis-branding of Accuzyme; and common law claims of unfair competition, injurious falsehood and interference with prospective business relationships. Stratus requests damages, punitive damages, treble damages, an accounting of Healthpoint’s profits, a recall of Healthpoint’s debridement products, attorney’s fees, costs, pre-judgment interest and preliminary and permanent injunctive relief on various of its claims. With respect to the requests for preliminary injunctive relief, Healthpoint filed a motion for preliminary injunction against Stratus on October 19, 2000, as supplemented. On November 14, 2000, Stratus filed its response and objection to the motion for preliminary injunction. On January 31 2001, the same day on which it consented to personal jurisdiction, Stratus filed its cross motion for preliminary injunction and brief in support. On April 18, 2001, after several unopposed extensions of time, Healthpoint filed its response to the motion for preliminary injunction. On February 27, 2001, both Health-point’s motion for preliminary injunction and Stratus’ cross motion for preliminary injunction were set for a hearing to begin on May 7, 2001 Beginning May 7, 2001 and ending on May 10, 2001 the Court held a consolidated evidentiary hearing on the two, cross motions for preliminary injunction. At the beginning of the May 7 hearing, Healthpoint orally moved to expand the scope of its motion for preliminary injunction to include Ziox as well as Kovia and proffered that it would rely on the same legal arguments as already expressed in its legal briefs but requested permission to develop the record regarding claims made by Stratus in marketing Ziox. Healthpoint proffered that Stratus’ representations about Ziox were very similar to the claims made about Kovia and often were made at the same time (given that both ointments concern wound care). Initially Stratus opposed the expansion of the hearing, arguing that it would be prejudiced by Health-point amending its motion at such a late date, but later offered that its witnesses on “FDA issues” who had been scheduled to testify at the May 7 hearing would cover “FDA issues” regarding both Kovia and Ziox. It was resolved that so long as Stratus could supplement the record with any Ziox-related issues, the hearing beginning May 7 would address Ziox as well as Ko-via. Healthpoint called eight witnesses to testify in person at the May 7, 2001 hearing: Philip Johnson, Gerald Meyer, Gary G. Heyland, Charles R. Cervantes, M.D., Alberto Hoyo, Mr. J.R. Locey, Larry Anderson and Angela Davis. In addition, Healthpoint presented deposition excerpts of the testimony of Juan Carlos Billoch, Peggy Goodnight and Lawrence Allen Rheins, Ph.D. Stratus called two witnesses to testify in person at the May 7 hearing: Gordon R. Johnston and Alberto Hoyo. In addition, Stratus presented deposition excerpts of the testimony of Kay Morgan, Peggy Goodnight, David Hobson, Mark Mitchell, Lawrence Allen Rheins, Ph.D, and Mark Newman. Further, for purposes of the preliminary injunction hearing, the parties agreed to a supplement to the deposition of Lawrence Rheins with a short statement of additional facts in lieu of personal testimony. Numerous exhibits were introduced into evidence. Both sides were allowed the opportunity to submit counter-designations of deposition testimony and post-trial briefs. The Court enters this Order to summarize findings and conclusions on the motions for preliminary injunction. The Order has not been sealed. III. ISSUES 1. Has Healthpoint satisfied its burden of proving entitlement to a preliminary injunction; and 2. Has Stratus satisfied its burden of proving entitlement to a preliminary injunction. IV. PRELIMINARY INJUNCTION STANDARDS In this Circuit, the test for entitlement to a preliminary injunction has four parts. A preliminary injunction may be granted only if the moving party establishes each of the following four factors: (1) a substantial likelihood of success on the merits; (2) a substantial threat that failure to grant the injunction will result in irreparable injury; (3) that the threatened injury outweighs any damage that the injunction may cause the opposing party; and (4) that the injunction will not disserve the public interest. A preliminary injunction is an extraordinary remedy and the decision to grant a preliminary injunction is to be treated as the exception rather than the rule. An evidentiary hearing is not always required before a court rules on a preliminary injunction. If factual matters are not in dispute, no oral hearing is required and the parties need only be given “ample opportunity to present their views of the legal issues involved.” On the other hand, “when factual disputes are presented, the parties must be given a fair opportunity and a meaningful hearing to present their differing versions of those facts before a preliminary injunction may be granted.” The basic question on the need for a hearing is whether it will add anything material to the Court’s consideration of the case. Evidence at a hearing on a preliminary injunction need not be “testimonial” and affidavits can be considered by the Court. The four-day evidentiary hearing concerning these ointments, the parties’ submission of declarations or deposition excerpts in lieu of testimony, and the parties’ ability to object to evidence and to counter-designate deposition excerpts, provided the parties with sufficient opportunity to develop disputed facts relevant to the motions for preliminary injunction. As a final procedural matter, Health-point made a “Daubert ” objection to Stratus’ expert, Mr. Johnston, and Stratus made a similar objection to Healthpoint’s expert, Mr. Meyer. Neither side asked for any consideration or findings under Daubert and Kumho Tire with respect to the admissibility of the testimony for purposes of the preliminary injunction hearing. Rather, both sides stated that the objection was made in order to preserve the objection for the time of trial. V. ANALYSIS: FINDINGS OF FACT; CONCLUSIONS OF LAW A. Summary of the Allegations Healthpoint’s motion for preliminary injunction is based on its false advertising claims and alleges that Stratus has provided false and misleading information, including the following alleged misrepresentations: (1) By representing Kovia as a “generic” or “generic alternative” to Accuz-yme, Stratus is implying that Stratus “has obtained FDA approval for Ko-via” but Kovia has not been approved as a “generic” drug by the FDA; (2) By representing Kovia as a “generic” or “generic alternative” to Accuz-yme, Stratus implies that Kovia “has identical amounts of the same active chemical ingredients in the same dosage form; that it meets Stratus’ standards of strength quality and purity; and that, if administered in the same amounts, will produce the same therapeutic effect, identical in duration [and] intensity,” but that Kovia “has far less papain activity than the Ac-cuzyme product,” and “the variance of papain activity from one Kovia tube to another in these tests is extreme indicating that Stratus fails to comply with good manufacturing practice.” (3) By promoting Kovia as “generic for Accuzyme, Stratus takes advantage of laws and contract provisions requiring or encouraging substitution of generic drugs for brand name drugs” because “[i]f the labels are the same, as they are in this case ... and the proprietor of the purported generic equivalent claims that they are the same, then pharmacists are likely to substitute the purported generic equivalent for the brand name drug;” (4) By representing “Kovia as a ‘generic’ drug implies that ... pharmacists and physicians can be assured that the drug has met the same rigid safety, efficacy, and quality-control standards met by the Accuzyme product;” (5) Kovia “is not a generic form of, but rather is inferior to and less effective than, the Accuzyme product” because tests show that Kovia “has significantly less papain activity” than Accuzyme, because, with “less papain activity, Kovia would not work as well as” Accuzyme, and, accordingly, Kovia “is not pharmaceutically equivalent, therapeutically equivalent or bioequi-valent to Accuzyme;” (6) Stratus has falsely stated that “Ko-via and Accuzyme are bioequivalent” and that assay results show that the ranges for urea and papain are within the “USP acceptable range” of “90% to 110%;” and (7) “Kovia is a misbranded and adulterated drug” due to test results which show an “appalling absence of papain activity” in Kovia lot 5025, “distressingly low amount of papain activity” in Kovia lot 5041 and “the variation in papain activity between the two.” With regard to the alleged false representations and misbranding, Healthpoint requests the Court to order Stratus, in sum: (1) to stop comparing its wound care products with Healthpoint’s wound care products; (2) to correct the false and misleading information Stratus has provided about Kovia, Accuzyme, Ziox and Panafil White by informing past and future purchasers that Kovia and Ziox are not “generic” alternatives to Accuzyme and Panafil White, that Kovia and Ziox have “not been approved by the FDA” and that Kovia has “not been produced in accordance with good manufacturing practices;” and (3) to recall all packages of Kovia and Ziox. Stratus’ cross motion for preliminary injunction is based on its false advertising claim and alleges that Healthpoint has made false and misleading statements, including the following misrepresentations which state or imply that: “(1) Kovia is not an alternative to Ac-cuzyme; (2) Kovia is ineffective or inferior to Ac-cuzyme in any respect; (3) It is illegal or otherwise in violation of federal or state law to prescribe, dispense or administer or use Kovia in place of Accuzyme; (4) Kovia is not an alternative to Accuz-yme because it is not AB rated’ or ‘A’ rated; (5) Accuzyme has been approved by the FDA for marketing or use; (6) Kovia requires an FDA approval or rating or that it is in any respect inferior to Accuzyme because it lacks any FDA approval or rating; (7) Stratus puts out inferior drugs; (8) Kovia is dangerous or unsafe; and (9) There are no generic equivalents to Accuzyme.” Stratus also claims that Healthpoint mis-branded Accuzyme or impermissibly has marketed Accuzyme under two labels. At the hearing, Stratus claimed that Health-point falsely stated that Stratus has no sales force. Stratus requests the Court to order Healthpoint, in sum, to stop making the above-noted false representations; to enter relief regarding Accuzyme’s label; to correct the false and misleading information Stratus has provided about Kovia, Ac-cuzyme and Stratus; to recall all packages of Accuzyme due to the labeling/misbrand-ing problem; and to inform all past and future purchasers of Accuzyme that Accuz-yme has not been made in accordance with good manufacturing practices. B. Primary Jurisdiction of the FDA As a threshold matter, the Court addresses the primary jurisdiction of the FDA to determine certain issues relating to drugs and their marketing. The primary jurisdiction of the FDA is relevant to an assessment of preliminary injunction burdens such as likelihood of success on the merits and irreparable harm. 1. Summary of Selected Cases and Analytical Framework Section 337(a) of the FDCA provides that “all such proceedings for the enforcement, or to restrain violations of [the Act] shall be in the name of the United States.” Construing this language and considering related arguments, courts have held that the FDCA does not create a private right of action to enforce or restrain the provisions of the FDCA or FDA regulations. Courts have held that a party should not be allowed to use the Lanham Act or a related common law cause of action to assert, in effect, a violation of the FDCA. Although the parties have not cited any Fifth Circuit precedent on point, courts have held that allegations of false and misleading advertising that “stray[ ] too close to the exclusive enforcement domain of the FDA” are impermissible attempts to circumvent section 387(a)’s denial of a private right of action. Courts have held expressly that mere false claims that a drug has been approved by the FDA when it has not are not actionable under the Lanham Act. A brief discussion of a few of the cases addressing this issue is instructive as to the general framework for drawing the boundary between the FDCA and FDA enforcement domain, on the one hand, and permissible Lanham Act and related common law claims, on the other. In Sandoz Pharmaceuticals Corp. v. Richardson-Vicks, Inc., plaintiff brought a Lanham Act claim, alleging that defendant falsely listed an ingredient as “inactive” on a cough syrup label when the FDA required that the ingredient be labeled as “active”. Defendant argued that plaintiffs claim was- a misbranding violation of the FDCA for which there was no private right of action. The Third Circuit affirmed the district court’s denial of a preliminary injunction, agreeing with the district court that plaintiff had not demonstrated likelihood of success on the merits; because the FDA had not found conclusively that the ingredient should be labeled as “active” under FDA regulations, plaintiff had not shown that the labeling was false. The Third Circuit stated: [plaintiffs] position would require us to usurp administrative agencies’ responsibility for interpreting and enforcing potentially ambiguous regulations. Jurisdiction for the regulation of OTC drug marketing is vested jointly and exhaustively in the FDA and the FTC, and is divided between them by agreement. Neither of these agencies’ constituent statutes creates an express or implied private right of action and what the [FDCA] and the FTC Act do not create directly, the Lanham Act does not create indirectly, at least not in cases requiring original interpretation of these Acts or their accompanying regulations. The Court held that “[b]ecause agency decisions are frequently of a discretionary nature or frequently require expertise,” the court would not preempt the exercise of that discretion by directly applying FDA regulations through the Lanham Act to address what was, in effect, a misbrand-ing claim, governed by FDA regulations, concerning a subject matter that the FDA had not yet resolved. In Mylan Laboratories, Inc. v. Matkari, the Fourth Circuit reversed the Rule 12(b)(6) dismissal of plaintiffs Lanham Act claim that defendants had falsely represented that their product was the “bioe-quivalent” of plaintiffs product and upheld the Rule 12(b)(6) dismissal of plaintiffs claim that defendants had falsely represented that their drugs had been approved by the FDA merely by the act of offering them in the market. The district court had dismissed Mylan’s Lanham Act claims on the ground that Mylan “failed to allege specifically that the defendant’s drugs were not in fact bioequivalent.” The complaint did not allege specifically that Matkari’s drugs were not bioequivalent. The Fourth Circuit held that the district court “correctly noted that, in order ultimately to succeed on its Lanham Act count, Mylan will have to show more evidence than mere proof that defendants’ claims were supported by unpersuasive test results.” But, the Fourth Circuit reversed the dismissal of alleged representations of bioequivalence, holding that My-lan’s allegations — that defendant had falsely represented that its product was “bioequivalent” to Mylan’s counterpart and “other approved generic equivalents,” was entitled to an “AB” rating from the FDA, and was the “generic alternative” to Mylan’s product — were “sufficiently particularized allegations of false or misleading representations to sustain for now” the Lanham Act claims. The Fourth Circuit reasoned that Mylan could be entitled to relief if it proved that defendant’s drugs were not bioequivalent or that the purported studies of bioequivalence had been based on data that was “falsified” or seriously “unreliable” or that the bioequiva-lence studies “had not been performed” or had been performed “on a drug manufactured differently from the one advertised.” In the same decision, the Fourth Circuit upheld the dismissal of Mylan’s claim that the defendant had falsely represented its drug was approved by the FDA by “the very act of placing the drug on the market” because such a claim, without evidence of any “advertising which declared ‘proper FDA approval,’ ” was an impermissible attempt to enforce the FDCA and FDA regulations. The Fourth Circuit stated: We agree with defendants that permitting Mylan to proceed on the theory that the defendants violate § 43(a) [§ 1125(a) of the Lanham Act] merely by placing their drugs on the market would, in effect, permit Mylan to use the Lanham Act as a vehicle by which to enforce the [FDCA] and the regulations promulgated thereunder. An attempt, by ingenious pleading, to escape one principle of law by making it appear that another not truly appropriate rule is applicable appears to have been attempted. Mylan in short, is not empowered to enforce independently the FDCA. * * * In order to state a proper claim for relief under ... the Lanham Act, Mylan was required to point out some claim or representation that is reasonably clear from the fact of the defendants’ advertising or package inserts. That it did not do. In Grove Fresh Distributors, Inc. v. Flavor Fresh Foods, Inc. (“Grove Fresh /”), plaintiff alleged that because defendant’s orange juice contained additives and adulterants, the representation that the product was “100% orange juice from concentrate” was false. The district court denied defendants’ motion to dismiss plaintiffs Lanham Act claim, holding that it was not an impermissible attempt to recover damages for the misbranding of food in violation of the FDCA: Grove Fresh relies on the FDA regulation [that defines “orange juice from concentrate”] merely to establish the standard or duty which defendants allegedly failed to meet. Nothing prohibits Grove Fresh from using the FDCA or its accompanying regulations in that fashion.... Grove Fresh does not base its claim solely on the FDCA or FDA regulations. Grove Fresh alleges that defendants have violated section 43(a) of the Lanham Act. Even without the FDA regulation defining “orange juice from concentrate,” Grove Fresh could attempt to establish a violation of section 43(a). Grove Fresh would simply need to provide other evidence establishing the proper market definition of “orange juice from concentrate.” The court allowed plaintiff to bring a Lan-ham Act cause of action for affirmatively misrepresenting facts -whether the orange juice was “pure” under a commercial definition — without interpreting any FDA regulation. Two months later, the same Court (before a different judge) in Grove Fresh Distributors, Inc. v. Everfresh Juice Co. (“Grove Fresh II”), held that “[wjhere Congress has precluded private causes of action under the FDCA, we find it difficult to justify the use of the FDCA to establish a crucial element of a private cause of action under the Lanham Act.” To sustain a Lanham Act claim the court held that Grove Fresh would have to “provide other evidence establishing the proper market definition of ‘orange juice from concentrate.’ ” In Summit Technology, Inc. v. High-Line Medical Instruments Co. (“Summit I ”), the district court dismissed plaintiffs Lanham Act and common law unfair competition claims that defendants had failed to disclose that their ophthalmological laser systems had not been approved by the FDA. The Court held that because the FDA had not yet determined that defendants’ systems needed approval, allowing plaintiffs Lanham Act claim to proceed would force the Court to decide the legality of defendants’ conduct before the FDA had a chance to do so. After plaintiff amended its complaint, the court, in Summit II, reiterated that “absent an affirmative representation that a drug has been officially approved by the FDA, a Lanham Act claim alleging that the defendant had failed to disclose FDA non-approval could not stand.” The Court explained that an affirmative misrepresentation that a product has “FDA approval” ... is actionable because it clearly misstates a fact and does not require an interpretation or application of FDA regulations .... [A] court can test the truth of the statement “FDA approval” without any need to interpret FDA regulations. On the other hand, the Court held that “to test the truth of defendant’s apparent claim that it can legally import the Summit lasers, the Court would be required to perform an ‘original interpretation’ of the FDA regulations governing this area,” an exercise the Court was not willing to undertake. In Braintree Laboratories, Inc. v. Nephro-Tech, Inc., a district court held that allegations the defendant falsely described and misbranded its product as a “dietary supplement” in violation of § 1125(a) and common law unfair competition should be dismissed because it is for the FDA and not the court to decide whether defendant’s product is properly classified as a “dietary supplement” under the FDCA and FDA regulations. This court was unwilling to consider evidence establishing an independent lay understanding of the term “dietary supplement” even though Braintree alleged that Nephro-Teeh’s labeling of its unapproved product as a “dietary supplement” was false “in the ordinary sense because the calcium in the product is not intended to be absorbed.” In Eli Lilly & Co. v. Roussel Corp., Eli Lilly brought suit against competitors selling bulk cefaclor, an antibiotic, and against other drug companies that purchased the bulk cefaclor for resale in retail dosage units. For many years, Lilly was the only manufacturer of cefaclor but after Lilly’s patent expired, a competitor sought FDA approval to sell bulk cefaclor. The FDA approved the abbreviated antibiotic drug application (“AADA”). Later, the FDA informed the competitor that it had found that its AADA contained false and misleading information. Eli Lilly brought suit, alleging a Lanham Act claim that the manufacturer fraudulently had obtained FDA approval by making false statements to the FDA about how and where they manufactured the product and that defendants misleadingly used terms such as “generic,” “cefaclor,” or “alternative to brand-name drugs” in product inserts and marketing materials implying that the FDA had determined their retail dose of cefac-lor was safe and effective. The district court dismissed Eli Lilly’s Lanham Act claims for failure to state a claim, noting that failure to disclose facts is not actionable under the Lanham Act; that if mere marketing a drug is an implied representation that the drug has been approved by the FDA, such a claim is an FDCA violation to be decided by the FDA; and that whether use of the terms “generic,” “cefaclor,” “alternatives to brand-name drugs,” and “safe and effective” implied FDA approval similarly “rely on interpretations of the FDCA” and were not alleged to be affirmative misrepresentations standing on their own. The Court emphasized that “Lilly has not alleged that defendants made false representations as to the quality, bioequivalency or safety of its products. Lilly has not alleged that defendants’ cefaclor was not generic cefaclor, or that it was not bioequi-valent to Ceclor or that it was not safe and effective.” Moreover, “Lilly has not pleaded any facts demonstrating that defendants’ generic products did not contain the active ingredients in Lilly’s Ceclor (ce-faclor) as represented.” The- Court held that, as in Mylan, such “broad and conclu-sory allegations” do “not allege that defendants misrepresented the quality of their products, but are based on defendants’ misrepresentations that they properly obtained FDA approval.” Absent an express, direct false statement that the FDA had approved the drug or other false statements about the product, false implications of FDA approval are not actionable. Eli Lilly relied in part on Barr Labs., Inc. v. Quantum Pharmics, Inc., (referred to herein as “Barr Labs I”). In Barr Labs. I, Barr, a generic drug manufacturer, sued Quantum, another generic drug manufacturer, after discovering that Quantum had filed false abbreviated new drug applications (“ANDA”s) with the FDA in order to obtain approval to market generic drugs. The FDA had found that certain statements and omissions which Quantum had made to the FDA regarding production and testing of lots used in support of an application for FDA approval were untrue which raised questions as to the reliability of Quantum’s data. Barr alleged that Quantum had violated the Lanham Act “when Quantum affixed labels with false descriptions and representations of its generic drugs,” and by “falsely advertising that Quantum’s generic drugs were the bioequivalent of, and contained similar therapeutic benefits as, the innovator drug and the generic drugs of other manufacturers, including Barr’s products.” The district court held that Barr had inadequately pleaded its Lanham Act claim. The court noted that neither the FDA, nor Barr, had found that Quantum’s drugs were not bioequivalent to the innovator drug as Quantum had represented. Finding that the complaint contained “broad and conclusory allegations” that Quantum falsely represented the therapeutic value of its generic drugs but (a) did “not specify what falsehoods or misrepresentations, if any, were contained” in the promotional information, (b) did not allege “any facts demonstrating that Quantum included false bioequivalence data in the ANDA’s that were submitted to the FDA,” and (c) did not allege that “the drugs were not the bioequivalent of the respective innovator drugs”, the district court, in a decision dated July 7, 1993, dismissed the Lanham Act false advertising claims without prejudice to re-pleading. Barr was provided 30 days to re-plead. In sum, courts have held not only that a plaintiff may not seek to enforce directly the FDCA through the Lanham Act but also that a plaintiff may not maintain a Lanham Act claim if the claim requires direct application or interpretation of the FDCA or FDA regulations. “[S]uch a claim would allow a private litigant to interfere with the FDA’s own investigatory time-table and prosecutorial decision-making ... [and] .. .would force the Court to rule directly ‘on the legality of ... conduct before the FDA has had a chance to do so.’ ” The court should not “determine presumptively how a federal agency will interpret and enforce its own regulations.” To do so would violate Congressional intent that the FDA have discretion to enforce the FDCA and implementing regulations. Therefore, as in Sandoz and Braintree courts have declined to consider misbranding claims under the Lanham Act and, as in Mylan, Eli Lilly and Summit I and Summit II, courts have declined to consider Lanham Act claims that, in essence, are false implications that a drug has FDA approval. But, as in Mylan, Grove Fresh I, and Summit, some courts have held that certain false statements are actionable under the Lanham Act “even if their truth may be generally within the purview of the FDA” so long as the representation “is in commercial advertising or promotion” and “misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods.” There is no single, bright-line test to distinguish sustainable from non-sustainable claims. 2. Application of Analytical Framework to the Factual Allegations In this case, as summarized above, Healthpoint seeks a preliminary injunction in part because Kovia as a “misbranded and adulterated drug” based on allegedly low or varying levels of papain. Correspondingly, Stratus seeks preliminary injunctive relief “due to the dual labeling problem” of Accuzyme based on the undisputed fact that Accuzyme being placed on the market today contains 8.B x 105 USP units of papain activity as measured by USP lot G whereas Accuzyme used to contain 1.1 x 106 USP units of papain activity as measured by USP lot F. Such claims based on alleged mislabeling are, in essence, misbranding claims which should be decided by the FDA. Therefore, the Court declines to consider awarding preliminary injunctive relief based on claims or arguments that Stratus incorrectly labeled or misbranded Kovia or that Health-point incorrectly labeled or misbranded Accuzyme. Similarly, the Court declines to consider awarding preliminary injunctive relief based on the argument that Kovia’s alleged low or varying level of papain render it adulterated. Claims of adulteration should be resolved by the FDA. Similarly, arguments concerning what federal law does or does not require for Kovia, Ziox, Accuzyme and Panafil White to be marketed legally require the direct application and interpretation of FDA regulations. The record reflects that Panafil White and Accuzyme have been on the market for years, that Kovia and Ziox have been marketed for more than one year, that the FDA has inspected the manufacturing operations for Accuzyme, Kovia and Ziox and that the FDA has an open investigation regarding Accuzyme, Kovia and Ziox. These and other facts show that the FDA is aware that the four ointments are on the market yet there is no proof that the FDA has taken any enforcement action against any of the four ointments to remove from the market. It is for the FDA to exercise its discretion to determine whether Accuzyme, Panafil White, Kovia and Ziox are on the market lawfully, whether it be because they are grandfathered or are exempt from the FDA pre-clearance process. Resolution of these questions in court would require the “direct interpretation and application of the FDCA ... [which] ... are more appropriately addressed by the FDA, especially in light of Congress’s intention to repose in that body the task of enforcing the FDCA.” As in Summit I and Summit II, were this court to decide the lawfulness of the marketing of the four ointments at issue, the decision improperly would “ ‘determine preemptively how a federal agency will interpret and enforce its own regulations.’ ” Other underlying, significant questions — such as whether Accuzyme, Panafil White, Kovia or Ziox should be required to file a new drug application (“NDA”) or ANDA; whether the allegedly low or varying levels of papain in Kovia indicates that Stratus fails to comply with good manufacturing practices; or whether Kovia would not work as well as Accuzyme; whether Kovia or Ziox are inferior to and less effective than Accuzyme or Panafil White; whether Kovia requires an FDA approval or rating; whether Health-point must change Aecuzyme’s NDC number now that Accuzyme’s label has changed; and whether Kovia is dangerous or unsafe — are enforcement issues which are committed to the FDA and are better suited for resolution by the FDA. The Court should decline to address them. Notwithstanding the decision to defer to the FDA to resolve these threshold claims, the Court also must decide whether other claims at the heart of this lawsuit may be addressed in federal court or should be deferred to the FDA. Apart from allegations which the Court holds are matters for the FDA, Healthpoint argues in its post-hearing brief that it is entitled to a preliminary injunction based on the following alleged false or misleading representations that Stratus allegedly has made to the pharmaceutical trade: Kovia is “generic” or a “generic alternative” to Accuzyme; Ziox is “generic” or a “generic alternative” to Panafil White; Compare Kovia, a “branded generic” or “brand name” with “generic” price, to Accuzyme; Compare Ziox, a “branded generic” to Panafil White; Kovia is “bioequivalent” to Accuzyme; Kovia is “equivalent” to Accuzyme; Ziox is “equivalent” to Panafil; Kovia has the “same ingredients” or “same active ingredients” as Accuz-yme; Ziox has the “same ingredients” or “same active ingredients” as Panafil; Kovia has “similar clinical effects” as Accuzyme; and Kovia and Ziox are “economical” and “high quality” alternatives to Accuzyme and Panafil. Healthpoint argues that “Stratus cannot seriously dispute that the last seven of the eleven representations, which concern the comparative qualities of and characteristics of Stratus’s ointments are actionable under the Lanham Act and common law” and the first four representations are actionable, even though they “impl[y] that the ointments are FDA approved” because “under the facts of this case, these claims are positively false statements in advertising that harmed Healthpoint’s commercial interests, and are not merely nonactiona-ble implications that Stratus has violated the FDCA by fraudulently obtaining FDA approval.” Healthpoint’s motion argues that such claims falsely imply Stratus “has obtained FDA approval for Kovia” and Ziox and induces pharmacists to conclude that Kovia may be substituted for Accuz-yme and Ziox may be substituted for Pa-nafil White. Healthpoint argues that because Stratus has not demonstrated that Kovia and Ziox are “therapeutically equivalent” or “pharmaceutically equivalent” or “bioequivalent” to Accuzyme and Panafil White, respectively, Stratus should not be allowed to suggest that Kovia and Ziox are freely substitutable, under most state laws, as a “generically” equivalent product. Healthpoint acknowledges that Stratus may market and advertise Kovia and Ziox, unless and until the FDA should initiate action to remove them from the market, and may work to encourage physicians to write prescriptions for either Stratus ointment, but may not place comparative advertisements that falsely suggest that either of Stratus’ two ointments may be substituted as an equivalent for the corresponding Healthpoint product. In turn, apart from the allegations which this Court holds are matters for the FDA, Stratus seeks a preliminary injunction based on the following alleged false or misleading representations that Health-point allegedly has made: Kovia is not an alternative to Accuzyme; It is illegal or otherwise in violation of federal or state law to prescribe, dispense or administer Kovia in place of Accuzyme; Kovia is not an alternative to Accuzyme because it is not “AB” or “A” rated; Accuzyme has been approved by the FDA; Stratus puts out inferior drugs; and There are no generic equivalents to Ac-cuzyme. Stratus argues that if it must provide evidence in Court to demonstrate that Kovia or Ziox is a “generic” or “equivalent” to Accuzyme or Panafil White in order to show it may correctly suggest substitution, the Court, in effect, would be overruling the “undetermined status” that both Kovia and Ziox apparently enjoy, would be requiring the submission of evidence the FDA has not sought from Stratus, and would be interfering with the FDA’s primary jurisdiction. Stratus argues that it should be free to market Kovia and Ziox as “alternatives” to and “substitutes” for Accuzyme and Panafil White, leaving it up to licensed pharmacists and practitioners to determine if substitution is proper under state law and based on patient needs. Stratus argues that a reference to “generic” could not mislead in Texas because Texas is an “Orange Book state” such that a drug not listed in the Orange Book may not be substituted. As a threshold matter, it seems clear that in addressing claims of “generic,” “equivalent to” or “alternative to,” the Court should not change the FDA’s definitions of such related terms of art as “pharmaceutical equivalents,” “therapeutic equivalents,” “bioequivalence” and “pharmaceutical alternative.” New definitions of FDA terms would undercut national uniformity regarding federal laws regulating the drug market or would confuse the public and undermine confidence in the drug supply in general and generic drugs in specific. Stratus has argued that the “drug industry” has a different definition of “generic” than that proposed by the FDA. Just as both Healthpoint and Stratus are “at risk” by marketing wound care ointments which are in an “undetermined status” with the FDA, it would appear that a drug manufacturer is at risk if it uses terms of art such as “generic” or “bioequivalent” when promoting a drug to mean something other than what the FDA requires. It is undisputed that health care professionals make drug substitution decisions based on determinations of pharmaceutical equivalence, therapeutic equivalence and/or bioequivalence (depending on the provisions of the applicable state’s law) — factors discussed in the FDA’s regulations, the Orange Book, and encompassed by CDER’s definition of “generic.” As urged by the FDA in its ami-cus brief in Solvay, to allow a drug manufacturer to use the word “generic” to mean something different for unapproved and approved drugs will confuse the consumer. Although the undersigned might agree, as argued by Healthpoint, that the false implication that a product has been approved could be as damaging as an express false claim of approval, as noted above, courts have held that false implications of FDA approval — as opposed to direct statements that a product was approved when it was not — are not actionable. As in Mylan, Eli Lilly and Summit II, to the extent that Health-point alleges that Stratus’ use of “informationally loaded” terms such as “generic” or “generic equivalent” implies FDA approval, the claims are not actionable and should be dismissed. The decision of whether Kovia is the “generic alternative” or “generic equivalent” or “bioequivalent” to Accuzyme and whether Ziox is the “generic alternative” or “ generic equivalent” of Panafil White should be made by the FDA. “[T]he task of identifying in the first instance whether one drug is the generic equivalent of another” belongs to the FDA, “the government agency with extensive technical and scientific expertise in the area.” Therefore, the Court declines to address any of the remaining claims to the extent they imply FDA approval. But, the undersigned does conclude that a drug manufacturer making a claim that a non-approved drug is “generic” to or a “generic equivalent” of another non-approved drug must use the FDA’s definition of “generic” and, when such a representation is challenged, as here, through a Lanham Act false advertising claim with specific allegations that the use of the terms is false and unsubstantiated, must defend and be prepared to demonstrate why it stated that its drug is a “generic equivalent,” that is, is “identical or bioequivalent to a brand name drug in dosage form, safety, strength, route of administration, quality, performance characteristics and intended use.” As in Mylan and unlike Eli Lilly, Healthpoint has alleged that Stratus has made false representation that two of its products were “bioequivalent” or “generically equivalent” or a “generic alterna-five” to two respective Healthpoint products. The primary jurisdiction of the FDA would not appear to bar a court from deciding Healthpoint’s false advertising claim that Stratus has made false claims of “generic equivalence” or “bioequivalence” and has allegedly falsely represented that Kovia and Ziox have the “same ingredients” or the “same active ingredients.” There is a distinction, on the one hand, between respecting the FDA’s primary jurisdiction to determine in the first instance whether a drug is lawfully marketed, “generic,” “bioequivalent,” “therapeutically equivalent,” “pharmaceutically equivalent” and, on the other hand, a Lanham Act claim that a false statement has been made about a product. Even though the FDA has not required Stratus to demonstrate the equivalence of Kovia to Ac-cuzyme or the equivalence of Ziox to Pa-nafil White, Stratus is not free to make false or misleading statements about its product. To hold to the contrary would mean that an administrative scheme could eviscerate a Lanham Act or related common law claim over which the agency has no jurisdiction. For example, if Stratus represents that its two ointments are “bioequivalent,” “generically equivalent,” “equivalent” or have “the same active ingredients” or “the same ingredients” or “the same active ingredients in the same amounts,” consumer and competitors have a right to expect that such representations have factual support and the Lan-ham Act provides a vehicle to enforce that expectation. Conversely, the FDA’s primary jurisdiction also should not bar the Court from deciding Stratus’ claim that Healthpoint made false or misleading statements about Kovia and Ziox (e.g., the Stratus products lack a needed FDA approval or rating). These claims are not merely claims that a drug falsely implied it has been approved by the FDA without any additional allegation of falsity; rather, each is a claim of false or misleading comparisons between two specific products in the context of comparative advertising and promotion relating to whether one drug can be substituted for another under state law. In sum, issues that require direct application or interpretation of the FDCA or its implementing regulations or FDA policies should not be addressed by the Court; neither Healthpoint nor Stratus has demonstrated likelihood of succeeding on the merits on any issue that requires the Court to directly apply or interpret the FDCA, implementing regulations or FDA policies. On the other hand, at this stage of the pleading, it appears that other issues are able to be resolved without the direct application or interpretation of the FDCA, implementing regulations or FDA policies. Whether or not either side has demonstrated a likelihood of success on any of those issues is addressed below. C. Unclean Hands and Lawfulness of the Marketing Stratus has argued that Accuzyme and Panafil White are not marketed legally and, therefore, Healthpoint should not be entitled to receive relief from the court. Stratus concedes that it created Kovia and Ziox by duplicating the label claims of Accuzyme and Panafil White and concedes that if Accuzyme and Panafil White are not marketed legally then neither are Ko-via and Ziox. Stratus argues that the Court should decline to consider any claim in this lawsuit, deferring all claims to the FDA. 1. Unclean Hands The doctrine of unclean hands “closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief, however improper may have been the behavior of the defendant.” Although equity does not demand that the parties “have led blameless lives ... it does require that they shall have acted fairly and without fraud or deceit as to the controversy in issue.” For the doctrine to apply, a party’s conduct does not need to be one punishable as a crime or one that would justify legal proceedings of any sort. “Any willful act concerning the cause of action which rightfully can be said to transgress equitable standards of conduct is sufficient cause” for the court to invoke the doctrine. The wrongful acts upon which the claim of unclean hands is premised must “in some measure affect the equitable relations between the parties in respect of something brought before the court for adjudication.” Plaintiffs alleged wrongdoing will not bar relief unless the defendant establishes personal injury resulting from plaintiffs conduct. The unclean hands doctrine “does not purport to search out or deal with the general moral attributes or standing of a litigant.” The doctrine of unclean applies to preliminary injunctions and affords the equity court broad discretion in rejecting an unclean litigant’s claims. However, the doctrine should “not be used as a loose cannon, depriving plaintiff of an equitable remedy ... merely because he is guilty of unrelated misconduct.” In applying, the unclean hands doctrine, the court must consider the situation as it existed at the time of the suit. Equity denies relief “where the plaintiff is misrepresenting to the public the nature of his product either by the trademark itself or by his label.” Unclean hands is a defense to a Lanham Act claims such as trademark infringement and unfair competition. As the Supreme Court said in Clinton E. Worden & Co. v. California Fig Syrup Co.: [W]hen the owner of a trade-mark applies for an injunction to restrain the defendant from injuring his property by making false representations to the public, it is essential that the plaintiff should not in his trade-mark, or in his advertisements and business, be himself guilty of any false or misleading representation; that if the plaintiff makes any material false statement in connection with the property which he seeks to protect, he loses his right to claim the assistance of a court of equity; that where any symbol or label claimed as a trade-mark is so constructed or worded as to make or contain a distinct assertion which is false, no property can be claimed on it, or, in other words, the right to the exclusive use of it cannot be maintained. Equity affords no protection to a party who is guilty of “materially false or misleading advertisements or business relative to the trademark.” A Lanham Act defendant must show that “plaintiffs conduct is inequitable and that the conduct relates to the subject matter of [plaintiffs] claims.” Ih a claim for false advertising, the unclean hands of the plaintiff must relate to the same product the defendant allegedly falsely advertised. A court may reject the doctrine where the “failure to grant an injunction would only increase the damage inflicted on the buying public.” The unclean hands doctrine should not bar Lanham Act claims when the doctrine is premised on allegations of noncompliance with the -FDCA because to do so would allow a mere accusation of an FDCA violation to bar Lanham Act relief but only the FDA has the power to decide if an FDCA violation has occurred. Courts have applied the doctrine of unclean hands to bar equitable relief in cases involving trademark infringement, false advertising, and unfair competition. In Strey v. Devine, the Seventh Circuit found that plaintiffs use of the designation “Dr.” on his product label, although plaintiff was not a licensed physician, could mislead the public into believing the product was prescribed by a doctor. Additionally, the court found that under the FDCA, plaintiffs product was misbranded because the label did not list all ingredients. The Seventh Circuit affirmed the dismissal of plaintiffs claims for trademark infringement and unfair competition, finding the claims barred by unclean hands. As noted, Stratus has argued that Healthpoint has unclean hands because Healthpoint cannot demonstrate that either Accuzyme or Panafil White are lawfully on the market. As an initial matter, Stratus’ argument is not without problems. Stratus has readily argued that it is in the same position as Healthpoint and, as noted herein, is relying on the same compliance policy guide, CPG 7132c.02, in marketing Kovia and Ziox. Stratus has contended that it attempted to duplicate Accuzyme and Panafil White when creating Kova and Ziox, respectively, therefore, if the FDA should determine that Accuzyme and/or Panafil White are not marketed lawfully, Stratus would be required to withdraw Kovia and Ziox as well. Further, the parties agree that administrative scheme applicable to Accuzyme, Panafil White, Kovia and Ziox provides that some drugs can be marketed without FDA pre-approval unless the FDA intervenes affirmatively to say otherwise. Accuzyme, based on Pa-nafil White, has been openly marketed and reported to the FDA since 1996 without pre-approval and the FDA has taken no action against Accuzyme, even though the FDA visited the San Antonio plant in 2000 in a misbranding investigation. Under these circumstances, the Court cannot determine that Healthpoint has “unclean hands” or lacks standing due to it failure to have affirmative proof that pre-approval is not required. 2. Marketing a Prescription Drug Without Prior FDA Approval The FDCA, first enacted in 1988 and subsequently amended, instituted pre-mar-ket clearance for new drugs before a drug may be sold in interstate commerce. The FDCA defines “drug” broadly to include any article listed in the USP and any article intended to affect the structure or function of the human body. The FDCA’s pre-market clearance through an NDA is required for every drug unless it satisfies one of two general exceptions to the statutory definition of “new drug.” A drug is a “new drug” unless (1) it has been “generally recognized, among [qualified] experts ... as safe and effective for the use under the conditions, prescribed, recommended, or suggested in the labeling thereof’ (“GRAS/E”) based on testing and investigations and use outside of the investigatory process; or (2) it is grandfathered under the terms of either the 1938 provisions or 1962 amendments. After the Hatch-Waxman Act in 1984, a “generic drug” may be approved without a NDA (and the extensive studies) if it is “therapeutically equivalent” to a brand name or “pioneer” drug. In such cases, an ANDA is required and allows the generic drug manufacturer to demonstrate safety and efficacy by showing that the generic drug is “bioequivalent” to the pioneer drug that has already been approved as safe and effective, and that the generic drug is a “pharmaceutical equivalent” to the pioneer drug, that is, the active ingredients are the same and the two drugs share the same strength, route of administration and dosage form. Many states require the substitution of less expensive, therapeutically equivalent generic drugs when a brand name drug is prescribed. The “Orange Book” compiles the list of all drugs that the FDA had approved as safe and effective with “therapeutic equivalence determinations” for the generic versions of listed pioneer drugs. The FDA developed compliance policy guide (“CPG”) 7132c.02 to address drug products that are on the market but have not received FDA approval for both safety and effectiveness. These drugs fall into several different categories. Drugs that fall within part B of CPG 7132c.02 may be marketed pending a final determination by the FDA as to their lawfulness. According to Mr. Meyer’s testimony, Accuzyme and Panafil White would fall within part B of CPG 7132c.02 because each meet the definition of being “a [prescription] drug product that contains one or more active ingredients first introduced into the marketplace before 1962” which is “marketed based on their manufacturer’s belief that such products are not subject to the new drug provisions of the act [‘FDCA as amended’].” Therefore, Mr. Meyer testified that Accuzyme and Panafil White— and Kovia and Ziox — are in an “undetermined status” with the FDA. The FDA must determine whether Accuzyme and Panafil White are GRAS/E or grandfathered or whether an NDA will be required and that there is an administrative scheme, with notice, opportunity to be heard and appellate rights, that will apply to the FDA’s decision. Pending that decision, the FDA, through CPG 7132e.02 has exercised its discretion to allow the ointments to be marketed, at least until they are removed from the market. The pre-marketing legal opinion obtained by Stratus essentially agrees with Mr. Meyer’s conclusions as to lawfulness. The law firm of McKenna and Cuneo, L.L.P. provided Stratus with an opinion letter dated June 26, 2000, regarding Ko-via which concluded, in sum, that (a) Pa-nafil White was on the FDA’s “DESI II” list; (b) “[u]ntil FDA takes action or makes a final determination, a similar version of the DESI II listed Panafil White formulation, which is identical in formulation, strength, dosage form, route of administration, indications for use, and intended patient population, may be marketed in accordance with CPG 7132c.02;” and (c) even though Kovia “is not absolutely identical to the DESI II listed formulation” of Panafil White, the “FDA is unlikely to take action against a product containing the formulation proposed by Stratus” that varies only as to the strength of papain activity, but otherwise has “a similar dosage form, route of administration, indication for use, and intended patient population ... [and] that there are not safety issues connected with the change in strength of the active ingredients.” The parties do not dispute that Accuz-yme, Panafil White, Kovia and Ziox are “drugs” within the meaning of the FDCA. There is no evidence that any of the four ointments has been the subject of a NDA or ANDA or that Stratus could file an ANDA based on Kovia and Ziox’s purported equivalence to Accuzyme and Panafil White (because Accuzyme and Panafil White are not the subject of an approved NDA). The FDA has not taken action to remove Accuzyme or Panafil White from the market, even though both have been on the market for a number of years, or to remove Kovia and Ziox from the market. The record reflects that Healthpoint has reported its marketing of Accuzyme in its annual reports to the FDA, the FDA has an open investigation of misbranding of Accuzyme, the FDA recently inspected the San Antonio plant in connection with the investigation. The record also shows that the FDA has inspected the manufacturing operation for Kovia and Ziox. It is clear the FDA has had and continues to have the opportunity to decide if further enforcement action is appropriate. Stratus’ arguments as to lawfulness advanced in connection with the preliminary injunction hearing are weaker, but, again, the FDA has had an open investigation regarding Stratus’ marketing of Kovia and Ziox and has not taken any enforcement action to remove it from the market. It is for the FDA to exercise its discretion to determine whether these four ointmen