A U.S. judge has denied an attempt by Covidien Ltd. (COV) to stop private drug maker URL Pharma Inc. from launching a low-dose generic version of Covidien's insomnia drug Restoril well before the drug's patent expires next May.

URL filed an application with the U.S. Food and Drug Administration on Nov. 1, 2006, seeking approval to make and sell the drug, which is known generically as temazepam.

A 30-month stay on FDA approval of that application is set to expire Aug. 12, but Covidien - which had sued for patent infringement - asked the U.S. District Court for the District of New Jersey for a preliminary injunction that would stop URL from launching when the stay lifts.

In a ruling dated Tuesday, Judge Stanley R. Chesler denied Covidien's motion while also ruling against Covidien's infringement claim.

At issue is a 7.5 milligram generic version of Restoril, which is the smallest of four available doses. Restoril is not a major product for Covidien, where it represents 4% to 5% of drug sales, said Coleman N. Lannum, vice president of investor relations, during a BMO Capital Markets health-care conference on Wednesday.

Drug sales also represent about 10% of Covidien's total sales, spokesman Bruce Farmer noted. Regarding Judge Chesler's ruling, Lannum said "we're going to take a look and defend that any way we can."

A spokesperson for URL Pharma wasn't available for immediate comment.

Generic versions of Restoril are already on the market. Mylan Inc. (MYL) announced in June that it had gained FDA approval to sell the 22.5 milligram dose. It already marketed 15 milligram and 30 milligram doses.

Shares of Covidien slipped 0.9% to close at $38.69 on Wednesday.

-By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com