Ruling may diminish ability to avoid induced infringement liability

Recently, the U.S. Court of Appeal for the Federal Circuit issued a split panel decision on induced infringement in GlaxoSmithKline LLC v. TEVA Pharmaceuticals USA, Inc., 2018-1976, 2018-2023 (Oct. 2, 2020). The court’s decision, if upheld, may limit the ability of a generic drug maker to avoid induced patent infringement liability, even where the generic drug maker carves out from its label indications covered by the claims of an issued patent — i.e., a “skinny label.”

First, the law: “Whoever actively induces infringement of a patent shall be liable as an infringer.” 35 U.S.C. Section 271(b).

Carvedilol is a U.S. Food and Drug Administration-approved drug for treatment of congestive heart failure. The branded “Coreg” franchise was protected, in part, by a method patent stating that it “decrease[s] a risk of mortality caused by congestive heart failure.”

Teva applied for FDA approval to market a generic version of Coreg, which the FDA tentatively approved for treatment of hypertension and left ventricular hypertension following myocardial infarction — but not for congestive heart failure. In press releases and marketing materials, Teva stated that its generic version of Coreg was “an AB Rated generic of Coreg tablets.” An AB rating indicates Teva’s generic version of Coreg is considered therapeutically equivalent to branded Coreg. Teva started selling its generic drug in 2007.

In 2011, the FDA required Teva to amend its label to be “identical in labeling to the branded drug.” So, Teva amended its label to include the indication for treatment of congestive heart failure.

In 2014, GSK sued Teva alleging induced infringement of GSK’s method patent. There are two relevant time periods here. The first period runs from when Teva initially marketed its generic drug in 2007 up until 2011, when the FDA mandated that Teva make a label change. In this first time period, the only indications in Teva’s generic drug’s skinny label were hypertension and left ventricular dysfunction following myocardial infarction — not congestive heart failure.

The second relevant time period was after the FDA mandated that Teva change its generic drug label in 2011 to include congestive heart failure as an indication — which is the subject matter of the claims of GSK’s patent.

For the first relevant time period, Teva argued that its generic drug label did not include an indication for congestive heart failure in its skinny label. So up until the 2011 label amendment, it could not have induced infringement of GSK’s congestive heart failure method patent because that was a required claim element in GSK’s patent, and Teva’s label explicitly excluded it.

For the second relevant time period, Teva argued that it should not be liable for induced infringement after the 2011 label change because: “to establish liability for induced infringement, GSK is required to prove that Teva directly communicated with the direct infringers and ‘caused them to directly infringe the method in [GSK’s reissued] method patent,’” and Teva did not do this.

In essence, Teva argued that even though its label, after the 2011 amendment, contained an indication for congestive heart failure, Teva had not actually communicated directly with health care providers so Teva could not have actively induced infringement — that is, health care providers used Teva’s generic drug to treat congestive heart failure not because Teva communicated directly with them, but because of other information sources including GSK’s branded drug label, trade publications, and the health care provider’s personal knowledge and experience.

The jury was not convinced, and found that Teva induced infringement of select claims of GSK’s method patent before and after the 2011 label amendment. But the district court nevertheless granted a Teva motion for judgment as a matter of law, holding in part that “GSK failed to prove by a preponderance of the evidence that ‘Teva’s alleged inducement, as opposed to other factors, actually caused the physicians [i.e., as a class or even at least one of them] to directly infringe’” by prescribing Teva’s generic version to treat congestive heart failure.

On appeal, the Federal Circuit initially focused on the first relevant time period. The jury had concluded that an AB rating meant that Teva’s generic drug was equivalent to GSK’s branded drug and could therefore be used for all of GSK’s branded drug indications. It appeared to conclude that promoting the AB rating amounted to Teva promoting its generic drug for congestive heart failure, even though that was not on Teva’s generic drug label. The Federal Circuit determined that it was proper for the jury to consider Teva’s promotion of its generic drug as AB rated as a cardiovascular agent before 2011 in coming to a decision.

Regarding the second relevant time period, the Federal Circuit held in part that “[p]recedent has recognized that the content of the product label is evidence of inducement to infringe.”

That Teva was found to induce infringement during the second relevant period is unremarkable. That the jury found induced infringement for the first relevant time period surprised many observers. The Federal Circuit, upon appeal, vacated the JMOL and remanded back to the district court. One of those who was surprised by the jury’s finding for the first relevant period was Chief Judge Sharon Prost, who issued a strong dissent.

It should not be surprising that JMOLs in jury trials, which negate jury findings, are rare because a party must show that the jury’s findings, presumed or express, are not supported by substantial evidence. Rather, the surprise here was the jury’s finding of inducing infringement during the first relevant period, and the Federal Circuit vacating the JMOL and remanding to the district court.

In essence, for the first relevant time period, the jury appeared to connect the dots as follows: An AB rated promotion means the generic drug is the same as the branded drug. And equivalent drugs can be used for all of the same indications. So Teva’s touting an AB rating constituted Teva promoting its generic drug for all of the indications on the branded drug label, even if the one or more of these indications were, during the first relevant time period, not on Teva’s generic drug label. As Chief Judge Prost pointed out in dissent, the jury’s finding would appear to obviate the legal protections afforded by a skinny label.

The case is interesting and may set an important precedent. For example, even if a generic attempts to carve out an indication using a skinny label, can the generic be liable for inducing infringement of a patent with claims drawn to the carved out indication if the generic promotes its product as AB rated? The case suggests this is possible. Would the case have been different if Teva promoted it generic as “AB rated for the indications on Teva’s label”? We do not know.

Would future bench trials come to different conclusions on similar fact patterns than the jury did here? The answer is unknown. And if bench trails came to a different conclusion, how would they distinguish a similar fact pattern case from the present case? The Federal Circuit’s opinion raises at least as many questions as it answers. 