Most judicial outcomes, particularly on appeal, are broadly based on varying combinations of process and outcome.  The law is replete with process-based decisions (standing, jurisdiction, waiver, to name a few) and of course even more frequently perhaps coming to the "correct" outcome is a major decisive factor in a court's opinions.  Rarely are these two features of judicial consideration juxtaposed in opposition (albeit not so rarely that the aphorism that "hard cases make bad law" is not appreciated in practice) but such a case is illustrated in the Federal Circuit's latest (and second) decision in GlaxoSmithKline LLC v. Teva Pharmaceuticals USA.

The matter arose in litigation over GSK's Coreg^® product (carvedilol) for treatment of hypertension (the initial approved indication; U.S. Patent No. 4,503,067), congestive heart failure (CHF) (the subject of U.S. Patent No. 5,760,069), and left ventricular dysfunction following myocardial infarction (LVD-MI).  The '069 patent recites a method of treating CHF with a combination of carvedilol and "one or more of an angiotensin-converting enzyme ("ACE") inhibitor, a diuretic, and digoxin."

Teva's ANDA was filed with a Paragraph III certification over the '067 patent and a Paragraph IV certification over the '069 patent.  The FDA tentatively approved Teva's generic product for "treatment of hypertension and heart failure" which Teva launched on expiration of the '067 patent.  Teva's label indicated that the product was approved treatment of LVD-MI and hypertension and announced that FDA had given its product an "AB rating" (which the opinion explained "allow[s] users to determine quickly whether the Agency has evaluated a particular approved product as therapeutically equivalent to other pharmaceutically equivalent products").  Thereafter, FDA required Teva to amend its label to be identical to the GSK label for Coreg®, which introduced treatment of heart failure into the approved treatments recited in Teva's label.

GSK filed for reissue of the '069 patent which was duly granted by the U.S. Patent and Trademark Office as Reissue Patent No. RE40,000; claim 1 is representative of the invention as claimed in the '000 reissue patent:

1.  A method of decreasing mortality caused by congestive heart failure in a patient in need thereof which comprises administering a therapeutically acceptable amount of carvedilol in conjunction with one or more other therapeutic agents, said agents being selected from the group consisting of an angiotensin converting enzyme inhibitor (ACE), a diuretic, and digoxin,
    wherein the administering comprises administering to said patient daily maintenance dosages for a maintenance period to decrease a risk of mortality caused by congestive heart failure, and said maintenance period is greater than six months.

(Where the italicized portion of the claim represents the modifications introduced in prosecution of the reissue application.)

GSK filed suit against Teva for inducement of infringement based on the Teva label, based on direct infringement by physicians prescribing the drug for the label indications.  Teva argued that it had "carved out" the indication for CHF pursuant to 21 U.S.C. § 355(j)(2)(A)(viii), resulting in a "skinny label" with regard to this indication.  Thereafter, FDA compelled Teva to amend its label to include that indication.  In addition, Teva argued that it could be liable for inducement only if GSK could show that Teva had "directly communicated with the direct infringers and 'caused' them to directly infringe the method in the '000 patent."  In a jury instruction the court informed the jury that circumstantial evidence could be used to satisfy this burden.

The jury found that Teva induced infringement of the '000 reissue patent both before and after the label amendment (albeit infringing several claims after but not before that change).  The District Court granted Teva's motion for judgment as a matter of law (JMOL) on the basis that GSK had not "caused" physicians to prescribe their product for the infringing uses.  Because proof of such causation was required, according to the District Court, its absence precluded the jury from basing its decision on substantial evidence.  The Court relied on the "many sources of information available to prescribing physicians" other than Teva's label (including paradoxically GSK's label and promotion of its Coreg® product) in finding this evidentiary deficiency.  Also, the Court based its decision on physician testimony that their prescribing behavior relied on "guidelines and research, as well as their own experience" and not Teva's label.  "In sum," the Court said, "substantial evidence [did] not support the jury's finding on causation, and therefore [did] not support its verdict that Teva is liable for induced infringement, during both the skinny and full label periods."  This appeal followed.

The Federal Circuit reversed, in an opinion by Judge Newman joined by Judge Moore; Chief Judge Prost provided a lengthy, comprehensive dissent.  The panel majority relied on the Supreme Court's decision in Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (2011), that copying is evidence of inducement, and also found compelling evidence from Teva's website regarding its product's AB rating with GSK's Coreg® product and other promotional content, as well as testimony from GSK's witnesses regarding physician reliance on information from generic drug makers.

The panel majority opined that the District Court erred in applying the correct legal standard, stating that "precedent makes clear that when the provider of an identical product knows of and markets the same product for intended direct infringing activity, the criteria of induced infringement are met."  Considering this precedent, the majority held that "[t]here was ample record evidence of promotional materials, press releases, product catalogs, the FDA labels, and testimony of witnesses from both sides, to support the jury verdict of inducement to infringe the designated claims for the period of the '000 reissue patent."

Chief Judge Prost dissented based, as the majority noted, on her objections to the quanta of evidence adduced and policy consequences should the majority's position be sustained.  In the Chief's view, the majority's decision undermines the policy goals, embodied in the provisions of the law regarding skinny labels, for balance between the incentives patents provide for pharmaceutical innovation and the public's need for access to that innovation once the patent term has expired.  In the Chief's view, the majority's decision undermined these policy goals by finding Teva induced infringement by marketing its generic drug produce for unpatented uses (emphasis in dissent) using its skinny label.  The dissent not only disagreed with the majority's decision, but apprehended it to "nullify[y] Congress's statutory provision for skinny labels—creating liability for inducement where there should be none," contrary to Congressional intent and "slowing, rather than speeding, the introduction of low-cost generics."

The original majority opinion occasioned an outpouring of outrage from industry groups (particularly generic ones) who latched onto the then-Chief Judge's rhetoric in her dissent to the effect that the opinion eviscerated the congressional sanctioning of skinny labels.  The Court granted panel rehearing in February that resulted in the current opinion.

In which the outcome has not changed (although the explication of the process aspects of the majority, per curium opinion are perhaps more explicit).  After reciting the procedural posture of this decision (as a panel rehearing), the majority address amici's concerns (amply represented in eleven amicus briefs, including a brief by one of the architects of the generic's law former Representative Henry Waxman).  The opinion recites with approval the behavioral distinctions underpinning the majority's decision based on the law with regard to skinny labels:

Generics could be held liable for actively inducing infringement if they marketed a drug with a label describing a patented therapeutic use or if they took active steps to encourage doctors or patients to use the drug in an infringing manner.  But generics could not be held liable for merely marketing and selling under a 'skinny' label omitting all patented indications, or for merely noting (without mentioning any infringing uses) that FDA had rated a product as therapeutically equivalent to a brand-name drug [emphasis in original].

Stating that the panel (or at least the majority) agreed to rehear arguments "to make clear how the facts of this case place it clearly outside the boundaries of the concerns expressed by amici, the opinion states succinctly that the basis for their decision that the jury correctly found Teva liable for inducing infringement was "by marketing a drug with a label encouraging a patented therapeutic use (emphasis in opinion).  The opinion also states more precisely the procedural basis for their opinion:  "[t]his is a case in which substantial evidence supports a jury finding that the patented use was on the generic label at all relevant times and that, therefore, Teva failed to carve out all patented indications" and that this decision is a "narrow, case-specific review of substantial evidence does not upset the careful balance struck by the Hatch-Waxman Act regarding section viii carve-outs."  The remainder of the majority opinion sets forth (extensively) the evidentiary basis for their opinion that there was sufficient evidence (including expert testimony and marketing efforts occurring both before and after FDA-mandated changes to Teva's label) to satisfy the substantiality standard and that the District Court erred in granting Teva JMOL to the contrary (inter alia including specific errors in treating factual questions as legal ones that the majority state were "not this court or the district court, to resolve").

(The majority also affirmed the jury's damages calculations, which apparently played a much less significant part of the controversy surrounding this appeal, albeit likely being at least as important to the parties.  Adding insult to injury the majority awarded costs to GSK.)

Former Chief Judge Prost remained unconvinced, in large part because this outcome (in her view) undermines the congressionally sanctioned skinny label regime (if only by rendering it much more case- and fact-specific than she perceives Congress intended).  The outcome-based philosophy of the dissent is presaged in its first sentence, where Judge Prost reminds the reader that "GSK's patent on carvediol expired in 2007" followed by the statement that "Because the FDA cannot authorize a generic version of a drug that would infringe a patent, this one remaining patented use could have prevented a less-expensive, generic carvedilol from coming to market altogether—even though the drug itself and other uses of it were unpatented."  The skinny label regime was Congress's solution to the "problem" it "saw coming" in Judge Prost's view.  The majority's decision thwarts this intent, in Judge Prost's view, based on evidence of inducement that was "thin to nonexistent."  The District Court had properly exercised its supervisory role in remedying a situation where a jury comes to the wrong conclusion, based on Judge Prost's evaluation of the evidence before it.  The Judge sets forth her motivation for writing (once again) in dissent (and that the majority's attempt to provide a comforting standard falls short in her opinion):

I write in this case because far from being a disagreement among reasonable minds about the individual facts, this case signals that our law on this issue has gone awry.  I am particularly concerned with three aspects of the majority's analysis.  First, even setting aside the majority's willingness to glean intentional encouragement from a label specifically designed to avoid encouragement, the majority further weakens the intentional-encouragement prong of inducement by effectively eliminating the demarcation between describing an infringing use and encouraging that use in a label.  Second, the majority defies basic tort law by eviscerating the causation prong of inducement.  The upshot of these two moves is that a plaintiff now has to show very little for a jury to speculate as to the rest.  Third, the majority creates confusion for generics, leaving them in the dark about what might expose them to liability.  These missteps throw a wrench into Congress's design for enabling quick public access to generic versions of unpatented drugs with unpatented uses.

The contrasting opinions by the majority and the dissent raise the issue (outside the policy one) of the extent to which a reviewing court (whether the district court or the Federal Circuit) can make judgments on the substantiality of the evidence upon which a jury bases its verdict.  The substantial evidence standard is intentionally deferential ("more than a scintilla"), based on the prudent principle that a jury has had the opportunity to hear evidence from witnesses and gauge the weight their testimony is given, based on considerations (demeanor, for example) unavailable to a court on appeal.  JMOL includes additional considerations (including the district court's opportunity for observing this same inferential evidence).  Here, the majority applied Third Circuit law on the standard for reviewing JMOL decisions, which according to the opinion was that JMOL should be granted "sparingly" and "only if, viewing the evidence in the light most favorable to the nonmovant and giving it the advantage of every fair and reasonable inference, there is insufficient evidence from which a jury reasonably could find liability" citing Marra v. Phila. Hous. Auth., 497 F.3d 286, 300 (3d Cir. 2007).  The majority, both based on the standard of review as well as the conventional deference given to jury verdicts, felt bound by these procedural considerations to reinstate against Teva the jury verdict of induced infringement liability.  Judge Prost, viewing the matter on outcome (for policy) grounds once again disagreed.  The only aspect that has changed (to the extent it has) is a perhaps comforting (and more informative) recitation of the standard the Federal Circuit will apply to induced infringement in the context of skinny labels; by itself this may be (and of course has to be) enough.

GlaxoSmithKline LLC v. Teva Pharmaceuticals USA (Fed. Cir. 2021)
Panel: Chief Judge Moore and Circuit Judges Newman and Prost
Per curiam