Federal Circuit Case May Diminish the Ability of Generic Drug Makers to Avoid Induced Infringement by Skinny Labeling

Wilson Sonsini Goodrich & Rosati

Introduction

The Federal Circuit recently issued a split panel decision on induced infringement. The court's decision is important in that it may, if upheld upon further appeal and not distinguished by subsequent courts, 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, indication(s) covered by the claim(s) of an issued patent (i.e., a skinny label).

Background

Because this is a case that deals, in part, with induced infringement of claim(s) of a patent, we begin by noting, that, by law: "Whoever actively induces infringement of a patent shall be liable as an infringer."

Carvedilol (also known as Coreg) is a U.S. Food and Drug Administration (FDA) approved drug that blocks the action of adrenaline on several different kinds of adrenaline receptors. Because adrenaline's ability to activate these receptors is decreased, Coreg results in expanded blood vessels, and slows the rate and force of heart contraction. Coreg was initially approved by the FDA for the treatment of high blood pressure; and was subsequently approved for treatment of congestive heart failure.

Facts Leading up to the District Court Suit

The branded Coreg franchise was protected by, for purposes of this analysis, two relevant patents-in-suit. The first patent was a composition of matter patent which expired in 2007. The second: a reissued GlaxoSmithKline (also called GSK) patent, was a method patent with claims drawn to methods of decreasing mortality caused by congestive heart failure by administering to a patient Coreg and digoxin (a diuretic), or a blood pressure lowing drug (i.e., an ACE inhibitor). GSK's method patent was reissued by the U.S. Patent and Trademark Office in 2008.

In 2002, Teva (a generic pharmaceutical company) applied for FDA approval to market a generic version of Coreg.

About two years later (2004), the FDA tentatively approved Teva's generic version of Coreg for: treatment of hypertension and left ventricular hypertension following myocardial infarction, and the approval to become effective upon expiration of GSK's composition of matter patent. Teva issued a press release regarding the tentative approval.

In press releases and marketing materials, Teva also 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." Teva amended its label to include the indication for treatment of congestive heart failure.

The District Court Suit

In 2014, GSK sued Teva in district court, in a jury trial, alleging induced infringement of GSK's 2008 reissued method patent, and for infringement of the patent prior to reissue. For purposes of analysis, there are two relevant time periods.

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. It is important to note that 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, neither of which is covered in the claims of GSK's 2008 reissued method patent.

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 2008 reissued method patent. Teva advanced different arguments for not inducing infringement during the two relevant time periods.

For the first relevant time period, Teva, among other things, argued that its generic drug label did not include an indication for congestive heart failure, also called CHF, (it was a skinny label) prior to being amended in 2011. So, up until the 2011 label amendment, Teva maintained that it could not have induced infringement of GSK's reissued congestive heart failure method patent because CHF was a required claim element in GSK's reissued patent, and Teva's label explicitly excluded CHF.

For the second relevant time period, Teva argued that it should not be liable for induced infringement of GSK's method patent 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 healthcare providers so Teva could not have directly induced infringement. Teva asserted that healthcare 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 healthcare provider's individual knowledge and experience.

The jury was not convinced by Teva's arguments 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 judgement as a matter of law (JMOL), 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 generic carvedilol and to do so for the treatment of mild to severe CHF."

GSK appealed to the Federal Circuit.

The Federal Circuit Appeal

Considering that standard of review, the Federal Circuit initially focused its analysis on the first relevant time period, during which Teva's generic drug skinny label did not contain an indication for CHF.

The jury in the district court trial, among other things, found that Teva had advertised its generic drug as being AB rated. The jury also 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. The jury appeared to conclude that promoting the AB rating amounted to Teva promoting its generic drug for CHF, even though CHF was not on Teva's generic drug label. The Federal Circuit determined that it was proper for the jury to consider, and that the jury did consider, Teva's promotion of its generic drug as AB rated as a cardiovascular agent before 2011 in coming to the jury's decision.

Regarding the second relevant time period—induced infringement after Teva's 2011 label change—the Federal Circuit held in part (citing to an earlier case) that "Precedent 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 Prost, who issued a strong dissent.

Analysis and Conclusion

The Sixth and Seventh Amendments of the Constitution preserve the right to trial by jury in criminal and certain civil cases. It should not be surprising, therefore, 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.

The surprise here was not the jury's finding of inducing infringement during the second relevant time period. Rather, what was surprising 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 drug attempts to carve an indication out of its label (a so-called 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.

Written by:

Wilson Sonsini Goodrich & Rosati
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