Federal Circuit Vacates Judgment, Reinstates Jury's Verdict of Induced Infringement

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In Short

The Situation: The Hatch-Waxman Act allows generic drug companies to omit from their labeling approved indications that are covered by the innovator's patents. While these "skinny labels" can be used to support a noninfringement defense, in GlaxoSmithKline v. Teva Pharmaceuticals, the Federal Circuit considered whether Teva's generic version of GSK's COREG® induced infringement despite Teva omitting from its label the indication for treatment of heart failure, which was claimed in a GSK patent.

The Result: On August 5, 2021, the U.S. Court of Appeals for the Federal Circuit ruled that substantial evidence supported the conclusion that Teva induced infringement of GSK's patent even during the time period when Teva used a "skinny label," or Section viii carve-out, that omitted the heart failure indication. The Federal Circuit found Teva's conduct in marketing and advertising the generic drug sufficient to establish inducement despite the skinny label.

Looking Ahead: Although this decision is unlikely to impact the analysis of "skinny labels" in a pre-marketing context, once a generic drug is launched, innovator companies should pay attention to how the generic advertises and markets the product, as this evidence—including any statements regarding therapeutic equivalency to the innovator product—may be sufficient to establish induced infringement even with a Section viii carve-out

Background

On August 5, 2021, the Federal Circuit issued an opinion in GlaxoSmithKline v. Teva Pharmaceuticals, Case No. 18-1976, in favor of GSK, finding that Teva was liable for inducing infringement of GSK's patent. This decision reversed the grant of judgment as a matter of law ("JMOL") that was entered by the trial court below and reinstated the jury's verdict for GSK.

The case involved so-called "skinny labels," also known as Section viii carve-outs—a reference to the provision of the Hatch-Waxman Act that allows a generic company to vary the label of its products from that of the reference listed drug in order to exclude one or more indications that are patented by the innovator. In this case, Teva sought and obtained FDA approval of a generic version of GSK's COREG® product but carved out of its label the approved indication for treatment of heart failure, in order to avoid a GSK patent claiming this use.

Years after the product was launched with the "skinny label," the FDA ordered Teva to add the heart failure indication back into its label. GSK brought a suit for patent infringement, claiming that Teva was liable for inducing infringement of its patent even during the time period when Teva's label omitted the heart failure indication. GSK argued that Teva's label was ambiguous, and further that Teva's conduct in the actual marketing and advertising of its generic drug was sufficient to establish inducement under 35 U.S.C. § 271(b).

The jury agreed with GSK, but the trial judge granted Teva's motion for JMOL, finding as a matter of law that Teva could not have induced infringement because it had specifically availed itself of the Section viii carve-out procedure and had removed the patented indication from its label. GSK appealed, and in October 2020, the Federal Circuit reversed and reinstated the jury verdict, based largely on Teva's promotional materials, which advertised its generic as therapeutically equivalent to GSK's COREG®.

In February 2021, the panel granted Teva's motion for rehearing, vacated its opinion, and scheduled new oral argument to address infringement during the skinny-label period.

Opinion of August 5, 2021

In a 2–1 opinion, the panel again concluded that the "narrow, case-specific review of substantial evidence" supported the jury's verdict of induced infringement by Teva.

Similar to its October 2020 opinion, the panel determined that Teva's marketing and promotional materials showed evidence of intent to induce infringement, even during the time when its label did not include the heart failure indication. It found that Teva could have advertised its drug as a cardiovascular agent, leaving physicians to wonder about its indications, but instead took affirmative steps via press releases to market its generic as an "AB-rated equivalent" of COREG®. This, according to the panel, was "Teva in a press release telling the world that its generic is a substitute for GSK's COREG®" for all approved indications, regardless of what Teva's more narrow label said, and it was reasonable for the jury to conclude as much.

Unlike the October 2020 opinion, however, the panel's second decision also included discussion of the indications remaining (i.e., not carved out) in Teva's label. While Teva carved out the patented indication for the "treatment of heart failure," it did not carve out the indication for the treatment of post-myocardial infarction left ventricular dysfunction ("post-MI LVD"). GSK's expert testified that treating post-MI LVD patients overlapped with treating heart failure patients, meaning Teva's carve-out was not a "skinny label" but, rather, a "partial label."

The court agreed with GSK. It said Teva failed to challenge the testimony of GSK's expert, and even Teva's own expert admitted some overlap did exist. The court also clarified that infringement via overlapping indications was a factual issue for the jury to decide, not a legal one for the district court to review de novo.

Recap

This case highlights the unsettled and contentious nature of infringement in the skinny-label context. The decision indicates that the use of a skinny label is not a dispositive noninfringement argument, at least after the product has been launched; courts can consider all evidence, including the label, expert testimony, and marketing and promotional materials to assess infringement. This was a post-marketing case, so questions remain concerning how it will be applied to "standard" Hatch-Waxman cases where infringement issues are addressed prior to FDA approval and launch of a generic.

Three Key Takeaways

  1. Using Hatch-Waxman's Section viii carve-out procedure alone may not be enough to avoid a finding of infringement, at least in the post-marketing context.
  2. Indications on a generic's label coupled with marketing materials and press releases advertising the generic's drug as the AB-rated equivalent of the brand can be sufficient to show infringement.
  3. The court's decision to vacate its October 2020 opinion and reissue a new opinion reaching the same conclusion suggests an attempt to narrow its holding to the unique facts of this case.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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