GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2020)

McDonnell Boehnen Hulbert & Berghoff LLP

McDonnell Boehnen Hulbert & Berghoff LLP

What Quantum of Culpable Conduct Is Required for an ANDA Applicant to Induce Infringement?

The back-and-forth, (almost) cat-and-mouse-like competition between branded innovator and generic drug makers sanctioned under the Hatch-Waxman Act has been on-going for over thirty years.  As part of this regime, Congress has provided a pathway for generic drug companies to obtain FDA approval for less than all the indications a branded drug has obtained, using a "carve out" strategy resulting in a so-called "skinny label."  This has raised the possibility of "off-label" use, where physicians prescribe the generic drug for an indication not approved for the generic drug but known to be clinically appropriate from the innovator's approval for the product.  The extent to which a generic drug company can use this strategy to avoid liability for inducing infringement was tested in the Federal Circuit's recent decision in GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc.

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, as applied in to generic drugs (which are required by regulatory statutes to "copy") in Eli Lilly & Co. v. Teva Parenteral Meds., Inc., 845 F.3d 1357, 1369 (Fed. Cir. 2017), and Sanofi v. Watson Labs. Inc., 875 F.3d 636, 645 (Fed. Cir. 2017) (as well as the earlier precedent of AstraZeneca LP v. Apotex, Inc., 633 F.3d 1042, 1060 (Fed. Cir. 2010), and Mentor H/S, Inc. v. Med. Device All., Inc., 244 F.3d 1365, 1379 (Fed. Cir. 2001)).  The majority 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.

Less persuasive to the Federal Circuit majority was Teva's evidence regarding "deliberately omit[ting]" reference to CHF in its skinny label, particularly in light of the continued promotion of the product by Teva in a manner not consistent with complete exclusion of the CHF indication (albeit without express inclusion of that indication).

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."  The opinion cites Vanda Pharm. v. West-Ward Pharm. Int'l Ltd., 887 F.3d 1117, 1129 (Fed. Cir. 2018), and Sanofi for the principle that the label's contents can be evidence of inducement to infringe.

The majority also takes its opportunity to address (briefly) the Chief Judge's dissent, stating that it is not proper for the appellate court to "find facts afresh" nor to engage in policy arguments regarding FDA approval standards.  In the majority's view, "[t]he implications of the dissent's position are vast, and if enforcement of patents on new discoveries varies with the extent to which the patentee has profited from past discoveries, this is a policy matter for Congress, not a factor in judicial review of jury verdicts."

The majority's opinion concludes by considering Teva's objections to the bases for the District Court's damages instructions and calculations, affirming because they concluded that "the jury instructions are in conformity to law."

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.  The Chief begins by referencing the need, in her view, 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, noting that this was one motivation for Congress to establish the generic drug approval system.  In the Chief's view the majority's decision undermines 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 sets out the opinion that Teva acted just as Congress intended when it enacted the skinny label provisions, by waiting (using its Paragraph III certification) until GSK's patent had expired before launching its product for unpatented indications.  And Teva's inclusion on its label of the CHF indication (recited in GSK's '000 reissue patent) was compelled by FDA; even then according to the dissent "there was still no inducement via the full label."  The Chief Judge believes that:

The district court got it right: no evidence established that Teva actually caused the doctors' infringement for either label.  No communication from Teva encouraged doctors to use generic carvedilol to practice the patented method.  And no evidence showed that doctors relied on Teva's label.  Indeed, GSK's own expert admitted that he had not read Teva's label before prescribing generic carvedilol.  Rather than suggest inducement, the record established that doctors relied on other sources of information, not Teva, in making their decision to prescribe carvedilol.  And in any case, the record showed that the switch from Coreg® to generic carvedilol occurred "automatically," often without doctors' knowledge at all.

The dissent not only disagrees with the majority's decision, but recognizes that "it nullifies 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."

After stating her opinion, the Chief Judge spends the rest of her lengthy dissent (at 33 pages much longer than the majority opinion) setting forth the following subjects:  1. The Statutory Background; 2. The Factual n Procedural Background; 3. [That] The Majority Nullifies Congress's Provision for Skinny Labels; and 4. [That] The Majority Misapplies the Law and Misconstrues the Facts.  The bulk of the Chief's arguments are in the third and fourth sections of her dissent (as commented upon by the majority).  Regarding the Chief's opinion that the majority engaged in judicial nullification of the skinny label option enacted by Congress, the Chief stated that:

To hold [that Teva infringes based on its label], as the Majority does, undermines Congress's provision for skinny labels by substantially nullifying section viii.  According to the Majority, a generic company that carves out from its label a patented method of use can nonetheless be found to infringe that patented method based on the content of the FDA-approved label.  See Maj. 16.  By finding inducement based on Teva's skinny label, which was not indicated for—and did not otherwise describe—the patented method, the Majority invites a claim of inducement for almost any generic that legally enters the market with a skinny label.  That is directly contrary to Congress's intent," citing Caraco Pharm. Labs., Ltd. v. Novo Nordisk, 566 U.S. 399 (2012) (emphasis in dissenting opinion).

The Chief also found Federal Circuit precedent contrary to the majority's opinion in Takeda Pharmaceuticals U.S.A. v. West-Ward Pharmaceutical Corp., 785 F.3d 625 (Fed. Cir. 2015), and Warner-Lambert v. Apotex Corp., 316 F.3d 1348 (Fed. Cir. 2003).  And rather than finding anything nefarious in Teva's carveout, the Chief opined that Teva "was acting in accordance with Congress's goals for it" as sanctioned by the Supreme Court in Caraco Pharm.

Chief Judge Prost's disapproval of the majority's application of the law to the facts revisited the jury's determination and the District Court's consideration that the jury lacked substantial evidence to support its verdict of induced infringement, unavoidably at least considering if not finding facts afresh as the majority noted in their opinion.

While not expressly discussed by either the majority or the dissent, there is a hint that the majority was concerned with generic drug companies improperly relying on the skinny label strategy to profit from "off-label use" by physicians for the very indication excluded by the skinny label carveout.  The majority extended the scrutiny regarding this stratagem perhaps farther than it can reliably be stretched, not requiring the level of promotion of the carved out indication that would be expected to attract inducement liability.  And the dissent argued strongly regarding the impropriety of the policymaking consequences of the majority's decision usurping Congress's role in deciding the extent to which a generic drug company can use the skinny label strategy to avoid infringement inducement liability.  It is likely that (at a minimum) the Court will hear this case en banc; perhaps less likely but certainly within the realm of possibility is Supreme Court review in light of the important policy considerations raised by the majority and even more strongly by Chief Judge Prost's dissent.

GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2020)
Panel: Chief Judge Prost and Circuit Judges Newman and Moore
Opinion by Circuit Judge Newman; dissenting opinion by Chief Judge Prost

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.

© McDonnell Boehnen Hulbert & Berghoff LLP | Attorney Advertising

Written by:

McDonnell Boehnen Hulbert & Berghoff LLP

McDonnell Boehnen Hulbert & Berghoff LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.