United States: Federal Circuit Finds Induced Infringement Of Drug Patent, Even When Skinny Label Was Used

In a recent 2-1 decision, GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc. (No. 2018-1976), the Federal Circuit held that substantial evidence supported the jury's findings of induced infringement throughout the term of GSK's patent, including when Teva used a “skinny” label to carve out the patented method.

The case arose from a drug for multiple indications. Carvedilol, marketed under the brand name Coreg®, is approved for three indications including hypertension, congestive heart failure (CHF) and left ventricular dysfunction following a myocardial infarction (post-MILVD). In 2002, Teva submitted an Abbreviated New Drug Application (ANDA) for approval of its generic carvedilol, making a Paragraph III certification that it would not launch its product until the expiration of U.S. Patent No. 4,503,067 ('067 patent) in 2007, and a Paragraph IV certification that U.S. Patent No. 5,760,069 ('069 patent) was “invalid, unenforceable, or not infringed.” GSK filed an application to reissue the '069 patent in 2003.

In 2004, Teva received FDA “tentative approval” of its ANDA and issued a press release. Teva launched its generic product on the expiration of the '067 patent in 2007, and issued a second press release. Teva used a skinny label including two indications only: hypertension and post-MILVD. In 2008, the '069 patent was reissued as RE 40, 000 ('000 patent), which covers a method of treating CHF in a patient by administrating a carvedilol combination. In 2011, as required by the FDA to have a full label, Teva amended its skinny label to include treatment of heart failure (i.e., CHF). In July 2014, one year before the patent expiration, GSK sued Teva for induced infringement of the '000 patent.

Teva argued that it had carved out the patented indication CHF from its initial label as authorized in 21 U.S.C. § 355(j)(2)(A)(viii), and thus did not induce prescribing physicians to infringe the '000 patent, at least not before it amended its label to include the CHF indication. The jury found Teva induced infringement. The district court granted Teva's motion for judgment as matter of law, stating that the verdict was not supported by substantial evidence. GSK appealed to the Federal Circuit.

As for legal standards, the Federal Circuit cited the Supreme Court case Global-Tech Appliances, Inc. v. SEB S.A.,  563 U.S. 754 (US, 2011)  and stated that “inducement to infringe is not negated when the direct infringers already knew of the infringing subject matter.” Citing other precedents, the Federal Circuit further stated that “[a] plaintiff may… prove the intent element [of induced infringement] through circumstantial evidence… (e.g., advertisements, user manuals) directed to a class of direct infringers.”

Applying such legal standards to this case, the Federal Circuit relied on Teva's press releases, product catalog and other promotional materials, which described Teva's carvedilol as AB rated equivalents of GSK's Coreg^® tablets. In addition, Teva's 2007 press release posted before the issuance of the '000 patent remained on Teva's website throughout the life of the '000 patent. When the district court sided with Teva, it stated that Teva's listing its carvedilol as AB rated to Coreg^® in product catalogs and reference guides did not encourage infringement and “physicians already knew how to use carvedilol for treating CHF,” and thus infringement was not caused by Teva. The Federal Circuit majority disagreed and stated 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.” Therefore, the Federal Circuit reinstated the jury's verdict of induced infringement and assessed damages of $234,110,000.

Chief Judge Sharon Prost issued a strong dissenting opinion, stating that the majority's holding is contrary to Congress' intent to not allow a claim of induced infringement liability when a skinny label is used. Judge Prost analyzed the evidence during the two periods of Teva's skinny label and full label separately in details and concluded no induced infringement occurred.

The majority's holding is likely to bring uncertainty to generic companies' use of skinny labels to avoid infringement claims. In addition to drug labels, attention needs to be paid to any promotional materials such as press releases, product catalog and websites, which would be subject to scrutiny and might be used as evidence. As one possible solution in this scenario, a generic company may need to expressly and consistently state in all materials that such a generic drug solely marketed for indications shown on the skinny label, or even disclaim that the generic drug is approved and marketed for the carved-out patented indication. 

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