On August 5 the Federal Circuit issued a new panel opinion in GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc., a case we have been following because it attracted numerous amicus briefs. Chief Judge Moore and Judges Newman and Prost formed the panel hearing this case. The court’s new opinion was filed per curiam, with Judge Prost authoring a dissent. In the new opinion, the court again vacated a district court’s grant of judgment as a matter of law “because substantial evidence supports the jury’s verdict of induced infringement.” Furthermore, as before, the panel reinstated the jury’s damages award “because the district court did not err in its jury instructions on damages.” But the new panel opinion is most notable because it addresses the arguments made in the amicus briefs supporting rehearing. Those amicus briefs argued that the panel’s original opinion “could be read to upset the careful balance struck with . . . carve-outs” in the context of Hatch-Waxman. Indeed, the case involved an alleged, so-called “skinny label,” a label that omits language indicating infringing use. In the panel’s new opinion, the majority maintained that its “narrow, case-specific review of substantial evidence does not upset the careful balance struck by the Hatch-Waxman Act regarding [such] carve-outs.” Here we provide the court’s description of the background of the case, a summary of the court’s analysis, and relevant parts of Judge Prost’s dissent.
GlaxoSmithKline filed this suit against “Teva Pharmaceuticals USA, Inc. in the United States District Court for the District of Delaware for infringement of claims of GSK’s Reissue Patent.” GlaxoSmithKline won a jury verdict “and was awarded of damages, but the district court granted Teva’s renewed motion for judgment as a matter of law of noninfringement.” GlaxoSmithKline “appeal[ed] the JMOL, and Teva conditionally cross-appeal[ed] the jury’s damages award.” The majority opinion provided background on the case:
GSK markets and sells the medicinal product carvedilol, a beta-blocker. . . . It was not until the FDA approved GSK’s Coreg® that using a beta-blocker to treat CHF [congestive heart failure] became the standard of care for reducing mortality in heart failure patients. The carvedilol compound was patented in 1985. . . . U.S. Patent No. 4,503,067, expiration date March 5, 2007. . . . In 1998, U.S. Patent No. 5,760,069 issued, which claimed a method of administering a combination of carvedilol and one or more of an ACE inhibitor, a diuretic, and digoxin to decrease mortality caused by CHF in a patient. . . .
In March 2002, Teva filed an Abbreviated New Drug Application (ANDA) for FDA approval of its generic carvedilol. . . . It certified, under Paragraph III of the Hatch-Waxman Act, that it would not launch its product until the. . . patent on the carvedilol compound expired in March 2007. Teva also certified, under Paragraph IV, that the ’069 patent was “invalid.” . . . On May 24, 2002, Teva sent GSK a Paragraph IV notice stating that the claims of the ’069 patent are anticipated or would have been obvious. GSK did not sue Teva upon receipt of the notice, and on November 25, 2003, GSK applied for reissue of the ’069 patent under 35 U.S.C. § 251. Teva received FDA “tentative approval” for its ANDA in 2004, “for treatment of heart failure and hypertension.” . . . On January 8, 2008, the PTO issued Reissue Patent No. RE40,000, and GSK notified the FDA on February 6, 2008. . . .The ’000 patent, asserted in this case, claims a method of decreasing mortality caused by CHF by administering carvedilol with at least one other therapeutic agent. . . . The ’000 patent is listed in the FDA’s publication “Approved Drug Products with Therapeutic Equivalence Evaluations,” commonly known as the Orange Book, as a patent claiming a method of using Coreg®.
Just before Teva launched its generic carvedilol in 2007, it certified to the FDA that its label “will not include the indication defined in use code U-233” until the expiration of the ’069 patent. . . . Patent use code U-233 corresponded to “decreasing mortality caused by congestive heart failure.” . . . Teva’s label dated “8/2007” thus included only two indications: the post-MI LVD indication and the hypertension indication. Teva’s press releases and marketing materials, however, touted its generic carvedilol as “indicated for treatment of heart failure and hypertension,” as the “Generic version of [GSK’s] cardiovascular agent Coreg®,” and as an “AB-rated generic equivalent of [GSK’s] Coreg® Tablets. In 2011, following GSK’s delisting of certain patents from the Orange Book, including the ’069 patent and U.S. Patent No. 5,902,821, the FDA instructed Teva to “revise [its] labeling to include the information associated with patent ’821 (delisted) and the associated Use Code (U-313).” . . . It told Teva to submit labeling “that is identical in content to the approved [GSK Coreg®] labeling (including the package insert and any patient package insert and/or Medication Guide that may be required).” The FDA also requested Teva “provide information regarding [its] position on [the ’000 patent].” Teva amended its label to include the indication for treating patients with chronic heart failure by administering carvedilol to increase survival and to reduce the risk of hospitalization. In addition, the post-MI LVD and hypertension indications remained on the label. In response to the FDA’s request for information regarding its position on the ’000 patent, Teva told the FDA it believed it need not “provide certification to [the ’000 patent]” because it received final approval of its ANDA before the ’000 patent issued.
On July 3, 2014, GSK sued Teva and Glenmark Pharmaceuticals USA, the two largest suppliers of generic carvedilol, in the District of Delaware, alleging that each had induced infringement of the ’000 patent. The action against Glenmark was severed and stayed. During a seven-day jury trial, Teva argued the asserted claims of the ’000 patent were invalid and not infringed. Teva argued it could not have induced infringement, at least prior to 2011, because it had “carved out” the indication and prescribing information for treatment of congestive heart failure in its 2007 label. . . . The district court instructed the jury to assess whether Teva induced infringement during two distinct time periods: the “partial label” period and the “full label” period. . . .
The jury found the ’000 patent was not invalid, that Teva induced infringement of claims 1–3 during the partial label period, and that Teva induced infringement of claims 1–3 and 6–9 during the full label period. The jury assessed damages based on a combination of lost profits and a reasonable royalty and found Teva’s infringement willful. The district court granted Teva’s renewed motion for JMOL, stating that substantial evidence did not support the verdict of induced infringement because GSK failed to prove that Teva’s alleged inducement, as opposed to other factors, actually caused physicians to directly infringe by prescribing generic carvedilol for the treatment of mild to severe CHF. . . . The district court also determined no reasonable juror could have found induced infringement based on the post-MI LVD indication in Teva’s partial label, which GSK had argued instructed practice of the claimed method. . . . It further reasoned infringement required carvedilol be “prescribed to treat the risk of mortality caused by CHF.” . . .
GSK appealed, arguing that substantial evidence supported the jury’s finding of induced infringement and that its verdict should be reinstated. We agreed. Teva petitioned for en banc rehearing, which we construed as also requesting panel rehearing. Teva argued our October 2, 2020 decision could be broadly read to impose liability on ANDA filers that carve out patented uses under section viii when seeking approval to market generic drug products, in direct contravention of the Hatch-Waxman Act. Amici curiae raised concerns about lack of clarity of our decision when the patented uses are carved out of the FDA-approved label. On February 9, 2021, we granted the petition for panel rehearing, vacated the October 2, 2020 judgment, and withdrew the October 2, 2020 opinions.
The panel, as it did before, vacated the district court’s grant of judgment as a matter of law “because substantial evidence supports the jury’s verdict of induced infringement.” Furthermore, as before, the panel reinstated the jury’s damages award “because the district court did not err in its jury instructions on damages.”
Notably, however, in its new opinion, the panel explains that “Teva argued our October 2, 2020 decision could be broadly read to impose liability on ANDA filers that carve out patented uses . . . when seeking approval to market generic drug products, in direct contravention of the Hatch-Waxman Act.” Moreover, the panel explained, “[a]mici curiae raised concerns about lack of clarity of our decision when the patented uses are carved out of the FDA-approved label.” The panel then addressed these arguments and concerns: “Amici were concerned that our prior decision could be read to upset the careful balance struck with . . . carve-outs.” But, explained the panel, “[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.” The panel went on to say that “[t]his narrow, case-specific review of substantial evidence does not upset the careful balance struck by the Hatch-Waxman Act regarding . . . carve-outs.”
After addressing these concerns, the majority went on to explain its holding in the case in more detail.
The panel, for example, considered the evidence available for the jury’s decision regarding the partial label period. The court noted the expert testimony of “Dr. McCullough[, who] explained where Teva’s partial label met each claim limitation and discussed other materials that would lead physicians to the partial label, culminating with his conclusion that Teva took action that it ‘intended would encourage or assist actions by another, i.e., the physician.’” The court concluded that sufficient evidence supported the jury’s verdict of infringement because “precedent has consistently held that, when a product is sold with an infringing label or an infringing instruction manual, such a label is evidence of intent to induce infringement.” And while Teva argued that “there is no evidence that doctors read labels or prescribe according to those labels,” the majority found that documents provided to the court show “that doctors do read labels” and that Teva’s Monthly Prescribing References made clear “[t]he clinician must be familiar with the full product labeling.” The court also referenced “extensive expert testimony along with Teva’s marketing efforts, catalogs, press releases, and testimony from Teva’s own witnesses, showing that Teva encouraged carvedilol sales for CHF despite its attempted carve-out” as possible jury proof of infringement. As a result, the panel held it was reasonable for a jury to find inducement during the partial label period.
During the full label period, the court also found that “substantial evidence supports the finding that Teva encouraged physicians to use its carvedilol for an infringing purpose during the full label period.” As part of the trial, the court explained, the jury was able to consider “the full label itself containing the infringing use, Dr. McCullough’s testimony that the full label contained each claim limitation, and Teva’s marketing materials as demonstrating Teva specifically intended to encourage, recommend, or promote the use of carvedilol in an infringing manner.”
The majority maintained that “the dissent confronts none of this evidence” and to not follow the jury finding of infringement would “be a major change in our precedent.”
The court also considered causation because “a patent owner must show that the accused inducer’s actions actually induced the infringing acts of another and knew or should have known that its actions would induce actual infringement.” Teva argued “that it did not cause doctors to actually prescribe generic carvedilol.” The panel stated, however, that “it was for the jury to decide—not us, the district court, or the dissent—whether Teva’s efforts actually induced infringement.” As a result, the panel held “it was fair for the jury to infer that when Teva distributed and marketed a product with labels encouraging an infringing use, it actually induced doctors to infringe.”
With causation established, the panel reiterated the standard for damages calculations, noting “‘the patent owner must show ‘causation in fact,’ establishing that ‘but for’ the infringement, he would have made additional profits.’” The majority found that the “district court correctly instructed the jury that the availability of carvedilol from other generic producers is not a ‘non-infringing substitute'” because there is “precedent for finding causation despite an alternative source of supply if that source is an infringer.” Therefore, the panel held “the damages verdict, which is not otherwise challenged, is sustained.”
As mentioned, Judge Prost authored a dissent. She argued Congress dealt with this situation to ensure “one patented use wouldn’t prevent public access to a generic version of a drug that also has unpatented uses.” The “skinny-label provisions of the Hatch-Waxman Act” allow, she explained, for “a generic version of that drug to come to market if the manufacturer ‘carves out’ such use from its drug label by omitting the language that the brand drug company identified.” Judge Prost argued “that’s what happened here.” She maintained the “evidence of inducement—i.e., that Teva had culpable intent to encourage infringement and that its skinny label or press releases caused doctors’ prescribing practices—was thin to nonexistent” and it is appropriate for “a court [to] reverse a jury’s verdict if there is insufficient evidence to support it.”
Judge Prost noted three parts of the majority’s analysis where, she argued, the “law on this issue has gone awry.” First, she explained, “the majority . . . 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, she claimed “the majority defies basic tort law by eviscerating the causation prong of inducement.” Third, she noted, “the majority creates confusion for generics, leaving them in the dark about what might expose them to liability.” As a result, she maintained that the majority has thrown “a wrench into Congress’s design for enabling quick public access to generic versions of unpatented drugs with unpatented uses.”
Judge Prost concluded her dissent by highlighting how this is “the majority’s second opinion in this case” given that “the first was vacated in light of Teva’s petition for rehearing and the eight amicus briefs in support.” She argued that “this new opinion does little to assuage, and even exacerbates, concerns raised by the original.”