On Friday, the Federal Circuit issued its opinion in GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc., a case we have been tracking because it attracted three amicus briefs. Judge Newman authored the majority opinion, which Judge Moore joined. Judges Newman and Moore vacated a district court’s judgment as a matter of law and remanded the case with instructions to reinstate a jury verdict of induced infringement in favor of GlaxoSMithKline based on indications of use in labels applied by Teva, a generic drug manufacturer. Chief Judge Prost filed a thirty-three page dissenting opinion, taking the majority to task for “creating infringement liability for any generic entering the market with a [so-called] skinny label, and by permitting infringement liability for a broader label that itself did not actually cause any direct infringement.” Here is a summary of the majority and dissenting opinions.
In this case the Federal Circuit considered whether substantial evidence supported the jury’s verdict that Teva willfully induced infringement of GlaxoSmithKline’s (GSK) method of treating congestive heart failure covered by Reissue Patent No. RE40,000 (the ’000 patent). GSK appealed the district court’s JMOL, arguing on appeal that substantial evidence supported the jury’s verdict. Teva subsequently cross-appealed, arguing that jury instructions were erroneous and that under correct instructions it “would have incurred no damages, or at most only a reasonable royalty.” Notably, the Federal Circuit issued its opinions in this case over a year after oral argument.
Judge Newman wrote the opinion for the panel, which vacated the district court’s granting of JMOL and remanded the case with instructions to reinstate the jury verdict in favor of GSK that Teva induced infringement of the ’000 patent. Judge Newman summarized the relevant facts as follows:
This litigation concerns the medicinal product having the common name “carvedilol.” States Patent No. 4,503,067 (“the ’067 patent”) was issued in 1985 for carvedilol and related compounds; this patent expired on March 5, 2007.
The FDA initially approved carvedilol for treatment of hypertension and the product was marketed with the brand name Coreg®. Scientists continued to study carvedilol, and discovered its efficacy in treating congestive heart failure. In May 1997, the FDA approved carvedilol for the additional treatment of congestive heart failure. The method was patented in United States Patent No. 5,760,069 (“the ’069 patent”). . . . The ’069 patent was listed in the FDA’s Orange Book with use code U-233, “decreasing mortality caused by congestive heart failure.” . . .
In March 2002, Teva applied for FDA approval of its generic carvedilol, certifying in the Abbreviated New Drug Application (“ANDA”) . . . that its product would not be launched until the ’067 patent expired in March 2007. . . . Teva received FDA “tentative approval” for this ANDA in 2004. . . . Teva, on June 9, 2004, issued a press release to this effect. . . .
GSK on November 25, 2003 filed an application to reissue the ’069 patent, as provided in 35 U.S.C. § 251. The ’000 [reissue] patent was issued on January 8, 2008. . . .
On expiration of the ’067 patent in 2007, Teva launched its generic carvedilol. . . . The label stated that “Carvedilol is indicated to reduce cardiovascular mortality in clinically stable patients who have survived the acute phase of a myocardial infarction and have a left ventricular ejection fraction of ≤ 40% (with or without symptomatic heart failure).” . . .
In 2011 the FDA required Teva to amend its carvedilol label to be “identical in content to the approved [GSK Coreg®] . . . Teva amended its label to include the indication for treatment of heart failure, as required by the FDA. . . .
On July 3, 2014, GSK filed suit for induced infringement of the ’000 patent. . . . The jury found that Teva induced infringement of claims 1–3 during the period starting January 8, 2008 (the date of the ’000 patent’s issuance) to April 30, 2011 (the last day before Teva amended its label); and that Teva induced infringement of claims 1–3 and 6–9 during the amended label period starting May 1, 2011 and ending June 7, 2015 (the date of expiration of the ’000 patent).
The panel’s opinion first addressed the appealed issue of induced infringement, and then it addressed the cross-appealed issue of damages.
First, the court concluded that there was enough evidence for the jury to conclude that Teva willfully induced infringement. Thus the court concluded it was error for the district court to grant JMOL.
Teva argued that it could not be liable for inducing infringement “because cardiologists already knew of carvedilol and its uses, and Teva did not directly ’cause’ them to infringe.” The court, however, agreed with GSK that clear precedent established that induced infringement “may be shown by evidence that the accused inducer promoted the infringing use with knowledge that such use directly infringes the patent claims.”
The court highlighted Teva’s promotional material in combination with the expert testimony that was presented to the jury. One of the experts, Dr. McCullough, testified based on Teva’s press releases, product guides, product catalogues, and other promotional materials that Teva had “indicate[d] that [doctors] should be able to prescribe generic carvedilol for heart failure.” In addition to this, the court recognized that “the content of the product label is evidence of inducement to infringe.”
Second, the majority addressed Teva’s cross appeal and concluded that the jury had received proper instructions related to damages.
Teva argued that the jury should have been instructed that GSK had to prove that the infringer would have purchased the prescribed carvedilol as GSK’s Coreg for every infringing sale, and not from another generic producer. The court, however, agreed with the district court’s assertion that “the law is clear that a lost profits analysis must be based on a world in which infringement of the asserted patent does not exist, and therefore it does not allow for infringing alternatives to be available in the hypothetical ‘but for’ world.” Since Teva did not challenge the quantum of the damages but instead only the jury instructions, the court sustained the damages award.
As mentioned, Chief Judge Prost filed a thirty-three page dissenting opinion. This exceeded the length of the majority opinion by thirteen pages.
In her dissenting opinion, Chief Judge Prost appealed to the importance of the critical balance between incentivizing innovation in pharmaceuticals by providing patent protection and speeding up the introduction of generic drugs into the market as soon as patents allow. She argued that the majority’s opinion “undermines this balance by allowing a drug marketed for unpatented uses to give rise to liability for inducement and by permitting an award of patent damages where causation has not been shown.”
Chief Judge Prost framed the issue presented to the court as whether Teva induced infringement of GSK’s patent by marketing its generic carvedilol through a “skinny label.” She pointed out that Congress provided for skinny labels to be used so that one patented method would not foreclose access to more affordable generics using unpatented methods.
She asserted that Teva acted exactly within the bounds of what Congress intended by waiting until GSK’s patent expired before launching its product covering two unpatented uses. Further, when GSK’s reissued ’000 patent issued, which recited a narrow method of treating a different indication, “Teva’s skinny label did not even suggest using its product according to the patented method.” Later, when Teva amended its label at the FDA’s direction to include the patented method, there was no change in the market or doctors’ prescribing decisions. Despite this, Chief Judge Prost argued, the majority “with little explanation, reverses [a thoughtful and thorough] decision [by the district court] by misapplying the law and misconstruing the facts.”
According to Chief Judge Prost, “no evidence established that Teva actually caused the doctors’ infringement for either label,” “[n]o 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.” The majority, she asserted, held that the content of the skinny label alone is enough to prove induced infringement, which, she said, is not only contrary to Congress’ intent but nullifies Congress’ statutory provision for skinny labels.
Chief Judge Prost explained that, 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.” This, she said, is directly contrary to Congress’s intent and “invites a claim of inducement for almost any generic that legally enters the market with a skinny label.”