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Federal Circuit Holds Marketing of Generic Bioequivalent Can Satisfy Induced Infringement

Publications / Oct 04, 2020

Article by Clyde Shuman

The U.S. Court of Appeals for the Federal Circuit held that a generic drug manufacturer’s marketing of a generic bioequivalent with knowledge and intent of its infringing use, and promotion of its generic product as the same as patented product, satisfies the legal requirements of active inducement of infringement. In GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc., Case No. 18-1976, the Court vacated the district court’s grant of judgment as a matter of law (“JMOL”) to Teva on the question of non-infringement, reinstated the jury verdicts of infringement and damages and remanded the case for appropriate further proceedings, including consideration of GlaxoSmithKline’s (“GSK’s”) post-trial motion based on the verdict of willful infringement.[1]

In a dissent stretching more than thirty pages, Chief Judge Prost argued that the Court’s ruling undermined Congress’ purpose in establishing pathways for generic drugs and, moreover, was unsupported by substantial evidence.

By way of background, GSK was the owner by assignment of patents directed to the medication carvedilol and its uses. Carvedilol had been approved initially for treatment of hypertension and was marketed with the brand name Coreg®. Subsequently, carvedilol was found effective in treating congestive heart failure (“CHF”) and the FDA approved it for this additional treatment. This led to a second patent, claiming treatment with a combination of carvedilol with additional medications.

Teva subsequently applied for approval of its generic carvedilol, certifying in the Abbreviated New Drug Application (“ANDA”) under Paragraph III of the Hatch-Waxman Act that its product would not be launched until the original patent expired. Teva also made a Paragraph IV certification that the CHF-related patent was “invalid, unenforceable, or not infringed” and sent GSK a Paragraph IV notice that the claims of the patent were anticipated or obvious. Teva received “tentative approval” for its ANDA to use carvedilol “for treatment of heart failure and hypertension,” effective on expiration of the first patent. Teva issued a press release to this effect.

GSK successfully sought reissue of the second patent. On expiration of the first patent, Teva launched its generic carvedilol. Teva’s label stated that “Carvedilol is indicated to reduce cardiovascular mortality in clinically stable patients who have survived the acute phase of a myocardial infarction…” Teva’s press releases and marketing materials state that its carvedilol was “an AB Rated generic of Coreg®.”

The FDA later required Teva to amend its label to be “identical in content to the approved [GSK Coreg®] labeling.” Teva complied, including an indication for treatment of CHF, as required.

GSK thereafter sued Teva for induced infringement of the reissued patent. Teva argued that since it had omitted CHF and related prescribing information from its initial, it could not be found to induce prescribing physicians to infringe the patent, at least not before amending its label to include all of the information that the FDA had approved for Coreg®.

The jury found that Teva induced infringement of between the issue date of the reissue patent and the day before Teva amended its label and also during the amended label period up to the expiration of the reissued patent. The district court granted Teva’s motion for JMOL, saying that “GSK failed to prove by a preponderance of the evidence that ‘Teva’s alleged inducement, as opposed to other factors, actually caused the physicians to directly infringe,’ by prescribing generic carvedilol and to do so for the treatment of mild to severe CHF.”

The district court noted that GSK had already informed physicians about the uses of Coreg®, citing evidence that cardiologists knew of the various uses of carvedilol before the FDA required Teva to amend its label.

On appeal, the Federal Circuit agreed with GSK that Teva’s marketing of carvedilol with knowledge and intent of its infringing use, and promotion of its generic as the same as Coreg®, met the legal requirements for active inducement.

The Court cited evidence that Teva’s promotional materials referred to its carvedilol tablets as AB-rated equivalents of Coreg®. There was evidence that Teva’s original press release remained on its website, referring to “Generic Coreg® Tablets.’”

To Teva’s argument that its press releases predated the reissue patent, the Court cited evidence that one release remained on Teva’s website throughout the life of the patent, the caption referring to “of Generic Coreg® Tablets.’”

The Court held that the jury could find inducement if Teva “continued to take an action that began before the [reissue] patent issued, after the [ ] patent was issued [ ], intending to cause the physicians to directly infringe by administering Teva’s carvedilol product.” This included Teva’s continued affirmative promotion of its tablet as the AB generic equivalent of Coreg® which could be used as a cardiovascular agent, after the issuance of the reissue patent.

The Court held that the district court erred in granting Teva’s motion for JMOL, saying 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.” Per the Court, there was “ample record evidence” to support the jury verdict of inducement to infringe for the reissue period.

Dissenting, Chief Judge Prost said the Court’s ruling undermined the “critical balance” of patent rights with public access to innovation once patents expire, by allowing a drug marketed for unpatented uses to give rise to liability for inducement. Per Judge Prost, “This case is about whether Teva induced infringement of GSK’s reissue patent[ ] by marketing its generic carvedilol of for unpatented uses through a ‘skinny label.’ The clear answer: Teva did not.”

Judge Prost argued that Congress provided for skinny labels “for exactly these circumstances” and that Teva acted “exactly as Congress intended.” waiting until GSK’s original carvedilol patent expired to launch its product covering unpatented indications. Per Judge Prost, when GSK’s reissue patent issued—reciting a narrow method of treating CHF—Teva’s skinny label did not suggest using its product according to the patented method.

Per Judge Prost, even though Teva amended its label, at the FDA’s direction, to include the patented method, there was still no inducement. Nothing changed in the market, and doctors’ prescribing decisions were not affected. Accordingly, per Judge Prost, to prove induced infringement, GSK had to show that Teva actually caused doctors to directly infringe the patent. “It failed to do so.”

Judge Prost said that the “district court got it right: no evidence established that Teva actually caused the doctors’ infringement for either label.” Inter alia, no evidence showed that doctors relied on Teva’s label. Per Judge Prost, the record established that doctors relied on other sources of information in making their decision to prescribe carvedilol and that the switch to generic carvedilol occurred “automatically,” often without doctors’ knowledge at all.

Judge Prost argued that the Court’s finding the “content” of Teva’s skinny (i.e., pre-amended) label alone was sufficient to prove inducement nullified Congress’s statutory provision for skinny labels. Per Judge Prost, “Congress contemplated the very circumstances this case presents… It facilitated generic drug approval as soon as patents would allow and…specifically provided generics a pathway to approval that avoids any infringement of a brand’s patents.”

Judge Prost noted that Congress provided generic manufacturers two pathways to show that proposed labels do not infringe an Orange-Book-listed patent, including by filing a certification explaining that the generic label will not infringe the listed patent, e.g., “paragraph III certification” that the generic will not launch its product until the listed patent expires or “paragraph IV certification” that the listed patent “is invalid or will not be infringed by the manufacture, use, or sale of the [generic] drug.”

The second pathway, available where at least one indication on the brand label is no longer patent protected, allows the generic to “carve out” other still-patented indications from its label. The resulting label is commonly called a “skinny label.” The approved generic is limited to the indications included on its skinny label but will nonetheless be able to launch its product without infringing the remaining method patent.

Per Judge Prost, the Court improperly failed to distinguish between Teva’s skinny and full labels, effectively nullifying Congress’s provision for skinny labels.

Judge Prost noted that Teva’s product approved and marketed through its skinny label was not identical to GSK’s Coreg® because, unlike Coreg®, Teva’s product was not approved to treat CHF patients according to the patented method. Per Judge Prost, “Teva’s carvedilol label did not suggest that it was approved to treat CHF at all, much less the [reissue] patent’s narrow method of treat[ment]. And there is no dispute that the only two uses included on Teva’s label [ ] were not patented.”

Attacking the Court’s ruling, Judge Prost said, “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.”

Judge Prost also argued that GSK failed to prove causation based on either label. “GSK cannot show that Teva’s skinny label alone induced infringement of the [reissue] patent, and GSK failed to show that any other communication from Teva to doctors actually caused doctors to directly infringe the patent method.” Per Judge Prost, “Regardless of what Teva’s skinny label encouraged, GSK failed to show that doctors actually relied on Teva’s label in deciding to prescribe generic carvedilol.”

Judge Prost argued that Teva’s press releases were not evidence of inducement because they predated the reissue patent. He said Teva’s documents did not encourage doctors to practice the patented method and argued there was no evidence suggesting doctors relied on communications by Teva in prescribing carvedilol according to the patented method.

For the full label period, Judge Prost argued that there was no evidence that any affirmative act by Teva actually caused doctors to directly infringe the patented method. There was no evidence that doctors relied on Teva’s full label in making prescribing decisions.

Concluding, Judge Prost said that the Court’s ruling “discourages generics from entering the market in the first instance. Teva did everything right—using a skinny label, taking care not to encourage infringing uses—and yet, given today’s result, it was ultimately more costly for Teva to sell an unpatented drug for unpatented uses than it would have been to stay out of the market altogether.” Per Judge Prost, “Teva entered the market according to [the Congressional] design and refrained from encouraging doctors to practice the [patented] method. Teva should not be liable for inducement.”

 

[1]           The discussion of Teva’s appeal of the jury’s damages verdict is not included in this article.

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