SCOTUS denies cert in skinny label appeal from the Federal Circuit

This case originated in the District of Delaware, where the Court granted Teva’s renewed motion for judgment as a matter of law (“JMOL”) of noninfringement following the jury’s verdict of infringement of claims of GlaxoSmithKline LLC and SmithKline Beecham (Cork) Ltd.’s (collectively, “GSK”) Reissue Patent No. RE40,000 and an award of over $200 million in damages. GSK appealed and, in 2020, the Federal Circuit vacated the grant of JMOL, reinstated the jury’s verdict and damages award, and remanded for further proceedings.  Following Teva’s petition for rehearing, the Federal Circuit reheard the case in 2021 and reached the same outcome. In both Federal Circuit opinions, Judge Prost filed a dissenting opinion. In 2022, the Federal Circuit denied petitions for panel rehearing and rehearing en banc. Teva filed a petition for certiorari for Supreme Court review on July 11, 2022.

In petitioning for certiorari, Teva argued that “the consequences of the majority’s decision are enormous” with implications to both patients and payers, as well as prescription-drug competition generally. Teva’s brief further stated that “[g]eneric versions of no-longer-patented drugs with patented uses launch with a skinny label almost half the time, saving patients and the federal government billions.” Teva argued that the Federal Circuit’s opinion puts all those launches at risk. The Solicitor General urged the Supreme Court to grant Teva’s petition for writ of certiorari, arguing that the Federal Circuit’s decision threatens the availability of lower-cost generic drugs by allowing courts to treat the “precise conduct that the [laws] contemplate” as evidence of infringement.

Facts

GSK markets and sells carvedilol, a beta-blocker, under the brand name Coreg®. GlaxoSmithKline LLC v. Teva Pharms. USA, Inc., 7 F.4th 1320, 1323 (Fed. Cir. 2021). The FDA approved carvedilol for three indications: hypertension, congestive heart failure (“CHF”), and left ventricular dysfunction following a myocardial infarction (“post-MI LVD”). Id.  U.S. Patent No. 4,503,067 was issued to GSK for the carvedilol compound in 1985. Id. U.S. Patent No. 5,760,069 was issued to GSK in 1998, for 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. Id.

In 2002, Teva filed an Abbreviated New Drug Application (“ANDA”) for approval of its generic carvedilol for all three indications, certifying that it would not launch its product until the ’067 patent expired and that the ’069 patent was invalid, unenforceable, or not infringed. Id. GSK did not sue Teva at that time, and Teva received tentative approval for its ANDA in 2004, pending the expiry of the ’067 patent in 2007. Id. at 1324. However, when Teva launched its generic carvedilol product in 2007, it excluded the CHF indication from its label. Id. In 2011, at the FDA’s instruction and following GSK’s delisting of certain patents (including the ’069 patent) from the Orange Book, Teva amended its label to include the CHF indication. Id. at 1324-25.

In the meantime, GSK applied for reissue of the ’069 patent in 2003, resulting in Reissue Patent No. RE40,000 in 2008, which, like the ’069 patent, claimed a method of decreasing mortality caused by CHF by administering carvedilol with at least one other therapeutic agent. Id. The ’000 patent was listed in the Orange Book. Id. In 2014, GSK sued Teva in the District of Delaware, alleging that Teva had induced infringement of the ’000 patent. Id. at 1325. Following a seven-day jury trial, Teva was found to have induced infringement during both the “partial label” period (from 2008 to 2011 when the label excluded the CHF indication) and the “full label” period (from 2011 onward, when the label included all three indications). Id. at 1325-26.  On Teva’s motion for JMOL, the district court set aside the jury verdict, finding that GSK had failed to prove Teva’s alleged inducement was the cause of any direct infringement. Id.  The district court also found that Teva could not be held liable for induced infringement based during the partial label period. Id.

GSK appealed and the Federal Circuit reinstated the jury verdict. Id. at 1326. Teva’s subsequent request for panel rehearing was granted. Id.

Majority Holding at the Federal Circuit

In its August 5, 2021 rehearing opinion, the Federal Circuit again found that substantial evidence supported the jury’s verdict that Teva induced infringement during both the partial label and full label periods. With respect to the partial label period, the Court agreed with GSK’s argument that “substantial evidence supports the jury’s verdict that Teva’s partial label encouraged an infringing use (via the post-MI LVD indication) and that Teva’s marketing materials encouraged prescribing carvedilol in a manner that would cause infringement of the ’000 patent.” Id. at 1327. With respect to the “full label” period, the Court held that “[s]ubstantial evidence supports the finding that Teva encouraged physicians to use its carvedilol for an infringing purpose during the full label period [and that] [t]he jury was entitled to credit the full label itself containing the infringing use, [GSK’s expert] 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.” Id. at 1339.

In its causation analysis, the Court explained that, “[t]o establish inducement, 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.” Id. It held that “[t]he jury had sufficient circumstantial evidence, in the form of labels, marketing materials, catalogs, press releases, and expert testimony, for it to conclude that Teva succeeded in influencing doctors to prescribe carvedilol for the infringing use.” Id. at 1340.

Finally, the Court sustained the damages verdict, which the jury had assessed to be based on lost profits plus a reasonably royalty payment. Id. at 1341. The Court held that the district court correctly instructed the jury that carvedilol products available from other generic manufacturers were not non-infringing alternatives since the ultimate use of those products would be infringing, notwithstanding that the mere sales of those products would not infringe the claims. Id.

Dissent at the Federal Circuit

Judge Prost filed a dissenting opinion, stating that “First, . . . the majority further 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, the majority defies basic tort law by eviscerating the causation prong of inducement. . . . Third, the majority creates confusion for generics, leaving them in the dark about what might expose them to liability.” Id. at 1343 (Prost, S., dissenting).

Key Takeaways

1. Patent holders for drug products should look beyond the label and consider all generic filer activities and documents, including marketing materials and press releases, in attempting to establish induced infringement.
2. Patent holders should consider whether the ultimate use of a product, not just its sale, would infringe asserted claims when assessing the availability of non-infringing alternatives.