In GlaxoSmithKline LLC v. Teva Pharm. USA, Inc., Slip Op. No. 2018-1976 (Fed. Cir. Oct. 2, 2020), a majority (Judges Newman and Moore) of the U.S. Court of Appeals for the Federal Circuit reversed the district court’s grant of judgment of non-infringement as a matter of law (JMOL) and reinstated the jury verdict that Teva is liable for induced infringement of GlaxoSmithKline (GSK)’s patent. This ruling also sustained the jury’s $235.5 million damages verdict against Teva. Id. at *20. Chief Judge Prost filed a spirited and lengthy dissenting opinion.
This case concerns the medicinal product called “carvedilol,” marketed by GSK under the brand name Coreg®. The history is somewhat complex.
Coreg® was protected by GSK’s U.S. Pat. No. 4,503,067 (“the ‘067 patent”). Id. at *3. The ’067 patent issued in 1985 and expired on March 5, 2007. Id. The FDA initially approved carvedilol for treatment of hypertension Id. After further clinical trials, it was discovered that carvedilol is also effective in treating congestive heart failure (CHF). Id.
In May 1997, FDA approved carvedilol for the CHF indication. Id. In June 1998, this method of treatment was patented in U.S. Pat. No. 5,760,069 (“the ‘069 patent”), entitled “Method of Treatment for Decreasing Mortality Resulting from Congestive Heart Failure.” Id. The ’069 patent issued June 2, 1998 and was listed by GSK in the FDA's Orange Book with use code U-233, “decreasing mortality caused by congestive heart failure.” Id. at *4.
In March 2002, Teva applied for FDA approval of its generic carvedilol, certifying in the Abbreviated New Drug Application (“ANDA”) under (1) Paragraph III of the Hatch-Waxman Act, stating that its generic product would not be launched until the ’067 patent expired in March 2007 and (2) Paragraph IV, asserting that the ‘069 patent was “invalid unenforceable, or not infringed.” Id. On May 24, 2002, Teva sent GSK a Paragraph IV notice stating that the claims of the ’069 patent are invalid for anticipation or obviousness. Id. GSK did not file a Hatch Waxman lawsuit against Teva.
GSK did not file a Hatch Waxman litigation upon receipt of the 2002 Paragraph IV notice. Dissent at *12. Rather, on November 25, 2003, GSK filed an application to reissue the ’069 patent, and as a result, on January 8, 2008, over four years later, RE40,000 issued (“the ‘000 patent”). Id. at *5.
The italicized text in claim 1 illustrates the limitations added by reissue:
wherein the administering comprises administering to said patient daily maintenance dosages for a maintenance period to decrease a risk of mortality caused by congestive heart failure, and said maintenance period is greater than six months.
‘000 patent, col. 8, ll. 30–40 (emphasis added).
In the meantime, in 2004, Teva received FDA “tentative approval” for its Coreg® ANDA to become effective on expiration of the ’067 patent and issued a press release announcing such. GlaxoSmithKline, at *4. In 2007, upon expiration of the ‘067 patent, Teva launched generic carvedilol at risk against the ‘069 patent with the following label, indicating only hypertension and post-MI LVD:
1 INDICATIONS AND USAGE
1.1 Left Ventricular Dysfunction following Myocardial Infarction . . .
1.2 Hypertension . . .
“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).”
Id. at *5.
Notably, the Teva 2004 label did not recite the CHF indication. “Teva’s press releases and marketing materials state that its carvedilol is ‘an AB Rated generic of Coreg® Tablets.’” Id. at *5-6.
In particular, Teva announced on September 6, 2007 that FDA had issued a final approval of Teva’s generic of Coreg® Tablets. Id. at*13. Regarding Teva’s 2007 label for its generic of Coreg® Tablet, Teva’s Rule 30(b)(6) witness testified that Teva deliberately omitted or “carved out” reference to CHF. Id. at*14. Teva’s 2007 label was thus a “skinny label” that did not mention CHF but indicated only hypertension and post-MI LVD ─ neither of which was literally covered by the ‘000 patent. Id. at *14. See also Dissent at *22.
In 2011, some years after Teva’s launch of its generic of Coreg® tablets, the FDA required Teva to amend its carvedilol label to be identical in content to the approved GSK Coreg® labeling. Teva, accordingly, amended its label to be a “full label” covering all three approved indications, including for treatment of CHF. Id. at *6.
Teva did not change its marketing materials. As noted above, those materials stated that carvedilol is an AB Rated generic of Coreg® Tablets
Hence, there were two periods considered during the litigation: (1) a Teva skinny label period, existing from August 2007 to 2011 and (2) a Teva full label period, which came into existence in 2011. As mentioned above, the ‘000 patent bridged both periods, having issued in 2008 and expired in 2015.
In July 2014, years after the ‘000 reissued, GSK filed a post-launch, non-Hatch Waxman suit in the District Court for the District of Delaware for induced infringement of the reissued ’000 patent against the two largest providers of generic carvedilol, Teva and Glenmark Pharmaceuticals USA. Id. The action against Glenmark was stayed. Id.
The action against Teva, not being a Hatch Waxman litigation, went to a jury. Id. In particular, Teva argued that since it had carved out from its initial (2007) label the indication and prescribing information for treatment of CHF, then Teva could not be found to have induced prescribing physicians to infringe the ’000 patent, at least not before Teva amended its label in 2011 to include all of the information that the FDA had approved for Coreg®. Id.
The jury found that Teva induced infringement of the ’000 patent both during the skinny label (Jan. 8, 2008 - April 30, 2011) and the full label (May 1, 2011 - June 7, 2015) periods and that the infringement was willful. Id. at *7.
Subsequently, the district court granted Teva's motion for JMOL, stating that the verdict of induced infringement was not supported by substantial evidence because “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.” Id. at *8. (internal quotations and a bracket deleted).
The district court referred to many non-Teva sources of information available to prescribing physicians, such as the American Heart Association, the American College of Cardiology, and various publications. Id. The district court concluded that: “A reasonable factfinder could only have found that these alternative, non-Teva factors were what caused the doctors to prescribe generic carvedilol for an infringing use.” Id. Accordingly, the district court ruled that “substantial evidence does not support the jury's finding on causation . . .during both the skinny and full label periods.” Id.
GSK appealed to the Federal Circuit, arguing the jury's finding of induced infringement was supported by substantial evidence and should be sustained. Id. at *9.
Three trade associations, including Biotechnology Innovation Organization (BIO), Pharmaceutical Research and Manufacturers of America (PhRMA), and Association for Accessible Medicines (AAM) filed Amicus Curiae briefs before the Federal Circuit.
BIO argued that “the district court strayed from this Court’s long-standing precedent . . . and adopted a discrete causation analysis that required GSK to prove that Teva’s conduct alone was sufficient to cause direct infringement” and that “[t]he district court went too far.” Amicus Curiae BIO at page 4. According to BIO, “[d]evelopments in inducement law that make it inordinately difficult to hold these generic competitors responsible undermines the value of the innovator method patents, and frustrates the promise of the U.S. patent system’s reward for innovation in exchange for a limited right to exclude.” Id. at page 27.
Similarly, PhRMA argued that “the legal standard for inducement applied by the district court runs contrary to established precedent and punishes innovators by setting an unduly high bar for proving infringement.” Amicus Curiae PhRMA at page 5 (emphasis in original). PhRMA further explained that “[u]nder the standard, GSK had to prove that a physician’s decision to prescribe Teva’s generic version to treat chronic heart failure was caused by Teva’s actions alone. This is not, and should not become, the law.” Id.
On the other hand, AAM argued that the Federal Circuit should affirm the district court’s decision as reversal would ruin the Hatch-Waxman’s carve-out process, which allows generics to avoid patented uses. Amicus Curiae AAM at pages at 11-12. If calling a generic drug “AB rated” (equivalent) to a brand product induces infringement, that would throw the ultimate wrench into the carve-out process, a key tool in a statutory regime “designed to speed the introduction of low-cost generic drugs to market.” Id. at pages 3, 11-12.
The Federal Circuit first clarified the standard of review when district courts granted JMOL. GlaxoSmithKline, at *9. According to the Federal Circuit, a “court may grant a judgment as a matter of law contrary to the verdict only if ‘the record is critically deficient of the minimum quantum of evidence’ to sustain the verdict.” Id.
GSK argued that the district court erred in law and fact with respect to induced infringement under 35 U.S.C. § 271(b). Id. at *10. According to GSK, the district court erred in law, “as shown in long-established and clear precedent 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.” Id. Additionally, GSK argued that “Teva’s marketing of carvedilol with knowledge and intent of its infringing use, and promotion of its generic product as the same as Coreg®, meet the legal requirements of active inducement of infringement.” Id. Therefore, GSK stated that “there was substantial evidence whereby a reasonable jury could so find.” Id.
Teva made a number of arguments. First, Teva argued that the district court correctly ruled because cardiologists already knew of carvedilol and its uses, and thus Teva did not directly “cause” cardiologists to infringe. Id. The Federal Circuit cited Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (2011) for the principle that “inducement to infringe is not negated when the direct infringers already knew of the infringing subject matter.” Id. at *11.
Additionally, Teva argued that it could not be liable for induced infringement because it had deliberately omitted, or “carved out” from its 2007 label, reference to CHF. Id. at *14. With respect to this argument, the Federal Circuit pointed out Teva’s witness’ testimony stating that carve out is “a legal strategy, not a commercial strategy” and that unless the doctor feels strongly, “Teva still expects to get sales where the doctor prescribed carvedilol for [CHF]”, even if Teva has carved out CHF. Id.
Moreover, Teva argued that the 2004 and 2007 press releases should not be considered as evidence of inducement because the ’000 patent was not issued until January 8, 2008. Id. at *15. The Federal Circuit responded that the jury could find inducement if Teva “continued to take an action that began before the ’000 patent issued, and after the ’000 patent was issued on January 8, 2008, intending to cause the physicians to directly infringe by administering Teva’s carvedilol product.” Id. The Federal Circuit then pointed out the evidence that the 2007 press release remained on Teva’s website after issuance of the ’000 patent and promotional catalogs circulated by Teva between 2008 and the expiration of the ’000 patent in 2015 “affirmative[ly] promot[ed]… its carvedilol tablet as the AB generic equivalent of Coreg® which could be used as a cardiovascular agent[.]” Id. at *15-16.
The Federal Circuit ultimately agreed with GSK that “[t]he district court applied an incorrect legal standard, for 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.” Id. at *16. The Federal Circuit concluded that “[t]here was ample record evidence of promotional materials, press releases, product catalogs, the FDA labels, and testimony of witnesses from both sides, to support the jury verdict of inducement to infringe the designated claims for the period of the ’000 reissue patent.” Id. The Federal Circuit also cited Vanda Pharm. v. West-Ward Pharm. Int’l Ltd., 887 F.3d 1117, 1129 (Fed. Cir. 2018) and Sanofi v. Watson, 875 F.3d 636, 646 (Fed. Cir. 2017), as precedent showing that the “content of the product label is evidence of inducement to infringe.” Id.
Accordingly, the Federal Circuit reinstated the jury verdict and damage award. Id. at *20.
Chief Judge Prost issued a 33-page dissent. The dissenting opinion emphasized the Congress’s legislative intent of the Hatch-Waxman Act. See Dissent at *2. According to the dissenting opinion, “Congress provided for skinny labels for exactly these circumstances, see 21 U.S.C. § 355(j)(2)(A)(viii), such that the lone method covered in the ’000 patent would not foreclose access to more affordable carvedilol.” Id. Judge Prost stated that Teva could not induce infringement of GSK’s reissue patent “—Teva’s skinny label did not even suggest using its product according to the patented method.” Id. “[T]o prove induced infringement, GSK had to show that Teva actually caused doctors to directly infringe the ’000 patent. It failed to do so.” Id.
The dissenting opinion agreed with the district court that “no evidence established that Teva actually caused the doctors’ infringement for either label” as shown by the established fact that “GSK’s own expert admitted that he had not read Teva’s label before prescribing generic carvedilol” and “doctors relied on other sources of information, not Teva, in making their decision to prescribe carvedilol.” Id. at *3 (emphasis in original).
Accordingly, the dissenting opinion concluded that majority’s holding was counter to Congress’s intent and incorrectly concluded that the jury’s verdict was supported by substantial evidence. Id. at *4.
This decision will likely have practical implications both to brand-name and generic pharmaceutical companies. Two trade associations submitting Amicus Curiae briefs shared their views on the decision. BIO commented that “[t]he law is very clear that generics should be able to sell their drugs for unpatented uses but not for patented ones.” AAC, however, stated that “[t]his decision will make it harder for patients to access more affordable generic medicines in a timely way.” See https://news.bloomberglaw.com/ip-law/glaxo-teva-ruling-could-spell-trouble-for-generic-drug-makers (last visited Oct. 6. 2020).
This decision clarifies that, at least in post-launch, non-Hatch Waxman litigation, carving out in a label itself does not necessarily avoid a finding of induced infringement. Notably, this case confirms that the “press releases” and “promotional materials” from the generic manufacturers may be found to induce doctors to use generic drugs for the carve-out indication, despite a skinny label.
As we have noted above, this decision involved post-launch activity and was tried before a jury. The litigation was not ANDA litigation.
This is a major decision. We would say: “Stay Tuned.”
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