Guest Post: The Open Source Hardware Association’s Perspective on GSK v. Teva

Guest Post by Michael Weinberg, Executive Director of the Engelberg Center on Innovation Law & Policy at NYU Law and the Board President of the Open Source Hardware Association (OSHWA) and David Wechsler, a 3L at NYU Law.

To the Open Source Hardware (OSHW) community, the Federal Circuit’s October opinion in the ongoing appeal of GlaxoSmithKline LLC v. Teva (“GSK”), No. 2018-1976 (Fed. Cir.) was a wolf in wolf’s clothing. Some language in the panel majority’s opinion suggested an expansion of induced infringement liability to transform mere statements of equivalence made on promotional materials into triggers for liability. This language came dangerously close to swallowing an industry extolled for democratizing science and helping the United States overcome its PPE shortage in the heart of the COVID-19 outbreak. The Federal Circuit’s subsequent choice to vacate its initial opinion and re-hear the case signals that crisis may have been averted, but the close call was a reminder of the uphill battle open design faces despite the significant public benefits it creates. We cannot predict exactly what the Federal Circuit’s new opinion will look like, but as advocates for the OSHW community, we hope the panel treads carefully.

I. The Importance of Open-Source Hardware to Innovation

Open source hardware is a physical item whose source files have been shared with the world and can be freely copied or modified. By enabling anyone to study, modify, distribute, make, and sell the design or hardware, open source hardware allows the sharing of knowledge and encourages innovation through the open exchange of designs. In contrast to proprietary hardware, any relevant documentation related to open source hardware is licensed for individuals to openly participate in the design and development of the hardware, or to replicate and manufacture the hardware devices. By making it easier to begin engineering from a prior design, open source design quickens invention and commercialization of new technologies.

The benefits of open source hardware were on vivid display last year, as the demand for PPE skyrocketed amid the COVID-19 outbreak and caused a “chronic shortage” of supply. Relying on open-source hardware and design, thousands of individuals met this moment of need with ingenuity. To name a few inspiring examples

Open source hardware facilitated this process by disseminating the designs for novel reusable PPE publicly, which not only enabled DIY enthusiasts to collaboratively iterate and manufacture designs for safe equipment at a low cost, but also solved local shortages in equipment. The response to COVID has exposed manufacturing and distribution as primary logistical challenges to disaster response, yet the use of open design to create PPE highlights how distributed manufacturing and supply chains—enabled by openness—can overcome logistical hurdles. Harnessing the power of open design to respond to global crises didn’t begin with the pandemic. Glia Project, for example, has responded to a need for stethoscopes and tourniquets among doctors in the Gaza Strip by sharing 3-D printable open source designs for these devices since 2018.

Beyond providing society with useful tools in responding to crises, open source hardware also has the higher order capacity to democratize science. Research equipment made with open source design is cheaper for scientists to acquire or build on their own, as well as modify to match local conditions, thus lowering the cost barrier to scientific research across the globe. The OSHW community believes that technological capacity should not depend on where one is born; open source hardware therefore offers a promising vision of the future by allowing scientific education in the poorest parts of the world to move past theoretical discussions and into practical applications.

II. GSK v. Teva: The Original Decision

Contrary to popular belief, legal education does not begin with learning the concepts of offer and acceptance in contracts, negligence in torts, or even well-pleaded complaints in Civil Procedure. No, legal education begins during recess period, when one friend (Charlie) encourages another friend (Skyler) to throw the only kickball over the school fence. When caught in the act, Skyler points the finger at Charlie’s encouragement, and the teacher must engage in a fact-finding mission to determine Charlie’s culpability. Depending on how actively Charlie encouraged Skyler, Charlie too may be spending Saturday morning in detention.

The doctrine of inducement infringement in intellectual property law is no different. 35 U.S.C. § 271(b) states “whoever actively induces infringement of a patent shall be liable as an infringer.” Traditionally, § 271(b) has been interpreted as requiring more than mere knowledge: plaintiffs must show active steps taken by the defendant that encouraged direct infringement. See, e.g., Takeda Pharm. U.S.A., Inc. v. West-Ward Pharm. Corp., 785 F.3d 625, 631 (Fed Cir. 2015) (“Merely describing an infringing mode is not the same as recommending, encouraging, or promoting an infringing use, or suggesting that an infringing use ‘should’ be performed.”) (cleaned up). To further the recess analogy, Charlie might be in trouble for imploring Skyler to throw the ball over the fence, but probably avoids culpability by merely explaining how to throw a ball so high as to clear the fence.

The ongoing pharma case GSK v. Teva—chronicled by PatentlyO here and here—has the potential to expand inducement liability to encompass far more than just “active encouragement.” But doing so would threaten the OSHW community, which would have deleterious downstream effects on innovation, crisis response, and the democratization of science.

The panel majority’s original opinion found Teva liable for inducing infringement of GSK’s patent on Coreg to treat congestive heart failure (“CHF”). Relevant to the OSHW community, GSK’s patents on Coreg and its non-CHF-related uses had already expired. Nevertheless, relying heavily (as Judge Prost points out in dissent) on evidence that Teva’s promotional materials referred to its generic tablets as “AB rated” equivalents of the Coreg tablets, Teva was found liable for inducing infringement despite only instructing patients and doctors to use its product for off-patent (i.e., non-CHF) uses.

The panel majority seemed to assume that doctors and pateints would combine the “AB rating” with instructions GSK (not Teva!) provided on how to use Coreg to treat CHF in finding Teva liable for inducement infringement. The panel majority’s reasoning indicates that a distributor of an unpatented product used for unpatented uses A and B could still be held liable if the product was also capable of being used for patented use C.  This would be true even if the distributor of the product made no mention of use C in advertising or educational materials. This broad language lessens patent holders’ burden of proving inducement and could create liability for wholly innocent OSHW developers whose statements of equivalence relate to off-patented uses entirely sepearate from and uninterested in the patented uses.

Statements of equivalence are a far cry from the traditional active encouragement test, spelling bad news for Charlie, our fearless recess ringleader, and potentially worse for designers of open source hardware. Would an open source hardware developer be subject to liability by simply promoting their product as structurally equivalent to a brand-name product, despite not encouraging, mentioning, or even being aware of a specific infringing use? The original panel majority’s focus on Teva’s AB rating suggests that it might be. But then how would the public benefit from the innovation and utility that flow from these cheaper and more accessible alternatives?

Further, the OSHW community would be burdened with administrative costs associated with monitoring which unpatented designs have patented uses. The OSHW community might also fall victim to an avalanche of new patent infringement claims from patent trolls.

The original GSK opinion was not only unduly broad, but also worryingly vague. What type of knowledge and marketing, for example, is sufficient to trigger liability under the panel majority’s rubric (“the provider of an identical product knows of and markets the same product for intended direct infringing activity”)? Without a clear statement on what type of promotional activity triggers inducement liability, open source developers, many of which are too small to afford sophisticated legal departments, will either have their activities chilled or expose themselves to liability. The confused expansion of inducement doctrine contained in the Federal Circuit’s October opinion could have been the death knell of a highly useful emerging industry.

Part III: GSK v. Teva: The Future

 Thankfully, the panel rehearing (which took place on February 23rd) may signal that the panel will decide the GSK case on clearer and—we hope—narrower grounds that do not inhibit the progress of the OSHW community. One way a new opinion could do so is by clarifying that mere statements of structural, chemical, or therapeutic equivalence are insufficient to create inducement liability. The panel can and should reaffirm that inducement can only be established through evidence of active steps taken by the defendant that encouraged direct infringement. Doing so would properly protect incentives to innovate without prohibiting the public from off-patent uses of the same: a win-win for innovators everywhere.

As we hope to have made clear, the open source hardware community spurs innovation and supports the public interest by reducing the cost of scientific research and increasing manufacturing capabilities. Any good intellectual property regime means to serve these interests.

 

Disclosure Statement: Michael Weinberg is the Executive Director of the Engelberg Center on Innovation Law & Policy at NYU Law and the Board President of the Open Source Hardware Association (OSHWA). David Wechsler is a 3L at NYU Law and a participant in NYU’s Technology Law & Policy Clinic, which represents OSHWA.

 

11 thoughts on “Guest Post: The Open Source Hardware Association’s Perspective on GSK v. Teva

  1. 3

    Sorry, but the sky is not falling.

    Please don’t treat the sophisticated Teva as some sort of country bumpkin. They knew exactly what they were doing.

    Exactly.

    And further; as xtian explains at 2, above:

    “I’d be interested in whether the Prof. can address this glaring factual difference. Otherwise, I am wholly unconvinced by the Prof’s article that any reconsideration of this decision has any effect outside of the pharma industry.”

    Me too.

    1. 3.1

      Please be mindful of your comments. Comments outside of the narrative will be deleted and if there are too many of them, then the comments will be turned off. This is a woke blog. The First Amendment is suspended along with critical thinking to push for “equity” for the views expressed in blog posts.

    2. 3.2

      ? No knowledgeable patent attorney would assume that major pharma companies would not have well funded top legal counsel and lobbyists, since patents and the FDA are so important to that business.

      Even if no is the answer to the question if “this decision has any effect outside of the pharma industry,” that does not make it any less important, given the huge and increasing private and taxpayer cost impacts of pharmaceuticals.

  2. 2

    “The panel majority’s reasoning indicates that a distributor of an unpatented product used for unpatented uses A and B could still be held liable if the product was also capable of being used for patented use C.”

    May be the professor doesn’t realize that an A/B ratable generic product means that the “unpatented product” will automatically be substituted at the pharmacy for the patented use “C” regardless of which use the Dr. prescribes it for.

    A more concrete example: Brand Pharma Co. has approved drug X sold under the trademark “HEALAMAB” indicated for 1) male pattern baldness and 2) big toe disease. Only the use of drug X for 1) treating male pattern baldness is still patented by Brand Pharma Co.

    Generic Co. obtains approval only for drug X for 2) big toe disease. However, when a Doctor writes a script for HEALAMAB for a patient with 1) male pattern baldness, the pharmacist fulfilling the script automatically substitutes Generic Co.’s drug X not HEALAMAB (not withstanding that Generic Co’s dug x isn’t indicated or approved for 1) male pattern baldness. That’s the effect of A/B switching.

    With this backdrop, I address the prof’s concerns summarized here: ” Would an open source hardware developer be subject to liability by simply promoting their product as structurally equivalent to a brand-name product, despite not encouraging, mentioning, or even being aware of a specific infringing use? ”

    I would say “no” unless the following facts are found: First, the OSHW developers product has to be identical, not structurally equivalent to the original software. Second, when someone orders the orignator’s software, one automatically receives the OSHW version notwithstanding the order was for the originator’s software. The key difference is that the companies selling their software are the ones controlling the means of its distribution. Unlike the pharma space, there is no pharmacists intermediary switching out software orders.

    I’d be interested in whether the Prof. can address this glaring factual difference. Otherwise, I am wholly unconvinced by the Prof’s article that any reconsideration of this decision has any effect outside of the pharma industry.

    1. 2.1

      interesting.

      1. 2.1.1

        I fail to see a sufficient public policy rationale that would lead to (a) GKS being granted the second patent that effectively locked a drug under patents 4 years after it had become generic, and (b) supporting the necessary intent to induce infringement when the basis for such intent is the coercive acts of the government. GKS has essentially stolen carvedilol from the public.

  3. 1

    I wish someone would write a good article on why the Fed. Cir. seems to have flipped from almost never supporting the “doctrine of equivalents” in its decisions until just a few years ago to apparently more recently more often supporting it? There are strong public policy arguments on both sides of this doctrine.

    1. 1.1

      P.S. while they are at it, please explain what appears to be ignoring of claim limitations in finding DOE in Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U.S. 605 (1950).

      1. 1.1.1

        Paul, hasn’t this issue been cleared up on subsequent S. Ct. decisions?

        1. 1.1.1.1

          Well, if DOE has been cleared up, what for example was the concurring Fed. Cir. judge recently complaining about in In Olaf Sööt Design LL.C v Daktronics Inc 2020-1009, 2020-1034? Reportedly expressing concern about the misuse of the doctrine of equivalents and seeking to reaffirm the primacy of the claims in determining the scope of a patent.

      2. 1.1.2

        P.S. I realize DOE is a different topic from “inducing infringement” here, but they both seem to generate fuzziness or ambiguities [case law boundary disputes] to the otherwise relatively clearer base tests for determining the infringement, or not, of patent claims by potential manufacturers and defendants. Both are thus used in patent litigation to evade discovery scope (and cost) limitations, complicate Markmans, and/or prevent summary judgements on infringement.

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