Can Equitable Estoppel Save Skinny Labels?

by Dennis Crouch

GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc., 18-1976 (Fed. Cir. 2022)

A divided Federal Circuit has denied Teva’s petition for en banc rehearing on the question of whether its FDA approved “skinny label” induced off-label infringement. The en banc rehearing vote appears to be 7-3  6-4 against rehearing. Chief Judge Moore and Judge Newman were both on the original panel. They were joined by Judges O’Malley, Taranto, Chen, and Stoll in denying the en banc petition.  Judges Prost was a member of the original panel and penned another dissent.  Judges Dyk, and Reyna each also wrote in dissent.  Judge Hughes’ vote was not announced, but I assume here that he voted in dissent with the majority.* Judges Lourie and Cunningham did not participate in the voting.

Although Teva lost its petition for rehearing, it really won the battle.  All of the judges agree that Teva “played by the rules” while GSK did something wrong.  On remand, Teva will apparently have the opportunity to argue this fairness issue under the doctrine of equitable estoppel.

• Statement that Patent Covers only CHF Use: The drug at issue here – carvedilol – is not patented. However, GSK has patented a particular use of carvedilol to “decrease a risk of mortality caused by congestive heart failure [CHF].” And, GSK provided a sworn statement to the FDA that identified CHF was the only patented use.
• Skinny Label: The FDA approved Teva’s sales of carvedilol, but only for limited uses under a “skinny label.”  In particular, Teva’s label says that its drug is for use only for treatment of hypertension and left ventricular dysfunction following a heart attack (“post-MI LVD”).  This skinny label approach carves-out the still patented use and is part of the Hatch-Waxman approach.   During Teva’s approval process GSK did not complain  or suggest that the skinny label uses would be infringing.
• Later in litigation, GSK argued that post-MI LVD uses statement induced infringement.

The original jury trial sided with the patentee, however Judge Stark flipped the verdict and issued a Judgment as a Matter of Law for the Teva. On appeal, the Federal Circuit flipped again and majority sided with the patentee — finding that the label coupled with other actions by Teva showed culpable intent to induce infringement of GSK’s use patent. However, here the majority walks through its explanation of Teva’s defense is equitable estoppel – rather than non-infringement.  And, the district court left that issue for decision on remand.

Equitable estoppel, a doctrine designed to avoid injustice, has three elements: misleading conduct, reliance, and prejudice.

In the patent context, the typical misleading conduct must someway reasonably inform the alleged infringer that the patentee does not intend to take action against certain conduct.   The majority here explains that estoppel is different from infringement analysis because estoppel includes a major focus on the patentee’s conduct rather than the accused infringing acts.

The dissent argues that the equitable estoppel approach is likely inadequate and unduly benefits the patentee.  Rather, an FDA approved skinny label that carves out all uses claimed-to-be-patented should absolve a generic maker from any inducement liability based upon the the label. “How could this label, which faithfully followed what the brand said about its own patents and which the FDA required Teva to use, itself be evidence that Teva intentionally encouraged something it knew would infringe? . . . When a generic plays by the skinny-label rules, the FDA-required label can’t be evidence of intent.” Prost in dissent.

The dissents generally argue that that the majority approach here gives branded companies an incentive to mislead the FDA and generic competitors in order to later catch them for infringement.

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The opinion does not indicate how Judge Hughes voted, but Prof. Karshtedt and another reader suggested that we can infer that he voted with the majority.  The Federal Circuit’s internal operating procedure indicate that the clerk’s opinion should note any dissenting votes. And here, Judge Hughes vote was not noted as dissenting.