Inducing Infringement with the Skinny Label

Hypo: Copycat would like to copy Competitor’s product. The patent covering the product expired as have patents covering some methods-of-use, but Competitor still has one method-of-use patent in force.  The question–when you sell its product, how careful does Copycat need to be to avoid inducing infringement?

This hypothetical situation gets trickier when we are talking about FDA regulated drugs because the FDA dictates labeling content for generic (ANDA) filers.  And, for the most part, the content of the generic label is derived directly from the brand-patentee’s label.

An important drug case involving this situation is pending on petition for certiorari before the Supreme Court. Teva Pharms. USA, Inc. v. GlaxoSmithKline LLC, SCT Docket No. 22-37 (2022).  Teva has petitioned its “skinny label” induced infringement loss to the Supreme Court–seeking a ruling that the FDA-approved process creates a limited safe harbor for its label content.

Once a brand drug is no longer patented, the fact that some of the drug’s uses remain patented “will not foreclose marketing a generic drug for other unpatented [uses].” Caraco (2012). Instead, a generic manufacturer can sell its product with a “skinny label” that “carves out” any patented uses found in the brand drug’s labeling—and thereby avoid inducing infringement of the brand manufacturer’s patent rights. See 21 U.S.C. § 355(j)(2)(A)(viii). To aid in this process, brand manufacturers must provide a sworn statement to FDA identifying “the specific section(s)” of their labeling “that describes the method of use” claimed by their patents. 21 C.F.R. § 314.53(c)(2)(i)(O)(2), (c)(2)(i)(P)(2). Those are the sections that generic manufacturers then carve out of their labeling in order to obtain FDA approval despite the brand manufacturer’s remaining patents.

The question presented is:

If a generic drug’s FDA-approved label carves out all of the language that the brand manufacturer has identified as covering its patented uses, can the generic manufacturer be held liable on a theory that its label still intentionally encourages infringement of those carved-out uses?

Teva Pharms. USA, Inc. v. GlaxoSmithKline LLC, SCT Docket No. 22-37 (2022).

Background: The drug carvedilol (a beta blocker) was patented, but those patents have expired.  GSK sells the drug with FDA approved labelling for treatment of three different cardiac-related problems: (1) congestive heart failure; (2) hypertension; and (3) left ventricular disfunction following myocardial infarction.  GSK had patent rights covering all three uses, but by 2007 the patents covering uses (2) and (3) had expired.  Teva obtained FDA approval to begin selling and marketing a generic version of the drug, but with a “skinny label” that doesn’t mention the still-patented method of use for congestive heart failure.  As you might expect, folks paying the bills in American healthcare immediately realized that Teva’s much cheaper drug was therapeutically equivalent to GSK’s branded ver$ion and began substituting the generic to treat congestive heart failure as well.  GSK sued Teva for inducing infringement and won a jury verdict for $235 million, but the district court rejected the verdict on JMOL. (Judge Stark, now at the Federal Circuit). On appeal, the Federal Circuit reinstated the jury verdict–critically finding that the FDA-required label on Teva’s generic drugs encouraged doctors to prescribe the drug.  The basic problem was that a medical professional could examine the label information about how the drug works for the non-patented uses and gain an understanding that it also works for congestive heart failure.  The majority opinion from Chief Judge Moore and Judge Newman was per curium.  Judge Prost filed a strong dissent in the case:

GSK’s sworn FDA filings identified just one use as patented. So Teva carved out that use and came to market with its “skinny” label. It played by the rules, exactly as Congress intended.

Prost in dissent. Beyond the label itself, GSK also presented evidence of a limited amount of Teva advertising that its version was “indicated for treatment of heart failure and hypertension” and was a “generic equivalent” of GSK’s branded drug.  That evidence helped the Federal Circuit reinstate the jury verdict.  But, the majority still relied upon language from the label itself in finding inducement.  The majority in the case also noted that on remand the district court might still decide the case in Teva’s favor on the theory of equitable estoppel based upon GSK’s statements to the FDA that were relied upon by Teva (to its detriment).

The petition provides two reasons for granting the writ:”

The divided panel’s controversial opinion upends the legal rules facing the modern prescription-drug marketplace, wreaking doctrinal havoc in two equally troubling ways. Such a radical transformation warrants this Court’s intervention now.

First, the decision below eviscerates the key element of inducement liability: the requirement that a plaintiff prove “active steps taken to encourage direct infringement.” Grokster. Actively encouraging or instructing an infringing use has always been required to support inducement, and merely “mentioning” or “describing” an infringing use has always been legally insufficient. Now, however, that difference has disappeared, leaving would-be defendants who sell off-patent products labeled for unpatented uses in the dark about whether and when they will face massive infringement verdicts.

Second, the decision below effectively nullifies a Congressional enactment created specifically to encourage precisely what Teva did here: bring a low-cost generic drug to market labeled for unpatented uses. For decades, the skinny-label statute has worked as intended by providing generic manufacturers with the predictability they need to bring low-cost generic drugs to market labeled for unpatented uses. If they carved out the portions of the labeling that brandname manufacturers themselves identified as covered by method-of-treatment patents, they could launch without risk of infringement liability. But now, every skinny-label launch is an at-risk launch—and patients, FDA, and the healthcare system will suffer the consequences.

Petition. The petition was filed by highly regarded Supreme Court litigator William Jay (Goodwin) on July 11, 2022.  This is a case that I would ordinary expect to see a CVSG from the Supreme Court. We’ll see.

18 thoughts on “Inducing Infringement with the Skinny Label

  1. 5

    The article in Gene’s blog today quotes this cert-appealing dual argument from the Teva cert petition:
    “[T]he court’s decision eliminates the key element of inducement liability requiring plaintiffs to prove that a defendant took active steps to encourage the direct infringement. . . [and] effectively nullif[ies] a Congressional act that was enacted to bring low-cost generic drugs to market. . .” – Teva petition

  2. 4

    The skinny label concept was created to allow approval of Gx for non-patented uses. But, we all know that your Target/CVS pharmacist doesn’t ask you why you are taking your drug. The Target/CVS pharmacist is mandated by the insurance companies to switch to a generic if any generic is available, regardless of the prescribe use.

    The game is for a Gx to find one, unpatented use to get on the market, with the knowledge that once on the market, it will be substituted for all prescribed uses (not just the carved out uses). I won’t say the skinny label policy has been abused by Gx, but it is out of balance in my opinion. I think this was a factor in the Fed. Cir. decision.

    Finally, the facts on this case won’t make good law. It is my understanding that the FDA required certain language on Teva’s label, which language was found by the judges to support their finding of inducement. Teva had no choice but to include this language in order to get its product approved.

    The actual issue to me is: Can one avoid infringement when the governing body regulating your product requires language/acts/alterations to your products that are directly responsible for the infringement of a third party patent?

    1. 4.1

      Finally, the facts on this case won’t make good law.

      Exactly. Teva’s incentives here are to make out as if the CAFC’s decision here spells the end of skinny labels, but subsequent CAFC cases have approved skinny labels without issue, because this case’s facts are so idiosyncratic as to be very limited in application.

      The CAFC majority here got this one right. That does not mean, however, that skinny labeling is dead. Leave the CAFC decision in place or overturn it, and the global impact will be scarcely different either way. The facts of this case are too weird for this precedent to have much impact in future.

      1. 4.1.1

        Would be helpful to contrast any such “weird” facts with the arguments being presented (the one seeking to overturn the decision characterizes this very differently than Greg does, and given Greg’s recent propensity for religious posting, his views just don’t have any weight to them).

        1. 4.1.1.1

          @anon see 1.3.2 comment below

  3. 3

    > because the FDA dictates labeling content for generic (ANDA) filers.

    Easy fix. Teva 3rd party impleads (IIRC, it’s been awhile) the FDA on the grounds they are just doing what Uncle Sam told them to do –> Teva/FDA looses on inducement –> FDA pays the judgment to Glaxo –> everyone “in the room” celebrates together with multiple $1000/bottle wines.

  4. 2

    Waiting for marty to weigh in here — THIS is much closer to his putative “information” patent than anything that deals with software.

  5. 1

    A patent law issue accused of contributing to higher drug prices by discouraging generics is of far more bi-partisan public interest than most other patent law related cert petitions. The brief cites a bunch of articles already published on the “skinny label” issue. This could get some interesting amicus briefs and break last terms reported zero out of 40 patent cases cert denial record.
    P.S. How much longer does the term of the “method of use” patent in suit here extend beyond the expiration of the underlying pharmaceutical patent?

    1. 1.1

      To your PS, Paul, you should be aware that most any “Method of Use” can be entirely separate from an underlying “hard goods” item.

      Were you attempting to be facetious?

      1. 1.1.1

        Of course we know that some independent method of use patents with later filing dates [not divisionals or continuations] can be obtained over the prior art pharmaceutical being used if that method of use was not 103 obvious. But how many GP lawyers, politicians or reporters [or even some academics] really understand or accept that and instead consider it “evergreening” the pharmaceutical patent?

        1. 1.1.1.1

          and instead consider it “evergreening”

          I need more force from you in joining me in repudiating ANY such blatant errors.

          Believe you me – Big Pharma is not one of my favorites, but when this type of error is promulgated as an illicit activity, everyone who knows better should point out this error.

          Forcibly.

        2. 1.1.1.2

          Further – as I am sure that you are aware of, “same-filed” items – cons and divs are ALSO not evergreening.

        3. 1.1.1.3

          +1

    2. 1.2

      The composition of matter patent expired in Mar 2007. The hypertension patent will expire in June 2023.

    3. 1.3

      Pharmaceutical patent was US4,503,067 (priority to 1978) expired March 2007
      Method to treat congestive heart failure was US5,760,069 (priority to 1995) expired June 2015

      Teva’s 2007 generic application certified ‘Paragraph 3’ (selling after expiration) for ‘067, and with ‘Paragraph 4’ (no valid claims infringed) for ‘069.
      The second certification should have been copied to the patent holder.

      GSK applied later in 2007 for a re-issue of the method patent ‘069, where the only new limitation I see is dosing for a six-month duration, which was granted on the first office action as RE40,000

      What confuses me is why the FDA in 2011 required Teva to match GSK’s label. Teva’s USSC brief implies that the cause was the narrowing of ‘069 when re-issued as ‘000.

      1. 1.3.1

        Oops, wrong dates.
        Teva’s ANDA generic-drug application was made in 2002,
        GSK’s re-issue application was 2003,
        and it did have one examiner rejection, for obviousness, before first notice of allowance in 2006.

      2. 1.3.2

        This goes to the idiosyncratic facts of this case. As you note Ohara, Teva tried to skinny label and remove language. FDA required them to put the langauge back in to get approval. This langauge was used as the basis for the inducement of infringement claim. Teva’s argument is “we carved out the problematic language, so even though the FDA made us put it back in, this is still a “skinny label” case.”

        1. 1.3.2.1

          Ah thanks – so the use of the term “skinny label” is part of the problem (in a 1984 style), in that the Government made it LESS THAN skinny enough.

Leave a Reply

Your email address will not be published. Required fields are marked *

You can click here to Subscribe without commenting

Add a picture