Corcept v. Teva Oral Argument: Infringement by Drug Label, Again

Guest post by Paul R. Gugliuzza & Jacob S. Sherkow

An important recent development in pharmaceutical patent law is the Federal Circuit’s embrace of a theory we call, in a forthcoming article, infringement by drug label. In several decisions since 2021, the court has approved claims of induced infringement against generic drug companies simply because (i) the generic’s product label could be read to contain a patented method-of-use and, in some cases, (ii) the generic stated that its product is an FDA-equivalent to the brand’s.

There are several problems with holding generic companies liable for inducing doctors (or patients) to perform a patented method of use based on a court’s (or, sometimes, an expert witness’s) interpretation of the generic’s label and the generic’s unremarkable—and often, legally required—statements about equivalence.

First, as a matter of patent doctrine, inducement usually requires active encouragement of direct infringement—not simply label language that might recite the patented method if construed like a patent claim. Even then, saying that label language induces direct infringement assumes doctors (or patients), read generic drug labels, which a body of evidence suggest they don’t. And it seems like a stretch to say that a generic’s statement that it is, well, a “generic” to its branded counterpart encourages doctors (or patients) to perform a specific, patented method of treatment.

Second, as matter of common sense, generics are required by FDA to mimic the brand’s label; it’s odd to say that a defendant is intentionally inducing patent infringement by saying something a government agency has required them to. In fact, in many of these cases, generic companies were trying to avoid encouraging infringement by removing (or at least trying to convince FDA to allow them to remove) from their label language referencing the patented method.

Finally, as a matter of policy, the mere threat of a finding of infringement by label can have a chilling effect on competition in drug markets: when brands file these suits after generic launch, generics (whose profit margins are very small) can be liable for the brand’s lost profits (which can be enormous).

To date, the Federal Circuit’s most significant decision involving infringement by label is GlaxoSmithKline v. Teva (2021). In that case, a 2-1 decision (with Chief Judge Moore and Judge Newman penning a per curiam opinion), the Federal Circuit upheld a jury verdict in favor of the patentee even though the generic had carved out of its label the only indication covered by the patent. (To make the stakes of these cases clear: the jury awarded $235 million in lost profits to the brand; the generic’s gross revenue on sales of its infringing product was a mere $75 million.) The Federal Circuit’s opinion leaned heavily on the case’s procedural posture, deferring to the jury’s presumed fact-finding, based on expert testimony presented by the patentee, that the patented method could still be found in the generic’s label, as well as press releases by the generic announcing the approval of its “equivalent” product.

Since GSK, the Federal Circuit has ruled in favor of patentees in several other cases involving infringement-by-label theories. For instance, in United Therapeutics v. Liquidia (2023), the court upheld a finding of inducement because following an FDA-required instruction on the generic’s label would, in the court’s view, inevitably lead to direct infringement. And, in Amarin v. Hikma (2024), the court reversed a dismissal where the allegedly inducing conduct was a warning on the generic’s label about the side effects of a patented use, along with public statements about generic equivalence.

On Monday of this week, the Federal Circuit heard oral argument in Corcept Therapeutics, Inc. v. Teva Pharmaceuticals USA, Inc., which involves Corcept’s patent on a method of administering particular doses of mifepristone along with a “strong CYP3A inhibitor” to treat Cushing’s syndrome. (Cushing’s syndrome is a rare but debilitating endocrine disorder.) After a bench trial, Chief Judge Renée Bumb of the District of New Jersey rejected Corcept’s induced infringement claim, finding that no doctor had actually practiced the patented method and that the generic’s label didn’t encourage the co-administration of mifepristone and a strong CYP3A inhibitor—it actually cautioned against it.

Corcept’s argument on appeal focuses heavily on Teva’s generic label, which, like Corcept’s, provides the dosing regimens recited in Corcept’s patent for patients for whom co-administration is necessary. The Federal Circuit panel (Chief Judge Moore, Judge Stoll, and Judge Nina Wang of the District of Colorado, sitting by designation) questioned Corcept’s attorney (Brian Cannon of Quinn Emanuel) about whether a court could find inducement without real-world evidence of co-administration at the doses covered by the patent. Corcept asserted that, to the contrary, there was evidence in the record that doctors had co-administered the drugs and would continue to do so in the future. But the Federal Circuit panel seemed unwilling to second guess the district judge’s factfinding on this point.

The judges were, however, notably curious about why Teva chose to copy Corcept’s label exactly and to not attempt to carve out the patented method. Teva’s attorney (John Rozendaal of Sterne Kessler) explained that Teva chose not to carve the patented method out of its label because the relevant language wasn’t in the portion of the label describing the drug’s FDA-approved indications—which is the type of language commonly carved out of generic labels. Instead, the language was in the portion of the label providing safety information and warnings—which, Teva’s attorney explained, FDA is very reluctant to allow generic companies to alter.

In response, the Federal Circuit judges floated the idea that Teva could have copied an older version of Corcept’s label that didn’t contain the warning involving the patented method. Teva’s attorney was, simply put, baffled at the suggestion FDA would have allowed a generic to mimic a defunct version of the brand’s label. (In general, generics have a duty to maintain the same labeling as the brand.)

Given the deferential standard of review that applies on appeal from a bench trial, it’s tempting to suggest the Federal Circuit will affirm the district court’s finding of no inducement. Yet the Federal Circuit’s judges kept returning to questions about why Teva didn’t carve the patented method out of its label, regardless of what FDA would have allowed. And Teva wasn’t really able to dispute that the patented method is in its label—albeit in a section discussing safety and warnings—even if no doctor in the real world would ever practice the patented method.

If the Federal Circuit were to overturn the jury verdict of no inducement and rule in Corcept’s favor, it would create a perverse imbalance in label-based infringement cases: a brand can use a generic’s real-world marketing activities to show inducement (e.g., GSK). But a generic can’t use doctors’ real-world clinical practice to disprove inducement if the court can locate a patented method in its label.

As we argue in our article, basing inducement liability on the mere presence of a patented method in a generic label effectively turns drug labels into patent claims, in that a patentee can win on an inducement claim without proving the defendant’s intent to encourage someone else to commit infringement. That intentionality, however, is a hallmark of indirect liability in all areas of law, not just patent law. And, in patent law, intentionality is what distinguishes induced infringement from the strict liability of direct infringement.

It’s also worth noting that Chief Judge Moore, who was on the Corcept panel, not only joined the per curiam majority opinion in GSK, she wrote a fiery concurrence in the denial of rehearing en banc in that case. And she was on the panel in Amarin, which overturned a district court’s dismissal of a label-based infringement claim.

Whatever the outcome of the Corcept case, the Federal Circuit’s receptiveness to theories of induced infringement by label will encourage brands to keep pursuing these suits. That’s not necessarily great for patient access to generic medicines. But it’s good business for patent lawyers.

Paul Gugliuzza is Professor of Law at the University of Texas School of Law. Jake Sherkow is Professor of Law and Professor of Medicine at the University of Illinois at Urbana-Champaign.