GlaxoSmithKline LLC v. Teva Pharms. USA, Inc.

Case Name: GlaxoSmithKline LLC v. Teva Pharms. USA, Inc., 25 F.4th 949 (Fed. Cir. 2022) (Circuit Judges Moore, Newman, Dyk, Prost, O’Malley, Reyna, Taranto, Chen, Hughes, and Stoll presiding; Moore, Newman, O’Malley, Taranto, Chen, and Stoll concur in the denial of the petition for rehearing en banc; Prost, Dyk, and Reyna dissent from the denial of the petition for rehearing en banc) (Appeal from D. Del., Stark, J.) 

Drug Product and Patent(s)-in-Suit: Coreg® (carvedilol); U.S. Patent No. RE40,000 (“the ’000 patent”)

Nature of Case and Issue(s) Presented: GSK sued Teva in the District of Delaware for infringement of GSK’s ’000 patent. After the jury’s verdict of infringement and their award of damages, the district court granted Teva’s renewed motion for judgment as a matter of law of non-infringement. On appeal, the Federal Circuit vacated the JMOL, reinstated the jury’s verdict and damages award, and remanded for appropriate further proceedings.

Teva filed a petition for rehearing. The petition was first referred to the panel that heard the appeal, which denied panel rehearing. The petition was then referred to all the circuit judges. After polling, Teva’s petition for rehearing en banc was denied.

Why GSK Prevailed: Judge Moore’s concurring opinion. The parties briefed and argued the question of whether, considering all the facts, substantial evidence supported the jury’s verdict that Teva actively encouraged infringement. The Federal Circuit was presented with a narrow and fact-dependent issue, and held in a narrow and fact-dependent opinion, that sufficient evidence of active encouragement supported the jury’s verdict at the district court. Teva never disputed (at the Federal Circuit) the jury’s finding that Teva knew that the uses it encouraged infringed GSK’s patent.

Teva cited and discussed the FDA’s regulatory framework in that context, but only as background and never to support an argument that there was conflict between the FDA regulatory framework and patent law that should be resolved by the Federal Circuit.

Ultimately, it was a sense of fairness that drove the dissenters to advance their positions. These positions fit squarely within the affirmative defense of equitable estoppel, which Teva pled and which the district court still had to decide on remand. The Federal Circuit should not grant Teva’s en banc petition to consider altering settled inducement-law standards based on fairness concerns that were central to a live equitable-estoppel defense. Instead, the Federal Circuit should “allow the district court to address these fairness concerns by adjudicating that defense on remand.”

Judge Prost’s Dissent. Congress specifically enacted the skinny-label provisions as a way for generics to avoid inducement liability. When a generic relied on a skinny-label defense, the FDA-required label could not be evidence of intent. Even if remaining label language might be pieced together to meet the elements of a patent claim, that fact was an unreliable gauge of a generic’s “intent” to infringe, because pharmaceutical labeling is so highly regulated. This is especially so given that the brand’s patent coverage and enforcement decisions dictate what label language is omitted from the skinny label. The panel majority’s decision “gives brands a powerful tactic: neglect to identify language as patent-covered, then sue a generic for including that very language.” This creates extraordinary risk for generics attempting to enter the market. And “[u]ltimately, if playing by the skinny-label rules doesn’t give generics some security from label-based liability, generics simply won’t play.”

Judge Prost specifically addressed the concurrence’s position that Teva’s arguments about conflict between the FDA regulatory framework and patent law were new. Judge Prost stated that t he original panel majority and dissent agreed on one thing: the undisputed facts of Teva’s skinny-label compliance at the FDA were relevant to inducement. The opinions’ disagreement concerned the legal significance of these facts. The majority dismissed the skinny-label compliance as mere “contrary or equivocal evidence” over which the jury could have still found that the skinny label showed inducement. Judge Prost’s dissent specifically advocated that these facts prevented the skinny label from showing inducement. In other words, the question of whether complying with a regulation could be used to prove inducement liability was made to the panel, the panel addressed it on its merits, and the majority resolved it against Teva.

What was new was the concurrence’s justification for the panel majority’s decision. In particular, the concurrence offered a “hodgepodge of forfeiture-like rationales” to suggest that Teva’s conflict argument was not made specifically enough. In Judge Prost’s opinion, if the concurrence truly believed that the conflict argument was somehow new, then the panel majority should have revised its opinion to say as much, and leave the conflict argument open for a future generic to make.

Finally, as to the concurrence’s position that Teva’s live estoppel defense was a cure to fairness concerns, Judge Prost stated that equitable estoppel was a general defense for which the accused infringer bore the burden, and whose application rested with the trial court’s discretion. In Judge Prost’s reading, there was no indication that Congress, when enacting the statutory skinny-label system, intended to “stake the efficacy of that system on a generic’s case-by-case equity showing.” Judge Prost’s concerns did not go merely to fairness, but “to what inducement law permits in view of the Hatch-Waxman Act.”

Judge Dyk’s Dissent. Judge Dyk wrote to elaborate on “why there cannot be infringement liability for using a label required by the FDA during the partial label period at issue in this case.” Specifically, Judge Dyk noted that GSK’s brand label contained three indications: congestive heart failure, left ventricular dysfunction following myocardial infarction, and hypertension. GSK submitted patent information to the FDA identifying congestive heart failure as the only method of use claimed by its patents. Then, the FDA provided Teva with a redline for its skinny label, carving out the patented indication for congestive heart failure from GSK’s branded label and keeping Teva’s remaining indicated uses in the label. Teva amended the label for its ANDA submission, using the text provided by the FDA. Teva was obliged to use the label at issue.

In similar circumstances where states have sought to impose tort liability on generic drug manufacturers for using the label required under federal law, the Supreme Court has made clear that federal law preempts tort liability on the part of the manufacturers. Here, there is a direct conflict between the FDA-required labelling and the supposed requirements of federal patent-infringement law. Canons of statutory construction required that the more specific and later-enacted provisions of the Hatch-Waxman Act override the general infringement provisions of the Patent Act. Thus, “[i]t is hard to see how Congress could have intended that a mandated label could be used as evidence of infringement.”

Judge Reyna’s Dissent. The Federal Circuit’s Internal Operating Procedure No. 13(2)(b) provided that en banc consideration was warranted for issues of “exceptional importance.” If left untouched, the majority’s opinion may have reasonably been read to mean that companies like Teva could be held liable for induced infringement despite demonstrated compliance with statutory and regulatory requirements. More, the majority opinion could be read to support such a finding of induced infringement where evidence as to intent is scant at best. Combined, these two factors “portend instability in the general ANDA process and, specifically, the skinny label process,” an area of patent law where the Federal Circuit should “affirmatively seek to maintain certainty and predictability as best as possible.”