On Oct 02, 2020, Federal Circuit vacated district court’s grant of JMOL and reinstated the jury verdicts of infringement and damages.
Background of the case:
Glaxo owns US 5,760,069 patent which claims treatment with a combination of carvedilol and one or more of an angiotensin-converting enzyme (“ACE”) inhibitor, a diuretic, and digoxin. GSK on Nov. 25, 2003 filed reissue application for ’069 patent, which ultimately issued as US RE40,000 on Jan. 8, 2008. This patent expired on June 7, 2015. Glaxo own another patent, US 4,503,067 which claims carvedilol and related compounds. This patent expired on March 5, 2007. Both these patents were listed in Orange Book (OB) for drug, Coreg®. USFDA initially approved carvedilol in Sep 1995. In May 1997, the FDA approved carvedilol for the additional treatment of congestive heart failure. In March 2002, Teva filed ANDA with PIII certification to US’067 patent & P-IV certification to US’069 patent. Glaxo did not sue Teva based on any of OB listed patents. Teva received FDA “tentative approval” for its ANDA in 2004. Teva, on June 9, 2004, issued a press release to this effect mentioning among other things that its product is “AB rated” to Coreg®. On expiration of the ’067 patent in 2007, Teva launched its generic carvedilol tablet. Teva’s label dated “8/2007” mentioned 2 indications:
1. Left Ventricular Dysfunction following Myocardial Infarction(MILVD)…
Before this final approval, Teva carved out third indication ie. Congestive Heart Failure. Thus, in September 2007, when the FDA finally approved Teva’s ANDA as an AB-rated version of GSK’s Coreg®, Teva’s skinny label was only indicated for hypertension and post-MI LVD—neither of which was covered by any patent.
Both Teva and the FDA announced the approval of generic carvedilol with a press release. Teva also announced that it would immediately begin shipping its product but did not suggest that its product should be used to treat CHF. In 2011 the FDA required Teva to amend its carvedilol label to include CHF indication. Teva, thus, amended its label to include the indication for treatment of heart failure, as required by the FDA. On July 3, 2014, GSK filed suit for induced infringement of the RE’000 patent. Jury trial was initiated. Teva presented the defenses of patent invalidity and non-infringement. Teva argued that since it had omitted (“carved out”) CHF indication from its initial 2007 label till Apr. 2011 (Skinny period) Teva could not be found to induce prescribing physicians to infringe the ’000 patent. Teva also argued that it could not be found to induce prescribing physicians to infringe the ’000 patent between May 2011 (when it amended label to include CHF) to June 2015 when patent expired (full label period).
The jury found that Teva induced infringement of claims 1–3 during the period starting January 8, 2008 to April 30, 2011 (Skinny period); and that Teva induced infringement of claims 1–3 and 6–9 during the amended label period starting May 1, 2011 and ending June 7, 2015 (full label period). The jury assessed damages based on a combination of lost profits and royalty, and found that the infringement was willful. The district court granted Teva’s motion for JMOL (judgment as matter of law), stating that the verdict of induced infringement was not supported by substantial evidence because “GSK failed to prove by a preponderance of the evidence that ‘Teva’s alleged inducement. The district court explained that: “Without proof of causation, which is an essential element of GSK’s action, a finding of inducement cannot stand.” The court stated that “even in Sep. 2007, when generic companies (including Teva) began selling carvedilol, doctors relied on guidelines and research, as well as their own experience, in addition to GSK marketing.” Therefore, a reasonable fact-finder could only have found that these alternative, non-Teva factors were what caused the doctors to prescribe generic carvedilol for an infringing use & not Teva. GSK appealed.
Federal Circuit analysis:
Glaxo argued that Teva’s marketing of carvedilol with knowledge and intent of its infringing use, and promotion of its generic product as the same as Coreg®, meet the legal requirements of active inducement of infringement. Teva responds that the district court correctly ruled that Teva could not be liable for inducing infringement, because cardiologists already knew of carvedilol and its uses, and Teva did not directly “cause” them to infringe. Federal Circuit said that there was substantial evidence to support the jury’s verdict of inducement to infringe the ’000 patent. The jury received evidence that Teva’s promotional materials referred to Teva’s carvedilol tablets as “AB rated” equivalents of the Coreg® tablets. This means Teva’s product can be substituted for Coreg® & since, Coreg is approved for CHF indication, Teva’s label would induce physician to prescribe for CHF indication. GSK’s witness, Dr. McCullough, testified that doctors are “completely reliant” on information provided by the generic producers, and that doctors receive Teva’s product catalogs, visit its website, and read its product guides. Dr. McCullough told the jury that the press release of Teva “indicates that we should be able to prescribe generic carvedilol for heart failure”. Dr. McCullough testified that Teva’s Spring 2008 catalog lists Teva’s carvedilol tablets next to Coreg® tablets and uses the phrase “AB rating,” and that this would lead a doctor to believe that “they’re therapeutically interchangeable.”
There was ample record evidence of promotional materials, press releases, product catalogs, the FDA labels, and testimony of witnesses from both sides, to support the jury verdict of inducement to infringe the designated claims for the period of the ’000 reissue patent. The district court, thus, applied an incorrect legal standard for granting JMOL to Teva. Federal Circuit, therefore, reversed the grant of JMOL & remanded for entry of judgment on the verdict.
Dissent form Chief Judge Prost:
Judge Prost said that this case is about whether Teva induced infringement of GSK’s reissue patent, RE40,000, by marketing its generic carvedilol of for unpatented uses through a “skinny label” & “full label” period.
With respect to skinny label, Judge Prost said that Congress provided for skinny labels for exactly these circumstances, such that the lone method covered in the ’000 patent would not foreclose access to more affordable carvedilol. Here, the Majority undermines Congress’s provision for skinny labels by substantially nullifying section viii. Teva in this acted exactly as Congress intended. Teva waited until GSK’s patent covering the carvedilol compound expired to launch its product covering two unpatented indications—hypertension and post-MI LVD. So, when GSK’s ’000 reissue patent later issued—reciting a narrow method of treating a third indication, CHF—Teva’s skinny label did not even suggest using its product according to the patented method. In marketing its generic carvedilol, Teva never stated that it was approved, or could be used, to treat CHF. Moreover, the parties agreed that when Teva launched, its skinny label did not instruct doctors to prescribe generic carvedilol to treat CHF. Also, GSK failed to present evidence showing that doctors relied on the label in making prescribing decisions. District court was right when it granted JMOL in favour of Teva a because “neither sufficient nor substantial evidence supports the jury’s finding of inducement.”
With respect to full label, Judge Prost said that at the FDA’s direction, Teva amended its label years later to include the patented method, but there was still no inducement via the full label. Nothing changed in the market, and doctors’ prescribing decisions were not affected. GSK failed to prove causation during the full label period. No evidence suggests that any affirmative act by Teva actually caused doctors to directly infringe the patented method. Specifically, no evidence suggests that doctors relied on Teva’s full label in making their prescribing decisions. The record also demonstrated that many generic carvedilol sales occurred without the doctors’ knowledge at all. In sum, to the extent the doctors prescribed generic carvedilol to treat patients according to the claimed method, no evidence shows that they did so because of any action taken by Teva. The district court’s JMOL of noninfringement during the full label period should therefore be affirmed.
Judge Post further said…”Teva did everything right—using a skinny label, taking care not to encourage infringing uses—and yet, given today’s result, it was ultimately more costly for Teva to sell an unpatented drug for unpatented uses than it would have been to stay out of the market altogether: Teva only sold $74 million worth of carvedilol during the allegedly infringing period (mostly for unpatented uses) but now owes $234 million in damages for sales made for a single indication. This irony reflects the fact that Teva’s product was dramatically less expensive—costing less than 4 cents per pill as compared with Coreg®’s price of at least $1.50 per pill. Teva should not be liable for inducement”.