The US Court of Appeals for the Federal Circuit denied a generic drug manufacturer’s petition for en banc review of a panel opinion finding induced infringement liability despite the manufacturer’s adherence to skinny labeling rules, and suggested that equitable estoppel was the appropriate vehicle for considering whether the branded drug manufacturer’s representations to the US Food & Drug Administration (FDA) should prevent it from recovering. GlaxoSmithKline LLC v. Teva Pharms. USA, Inc., Case Nos. 18-1976, -2023 (Fed. Cir. Feb. 11, 2022) (per curiam) (Moore, C.J., concurring) (Prost, J., dissenting) (Dyk, J., dissenting) (Reyna, J., dissenting).
GlaxoSmithKline (GSK) developed a drug called carvedilol, which it markets (with FDA approval) for three indications: hypertension, left ventricular dysfunction following myocardial infarction (post-MI LVD) and congestive heart failure (CHF). GSK indicated to the FDA that only the CHF indication was under patent. Teva developed a generic version of carvedilol. Commensurate with skinny labeling regulations, Teva carved out from its label the language that GSK indicated was related to the protected CHF indication. Nonetheless, GSK alleged that Teva’s label induced infringement of patents covering the CHF indication. After trial, the jury agreed that the remaining language on Teva’s label would encourage physicians to practice the patented method of treating CHF. Notwithstanding the jury’s verdict, the district court granted judgment as a matter of law that Teva did not induce infringement. GSK appealed, and a divided panel reinstated the verdict (GSK v. Teva). Teva sought panel rehearing, which was denied, and then sought en banc review.
Out of the nine judges who considered the petition for en banc review, six voted to deny it and three would have granted it. All nine judges expressed concern that Teva should be held liable for induced infringement notwithstanding its compliance with the skinny labeling regulations and GSK’s representation to the FDA that the carved-out language was the only language in the label that would implicate its patents on the CHF indication. The judges differed, however, as to why Teva should not be held liable.
Chief Judge Moore’s concurrence, in which Judges Newman, O’Malley, Taranto, Chen and Stoll joined, affirmed the panel majority’s opinion and endorsed its approach of considering all the evidence. According to Judge Moore, any concerns that the result was unfair to Teva, which had complied with the skinny labeling requirements, should be addressed in the district court’s resolution of the still-pending equitable estoppel defense. In Judge Moore’s view, the facts fit squarely within the doctrine of equitable estoppel: GSK’s representations to the FDA could be seen as misleading Teva into believing that GSK would not seek to enforce its patents against the skinny label (which would omit the language GSK identified as relating to the infringing use); Teva could be seen as having relied on GSK’s representations in obtaining its skinny label and bringing its generic carvedilol product to market; and Teva could be seen as having been greatly prejudiced by later being found liable for GSK’s lost profits, which were greatly in excess of Teva’s revenues (and even more so its profits) on its generic carvedilol product. Judge Moore concluded that the Federal Circuit should “allow the district court to address these fairness concerns by adjudicating that [equitable estoppel] defense on remand. If the result is unsatisfying, we will surely have a chance to review it.”
Judge Prost, who had dissented from the panel opinion, also dissented from the denial of rehearing en banc. Her opinion was joined by Judges Dyk and Reyna. In Judge Prost’s view, carving out an indication in compliance with the FDA’s skinny labeling regime manifested an intent to avoid patent infringement, and so Teva could not have had the requisite intent to induce infringement. Judge Dyk wrote an additional dissent to emphasize that Teva was required to use the skinny label by FDA regulations. Because “there is a direct conflict between the FDA-required labeling and the supposed requirements of federal patent infringement law,” and because a later specific statute controls over an earlier general statute, his view is that the Hatch-Waxman Act (which provides for skinny labeling) created an exception to the generally applicable rules of induced infringement. Judge Reyna wrote an additional dissent in which he argued that the important question of whether skinny labels can give rise to inducement liability merited en banc review under the Federal Circuit’s internal operating procedures, even if ultimately to affirm the panel opinion.