Locke Lord QuickStudy: Federal Circuit Hints at Reversed Course on “Skinny Labels”‎

Locke Lord LLP
February 12, 2021

On October 2, 2020, the Federal Circuit issued a precedential opinion vacating a district court’s judgment as a matter of law and reinstating a jury verdict finding of induced infringement of a patented use that had been carved out of a generic applicant’s label.  GlaxoSmithKline LLC v. Teva Pharms. USA, Inc., 976 F.3d 1347 (Fed. Cir. 2020).  We previously analyzed this opinion and its impact in Federal Circuit Places “Skinny Labels” in Danger.

At issue in the case is whether Teva’s marketing of carvedilol first with a skinny label, and later an amended label including the carved out indication as required by FDA, induced infringement of GSK’s reissue patent, RE40,000 (“the ’000 patent”).  Id. at 1357.  Teva initially carved out the congestive heart failure (“CHF”) indication from its proposed label.  Id. at 1361.  Years later, in 2011, Teva revised its label to include the CHF indication at FDA’s direction.  Id. at 1363.

On appeal to the Federal Circuit, the majority, citing only to circumstantial evidence (press releases and product catalogs published by Teva before the issuance of the ’000 patent which remained on Teva’s website throughout the life of the ’000 patent), found the evidence substantial enough to support the jury’s finding of induced infringement during the skinny label period.  Id. at 1351, 1368.  The majority, citing to precedent not directed to skinny labels, further held that “the ‘content’ of Teva’s skinny label alone was sufficient to prove induced infringement.”  Id. at 1355, 1358.  Chief Judge Prost penned a lengthy dissent strenuously disagreeing with the majority.

On December 2, 2020, Teva petitioned for en banc rehearing.  In its petition, Teva argued that the panel’s multiple departures from longstanding precedent threaten any product sold with a skinny label and that the potential harm to competition makes the decision exceptionally important.  Specifically, Teva argued:  (1) the panel’s decision nullifies the carve-out statute; (2) the panel’s decision allows juries to find inducement from conduct predating the patent; and (3) the panel’s decision hollows out inducement doctrine.  In its opposition to Teva’s petition, GSK argued that the majority applied settled law to properly conclude that substantial evidence supports the jury’s verdict and that the panel’s decision does not spell the end of section viii carve-outs.  The decision was so surprising that it drew the attention of former Congressman Henry A. Waxman, a co-sponsor of the Hatch-Waxman Act.  In an amicus brief in support of Teva’s petition, Congressman Waxman argued that Congress considered the scenario presented in this case and passed comprehensive legislation intended to account for it.  Congressman Waxman further contended that the majority’s decision “threatens to decimate the compromise at the heart of the Hatch-Waxman Act, which in turns threatens to undermine the generic pharmaceutical industry.”

On February 9, 2021, the Federal Circuit issued an order vacating its October 2, 2020 opinion, stating that the panel will rehear the issue of “whether there is substantial evidence to support the jury’s verdict of induced infringement during the time period from January 8, 2008 through April 30, 2011.”  This result is somewhat at odds with Teva’s petition, which requested en banc review.  Oral arguments are set for February 23, 2021.

Although this is a potentially positive development for generic applicants, those choosing to rely on section viii carve-outs as a means of avoiding patented indications or uses should still consider carefully whether extraneous information, such as press releases or product catalogs, could still put them at risk for an infringement claim.