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Too Good to Be True? Federal Circuit Demands Evidence of Reliance on Favorable Ruling, Stipulation

by | Nov 4, 2020 |

The US Court of Appeals for the Federal Circuit held that notwithstanding a stipulation on claim construction, a party may still induce infringement absent proof that it actually relied on the stipulation, and that mere inaction, absent an affirmative act to encourage infringement, cannot be the basis for a claim of inducement. The Federal Circuit also affirmed the district court’s reduction of the jury’s damages award to $0 despite a finding of direct infringement because the plaintiff failed to prove damages. TecSec, Inc. v. Adobe Inc., Case Nos. 19-2192, -2258 (Fed. Cir. Oct. 23, 2020) (Taranto, J.).

TecSec owns several patents on systems and methods for multi-level security for network-distributed files. TecSec sued Adobe (among other defendants) in this now-10-year-old-case, which the Federal Circuit has considered several times. As relevant here, the district court entered a claim construction in 2011 that led to a stipulation of non-infringement, and the Federal Circuit reversed that claim construction in 2013. On remand, the district court barred TecSec from introducing evidence of inducement in the 2011–2013 period on the grounds that it was reasonable for Adobe to have relied on the district court’s ruling and the stipulation. On the new claim construction, Adobe stipulated to one act of direct infringement. Adobe also moved for summary judgment of patent ineligibility, which the district court denied, stating that its rationale supported judgment for TecSec that the patents claimed eligible subject matter. At trial, the jury found that the claims were valid and that Adobe directly infringed but did not induce infringement. The jury awarded TecSec $1.75 million in damages. On Adobe’s post-trial motion, the district court reduced the damages award to $0 because TecSec had not proved inducement and had proved no damages associated with the single act of direct infringement. Both parties appealed.

Inducement

The Federal Circuit reversed the district court’s decision on Adobe’s motion in limine barring inducement evidence for the 2011–2013 period. The district court’s primary rationale for granting the motion had been the reasonableness of Adobe’s reliance on the claim construction order and stipulation of non-infringement. However, the Federal Circuit reasoned that the intent prong of inducement is a subjective inquiry, and that inducement could still be found upon a showing that Adobe subjectively believed that the claim construction order was wrong and would subsequently be reversed.

Jury Instructions

The Federal Circuit next addressed two challenges by TecSec to jury instructions. The first instruction was predicated on three facts: (i) that Adobe had admitted that a certain sequence of steps constituted direct infringement, (ii) that Adobe had performed the steps on at least one occasion, and (iii) that “the parties agree that the one time for which Adobe had admitted infringement . . . occurred before TecSec filed its lawsuit.” The Court found that this instruction was factually accurate and therefore not erroneous. The second instruction explained that inducement required “an affirmative act to encourage infringement,” and that “[e]vidence of mere inaction, or a failure to stop or prevent infringement, does not [...]

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No Stay, But Please Fix

by | Nov 4, 2020 |

The US Court of Appeals for the Federal Circuit denied a motion to stay issuance of a mandate while a petition for certiorari regarding patentability under § 101 was pending before the Supreme Court of the United States, finding no irreparable harm if it did not do so. American Axle & Manufacturing, Inc. v. Neapco Holdings LLC, Case No. 18-1763 D.I. 139 (Fed. Cir. Oct. 23, 2020) (Dyk, J.) (Moore, J., concurring). In her concurrence, Judge Moore encouraged the Supreme Court to grant certiorari in order to clarify the scope of § 101.

This decision was the fourth opinion issued by the Federal Circuit in this case. In the Court’s first opinion, a divided panel affirmed that method claims for a mechanical invention were invalid under 35 USC § 101. American Axle & Manufacturing I. The patent owner, American Axle, filed a petition for rehearing and a petition for rehearing en banc. American Axle & Manufacturing II. Several amicus briefs were filed, including one by former Federal Circuit Chief Judge Paul R. Michel. In view of these petitions and amicus briefs, the original panel modified and re-issued its opinion to affirm that certain claims were invalid and to reverse its holding that one claim was invalid. Subsequently, the full Federal Circuit denied the petition for a rehearing en banc, polling 6–6 and demonstrating the Court’s division on the application and scope of § 101.

American Axle filed a petition for certiorari at the Supreme Court and sought a stay from the Federal Circuit of the issuance of the mandate. The Federal Circuit denied a stay, citing Rule 41 of the Federal Rules of Appellate Procedure, which “provides that a motion for stay of the mandate ‘must show that the petition would present a substantial question and that there is good cause for a stay.’” Fed. R. App. P. 41(d)(1). The Court explained that a three-prong test determines whether a stay in a patent case is appropriate under this rule. The applicant must show (1) a reasonable probability that four justices will grant certiorari, (2) a fair prospect that the Supreme Court will reverse judgment, and (3) a likelihood that irreparable harm will result if the stay is denied.

Relying exclusively on irreparable harm, the Federal Circuit denied a stay. With respect to the invalid patent claims, the Court explained that a stay was not warranted because no further action was required by the district court. The Court dismissed American Axle’s argument that it would have to recall its mandate if reversed by the Supreme Court, explaining that this occurrence is common for every case that is reversed. With respect to the valid patent claim, the Court explained that the burden of litigation and litigation expenses is insufficient to show irreparable harm. Thus, the Court dismissed American Axle’s motion to stay the mandate.

Judge Moore filed a concurring opinion asking the Supreme Court to grant certiorari. Moore explained that the Supreme Court often grants cases where there is a [...]

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First-to-File Rule Must Be Followed Unless Compelling Circumstances Justify Exception

by | Nov 4, 2020 |

Vacating and remanding a district court’s decision not to transfer a case, the US Court of Appeals for the Federal Circuit granted a petition for a writ of mandamus because the district court did not consider whether the first-to-file rule favored keeping the case in the second-filed court. In re: Nitro, Case No. 20-142 (Fed. Cir. Oct. 28, 2020) (Reyna, J.).

In 2018, Cameron International filed a suit against Nitro in the Southern District of Texas alleging that Nitro’s fracturing-fluid delivery systems infringed three of Cameron’s patents. In February 2020, Cameron filed a second suit against Nitro in the Western District of Texas, alleging that the same accused products infringed two of Cameron’s other related patents. Relying on the first-to-file rule, which generally dictates that the court in which an action is first filed is the appropriate court to determine whether subsequently filed cases involving substantially similar issues should proceed, Nitro moved the Western District of Texas to decline jurisdiction or transfer the action to the Southern District of Texas.

The district court rejected the application of the first-to-file rule, but not because the two cases lacked substantial overlap. Instead, the district court relied on US Court of Appeals for the Fifth Circuit precedent stating that even where there is such overlap, the court still must determine whether there are “sufficiently ‘compelling circumstances’ to avoid the rule’s application.” The district court determined that it was appropriate to use a balance of the traditional transfer factors to make that determination, concluding that when a balance of transfer factors “does not weigh in favor of transfer[,] . . . compelling circumstances exist in order to avoid application of the first-to-file rule.” Applying this standard, the district court denied Nitro’s motion. The district court found that although two of the factors (relative ease of access to sources of proof, and local interest in having localized interests decided at home) favored transfer, the administrative difficulties flowing from court congestion, co-pending suits against another defendant involving the same patents, and the district court’s ability to more quickly schedule a trial weighed against transfer. Nitro filed for mandamus.

Proceeding from the district court’s premise that transfer pursuant to the first-to-file rule would be proper absent the existence of compelling circumstances, and that a balance of the transfer factors can support such an exception, the Federal Circuit explained that consideration of Nitro’s petition turned on the correctness of the district court’s application of those factors. The Court explained that the district court had it backwards by concluding that the first-to-file rule is only applicable when the balance of factors favors the first-filed court. Instead, the proper inquiry is that unless the balance of transfer factors favors keeping the case in the second-filed court, there are no compelling circumstances to keep the case in the second-filed court.

The Federal Circuit found that the district court did not resolve the critical issue of whether a balance of the factors favored the second-filed court. The Federal Circuit explained that although [...]

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Size Matters in Obviousness Analysis

by | Oct 29, 2020 |

The US Court of Appeals for the Federal Circuit affirmed in part and reversed in part two Patent Trial and Appeal Board (Board) decisions, finding that the Board erred in its construction of certain claim terms relating to an artificial heart valve that does not require removal of the damaged native heart valve. St. Jude Medical, LLC v. Snyders Heart Valve LLC, Case Nos. 19-2108, -2109, -2140 (Fed. Cir. Oct. 15, 2020) (Taranto, J.).

St. Jude filed two petitions for inter partes review (IPR) of a patent for an artificial heart valve and a system for inserting the valve. Both petitions were instituted by the Board and resulted in final written decisions. In the first decision, the Board found that St. Jude failed to establish unpatentability of the challenged claims, rejecting St. Jude’s contention that all challenged claims were anticipated by and obvious over the Leonhardt prior art reference. In the second decision, the Board found that certain claims were anticipated by the Bessler prior art reference, but rejected St. Jude’s contentions as to all other claims. St. Jude appealed, arguing that the Board erred in the first decision by erroneously construing the term “band” and erred in the second decision by finding that St. Jude failed to prove that a skilled artisan would have made a particular combination of Bessler and the Johnson prior art. Snyders cross-appealed in the second decision as to the claims the Board found were anticipated by Bessler.

The Federal Circuit affirmed the Board’s conclusions in the first decision, finding that not only was the Board’s construction of the term “band” proper, but that it was actually broader than St. Jude’s proposed construction—and that St. Jude expressly accepted the Board’s construction. The Board construed the heart valve band to mean “a structure generally in the shape of a closed strip or ring” (replacing St. Jude’s “circular” with “closed”). In the prior art, Leonhardt discloses a graft material which extends the length of the entire structure. The Federal Circuit agreed with the Board’s finding that Leonhardt’s graft material was “like a sleeve” as opposed to “a closed strip or ring.” St. Jude argued that an ordinary skilled artisan’s understanding of the term “band” does not include a length restriction, that a Leonhardt’s material was just a long band, and that the Board effectively changed its construction of the term. The Federal Circuit, however, was not persuaded by St. Jude’s unlimited-length definition of “band,” instead turning to dictionary definitions that included terms like “thin” and “narrow,” and looking to the patent specification that did not explicitly disclaim any length restrictions. The Court ultimately rejected St. Jude’s arguments, finding that St. Jude should have proposed a claim construction that precluded any limitations on length if it wished to argue such. The Federal Circuit affirmed the Board’s findings as to first decision.

The Federal Circuit next addressed Snyder’s cross-appeal. Snyder disputed the board’s construction of the “size[] and shape[]” of a frame that the patent requires must be inserted [...]

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PTO Seeks Comments on Proposed Rulemaking for Denying Patent Reviews

by | Oct 29, 2020 | ,

The US Patent and Trademark Office (PTO) requested public comments on considerations for instituting trials under the Leahy-Smith America Invents Act (AIA). Comments are due by November 19, 2020.

Patent practitioners have grown accustomed to reviewing the PTO Patent Trial and Appeal Board (Board) administrative guide, precedential or informative opinions, and other published filings and decisions to discern best practices for filing petitions for and defending against inter partes review, post-grant review, covered business method and derivation proceedings before the Board. For example, the latest Board Consolidated Trial Practice Guide (Nov. 2019) (CTPG) is available here. The PTO is considering codifying or modifying its current policies and practices through formal rulemaking and wishes to gather public comments on its current approach and other approaches suggested by stakeholders.

PTO policies and Board decisions such as General Plastic, Valve Corp. I, Valve Corp. II, NHK Spring and Fintiv set forth factors for analyzing whether to institute an AIA proceeding (and particularly a follow-on or serial petition) or issue a discretionary denial due to the timeline for parallel district court proceedings. Many of these policies and cases are also discussed in the CTPG. The PTO already has received input from stakeholders on these policies that expand on the PTO director’s discretionary authority to institute an AIA trial. Most stakeholder comments suggested that the case-specific analysis outlined in precedential opinions and the CTPG achieves the appropriate balance and reduces gamesmanship—for example, by ensuring that AIA proceedings do not create excessive costs and uncertainty for the patent owner or the system, while allowing meritorious challenges to patents to be heard. However, some stakeholders have proposed that the PTO adopt brightline rules, regardless of the case-specific circumstances, to:

  • Use its discretion to preclude claims from being subject to more than one AIA proceeding
  • Permit more than one AIA proceeding only if the follow-on petitioner is unrelated to the prior petitioner
  • Place no limits on the number of petitions that can be filed or the number of AIA trials that can be instituted against the claims of a patent, so long as the petition complies with statutory timing requirements and the institution threshold of showing that at least one claim of the patent is unpatentable
  • Preclude institution of an AIA trial against challenged claims if the patent owner opposes institution and a related district court or US International Trade Commission (ITC) action (in which any of the challenged claims are or have been asserted against the petitioner, the petitioner’s real-party-in-interest or a privy of the petitioner) is unlikely to be stayed
  • Eliminate any consideration of the status of any district court or ITC actions involving the challenged patent, so long as the petition complies with statutory timing requirements and the institution threshold.

These contrasting views prompted the PTO to issue a request for comments on the factors that should be considered as part of a balanced assessment of the relevant circumstances when exercising its discretion to institute an AIA trial. The PTO [...]

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Only Human: Broadest Reasonable Interpretation Standard Applies to Intentionally Expired Patent

by | Oct 22, 2020 | ,

Affirming an invalidity finding by the Patent and Trial Appeal Board (PTAB), the US Court of Appeals for the Federal Circuit found that the claims of the now-expired patent should be construed under the broadest reasonable interpretation (BRI) standard, and not under the Phillips standard, because the patent owner intentionally gave up the remainder of the patent term only after the appeal was fully briefed. Immunex Corp. v. Sanofi-Aventis U.S. LLC, Case Nos. 19-1749, -1777 (Fed. Cir. Oct. 13, 2020) (Prost, C.J.).

Immunex owns a patent directed to human antibodies that inhabit certain receptors to treat inflammatory diseases such as arthritis. After being sued for infringement, Sanofi and Regeneron (collectively, Sanofi) requested inter partes review (IPR) of the patent, which the PTAB instituted. Based on the IPR filing date and because the patent was unexpired during the pendency of the IPR proceeding, the PTAB used the BRI standard to construe various claim terms. Had the patent been expired, the PTAB would have used the more stringent Phillips standard to construe the claims. Ultimately, the PTAB found all of the challenged claims unpatentable. Immunex appealed.

After appellate briefing was complete, Immunex filed a terminal disclaimer of its patent. The US Patent and Trademark Office accepted the terminal disclaimer, and as a result the patent term expired approximately two months before oral argument. Immunex then filed a citation of supplemental authority informing the Federal Circuit of the terminal disclaimer and asking the Court to change the applicable claim construction standard from BRI to Phillips.

The Federal Circuit found that the application of the BRI standard to Immunex’s patent was appropriate. Although the PTAB currently applies the Phillips claim construction standard in all newly filed IPRs, at the time that Sanofi filed its IPRs, the PTAB applied the Phillips standard only to expired patents. For unexpired patents, it applied the BRI standard. The Court noted that the use of the Phillips standard in cases where the patent expired during the appellate process should not be an absolute, particularly when the patent term expired at an unexpected early date, such as through the filing of a terminal disclaimer.

The Federal Circuit further affirmed the PTAB’s claim construction under the BRI standard and the invalidity finding predicated on that claim construction. The issue on appeal was whether a “human antibody” must be entirely human (as asserted by Immunex) or whether it may also be “partially human,” including “humanized” (as asserted by Sanofi and construed by the PTAB). The Court agreed with the PTAB and found that the patent’s specification supported the conclusion that the BRI of “human antibody” “includes both fully human and partially human antibodies.” The Court also found that “human antibodies” in the context of the patent-in-suit is a broad category that encompasses both partially and completely human antibodies. The Court therefore affirmed the PTAB’s finding.

The Federal Circuit also commented on the PTAB’s departure from an earlier claim construction ruling by a district court in which “human” was construed to mean “fully [...]

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Inventor Uses Abstention to Avoid Getting “Screwed”

by | Oct 22, 2020 |

The US Court of Appeals for the Federal Circuit affirmed the dismissal of a declaratory judgment complaint related to patent validity under the federal abstention doctrine because the issue had been decided in state court. Warsaw Orthopedic, Medtronic Inc., et al. v. Rick C. Sasso, M.D., Case No. 19-1583 (Fed. Cir. Oct. 14, 2020) (Newman, J.).

Warsaw Orthopedic and Medtronic (collectively, Medtronic) filed a declaratory judgment complaint against Sasso, a surgeon and inventor. The district court dismissed the complaint, without prejudice, under the doctrine of federal court “abstention” because of a concurrent lawsuit in state court between the same parties and concerning the same dispute. As described by the respective plaintiffs, the state court case is “a contract case for payment of patent rights,” and the federal case is “a patent case in which payment requires valid patents.”

In 1999, Medtronic and Sasso entered into an agreement that provided for quarterly royalty payments based on Medtronic’s sales of medical devices using Sasso’s inventions related to screw delivery systems and methods. The agreement does not terminate until “the last to expire of the patents included in Intellectual Property Rights, or if no patent application(s) issue into a patent having valid claim coverage of the Medical Device, then seven (7) years from the Date of First Sale of the Medical Device.” Two patents issued for the invention at issue, and Medtronic made royalty payments from 2002 to 2018.

In 2014, Sasso filed a lawsuit in Indiana state court for breach of contract and damages because Medtronic was not paying royalties on all relevant devices. Medtronic argued that Sasso was seeking royalties for products not covered by a valid patent claim. The district court granted Sasso’s motion for summary judgment on the term of the agreement and on patent validity as a defense to payment, stating that the monies to be paid under the agreement depend on the issuance of the patents and their expiration—not their validity. At trial, the jury found that Medtronic had breached the agreement and awarded damages. Medtronic filed an appeal to the Indiana Court of Appeals.

Medtronic also filed a declaratory judgment action in Indiana district court. Medtronic alleged that no valid claim of the patents covered the Medtronic products for which Sasso sought royalties. The district court dismissed the action without prejudice, stating that the state court had already entered judgment in favor of Sasso and no order from the district court could undo that judgment—only the Indiana Court of Appeals and the Indiana Supreme Court have authority to review that judgment.

Medtronic appealed to the Federal Circuit, asserting that the district court’s “abstention” was an abuse of discretion. Medtronic argued that because the agreement required valid claim coverage, and patent validity is within exclusive federal jurisdiction, the district court had an obligation to receive and resolve the dispute.

The Federal Circuit found that the district court had reasonably relied on the Supreme Court’s Wilton/Brillhart abstention doctrine (1995), which provides support for district courts to dismiss or [...]

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Define Frustration: Appealing from Decision in Suit Against Co-Owner’s Wholly Owned Subsidiary with Major Issues Still Undecided

by | Oct 22, 2020 |

The US Court of Appeals for the Federal Circuit vacated a grant of summary judgment of non-infringement and remanded for resolution of numerous factual issues in a case addressing “extremely frustrating” issues involving the litigant’s failure to differentiate statutory prerequisites for bringing suit under 35 USC §262 and Article III standing, waiver of a co-owner’s right to refuse to join a patent enforcement action, and the existence of an express or implied license. AntennaSys, Inc. v. AQYR Techs., Inc., Case No. 19-2244 (Fed. Cir. Oct. 7, 2020) (O’Malley, J.).

AntennaSys and Windmill International are co-owners of the patent in suit. AntennaSys and Windmill entered into a license agreement pursuant to which Windmill acquired an exclusive license to AntennaSys’s one-half interest in the patent in two separate markets. In exchange, AntennaSys was entitled to a royalty of 3% of gross sales. Windmill was also required to create a wholly owned LLC, GBS Positioner, which would own both the license interest and Windmill’s ownership interest in the patent. In the event that Windmill failed to meet the minimum sales targets, the exclusive license became non-exclusive and either party was granted the right to commence a lawsuit against “third party” infringers.

Windmill did not meet its sales targets. AntennaSys subsequently brought suit against AQYR Technologies, a wholly owned subsidiary of Windmill, for patent infringement and several state-law claims. The suit named Windmill as a co-defendant. Following claim construction, AntennaSys conceded that it could not prevail on its patent infringement claim under the court’s construction of one of the claim terms. In an apparent attempt to moot the affirmative defenses of invalidity and unenforceability, AntennaSys sought summary judgment of non-infringement, which the district court granted. Additionally, after a hearing where AntennaSys admitted that its state law claims were dependent on the success of its patent infringement claim, the court entered judgment in favor of defendants on the state law claims. AntennaSys appealed.

AntennaSys challenged the district court’s claim construction. Windmill and AQYR countered that the Federal Circuit need not reach the merits because AntennaSys “lacks standing” to bring an infringement action in federal court absent joining co-owner Windmill as a co-plaintiff.

The Federal Circuit agreed that the need to join Windmill as a co-plaintiff was a threshold question, but stressed that the issue did not affect AntennaSys’s Article III standing. Instead the issue stemmed from AntennaSys’s ability to satisfy the statutory prerequisites for bringing an infringement action. Under 35 USC § 262, each joint owner of a patent may make, use, offer to sell, or sell the patented invention without the consent of, and without accounting to, the other owners. Furthermore, in order to bring an action for infringement, all co-owners must be joined as plaintiffs. The Court acknowledged two exceptions to this rule: (1) when any patent owner has granted an exclusive license, and (2) when a co-owner waives its right to refuse to join an infringement action.

As the license in this case had morphed into non-exclusive status, the question became whether [...]

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Significant Third-Party Discovery Too Complex for ITC Early Disposition Program

by and | Oct 22, 2020 | ,

The US International Trade Commission (ITC) denied a proposed respondent’s request to use the early disposition program to determine whether a complainant met the domestic industry requirement in a Section 337 investigation. The ITC concluded that the issues proposed for resolution were too complex to be decided within 100 days of institution because significant third-party discovery was likely necessary. Certain Video Processing Devices, Components Thereof, and Digital Smart Televisions Containing Same, Comm’n Order, USITC Inv. No. 337-TA-1222 (Oct. 14, 2020).

The early disposition program aims to limit unnecessary litigation and save time and resources for litigants and the ITC by resolving obvious and fatal deficiencies in a complainant’s case before the parties embark on a full Section 337 investigation. The program provides for an initial determination by the presiding administrative law judge within 100 days of institution on potentially dispositive issues. The administrative law judge may hold expedited hearings and stay discovery of any other issues during the pendency of the 100-day proceeding. The ITC has indicated that appropriate issues for resolution include domestic industry, importation, standing and patent subject matter eligibility.

Complainant DivX, LLC, a video software technology company, relied on its licensee’s assembly of smart TVs in the United States to satisfy the domestic industry requirement. Proposed respondent Realtek Semiconductor Corporation, a chipmaker for consumer electronics, argued that DivX would be unlikely to meet the domestic industry requirement because DivX’s licensee stopped identifying several of its products as “Assembled in the USA” to avoid deceiving consumers in connection with a petition filed before the Federal Trade Commission. Realtek also argued that DivX could not identify smart TVs as the domestic industry product for purposes of the economic prong and a different video processor product for purposes of the technical prong. Realtek sought to resolve these issues through the early disposition program, and DivX opposed. Although neither party raised the issue of third-party discovery, the ITC denied Realtek’s request because such discovery was likely necessary, making adjudication within 100 days impracticable.

Practice Note: The ITC places great emphasis on the expeditious adjudication of Section 337 investigations because of the ITC’s statutory mandate to complete them at the earliest practicable time. The early disposition program builds on that mandate and can provide an even speedier timeframe by streamlining and resolving dispositive issues within 100 days of institution. A proposed respondent should consider requesting early disposition for clear weaknesses in a complainant’s case where the issue to be decided is not complex and does not require significant discovery. While the ITC does not grant use of the early disposition program often, where it has done so, several cases have ended with withdrawal of the complaint or termination before a hearing.



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Federal Circuit Restores Induced Infringement Verdict Against Teva

by | Oct 15, 2020 |

Addressing the issue of whether a generic pharmaceutical company can be found to induce infringement even when all patented uses have been “carved out” of the label (resulting in a so-called “skinny label”), the US Court of Appeals for the Federal Circuit held that circumstantial evidence of inducement was sufficient. The Court relied on evidence that defendant stated its drug was a “complete replacement” for plaintiff’s drug covered by the asserted patent. GlaxoSmithKline LLC et al. v. Teva Pharmaceuticals USA Inc., Case Nos. 18-1976, -2023 (Fed. Cir. Oct. 2, 2020) (Newman, J.) (Prost, C.J., dissenting). The Court reinstated a jury verdict against Teva Pharmaceuticals, ordering it to pay GlaxoSmithKline (GSK) $235 million.

GSK brought suit against Teva in 2014 in response to Teva’s attempt to market a generic form of carvedilol, developed and marketed by GSK under the brand name Coreg®. Coreg® was US Food and Drug Administration (FDA) approved for three separate indications: hypertension, congestive heart failure (CHF), and left ventricular dysfunction following a myocardial infarction (post-MI LVD). After March 2007, however, no GSK Orange-Book-listed patent covered the hypertension or post-MI LVD indications. A reissue patent that issued in January 2008 remained in force for CHF.

In 2002, Teva filed an abbreviated new drug application (ANDA) with the FDA. Before Teva’s carvedilol product was finally approved in September 2007, Teva amended its ANDA and proposed label to “carve out” the CHF indication according to 21 USC § 355(j)(2)(A)(viii)—often referred to as a “section viii carve-out.” Thus, Teva’s carvedilol “skinny label” was only indicated for hypertension and post-MI LVD, neither of which was, at that time, covered by any GSK patent.

After a trial, the jury found that Teva had willfully induced infringement of GSK’s patent and awarded GSK $235 million in damages. The district court then granted Teva’s motion for judgment as a matter of law, concluding that the inducement verdict was not supported by substantial evidence. GSK, the district court reasoned, had failed to prove by a preponderance of the evidence that Teva’s alleged inducement (as opposed to other factors) had actually caused even at least one physician to prescribe generic carvedilol for CHF. GSK appealed.

On appeal, the Federal Circuit overturned the grant of judgment as a matter of law, reasoning that the “intent element” of inducement may be proven through circumstantial evidence. The Court noted that the jury had received evidence of, e.g., “Teva’s promotional materials [referring] to Teva’s carvedilol tablets as AB rated equivalents of the Coreg® tablets,” press releases identifying Teva’s product as “Generic Coreg® Tablets,” Teva’s Monthly Prescribing References, and testimony from GSK’s cardiologist witness that physicians are “completely reliant” on information provided by the generic companies. The majority concluded that this was “ample record evidence . . . to support the jury verdict of inducement.”

Chief Circuit Judge Prost authored a lengthy dissent warning of the broad implications of the majority’s ruling, including contravening the congressional design and intent of the generic approval system, and potentially stifling innovation by giving rise to [...]

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