Drug Labeling that Excludes Patented Use Can Still Induce Infringement

In Glaxosmithkline LLC v. Teva Pharmaceuticals USA, Inc., [2018-1976, 2018-2023] (August 5, 2021), the Federal Circuit vacated the grant of JMOL in favor of Teva, and reinstated the jury’s verdict and damages award for infringement of RE40,000, and remanded for appropriate further proceedings.

The ’000 patent claims a method of decreasing mortality caused by chronic heart failure by administering carvedilol with at least one other therapeutic agent.

Teva argued it could not have induced infringement prior to 2011, because it had “carved out” the indication and prescribing information for treatment of congestive heart failure in its 2007 label under section viii, and that it could not be be liable for inducement for any time period because it did not cause others to infringe the method claimed in the ’000 patent. The jury found the ’000 patent was not invalid, that Teva induced infringement of claims 1–3 during the partial label period proir to 2011, and that Teva induced infringement of claims 1–3 and 6–9 during the full label period after 2011. The jury assessed damages based on a combination of lost profits and a reasonable royalty and found Teva’s infringement willful.

The district court granted Teva’s renewed motion for JMOL, finding that substantial evidence did not support the verdict of induced infringement because GSK failed to prove that Teva’s alleged inducement, as opposed to other factors, actually caused physicians to directly infringe by prescribing generic carvedilol for the treatment of mild to severe chronic heart failure.

The Federal Circuit agreed with GSK that substantial evidence supports that Teva actively
induced by marketing a drug with a label encouraging a patented therapeutic use. The Federal Circuit said that the labeling did not omit all patented indications or merely note (without mentioning any infringing uses) that FDA had rated a product as therapeutically equivalent to a brand-name drug. Instead, the Federal Circuit said this was a case in which substantial evidence supports a jury finding that the patented use was on the generic label at all relevant times and that, therefore, Teva failed to carve out all patented indications. The Federal Circuit address the concerns of several amici, nothing that its narrow, case-specific review of substantial evidence does not upset the careful balance struck by the Hatch-Waxman Act regarding section viii carve-outs.

35 U.S.C. § 271(b) provides “Whoever actively induces infringement of a patent
shall be liable as an infringer.”The Federal Circuit explained that “[a] finding of inducement requires establishing “that the defendant possessed specific intent to encourage another’s infringement.” This requires a plaintiff to show that the alleged infringer’s actions induced infringing acts and that he knew or should have known his actions would induce actual infringements. The Federal Circuit said that when a plaintiff relies on a drug’s label accompanying the marketing of a drug to prove intent, the label must encourage,
recommend, or promote infringement.

The Federal Circuit found that despite Teva’s purporting to carve out the patented congestive heart failure indication, and its deletion of the indication from its pre-2011 partial label, substantial evidence supports the jury’s finding that Teva induced doctors to infringe the method of use claimed in the ’000 patent. GSK argues that substantial evidence supports
the jury’s verdict that Teva’s partial label encouraged an infringing use (via the post-MI LVD indication) and that Teva’s marketing materials encouraged prescribing carvedilol in a manner that would cause infringement of the ’000 patent, and the Federal Circuit agreed. GSK provided substantial evidence that Teva’s partial label instructed the method of use
claimed in the ’000 patent and thus was not a skinny label, because some of the labeled incidations overlapped the patented process.

Amendment of Claims in Parent Application Do Not Apply to Continuation Claims that do not have the Amended Language

In Sanofi v Watson Laboratories, Inc., [2016-2722, 2016-2726](November 9, 2017), the Federal Circuit affirmed the district court’s final judgment rejecting the obviousness challenge to claims 1–6, 8–13, and 16 of the U.S. Patent No. 8,410,167; finding inducement of infringement, by both
defendants, of all of those claims except claim 5; and finding infringement by both defendants of claims 1–3, 5-9, and 12–15 of U.S. Patent No. 8,318,800, and by Watson of claims 10 and 11 as well.

On appeal, Watson and Sandoz challenge the district court’s inducement
finding as to the ’167 patent, the district court’s rejection of their obviousness challenge to that patent, and the district court’s rejection of their prosecution disclaimer argument for limiting the scope of the ’800
patent claims.

On the inducement issues, the Federal Circuit said that it reviews the district court’s finding of inducement based on encouragement and inferred intent for clear error, which the Federal Circuit found was absent.  The Federal Circuit noted that the label directed medical providers to information identifying the desired benefit for only patients with the patent-claimed risk factors.  The Federal Circuit rejected Watson and Sandoz argument that substantial noninfringing uses not forbidden by the
proposed labels prevented a finding of intent to encourage an infringing use.  The Federal Circuit found no legal or logical basis for the suggested limitation on inducement.

On the obviousness issue, Watson and Sandoz only challenged the district court’s finding of no expectation of success.  The Federal Circuit said that although the evidence might well have supported the opposite finding, it could not conclude that the district court clearly erred in its finding.

On the infringement issue, the Federal Circuit rejected the argument that Watson and Sandoz  that the district court erred by failing to limit
the claims of the ’800 patent to exclude polysorbate surfactants.  While while prosecuting the parent application, which issued as U.S. Patent No. 7,323,493, Sanofi amended the sole independent claims
(hence all claims)f so as expressly to exclude pharmaceutical
compositions with a “polysorbate surfactant.”  Based on that amendment,
Watson and Sandoz contend that Sanofi made a “prosecution
disclaimer” that also limits the scope of the claims of the ’800 patent, despite the absence of any limiting language in the ’800 patent’s claims.

The Federal Circuit said that a prosecution disclaimer occurs when a patentee, either through argument or amendment, surrenders claim
scope during the course of prosecution.  But when the purported
disclaimers are directed to specific claim terms that have been omitted or materially altered in subsequent applications (rather than to the invention itself), those disclaimers do not apply.  The general ruling being that a prosecution disclaimer will only apply to a subsequent patent if that patent contains the same claim limitation as its predecessor.

The Federal Circuit observed that in prosecuting the application
that issued as the ’493 patent, was to write an express limitation into the claims: “provided that the pharmaceutical composition does not contain a polysorbate surfactant.” This language does not appear in the ’800 patent claims at issue, and Sanofi did not argue during prosecution that the unamended claim language of the ’493 patent, or the disclosed invention generally, excluded polysorbate surfactants.  The Federal Circuit said that the prosecution followed a familiar pattern:

an applicant adopts an explicit claim-narrowing limitation to achieve immediate issuance of a patent containing the narrowed claims and postpones to the prosecution of a continuation application further arguments
about claims that lack the narrowing limitation.

The Federal Circuit said that without more than exists here, that process does not imply a disclaimer as to claims, when later issued in the continuation, that lack the first patent’s express narrowing
limitation.  The Federal Circuit affirmed the district court’s ruling that the
scope of the claims of the ’800 patent should not be limited so as to exclude polysorbate surfactants.

Knowledge of Ex-Employees Working for Accused Infringer Makes Inducement Claim Plausible

In Lifetime Industries, Inc., v. Trim-Lok, Inc., [2017-1096] (September 7, 2017), the Federal Circuit reversed the district court’s dismissal of Lifetime’s complaint for infringement of U.S. Patent 6,966,590 failing to adequately allege that Trim-Lok either directly or indirectly infringed the patent.  Lifetime filed two amended complaints after Trim-Lok twice moved for dismissal for failure to identify the accused product. A Lifetime representative  discovered a two-part Trim-Lok seal installed on an RV with a slideout room at a plant run by a third party.  On Trim-Lok’s third motion, the district court determined that Lifetime had adequately
identified the accused product, but that Lifetime had not adequately pleaded its case.

The district court concluded that Lifetime had not adequately pleaded direct infringement because the claims require both a two-part seal and an RV, and Trim-Lok only manufactures seals.  The district court rejected Lifetime’s argument that Trim-Lok had “assisted with the installation, directed the installation, or directly installed” the Trim-Lok seal as confusing liability for direct infringement with liability for contributory infringement, which the court characterized as imposing liability “based on an offer to sell a component, material, or apparatus,” and dismissed the complaint for direct infringement.

As to indirect infringement, the district court concluded that Lifetime had not alleged any facts from which intent to infringe could be inferred in this case, and dismissed the complaint for indirect infringement as well.

The Federal Circuit found that Lifetime adequately alleged that Trim-Lok directly infringed, observing that one who “makes” a patented invention without authorization infringes the patent.  The Federal Circuit said that commercial manufacture is not the only way that a combination can infringe; limited internal manufacture and use can also infringe.  The Federal Circuit said that although Lifetime did not allege that Trim-Lok made the RV onto which it installed the seal, Lifetime did allege that Trim-Lok installed the seal onto the RV; that is, Lifetime alleged that Trim-Lok made an infringing seal-RV combination.  The Federal Circuit found that Trim-Lok’s demand for more detail “asks for too much,” noting that there is no requirement for Lifetime to prove its case at the pleading stage.

The Federal Circuit also found that Lifetime has plausibly alleged
that Trim-Lok induced infringement.  The Federal Circuit noted that the plausibility requirement is not akin to a probability requirement at the pleading stage; it simply calls for enough facts to raise a reasonable expectation that discovery will reveal that the defendant is liable for the
misconduct alleged.  The Federal Circuit found that specific allegations that former employees Busch and Torrey had knowledge of the patent and its scope when they joined Trim-Lok, making it plausable that Trim-Lok had knowledge of the patent.  The Federal Circuit also found adequate pleading of intent to infringe, noting that Lifetime alleged that after gaining knowledge of the patent and the products covered by the patent Trim-Lok assisted in the installation of the same time of seal on a RV, never having previously made or sold such seals.

The Federal Circuit also agreed with Lifetime that pleading contributory patent infringement only requires pleading knowledge of the patent, not also an intent to infringe the patent.


Providing a Service Alone is not Contributory Infringement

In the Cleveland Clinic Foundation v. True Health Diagnostics LLC, [2016-1766](June 16, 2017), the Federal Circuit affirmed that the asserted claims of U.S. Patent Nos. 7,223,552, 7,459,286, and 8,349,581 are not directed to patent-eligible subject matter, and that Cleveland Clinic failed to state a claim of contributory or induced infringement of U.S. Patent No. 9,170,260.

The patents were all directed to methods for detecting the risk of cardiovascular disease in a patient.  The district court next found the three testing patents patent ineligible under the two-step framework for analyzing patent subject matter eligibility under §101 articulated in Alice.  More specifically, the district court found that the testing patents’ claims were directed to a law of nature under Alice step one because the claims were directed to the correlation between MPO in the blood and the risk of cardiovascular disease.  Under Alice step two, the district court found there was no saving inventive concept, employing well-known methods to detect MPO, comparing MPO levels with a control value in what could be a bare mental process, and ultimately, instructing a user to apply a natural law.

The district court further found that True Health’s testing service was not a “material or apparatus” that could form the basis for a contributory infringement claim.  The district court further found that the Cleveland Clinic did not allege facts sufficient to show the specific intent to induce third parties to infringe.

The Federal Circuit affirmed the propriety of deciding §101 rejections at the motion to dismiss stage, before claim construction or significant
discovery has commenced.  On the merits, the Federal Circuit agreed that the claims of the testing patents were directed to multistep methods for observing the law of nature that MPO correlates to cardiovascular disease.  Because this relationship exists in principle apart from human action, the claims are directed to a patent ineligible law of nature.  The Federal Circuit found the case similar to Ariosa.  At step two of the Alice inquiry, the Federal Circuit agreed that the practice of the method claims
does not result in an inventive concept that transforms the natural phenomena of MPO being associated with cardiovascular risk into a patentable invention.

On the issue of contributory infringement, the Federal Circuit said that a party that provides a service, but no “material or apparatus,” cannot be liable for contributory infringement.  Because the defendant was merely providing testing services, the Federal Circuit agreed that the claim should be dismissed.  On the issue of inducement, the Federal Circuit observed that the mere knowledge of possible infringement by others does not amount to inducement; and that specific intent and action to induce infringement must be proven. The Federal Circuit found that merely providing test reports to physicians falls short of showing the specific intent and action to induce infringement of the ’260 patent.


“A Finding of Induced Infringement Requires Actual Inducement”

In Power Integrations, Inc., v. Fairchild Semiconductor International, Inc., [2015-1329, 2015-1388] (December 12, 2016), a complicated action where each party claimed the other directly and indirectly infringed its patents,  the Federal Circuit affirmed the jury’s verdict that the asserted claims of the ’876 patent were not anticipated; vacated the jury’s verdict that Fairchild induced infringement of the asserted claims of the ’876 and ’851 patents; reversed the jury’s verdict that the asserted claims of the ’605 patent were not anticipated; and affirmed the district court’s construction of the ’972 patent.

On this issue of induced infringement, the Federal Circuit noted  that induced infringement is defined in 35 U.S.C. § 271(b): “Whoever actively induces infringement of a patent shall be liable as an infringer.”  Fairchild’s proposed jury instruction tracked the then-current Federal Circuit Bar Association model, while Power Integrations’ proposal was a variation of an instruction given in a prior trial in the District of Delaware.  The district court adopted an instruction that largely tracked the one proposed by Power Integrations:

Each party alleges that the other is liable for infringement by actively inducing others to directly infringe the patents in suit. The direct infringement may either be literal or under the doctrine of equivalents. A party induces patent infringement if it purposefully causes, urges, or encourages another to use a product in a manner that infringes an asserted claim. Inducing infringement cannot occur unintentionally.

A party is liable for active inducement only if the patent owner proves by a preponderance of the evidence that:

  1. the party took some action during the time the patents in suit were in force intending to encourage or assist actions by others;
  2. the party was aware of the patent and knew that the acts, if taken, would constitute infringement of that patent or the party believed there was a high probability that the acts, if taken, would constitute infringement of the patent but deliberately avoided confirming that belief; and
  3. use by others of the party’s product infringes one or more of the asserted claims of the patent.

In order to establish active inducement of infringement, it is not sufficient that others directly infringe the claim. Nor is it sufficient that the party accused of infringement was aware of the acts by others that directly infringe. Rather, in order to find inducement, you must find that the party accused of infringement intended others to use its products in at least some ways that would infringe the asserted claims of the patent. However, that infringement need not have been actually caused by the party’s actions. All that is required is that the party took steps to encourage or assist that infringement, regardless of whether that encouragement succeeded, or was even received.

Intent to encourage or assist the acts that constitute direct infringement must be proven by evidence of active steps taken to encourage direct infringement, such as providing products, advertising any infringing use, or instructing how to engage in any use that is infringing. Proof of intent to induce infringement may be based on circumstantial evidence, rather than direct evidence.

The Federal Circuit said that this instruction left the jury with the incorrect understanding that a party may be liable for induced infringement even where it does not successfully communicate with and induce a third-party direct infringer. The Federal Circuit said that the Supreme Court in Global-Tech Appliances explained that the term “induce” as it is used in § 271(b) “means ‘[t]o lean on; to influence; to prevail on; to move by persuasion.” Each definition requires successful communication between the alleged inducer and the third-party direct infringer.

The Federal Circuit noted that in Dynacore Holdings it held that “[t]o prevail under a theory of indirect infringement, [plaintiff] must first prove that the defendants’ actions led to direct infringement of the [patent-in-suit].” And that in DSU Med. Corp. it held that the plaintiff has the burden of showing that the alleged infringer’s actions induced infringing acts,  The Federal Circuit concluded that under this precedent, a finding of induced infringement requires actual inducement, although this inducement may be proven via circumstantial evidence.

In other words, liability for inducement requires proof that (1) a third party directly infringed the asserted claims of the patent; (2) the defendant induced those infringing acts; and (3) defendant knew the acts it induced constituted infringement.

Incorrect Position on Infringement is not a Defense to Inducement

In Warsaw Orthopedic, Inc. v. NuVasive, Inc., [2013-1576, 2013-1577] (June 3, 2016), on vacatur and remand from the Supreme Court (for further consideration in light of Commil) the Federal Circuit reaffirmed its the district court’s judgment with respect to induced infringement of U.S. Patent No. 7,470,236 and reinstated its earlier judgment in other respects.

The only question was whether there was substantial evidence for the jury to conclude that the counterclaim defendant, MSD, induced infringement of the ’236 patent.  The Federal Circuit reviewed the law of inducement, noting that under Global-Tech and Commil proof of induced infringement requires not only knowledge of the patent, but also proof the defendant knew the induced acts were infringing, and that Commil reaffirmed that willful blindness can satisfy the knowledge requirement for active inducement. The Federal Circuit further said that Global-Tech also held that knowledge of infringement can be inferred from circumstantial evidence.

At issue was the claim limitation:

increasing the intensity level of said stimulus signal until said predetermined neuro-muscular response is elicited by said stimulus pulse and stopping the emission of said stimulus signal immediately after said predetermined neuromuscular response is detected.

MSD argued that no reasonable jury could have inferred that it had knowledge of (or was willfully blind to) its customers’ infringement of the ’236 patent, arguing that under its claim construction, the acts were not ifnringement.  The Federal Circuit found that MSD’s position was “clearly inconsistent” with the claim construction.  The Federal Circuit said that the undisputed evidence before the jury showed that, immediately
after nerve stimulation, the NIM-Eclipse device stopped “stimulus pulses” within the meaning of the claims. The Federal Circuit found that there is no support in the language of claim or its prosecution history to support MSD’s construction.

The Federal Circuit said that given the strength of the evidence presented, a reasonable jury could have concluded that MSD must have known, or was willfully blind to the fact that its device met the properly construed claims, and in particular the “stopped” limitation.

After Commil, a belief of invalidity was no longer a defense of inducement,  Now, after NuVasive, an incorrect belief that the actions do not infringe also is not a defense to infringement.  The Federal Circuit did not appear concerned with the reasonableness of MSD’s position, just its correctness,  Thus, if a party induces conduct that is eventually found to infringe a valid patent, that party had induced infringement if it knew about the patent.