Another patent case at the Supreme Court. Another unanimous opinion. Another narrow ruling that changes seemingly little about the current state of the law. See, e.g., Helsinn v. Teva; Amgen v. Sanofi. This time, however, a reversal, which could make it harder for brands to get past the pleading stage in skinny label cases.
Today, the Supreme Court decided Hikma v. Amarin, a case about what it takes to allege induced infringement based on a generic maker’s marketing statements when generic otherwise “carves out” patented uses from its label.
For a more detailed discussion about the case’s background, be sure to check out our oral-argument recap. To make a long story short: Amarin claimed that Hikma’s generic product infringed patents for methods of reducing cardiovascular risk (the “CV Indication”) listed in the Orange Book for Amarin’s Vascepa. Even though Hikma filed a section viii statement that sought to limit the generic’s approved uses to a non-patented indication, Amarin argued that certain marketing statements, when coupled with side effects listed on Hikma’s generic label, were enough to show that Hikma actively induced healthcare professionals to prescribe its generic product for the patented CV-indicated use. The district court rejected this argument and dismissed Amarin’s complaint, but the Federal Circuit reversed. And today, the Supreme Court reversed the Federal Circuit, holding that Amarin indeed failed to state a claim for induced infringement under 35 U.S.C. § 271(b). Rather than articulate any new test, the Supreme Court restated its longstanding precedent on “active inducement” and held that the Federal Circuit had strayed from that precedent by wrongly shifting focus from the whether the generic maker encouraged infringement to how doctors may interpret a generic maker’s statements. More than anything, however, it seems the Court simply felt that Amarin’s allegations established a mere possibility of active inducement, not the required plausibility of inducement. This is a line that is blurry at best.
The unanimous decision, authored by Justice Jackson, proceeds in three parts.
In Part I, the Court explains the legislative backdrop, regulatory scheme, and factual history that led us here. It describes the FDA’s role in approving new and generic drugs before they can go to market; the function of the Orange Book and how the section viii pathway that lets generic makers carve out patented uses to market generic drugs for unpatented uses; and how state and federal drug-substitution laws permit or sometimes “require” that prescribers and manufacturers provide “the cheaper generic version” of a drug to patients, meaning that generic manufacturers “surely know (and perhaps even expect) that their products will be put to infringing use.” Part I also explains why that knowledge (or expectation, as the case may be), is not enough to show induced infringement: Besides needing to show that Hikma knew that some third party directly infringed Amarin’s patents, Amarin needed to show that Hikma took “active steps to encourage direct infringement.” And finally, Part I summarizes the development of Amarin’s Vascepa and Hikma’s generic and the legal dispute that followed Hikma’s launch.
Part II turns to the applicable legal standards. The Court began with procedure: Because this case reached the Court on a motion to dismiss, the Court reiterated the “well-established pleading standards” that applied to Amarin’s complaint. This will be familiar to anyone who has taken civil procedure. In short, a plaintiff must plead allegations that, if true, plausibly state a claim for relief. And to cross the line between “possible” and “plausible,” the plaintiff must plead facts that let “the court draw the reasonable inference that the defendant is liable for misconduct alleged.” Part and parcel of that requirement is ruling out the “obvious” and innocent alternatives. Next, the Court addressed substance: Because induced infringement under § 271(b) requires “active steps to encourage direct infringement,” the Court emphasized that it is not enough to allege that Hikma made statements that could lead a healthcare provider to prescribe the generic product for a patented use. Put differently, statements designed to cause providers to prescribe the generic for a patented use are different than statements that could cause providers to prescribe that patented use, and inducement requires the former, not the latter.
Lastly, Part III applies the law to the facts and concludes that Amarin’s complaint did not cross the plausibility threshold.
First, the Court found that several of Hikma’s statements “have an ‘obvious alternative explanation.’” For instance, Hikma’s allegedly inducing label statements were most obviously there because they were legally required, not because Hikma intended that prescribers would rely on them for infringing uses. So too with Hikma’s describing its product as “generic Vascepa.” This is normal industry practice and consistent with how the law defines a “generic version” of a drug. So the Court refused “to put generic manufacturers between a rock and a hard place by turning adherence to the law and industry standards into building blocks for illegal conduct.”
Second, the Court reiterated that mere inaction is not grounds to infer active inducement. Hikma had no duty to further disclaim the un-approved indications for its generic in various press releases.
And third, the Court reprised its discussion in Part II about the line between encouraging infringement and understanding it could happen. To this end, the Court characterized Amarin’s assertions as “implausibly roundabout ways to induce medical providers to infringe.” For example, a press release that described Hikma’s generic as a “hypertriglyceridemia” drug (rather than a drug for the unpatented indication for severe hypertriglyceridemia) was no different from characterizing a “leukemia drug” as a “cancer drug.” According to the Court, describing a drug using a “broad category” (e.g., “cancer drug” or drug for “hypertriglyceridemia”) is “not an instruction to prescribe the drug” for a particular use. Similarly, when Hikma issued a press release that discussed Vascepa’s aggregate sales (i.e., for patented and unpatented uses), the causal chain between those statements and direct infringement was far too weak to plausibly believe that Hikma made that statement to induce providers to prescribe the generic for patented uses. In essence, Amarin would somehow need to plausibly plead that Hikma intended that a healthcare provider would read a press release intended for investors, know enough about drug sales to understand that sales figures to encompass both patented and unpatented sales, and would become motivated to prescribe the drug for the patent uses simply because of those aggregate sales. Because this chain, on its face, is merely possible, not plausible, it failed to give rise to an active-inducement claim.
As I mentioned in the Oral Argument Recap, I saw two likely outcomes for this case: Either Amarin would have a very narrow victory, or Hikma would win in a procedure-heavy opinion. I saw the former option as more likely because the justices seemed to lament taking the case to engage in mere “error correction.” But, as it turns out, the Court took the latter approach here. As I discussed, this outcome is not all too surprising, especially in view of some pointed questions about the pleading standard from Justices Kagan, Gorsuch, and the opinion author, Jackson.
So where does this leave us?
In terms of the big picture, this can be seen as a win, though potentially a narrow one, for generic makers. The decision confirms that label statements required by law cannot support induced infringement, and it requires that generic makers take more specific steps to promote infringing uses that characterizing its drug as a “generic,” “generic equivalent,” or “AB rated” version of a brand drug. But this case is about the pleading standard, so it is unlikely that it will pose insurmountable barriers for brands to state claims for induced infringement. In all likelihood, the response will be more detailed complaints and more creative theories of inducement, not fewer complaints.
What the opinion did clarify, however, is that “that the key question is whether a defendant actively encouraged infringement through its statements, not merely how others may understand those statements.” This seems to give leeway to generics to rely on implication, though the Court was careful to clarify that active does not necessarily mean express.
In any event, District courts will need to scrutinize a complaint’s allegations in deciding whether statements actively encourage infringement. And courts now may be more willing to grant motions to dismiss.
This case may have post-pleading effects, too. By refocusing the analysis on the defendant’s conduct, today’s decision may limit the need for expert testimony from physicians on how they would interpret the label or various post-marketing statements. That said, because it is hard to decouple a party’s actions from that party’s intent, some courts may still find expert testimony from physicians probative on the issue of active inducement
As for the parties, the path forward is less clear. During argument, Amarin’s lawyer suggested that the proper procedure would be for the Federal Circuit to remand to the district court where Amarin would seek leave to file an amended complaint to cure the pleading defects. Hikma’s lawyer, however, noted that Amarin conceded to a judgment of dismissal with prejudice, thus limiting the opportunity to re-open the pleading window. Whether the district court will nevertheless entertain a motion that seeks an opportunity to amend the complaint is uncertain.
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