AuthorPotter, Garretl T.


The cost of pharmaceuticals has a massive influence on the healthcare system. The global pharmaceutical industry had a revenue of $1.27 trillion in 2020, with revenue of sales in North America accounting for approximately half of that. (1) This colossal market is seen as a burden to many, and a majority of United States citizens shows unified support for decreasing the price of drugs.- Government officials from both Democratic and Republican parties have floated plans to decrease the cost of healthcare by incorporating more use of generic drugs which would serve as competition to brand drug manufacturers that otherwise retain a monopoly on the drug market. (3)

Brand manufacturers consistently seek to expand their patent coverage to maintain a monopoly on the market, often with patents covering particular excipient formulations, dosage regimes, administration forms, and methods of treatment. (1) Periodically, a brand manufacturer discovers a new method of treatment using a drug that has already been on the market and seeks patent coverage for that method of treatment.

One way that generic drug manufacturers are able to compete with brand manufacturers is through the use of "skinny labels." Under the Hatch-Waxman Act of 1984, drug manufacturers can introduce a generic version of a pioneer drug to the market so long as any patented methods of use or treatment are "carved out" of the drug label, making it a so-called "skinny label." (5) This allows the generic manufacturer to produce the drug without directly or indirectly infringing the patented method of treatment. Such skinny labels remove an average of over three years' time from the brand drug manufacturer's monopoly, with high-revenue brand-name drugs being a key target. (6)

The pioneer drug manufacturers, in response, seek other means of enforcing control over their intellectual property. In 2000, SmithKline Beecham argued generic manufacturers should not be able to copy elements of its drug labels because it would be copyright infringement. (7) The Second Circuit held that the Hatch-Waxman Act trumps copyright law, and SmithKline Beecham's arguments fell flat. (8) Brand manufacturers have also entered "pay-for-delay" agreements in litigation settlements, essentially paying generic manufacturers to not compete--potential antitrust issues notwithstanding. (9) Pioneer drug manufacturers have also succeeded in arguing that generic manufacturers' labels contrihute to indirect infringement of their patents, including induced infringement. (10)

Induced infringement "is often described as activity that 'aids and abets' infringement" of a patent." It requires that the alleged inducer have a specific intent to cause acts that constitute infringement, an affirmative act that induces others to infringe the patent, and that an act of direct infringement of the patent occur. (12) It also requires that the alleged inducer have actual knowledge of the patent and knowledge that its affirmative act to induce others would lead to such direct infringement." The determination of whether each element has been met is currently a question of fact determined in many cases by a jury. (14) This Note will argue that the determination of whether a party actually intended to induce another to infringe the patent should instead be a question of law.

The influence of induced infringement on the generic manufacturer landscape and its interactions with skinny labels is best evidenced by the August 5, 2021, Federal Circuit decision of Glaxo Smith Kline v. Teva (also referred to herein as "GSK v. Teva"). (15) In that case, the Federal Circuit largely affirmed its October 2, 2020, decision, (113) which held that a jury had ample support to find induced infringement even during periods where Teva had used a skinny label that carved out the allegedly infringed-upon patent. (17) This resulted in an order that Teva pay GlaxoSmithKline $234 million in damages, though Teva only sold $74 million worth of the generic drug. (18) Criticism to this decision was swift, with many commentators indicating it was a death knell to the reliance of generic manufacturers on the safety provided by the practice of skinny labeling. (19) In late 2021, Teva filed a petition for rehearing en banc before the Federal Circuit arguing the prior decision would "have a 'seismic' impact on the drug industry," but a sharply divided Federal Circuit announced in February 2022 that it would not take up the en banc petition. (20) While GlaxoSmithKline contends that Teva is overly alarmist, Teva announced plans to seek Supreme Court review, and commentators believe a congressional correction or Supreme Court hearing may be forthcoming. (21)

Although the Federal Circuit considered GSK v. Teva to be a "narrow, case-specific" (22) decision, it is nonetheless clear that the generic drug manufacturing industry is concerned that this will serve as a basis for similar arguments in the future, and that it will be further broadened outside the scope of that specific case.

A notable concern of GSK v. Teva was that a jury found induced infringement to exist where there was little evidence of such, and substantial evidence suggesting the contrary. The district court judge granted a motion for JMOL because the judge felt the evidence failed to support a finding of inducement. (21) Notwithstanding the sparse evidence, the Federal Circuit reversed the motion for JMOL, relying almost entirely on the supremacy of the jury's decision and the categorization of this issue as a question of fact. (24) There is, however, no statutory requirement or instruction from the Supreme Court indicating that the determination of all elements of inducement are actually questions of fact. In patent law, what is considered a question of fact and what is considered a question of law can appear a haphazard mix with no significant substance or reasoning to guide the wayward practitioner. (25)

This Note proposes a novel argument for improving the application of induced infringement by splitting its elements into separate questions of fact and law, incorporating the relevant perception and reasoning of both judge and jury. Part I provides a primer of the Hatch-Waxman Act and interactions (and lack thereof) between the USPTO and FDA in regulating pharmaceutical compositions. Part II assesses the historical landscape that led to the codification of induced infringement. Part III concludes by proposing an alternate approach by treating an element of induced infringement as a question of law, rather than a question of fact, and sets forth the groundwork enabling the courts to consider it as such.

Although it is important that researching companies recoup costs in their endeavors to develop novel pharmaceutical agents and methods of treatment, the finding of induced infringement in GSK v. Teva took the application of induced infringement too far. Induced infringement should be found only in those cases where the alleged perpetrator actually intended to induce such infringement, which is an understanding more aligned with the fundamentals of patent law and the protection of intellectual property rights. Expanding the theory of induced infringement to cover any generic pharmaceutical that has a new method of treatment will have a chilling effect on the industry, allowing the brand manufacturer to essentially re-monopolize a composition that would otherwise be available to the public.


    In order to sell a pharmaceutical moiety in the United States, it must be proven effective for its intended use and safe for human consumption. (20) The process of developing a novel pharmaceutical from concept to FDA approval will typically cost over $1 billion over the course of twelve years. (27) There is a remarkably high amount of failure that comes with drug development, with more than 90% of potential drugs failing at some point during the process--the vast majority meeting failure when issues are found with efficacy or safety-leading to large losses for the unfortunate drug developer that fails to get to market. (28) Pioneer drug developers argue that a strong patent system should ensure that researchers recoup their expenses in bringing a drug to market, as well as money lost in developing drugs that could not make the cut, as total losses in research and development. (29)

    The Hatch-Waxman Act of 1984 recognized the importance of pioneer drug manufacturers' research and development, and sought to allow them to recoup such costs. It does so by providing "patent term restoration" to restore up to five years of time lost during the FDA approval process, extending patent coverage of the drug. (30) The Act also balances the interests of generic drug manufacturers by allowing them to enter the drug market so long as their compound does not infringe a brand manufacturer's patent.

    In seeking to lower costs of pharmaceuticals by providing less expensive generic products, the Act expedites generic drug approval through the FDA." A generic company can rely on the safety and efficacy information provided by the original manufacturer of the drug by filing an Abbreviated New Drug Application (ANDA), resulting in accelerated FDA approval whereby the drug can be placed on the market as soon as the original patent on the drug expires. (32) Generic manufacturers are additionally incentivized to promptly file an ANDA because the first manufacturer to file an ANDA that results in approval is eligible to receive a 180-day period of exclusivity, during which all other generic manufacturers are barred from entering the market, leading to a sizable competitive advantage that continues years following the approval. (33)

    If a chemical moiety is no longer under patent, and absent any additional exclusivity period provided by the FDA, then the composition of matter belongs to the public. (34) As described in the Introduction, pharmaceutical...

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