Guest post by Kaidi (KD) Zhang, Stanford Law School J.D. expected 2027; UC Berkeley Ph.D. in Chemistry 2024
The Supreme Court will hear arguments in Hikma v. Amarin on April 29. The core question before the Court is seemingly straightforward but carries massive industry implications: Should a patent infringement claim based on inducement survive a 12(b)(6) motion to dismiss if the alleged infringer uses a statutorily permitted “skinny label,” but markets its generic drug as the “therapeutically equivalent” of the patented drug?
In the decision below, the Federal Circuit held that pleading “the totality of the allegations of inducement” as “a whole” was sufficient for an induced infringement case to proceed. This ruling continued to narrow the viability of skinny labels, following the court’s earlier decision in GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc. (GSK), where it upheld a jury verdict of induced infringement based on a skinny label.
In a recent Stanford Law Review article, Professors Jacob Sherkow and Paul Gugliuzza criticized the GSK decision for “turn[ing] two decades of Federal Circuit jurisprudence on drug labels and inducement on its head.” The Supreme Court declined to intervene then, but has granted certiorari in this case, which may have profound implications for the pharmaceutical industry. A brand-name drug is often approved to treat multiple different conditions (known as “indications”). Over time, the patent for the original drug compound may expire, but the brand-name company might still hold active “method-of-use” patents for specific indications. In many cases, companies pursue these additional indications after the drug is already on the market, which can extend their exclusivity.
Section viii (21 U.S.C. § 355(j)(2)(A)(viii)) of the Hatch-Waxman Act provides a statutory pathway for generic companies to enter the market before all method-of-use patents have expired. It allows a generic manufacturer to submit a statement to the FDA essentially saying: “We only want approval to sell this drug for older, unpatented uses; we are not seeking approval for the use that is still under patent.” To legally utilize the Section viii pathway, the generic manufacturer must remove—or “carve out”—all instructions, marketing, and references related to the patented use from their product’s packaging and informational inserts.
This specific dispute centers on Vascepa, a brand-name drug developed by the respondent, Amarin. Vascepa was initially approved in 2012 for a small group of patients suffering from severe hypertriglyceridemia (SH). In 2019, following a five-year study involving 8,000 patients, the drug received approval for a second indication for reducing the risks of cardiovascular events (CV). The petitioner, Hikma, subsequently developed a generic version of Vascepa (icosapent ethyl) and obtained FDA approval to sell the drug exclusively for the SH indication using the Section viii pathway.
Notably, there are 11 companies with generic versions of icosapent ethyl approved for SH, and many of these generics (seven at the time the respondent’s brief was filed) are already on the market. Even though all generic pharmaceuticals are legally required to have the same labels carving out the CV indication, Amarin only sued Hikma because, according to Amarin, “[Hikma] alone chose to publish statements that healthcare providers would interpret as encouraging prescriptions that infringe respondents’ patents.”
Under 35 U.S.C. § 271(b), inducement liability requires that a party “actively induce[d]” a direct infringer to take specific action that suffices for “infringement of a patent.” Hikma contends it can be liable only if it actively encourages medical professionals to prescribe its generic icosapent ethyl specifically for the CV indication, and that none of its actions rise to this level. It argues that its skinny label encourages only non-infringing use, and that its external statements do not actively induce specific conduct. Hikma emphasizes that the only time the patented CV indication was mentioned on the label was to warn of the drug’s potential side effects “in people who have heart (cardiovascular) disease.” This warning, Hikma argues, cannot plausibly establish active inducement of the CV treatment method. Therefore, the case should be dismissed for failure to state a claim under the rigorous Iqbal-Twombly pleading standard.
Amarin counters that active infringement was pleaded with sufficient plausibility. Because direct infringement by doctors and intent to infringe by Hikma were conceded, the only issue was whether Hikma actively induced that infringement. Amarin argues that Hikma’s broader advertising practices are enough to state a plausible claim of active inducement. Amarin heavily relies on public statements directed at medical professionals: Hikma described its product as a “generic version” or “therapeutically equivalent” to Vascepa, issued a press release citing Vascepa’s massive annual sales, and marketed the generic drug broadly for “Hypertriglyceridemia”—a term that encompasses both the unpatented SH indication and the much more common, patented CV indication. Because these statements were intentionally directed at healthcare providers, Amarin argues this highly trained audience would plausibly understand them as encouragement to use the generic broadly for the predominant CV indication. Physicians routinely consult such statements and look beyond the label when deciding what to prescribe. Assuming these well-pleaded factual allegations are true, Amarin insists its claims easily survive a 12(b)(6) motion.
Furthermore, Amarin also argues that the Court should dismiss the case as improvidently granted because Hikma changed its arguments from those made in the petition for certiorari. For example, the petition argued that the Federal Circuit’s decision used “pre-Twombly caselaw” for the pleading standard, but they did not raise this argument in the merits brief. And even if the Court disagrees with the Federal Circuit’s ruling, Amarin argues that it should be given leave to amend its complaint rather than dismissing the case outright as Hikma demands.
Professors Michael Carrier, Charles Duan, S. Sean Tu, and Aaron Kesselheim filed an amicus brief signed by 76 scholars in law, business, economics, and medicine supporting the petitioner. They argue the doctrine of inducement for patent infringement has always required an act that is specific, unambiguous, and affirmative, and the Federal Circuit erroneously expanded this doctrine. Access-to-medicines organizations, the United States government, and the original sponsor of the Hatch-Waxman Act (former Representative Henry Waxman), also filed briefs in support of Hikma. They argue that protecting the skinny label pathway is precisely what Congress intended. Furthermore, because states often have mandatory automatic-substitution laws at the pharmacy, generic companies have no incentive to “actively induce” doctors; generics sell to wholesalers, not to prescribers or patients.
Conversely, Amarin is backed by several pharmaceutical companies, academic medical centers, the AIPLA, and former Federal Circuit Chief Judge Paul Michel, writing with a group of scholars of law and economics. They caution that Section viii was never meant to operate as a safe harbor for infringing advertisements, and such a safe harbor can only be provided by Congress, not the courts. In addition, they argue that the Federal Circuit correctly applied the Iqbal-Twombly pleading standard by accepting the well-pleaded facts to be true and drawing all reasonable inferences in favor of Amarin.
A few briefs were filed in support of neither party. The Intellectual Property Owners Association and NYIPLA argue that no special pleading standards should be applied for patent inducement cases. The Public Interest Patent Law Institute, citing First Amendment concerns, petitions the Court to delineate a threshold for secondary liability in patents to preserve good-faith entry of generics. The Licensing Executives Society explains the importance of a clear standard in pleading secondary liability cases to ensure robust patent rights. Professors Paul Gugliuzza and Jacob Sherkow reiterate the arguments from their article, pointing out the misstep the Federal Circuit made in GSK and urging the Court to reject secondary liability purely based on a statutorily required skinny label.
From a policy perspective, Hikma and its amici warn that ruling for Amarin would impose liability for mere passive inducement at the motion-to-dismiss stage. This would create a severe chilling effect on Section viii skinny label filings and ultimately delay affordable generic drugs from reaching the market. The scholars argued that an expansion of the doctrine of inducement will stymie innovation and competition, especially after the Federal Circuit already discourage use of Section viii in its GSK decision. Indeed, the petitioner cited the Ziaks et al. study, which showed the proportion of first generic prescriptions approved with a skinny label decreased from about 43% in a 2015-2019 sample to 20% in 2023 following GSK. Supporters of Hikma also warn of effectively permanent patent terms for brand-name drugs, as companies could continually obtain sequential method-of-use patents without facing the risk of skinny-label generic entry.
Amarin directly responds to the Ziaks study by pointing out that only five generics were susceptible to skinny label in 2023––a miniscule number compared to the total generics approved each year. Furthermore, before GSK, the skinny label approval rates were 26% (2015) and 25% (2017), which are comparable to the 2023 figure. Therefore, Amarin argues the data show no chilling effect on generic drug companies. Amarin and its supporters also argue that drug development requires immense financial investment, which the patent system is designed to incentivize. Allowing generic companies to freely advertise their products as “generic equivalents” for patented uses without the risk of liability would destroy the financial incentive to discover new uses for existing pharmaceuticals.
Two of Amarin’s amici (the academic medical centers and the scholars writing with former Chief Judge Michel) point to a working paper by Budish, Durvasula, Roin, and Williams, which empirically documents that the difficulty enforcing patents on new uses of existing drugs after generic entry causes substantial underinvestment in these new uses. This leads to a significant “missing market” for new uses of existing drugs, with estimated value in the trillions of dollars. One example of this is the therapeutic metformin, which was approved for treatment of diabetes in 1995 and for which generics entered the market in 2002. Though has been viewed for many years as a promising compound for cancer treatment, no one is willing to fund a clinical trial––potentially because the market participants understand that the Section viii carve-out provisions will prevent them from being able to recoup their investment.
But Budish et al. do not argue for tighter restrictions on skinny labels, which could have its own perverse consequences in delaying generic entry and incentivizing investments that have little added value for patients. Instead, they discuss how policymakers can use non-patent incentives—including ex post prizes like advance market commitments or ex ante incentives like direct federal funding—to close the investment gap. As Professor Lisa Larrimore Ouellette argues in her paper on Supreme Court patentable subject matter jurisprudence, courts should not put on “patent blinders” and overlook non-patent incentives when evaluating the policy rationale of patent doctrines. Indeed, companies developing new uses can be encouraged through a package of tax deductions, accelerated approval time, and additional manufacture rebates for Medicaid. To the extent the Supreme Court is concerned about this underinvestment problem, patent inducement liability might not be the best lever to encourage development of new uses.
Ultimately, the Supreme Court might resolve this case on the narrow issue of whether the pleadings were sufficient to survive a motion to dismiss. Contrary to arguments raised by amici like Regeneron Pharmaceuticals, the Court could hold that the “totality of the circumstances” approach under Iqbal and Twombly must be viewed through the lens of Congress’s clear intent to allow Section viii carve-outs. Consequently, pleading inducement in these specific cases might require overcoming a presumption of valid generic entry. Though the Court might frame the pleading standard as unchanged from prior jurisprudence in civil cases, it essentially creates a tailored pleading standard for § 271(b) Hatch-Waxman cases—much like the Court did in Twombly for § 1 Sherman Act claims, even though both parties argued against a special pleading standard.
Furthermore, the Court might draw upon its recent copyright jurisprudence in Cox Communications, Inc. v. Sony Music Entertainment, which held that an internet service provider cannot be held liable for contributory copyright infringement based merely on providing a dual-use service and failing to police infringement. While respondents’ amici stress the differences between copyright “aiding and abetting” and patent inducement, the Supreme Court frequently borrows doctrines across intellectual property regimes. Indeed, even the respondents relied heavily on Grokster—a landmark copyright case—to argue that advertising is sufficient to plead induced patent liability.
On the other hand, the Court might take Amarin’s suggestion to dismiss the case as improvidently granted. The Court may decide it does not want to wade into complex patent policy matters when it originally granted certiorari simply to review a pleading standard question. While this outcome is possible, it would undoubtedly be disappointing for the many amici who have urged the Court to finally clarify the boundaries of inducement liability for skinny labels.
