Hikma v. Amarin Argument Preview

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.

Can You Copyright a Pose?

An interesting case caught my eye this week, and piqued my interest enough to explore further. In Folkens v. Wyland Worldwide the Ninth Circuit considered whether Wyland's depiction of crossing dolphins copied from Folkens's original. Below is a reproduction from the complaint, but it doesn't really do them justice. Better versions of Folkens (pen and ink) and Wyland (color) highlight the similarities and differences. [UPDATED to include the closely related Rentmeester v. Nike]

Folkens (left) v. Wyland (right)

The differences between these two are relatively clear: coloring, "lighting," background, and so forth. But there are undeniable similarities, and the primary similarity is the dolphin "pose," which is strikingly similar. It is this similarity (and the Ninth Circuit's treatment of it) that I'd like to explore. Nothing in this analysis, however, should be taken to mean that I think Folkens should necessarily win here. My concern is only with how the court got there, as I discuss below.

Experiments on Bias in Patent Litigation OR Does Everyone Hate NPEs?

Lisa has written about the importance of experiments in patents, and I agree. I read about a really good one today. Bernard Chao (Denver Law) and one of his students, Roderick O'Dorisio, conducted an experiment to simultaneously test whether there is a bias against patentees sued for declaratory relief of non-infringement and against NPEs. To do so, they made identical patent vignettes used to resolve a close, but simple, infringement case. The only differences in the videos shown to the subjects were whether the defendant sued first and whether the plaintiff was an NPE (and in one, both were true). The abstract his here, for the paper forthcoming in the Federal Circuit Bar Journal:

Although everyone believes that telling a good story is an important part of jury persuasion, attorneys inevitably rely on their intuition to choose their stories. Experimental methodologies now allow us to test how effective these stories are. In this article, we rigorously test how two different narratives common to patent law affect mock jurors. First, we look at whether accused infringers can improve their chances of prevailing by being the aggressor. Prior studies have observed that accused infringers that file declaratory judgment actions to vindicate their rights win more often than those that are sued by patent holders. However, these results may simply be an artifact of the selection effects. For example accused infringers may simply be suing on stronger cases. To date, no studies have tried to control for these selection effects and determine whether it is truly the story that sways juries. Second, we looked at whether an accused infringer can influence mock jurors by making a few disparaging remarks about one kind of patentee’s business model, the non-practicing entity (NPE). NPEs, often pejoratively called patent trolls, may have a more difficult time prevailing at trial than practicing entities do.

To test how these narratives affect potential juries, we used a 2x2 between-subjects online experiment. We randomly assigned virtual mock jurors to watch one of four different scenarios of an abbreviated patent trial and render verdicts. The results showed that accused infringers that filed declaratory judgment actions prevailed more often than those where the patentee initiated the lawsuit. In addition, our study found that NPEs won less often than practicing entities. We discuss implications for strategy and policy.

The results are pretty clear - there were marked differences in favor of those who sued first and in favor of those sued by NPEs. And for the group that is both NPEs sued for declaratory relief, the numbers are the lowest of all. I consider this to be a validating check on the findings for each of the individual treatments (though more on that later, as statistically it is not so clear).

As the title of this post implies, there are a couple of ways to read this data. The results here may show an implicit bias against NPEs. Or, NPEs may be the baseline, and it shows a preference for practicing entities. The highest win rate was 39%, so it is not like the plaintiffs were running away with victory here. Or, it may show that taking the bull by the horns is rewarded - patentees prefer defendants who assert their "rights" to defend against infringement.

Nonetheless, the results are a bit shocking - a product making plaintiff was more than twice as likely to win than an NPE sued for declaratory judgment of non-infringement on identical facts and presentations. This makes me think that we have to talk about more than patent quality when we talk about low NPE win rates.

About the statistics: the Declaratory Relief effect was significant at p<.1 (and at p<.05 if you included demographics). The NPE effect was significant at p<.01. Interesting, despite the marked drop for both combined, when the entire model was tested, including the interaction of declaratory relief and NPE, then none of the treatments was statistically significant. This result is difficult to interpret, but my sense from eyeballing the data is that the NPE effect is doing most of the work in the combined model, and so combining the DJ effect with it confounds the model.

A final note on methodology - the authors use Mechanical Turk, and cite to literature that such users are reliable for research like this. They also use some techniques to ensure attention. Finally, if there are attention issues, it is unclear why they would affect one category more than any other. Nonetheless, to the extent that one is skeptical of mTurk, one might be skeptical of the results here.

Can You Induce Yourself to Infringe?

The Supreme Court granted certiorari in Life Tech v. Promega Corp. today to resolve an interesting conundrum of statutory interpretation having to do with foreign infringement. I won't provide all the details here - as Jason Rantanen and Dennis Crouch have ably done so. [Note: it turns out that the issue on which the court granted cert. is the one I find less interesting. Thus, I've edited this!]

The question is deceptively simple: when a manufacturer creates an infringing product in a foreign country, here a "kit," is it infringement of the patent for the manufacturer to buy or make a key component of that kit and then export it from the U.S. to the foreign manufacturing facility?

You'd think there would be a clear answer to this question, but there isn't. The statute, 35 U.S.C. § 271(f)(1), states:

Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

I had always assumed that the exported product is a substantial portion. The jury found it was, and if it turns out it wasn't, then that's just not that interesting a question. But I guess not - as this is the question that the court granted cert on. Indeed, on this issue only, as discussed further below.

The only thing that's interesting about the substantial portion question is that the exported product is a commodity, and thus 35 U.S.C. § 271(f)(2) - which enforces liability for exporting specially made products used for contributory infringement - doesn't apply. In other words, this is an interesting case because inducement liability is the only type of liability available, and inducement liability is really hard to prove, especially with a commodity.

But inducement is much easier here, theoretically, because the exporter is the same company as the foreign manufacturer. In other words, you can assume that the intent of the export was to combine the product into the infringing combination. And, yet, the court did not grant cert on that issue.

Instead, it will have to answer the question in a roundabout way - whether self-inducement is possible, but not when the component is a commodity. I suppose the Court could say, well, it's not the commodity that matters, but that it was too small a component. But isn't that a jury question? It seems to me that the only way the Court can reasonable make a distinction is either to make some new threshhold for what "substantial" is, or say that a commodity can never qualify. I don't like either of those options much, though - as I note below - the commodity angle has more legs given that the same commodity could be purchased from a third party without liability.

When this type of combination is done by a single manufacturer in the U.S., we call it direct infringement under § 271(a). The concept of inducement simply never comes up, and thus all the precedent to date discusses inducing another and spends no time on the importance of each component (indeed, § 271(b) says you can induce without selling anything!). So, to say that Life Tech is liable under § 271(f)(1) is to say that it has induced itself to infringe by exporting the commodity component that it could have bought from someone else who would not have induced it.

I don't think this was such a clear cut case on the self-inducing point, and I think that granting cert. on only the substantial component issue muddles the question. I offer two opposing viewpoints.

On the one hand, of course one can induce oneself for this statute. Foreign infringement liability was written in order to stop parties from avoiding the reach of a U.S. patent by shipping parts overseas to be assembled there. Viewed from this angle, it is not only rational but mandated that a company be held liable for shipping components overseas for the purpose of combining them into an infringing product. From this perspective, the policy goals of the statute dictate liability - even if the component shipped is a commodity.

On the other hand, the key component is a commodity, supplied by any number of companies. If Life Tech had only ordered the commodity from one of the other companies for shipment from the U.S., rather than supplying it from it's U.S. arm, it surely would not be liable. Viewed from this perspective, the extraterritorial reach of the statute makes little sense -- is a little silly even -- if it turns on a detail as minute as whether a company bought a commodity and shipped it overseas to itself or whether it bought a commodity and had the seller ship it overseas to itself.

My gut says follow the statute and find liability, even if avoiding liability is ridiculously easy. There are lots of statutes like that, and there's no reason why this shouldn't be one of them. In that sense, the Court's denial of cert. on the self-inducement issue makes sense, but I don't know what to make of the issue on which it did grant review.

Samuel Ernst on Reviving the Reverse Doctrine of Equivalents

Samuel Ernst (Chapman University) has recently posted The Lost Precedent of the Reverse Doctrine of Equivalents, which argues that this doctrine is the solution to the patent crisis. The reverse doctrine of equivalents was established by the Supreme Court in the 1898 case Boyden Power-Brake v. Westinghouse, in which the Court wrote that "[t]he patentee may bring the defendant within the letter of his claims, but if the latter has so far changed the principle of the device that the claims of the patent, literally construed, have ceased to represent his actual invention," the defendant does not infringe.

Here is Professor Ernst's abstract:

Proponents of legislative patent reform argue that the current patent system perversely impedes true innovation in the name of protecting a vast web of patented inventions, the majority of which are never even commercialized for the benefit of the public. Opponents of such legislation argue that comprehensive, prospective patent reform legislation would harm the incentive to innovate more than it would curb the vexatious practices of non-practicing entities. But while the “Innovation Act” wallows in Congress, there is a common law tool to protect innovation from the patent thicket lying right under our noses: the reverse doctrine of equivalents. Properly applied, this judge-made doctrine can be used to excuse infringement on a case-by-case basis if the court determines that the accused product is substantially superior to the patented invention, despite proof of literal infringement. Unfortunately, the reverse doctrine is disfavored by the Court of Appeals for the Federal Circuit and therefore rarely applied. It was not always so. This article is the first comprehensive study of published opinions applying the reverse doctrine of equivalents to excuse infringement between 1898, when the Supreme Court established the doctrine, and the 1982 creation of the Federal Circuit. This “lost precedent” reveals a flexible doctrine that takes into account the technological and commercial superiority of the accused product to any embodiment of the patented invention made by the patent-holder. An invigorated reverse doctrine of equivalents could therefore serve to protect true innovations from uncommercialized patents on a case-by-case basis, without the potential harm to the innovation incentive that prospective patent legislation might cause.

Interestingly, according to Ernst, "the Second, Sixth, and Ninth Circuits had precedent requiring that the district court must always consider reverse equivalents prior to determining infringement," and the standard was only whether the accused product was "substantially changed," not whether it was a "radical improvement" (a standard that emerged from scholarly articles, not case law).

I don't have high hopes for the revival of this doctrine, but the Federal Circuit has made clear that it is not dead yet; for example, Plant Genetic Systems v. DeKalb (2003) quoted an earlier case as saying that "the judicially-developed 'reverse doctrine of equivalents' . . . may be safely relied upon to preclude improper enforcement against later developers." So litigators should keep this in their toolkits, just in case.

Tim Holbrook on Induced Patent Infringement at the Supreme Court

Tim Holbrook (Emory Law) has a new article, The Supreme Court's Quiet Revolution in Induced Patent Infringement (forthcoming in the Notre Dame Law Review), arguing that with all the hand-wringing over Supreme Court patentable subject matter cases, scholars have missed the substantial changes the Court has wrought in induced patent infringement. Here is the abstract:

The Supreme Court over the last decade or so has reengaged with patent law. While much attention has been paid to the Court’s reworking of what constitutes patent eligible subject matter and enhancing tools to combat “patent trolls,” what many have missed is the Court’s reworking of the contours of active inducement of patent infringement under 35 U.S.C. § 271(b). The Court has taken the same number of § 271(b) cases as subject matter eligibility cases – four. Yet this reworking has not garnered much attention in the literature. This article offers the first comprehensive assessment of the Court’s efforts to define active inducement. In so doing, it identifies the surprising significance of the Court’s most recent case, Commil USA, LLC v. Cisco Systems, Inc., where the Court held that a good faith belief on the part of the accused inducer cannot negate the mental state required for inducement – the intent to induce acts of infringement. In so doing, the Court moved away from its policy of encouraging challenges to patent validity as articulated in Lear, Inc. v. Adkins and its progeny. This step away from Lear is significant and surprising, particularly where critiques of the patent system suggest there are too many invalid patents creating issues for competition. This article critiques these aspects of Commil and then addresses lingering, unanswered questions. In particular, this article suggests that a good faith belief that the induced acts are not infringing, which remains as a defense, should only act as a shield against past damages and not against prospective relief such as injunctions or ongoing royalties. The courts so far have failed to appreciate this important temporal dynamic.

The four cases he's talking about are Grokster, Global-Tech, Limelight, and Commil. (You might say, "Wait, Grokster is a copyright case!" But Holbrook explains the substantial impact it had on patent law.) I think the article is worth a read, and that the concluding point on damages is quite interesting.

Commil v. Cisco and the Tort of Patent Infringement

Guest post by Saurabh Vishnubhakat, Postdoctoral Associate at Duke Law School. Vishnubhakat is also an expert legal advisor in the USPTO's Office of Chief Economist. His scholarship is available on SSRN, and you can follow him at @emptydoors. The arguments in this writing are the author’s and should not be imputed to the USPTO or to any other organization.

Commil v. Cisco Cert Grant on Knowledge for Induced Patent Infringement

The Supreme Court granted cert today in its second patent case of the 2014 Term, Commil v. Cisco, on whether a defendant’s belief that a patent is invalid is a defense to induced infringement under 35 U.S.C. § 271(b). (The Court did not take the petition's second question, and Justice Breyer is recused.) For those who haven't been paying attention, here's a quick rundown:

Seaman on Willful Patent Infringement

What effect has In re Seagate had on willful infringement findings? Seagate raised the bar for willfulness by requiring patentees to show "objective recklessness." Christopher Seaman (Chicago-Kent Law) addresses this question in Willful Patent Infringement and Enhanced Damages After In re Seagate: An Empirical Study (forthcoming in the Iowa Law Review). Seaman created a dataset of all patent willfulness cases from September 2004 to July 2010 (straddling the Seagate decision in August 2007); the paper says that data "will be made publicly available on the author's website," but they don't appear to be posted yet.

Although "[m]any observers predicted that [Seagate's] heightened standard would result in far fewer willfulness findings and enhanced damage awards," Seaman's empirical study "finds that willful infringement was found only about 10% less often after Seagate." For a concise summary of the specific findings, see Peter Zura's post on his 271 Patent Blog. Of course, with studies of this sort it is always difficult to separate the effect of the new legal rule from the decisions of the parties over which cases to litigate, so it is hard to know what conclusions we can draw, but I think Seaman's findings are still useful.