GlaxoSmithKline LLC et al v. Teva Pharmaceuticals USA Inc.

Filing 328

MEMORANDUM ORDER re 191 REPORT AND RECOMMENDATION is ADOPTED -- 63 MOTION to Dismiss filed by Teva Pharmaceuticals USA Inc. is DENIED. Signed by Judge Leonard P. Stark on 3/20/17. (ntl)

IN THE uNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
GLAXOSMITHKLINE LLC and SMITHKLINE
BEECHAM (CORK) LIMITED
Plaintiffs,
C.A. No. 14-878-LPS-CJB

v.
TEVA PHARMACEUTICALS USA, INC.
Defendant.

MEMORANDUM ORDER
WHEREAS, Magistrate Judge Burke issued a 39-page Report and Recommendation (the
"Report") (D.I. 191), dated July 20, 2016, recommending that Defendant Teva Pharmaceuticals
USA, Inc.'s ("Defendant" or "Teva") motion ("Teva's Motion to Dismiss") (D.I. 63), seeking to
dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(6), Plaintiffs GlaxoSmithKline LLC
and SmithKline Beecham (Cork) Limited's (collectively, "GSK") induced infringement claim
relating to the period between January 2008 and May 2011 ("the Pre-May 2011 Period" or "the
Relevant Period") in GSK's Second Amended Complaint ("SAC") be denied;
WHEREAS, on August 8, 2016, Teva objected to the Report ("Objections") (D.I. 194),
specifically objecting to the Report's conclusions that: (1) Teva's carved-out ("skinny") label
could instruct third parties to infringe U.S. Patent No. RE40,000 (the '"000 patent") and
(2) the SAC's allegations make it plausible that Teva knew the skinny label would induce
infringement;
WHEREAS, on August 25, 2016, GSK responded to Teva's Objections ("Resp_onse")

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(D.I. 197), asserting that the Report correctly found that the SAC met the applicable pleading
standards and sufficiently alleged facts to show that the claims of induced infringement in the
Relevant Period were plausible;
WHEREAS, the Court has considered the parties' objections and responses de novo, see
St. Clair Intellectual Prop. Consultants,

Inc~

v. Matsushita Elec. Indus. Co., Ltd., 691 F. Supp.

2d 538, 541-42 (D. Del. 2010); 28 U.S.C. § 636(b)(l); Fed. R. Civ. P. 72(b)(3);
NOW THEREFORE, IT IS HEREBY ORDERED that:
1.

Teva's Objections (D.I. 194) are OVERRULED, Judge Burke~s Report (D.I. 191)

is ADOPTED, and Teva's Motion to Dismiss (D.I. 63) is DENIED.
2.

Teva argues that the Report commits legal error by concluding that Teva's

skinny label could instruct third parties to infringe the '000 patent, as Teva's generic carvedilol
product was never approved by the FDA for the alleged patented use - relating to treatment of
congestive heart failure ("CHF")- since Te_va specifically carved out that patented use from its
label. (Objections at 3-4) Teva argues that the Report wrongly found plausibility in the.
allegation that Teva' s label "could" lead to infringement by some third parties based, in part~ on
Teva's label's statements relating to treatment of a different condition- left ventricular
dysfunction following myocardial infarction ("Post-MILVD"). (Id. at 6) According to Teva,
this is legal error, notwithstanding any overlap between treatment of CHF and treatment of PostMI LVD. (Id. at 6-7) (citing Warner-Lambert Co. v. Apotex, Corp., 316 F.3d 1348, 1364-65
(Fed. Cir. 2003); Allergan, Inc. v. Alcon Labs., Inc., 324 F.3d 1322, 1324, 1327-28 (Fed. Cir.
2003); Bayer Schering Pharma AG v. Lupin, Ltd., 676 F.3d 1316, 1323-24 (Fed. Cir. 2012))
However, as the Report explained, "there can, in fact, be situations where a generic

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manufacturer seeks and obtains a section viii carve-out for a use of a drug that is (according to
the FDA) a 'different' use from a patented use - and yet the generic's label could nevertheless be
written in such a way that it evidences active steps to

indu~e

patent infringement." (Report at 30) i

.

,

:

Here, Teva's label carves out use of the drug for CHF but expressly includes instruction on use of
Teva's product to treat Post-MI LVD. That Post-MI LVD portion of the label includes
,

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statements that, for reasons explained in the Report, could plausibly be found to be knowing,
intentional instructions to use Teva's product to treat CHF. (See id. at 31-34) While the
plausibility of this allegation is supported by the relatedness of the patented use (treatment of
CHF) and the unpatented use (treatment of Post-MI LVD), that relatedness is not the sole basis
on which the Report's (correct) conclusion of plausibility is based.
3.

Teva accuses the Rep.ort of permitting "an expansion of the law on inducement in

the context of generic pharmaceuticals" that "simply cannot be squared with firmly rooted" law.
(Objections at 1) For this contention, Teva relies primarily on three Federal Circuit decisions,
which Teva insists are "unequivocal" in holding that "based on Teva's skinny label there can be
no claim for inducement of a patent that requires the intentional treatment of CHF." (Id. at 4)
(citing Warner-Lambert, 316 F.3d at 1364-65; Allergan, 324 F.3d at 1334; Bayer, 676 F.3d at
1324) Contrary to Teva's characterization, the Court agrees with GSK that the ANDA. cases on
which Teva relies at most establish that were this an ANDA case (it is not), and were GSK's

allegations based solely on the label (they are not), GSK's inducement theory might lack merit
as a matter oflaw. (See Response at 3) ("Those Hatch-Waxman cases deal with a markedly
different circumstance -proving infringement under 35 U.S.C. § 271(e)(2) based on the
proposed generic product and accompanying labeling, as set out in an ANDA, before any
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product is ever sold.")
4.

Teva further argues that the Report incorrectly concluded that Teva knew its label

was inducing infringement. (Objections at 7) Teva claims that the only use code GSK
associated with the '000 patent was "decreasing mortality caused by congestive heart failure,"
which relates only to treating CHF and not to Post-MILVD. (Id. at 8-9) Teva concludes that
because GSK did not itself believe that the '000 patent could be asserted against the Post-MI·.
LVD indication, there is .no way Teva could have known that this indication would infringe the
patent. (Id. at 9)
GSK responds that the use code covered all infringing uses of carvedilol to decrease the
risk of mortality caused by heart failure, including Post-MI LVD patients who also had heart
failure. (Response at 9) Thus, GSK maintains that the SAC sufficiently alleges Teva knew its
label was inducing infringement: Teva knew of the '000 patent (and its parent patent) when it
created its carve-out label and "had those patents in mind when it acted affirmatively in preparing :
its skinny label, an act which would have involved considerations of what uses might infringe.~'
(Id. at 8)

The Report concludes that, based on the SAC, "it is plausible that Teva knew that certain
language in its label would induce infringement of GSK's patent directed to a method of
decreasing mortality caused by CHF." (Report at 32 n.20) The Court agrees. The SAC contains
allegations that Teva knew of the patents and generated its carve-out to avoid infringing the CHF
indication. (SAC at ljfljf 49, 50, 52, 71) But it further alleges that Teva's label includes language
for post-MI LVD, which directs patients to take the generic product "to reduce cardiovascular·
mortality in clinically stable patients ... with ... symptomatic heart failure." (SAC at ljf 52) It

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alleges still further that there are no substantial non-infringing uses for carvedilol, as GSK only
marketed the drug for the CHF indication (in the United States) and uses for the other indications
(Post-MILVD and hypertension) are not substantial - all of which Teva is alleged to have known :
as it crafted its label. (SAC at ifif 22, 32, 34, 52, 61, 80, 83) All of this, taken as true, supports a
conclusion that GSK has plausibly alleged that Teva specifically intended third parties to infringe
the '000 patent during the Relevant Period and knew that the third parties' acts would constitute
infringement, which is all that must be found at this stage in order to deny Teva's motion. See In
re Bill ofLading Transmission & Processing Sys. Patent Litig., 681F.3d1323, 1339 (Fed. Cir.

2012); see also Report at 13-14.

5.

.Finally, the Court stresses (as did the Report) that in denying Teva's motion, the.

Court is not concluding that GSK will prove induced infringement. Instead, the Court is merely
concluding that GSK has pled a plausible claim of induced infringement, one that must be
subjected to the rigors of discovery and evidentiary proceedings. Much of Teva's attack on the
Report misses the mark as it appears to be based on Teva's view (which may ultimately be
correct, but which is unavailing on a motion to dismiss) that GSK will fail to prove induced
infringement.

March 20, 2017
Wilmington, D~laware

HON. L ONARD P. ST
UNITED STATES DISTRICT JUDGE

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