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Last week, the U.S. Court of Appeals for the Federal Circuit issued an order in <a href="http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/18-1976.OPINION.10-2-2020_1663180.pdf" target="_blank" rel="noopener"><em>GlaxoSmithKline LLC v. Teva Pharmaceuticals USA LLC</em></a>, No. 18-1976 (Feb. 9, 2021), vacating its prior panel decision in favor of GSK and granting a new hearing.

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At the district court, a jury found Teva liable to GSK for $235 million in lost profits for selling an unpatented drug labeled for unpatented uses, a so-called “skinny label” that included only the two unpatented indications and “carved out” GSK’s patented method. After the verdict, the district court granted Teva's motion for judgment of non-infringement as a matter of law, holding the verdict was not supported by substantial evidence because GSK failed to prove that “Teva’s alleged inducement, as opposed to other factors, actually caused the physicians [i.e., as a class or even at least one of them] to directly infringe” by prescribing the generic drug for the patented method. GSK appealed.

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In an opinion issued on October 2, 2020, Judge Newman, writing for the panel majority, reversed, concluding that despite the carve-out on the label substantial evidence supported the jury’s finding. Judge Prost dissented, asserting that the majority’s decision undermines the balance between patent rights and public access to innovation “by allowing a drug marketed for unpatented uses to give rise to liability for inducement and by permitting an award of patent damages where causation has not been shown.”

On December 2, 2020, Teva requested rehearing en banc, arguing the panel’s decision deviated from long-standing precedent that permits skinny labels and carve-outs to avoid infringement. Teva received amicus support from numerous entities, including Novartis Pharmaceuticals Corporation and Sandoz, Inc.; Mylan Pharmaceuticals Inc.; and Fifty-Seven Law, Economics, Business, Health, and Medicine Professors. On February 9, 2021, the Federal Circuit issued an order vacating the prior panel decision and granting a panel rehearing on the merits. The Court noted that, while Teva requested en banc review, the Court’s internal operating procedures (IOP 14(2)(a)) permit it to grant panel rehearing instead. The Court’s order also set a date for additional oral argument to address the following question: “whether there is substantial evidence to support the jury’s verdict of induced infringement during the time period from January 8, 2008 through April 30, 2011.” The additional oral argument will be heard on February 23, 2021.

CAFC Grants New Hearing In “Skinny Label” Case