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Article: July 2017: Impact of Eli Lilly v. Teva Parenteral Medicines Inc. on Divided Infringement

Business Litigation Reports

The Federal Circuit in Eli Lilly v. Teva Parenteral Medicines Inc., 845 F.3d 1357 (Fed. Cir. 2017), recently addressed the issue of “divided infringement” in the context of pharmaceutical patents for the first time since its 2015 decision in Akamai Technologies Inc. v. Limelight Networks, Inc., 797 F.3d 1020 (Fed. Cir. 2015) (“Akamai V”). Divided infringement occurs when multiple actors are involved in carrying out the claimed infringement of a method patent and no single accused infringer has performed all of the steps of the method. In cases of divided infringement, courts will generally hold a defendant infringer liable for the infringing actions of another where the defendant directs or controls the other’s actions or forms a joint enterprise or acts with a common purpose together with the other. See Akamai V, 797 F.3d at 1022.

In Eli Lilly, the Federal Circuit reviewed the question of what constitutes directing another’s actions in cases where pharmaceutical drug labeling information provides firm directions to physicians to instruct the patient to self-perform certain steps of a patented treatment method. The Court held that where the drug labeling information provides the required steps that physicians must direct patients to take prior to administering the drug, and provides firm instructions to the physicians relative to the drug’s administration, the drug manufacturer can be held liable for inducing infringement of a method-of-use patent.

Case Background
Pharmaceutical company Eli Lilly, the plaintiff in this case, holds a patent relating to the treatment of cancer, and specifically relating to methods for administering the drug pemetrexed disodium (“pemetrexed”). Pemetrexed is a chemotherapy drug that kills cancer cells that Eli Lilly sells under the brand name ALIMTA®. Treatment with permetrexed requires physicians first to treat the patient with folic acid and vitamin B12 before administering the drug, which reduces the drug’s toxicity and increases safety. The pemetrexed patent states that the process of drug treatment requires “administering an effective amount of folic acid” to the patient, specifically “between about 350 μg and about 1000 μg.”

The defendants were a collection of generic drug companies that sought to sell generic versions of ALIMTA® prior to the expiration of Eli Lilly’s patent. The defendants planned to sell pemetrexed for the same purpose as the patented method—to use pemetrexed to treat cancer cells after first reducing the toxicity using folic acid and vitamin B12. They nevertheless argued that they did not infringe Eli Lilly’s patent because the steps that defendants proposed would be taken would be divided between physicians and patients, where the patient self-administers folic acid with guidance from the physician, while the physician administers vitamin B12 and pemetrexed.

To show that these two actions amounted to divided infringement, Eli Lilly had to show that the defendants induced direct infringement of the patent from multiple parties by establishing that “the acts of one are attributable to the other such that a single entity is responsible for the infringement.” This occurs in two types of circumstances: when the entity “directs or controls” another’s performance, or when the actors “form a joint enterprise.” See Akamai V, 797 F.3d at 1022. The question in Eli Lilly was whether the defendants infringed Eli Lilly’s patent because it called for the physician to “direct or control” the patient’s performance. Following a bench trial, the district court determined that it did, and the Federal Circuit affirmed that decision.

Directing or Controlling Performance
Relying upon prior Federal Circuit precedent, in particular Akamai V, the court noted that “directing or controlling others’ performance includes circumstances in which an actor: (1) ‘conditions participation in an activity or receipt of a benefit’ upon others’ performance of one or more steps of a patented method, and (2) ‘establishes the manner or timing of that performance.’” Eli Lilly, 845 F.3d at 1365. Given that the permetrexed labeling information, including the physician prescribing information and the patient instructions, established clear directions and methods of compliance that physicians were required to give to patients prior to administering the drug, the court concluded that defendants were liable for divided infringement by “directing and controlling” the other infringers’ actions. With respect to the first prong, the district court “identified pemetrexed treatment as the benefit to be conditioned.” The product labeling repeatedly tells physicians to instruct patients on taking folic acid, along with folic acid dosage ranges and schedules. Likewise, the patient information informs patients that the physician may withhold pemetrexed treatment, with both sides’ experts acknowledging that if the physician knew that the patient did not first take the required amount of folic acid, any reputable physician would withhold treatment of pemetrexed. Thus, the Federal Circuit agreed that physicians do not merely “guide or instruct” the patients to take folic acid, but rather condition participation in administering pemetrexed upon the patient first taking folic acid.

With respect to the second prong, Defendants argued that because the product labeling gives patients wide latitude to select the dose, the form of dose, and the timing of taking the folic acid, it cannot be said that the physician “establishes the manner or timing of [] performance.” In rejecting these arguments, the Federal Circuit again focused on the product labeling, noting that the physician prescribing information instructs physicians to tell patients to take folic acid orally and to take between 400 μg and 1000 μg of folic acid daily for one week before the start of pemetrexed. These instructions overlap with the dosage ranges and schedules in Eli Lilly’s patent, and thus the Federal Circuit determined that Eli Lilly satisfied the second prong.

Intent to Induce Infringement
Having found the two-prong Akamai V test met, the court next turned to the question of whether Eli Lilly proved that defendants had “specific intent and action to induce infringement.” The district court found that defendants had acted with such specific intent, because the administration of folic acid was a critical step for the administration of pemetrexed—not just a suggestion or recommendation—and because the defendants’ proposed labeling induced the physicians to act in accordance with that labeling. In upholding that decision, the Federal Circuit noted that the intent must be directed to the actions of the underlying direct infringer, here the physicians, but it is not necessary for the plaintiff to provide evidence regarding whether the induced activity is actually prevalent. Rather, when proving intent based upon product labeling, the “label must encourage, recommend, or promote infringement” in order for the court to be able to infer an affirmative intent to infringe the patent. If the instructions clearly instruct users to follow the instructions in an infringing manner, then the court will find intent to induce infringement, even if some users might not follow the instructions. On the other hand, if the instructions are vague and require the actor to look outside the label to understand and undertake the implied infringing action, then an intent to induce infringement cannot necessarily be inferred. In this case, the product labeling made clear what was required of the physician, including the instructions to convey to the patient. Although defendants argued that physicians often take additional steps not considered by the patent, such as asking patients to keep pill diaries or confirming compliance with folic acid administration, the court determined that these additional guidelines are irrelevant to the question of inducement whenever the product labeling would inevitably lead some physicians to infringe the patent.

Divided Infringement Going Forward
In light of the Federal Circuit decision in Eli Lilly, in order for a patent holder to succeed on a claim of divided infringement against a company seeking to market a generic drug by incorporating steps to be taken by different actors, the patent holder must show that the generic drug company intentionally induced a party, such as a physician, to infringe the patent by either directing or controlling the other party to engage in actions that—together with the actions of the controlling party—would infringe the patent, or by joining into an enterprise with the other party and jointly infringing the patent. Where Eli Lilly is additive to the existing body of case law on this question is that it identifies the drug labeling information used by the generic company as particularly important evidence both in establishing direction or control and in establishing an intent to induce infringement. If the generic company includes in its labeling to the United State Food and Drug Administration that certain tests or steps must be performed by the physician or under the physician’s direction, then according to Eli Lilly, infringement will likely be found. If, on the other hand, the generic company is able to avoid definite requirements in the product labeling, instead leaving it to the physician to independently determine the method of administration, Eli Lilly suggests that it may be more difficult for the patent holder to establish the requirements to hold the generic company liable for divided infringement. Eli Lilly expressly did not reach the question whether more than just a patient-physician relationship is required to show that the patient is acting under the physician’s “direction or control,” while also leaving open the possibility that other scenarios not involving directions to physicians in FDA-approved labels could serve to satisfy the “direction or control” requirement.