On January 12, 2017, the Federal Circuit in Eli Lilly v. Teva Parenteral Medicines affirmed a finding that Teva and other drug makers would induce infringement of Eli Lilly’s method-of-treatment patent, U.S. Patent No. 7,772,209, where those drug makers had sought FDA approval for product labels that instructed doctors to perform certain steps of the patented method and patients to perform the remaining steps. The Federal Circuit’s affirmance confirms that liability for inducing infringement can arise in circumstances where a doctor is found to “direct or control” the actions of his or her patient in an infringing manner.

In 2010, Eli Lilly, the maker of the chemotherapy drug Alimta® (pemetrexed), sued Teva and others under the Hatch-Waxman Act in the District Court for the Southern District of Indiana to prevent them from launching generic versions of pemetrexed. As part of that suit, Eli Lilly asserted that the defendants would induce infringement of the ’209 patent, which claims methods of administering pemetrexed following pre-treatment with folic acid and vitamin B12. The district court found the defendants liable for inducing infringement of the ’209 patent. The defendants appealed.[1]

On appeal, Justices Prost, Newman and Dyk of the Federal Circuit affirmed. First, the Federal Circuit reiterated the two basic requirements for proving inducement of infringement: a patentee must show, by a preponderance of evidence, (i) direct infringement, and (ii) that the alleged infringer possessed the requisite intent to induce direct infringement, i.e., the alleged infringer knew, or should have known, that its actions would induce actual infringement.

Next, the Federal Circuit reviewed the relevant portions of Akamai Techs., Inc. v. Limelight Networks, Inc., 797 F.3d 1020 (Fed. Cir. 2015) (en banc), which holds that, where no single actor performs all steps of a patented method, direct infringement—the first requirement for proving inducement—can only occur where the acts of one actor are attributable to another such that a single entity is responsible for infringement, and that acts by one actor are attributable to a single entity where (i) that entity “directs or controls” the others’ performance, or (ii) where the actors form a “joint enterprise.” Id. at 1022. For purposes of the appeal, the parties agreed that no single actor would perform all steps of the patented method; rather, doctors would administer vitamin B12 and pemetrexed, whereas patients would self-administer folic acid. And because Eli Lilly did not pursue a “joint enterprise” theory, the Federal Circuit limited its direct infringement analysis to the question of whether doctors “direct or control” their patients’ self-administration of folic acid.

As to that question, the Federal Circuit again turned to Akamai to assert that “directing or controlling” may be found in circumstances where an actor (i) “conditions participation in an activity or receipt of a benefit” upon another’s performance of one or more steps of the patented method, and (ii) “establishes the manner or timing of that performance.” 797 F.3d at 1023.

With respect to the “conditioning” prong, the Federal Circuit held that the district court did not err in finding that doctors “condition” pemetrexed treatment on their patients’ administration of folic acid, in view of the fact that the defendants’ product labels expressly instruct doctors to tell their patients to take folic acid to reduce the side effects of pemetrexed, and in view of expert testimony demonstrating that doctors generally will not administer pemetrexed to patients who have not taken folic acid. The Federal Circuit rejected the defendants’ complaints that there was no evidence to show that doctors verified patient compliance with their instructions or threatened to deny pemetrexed treatment to their patients. The Federal Circuit noted that “[c]onditioning . . . does not necessarily require double-checking another’s performance or making threats.” The Federal Circuit also rejected the defendants’ theory that an actor can only “condition” the performance of another by “imposing a legal obligation to do so,” noting that direct infringement “is not limited solely to principal-agent relationships, contractual arrangements and joint enterprise.”

With respect to the “manner and timing” prong, the Federal Circuit held that the district court did not err in finding that doctors establish the manner and timing of the administration of folic acid, in view of the fact that defendants’ product labels expressly instruct doctors to tell their patients to take 400 µg to 1000 µg of folic acid once daily beginning 7 days before the first dose of pemetrexed, and in view of expert testimony demonstrating that doctors, rather than patients, determine the manner and timing of folic acid administration.

The Federal Circuit noted that “[o]ur holding today does not assume that patient action is attributable to a prescribing physician solely because they have a physician-patient relationship” and that “[w]e leave to another day what other scenarios also satisfy the ‘direction or control’ requirement.” The Federal Circuit also did not reach Eli Lilly’s alternate theories of direct infringement, including whether, as a matter of claim construction, physicians “administer” folic acid, and whether, under the doctrine of equivalents, physicians’ prescribing actions are equivalent to putting folic acid into patients’ bodies.

The Federal Circuit then turned to the issue of intent—the second requirement for proving inducement. As to that requirement, the Federal Circuit, citing AstraZeneca LP v. Apotex, Inc., 633 F.3d 1042, 1059-60 (Fed. Cir. 2010), observed that a drug company’s decision to seek FDA approval for a product label that “instructed users to follow the instructions in an infringing manner” sufficed to show intent, “even though some users would not follow the instructions” and “even though the product in question had substantial noninfringing uses.” Accordingly, the Federal Circuit found that the district court did not err in finding that the defendants possessed the requisite intent to induce infringement, in view of the fact that their product labels include “repeated instructions and warnings regarding the importance of and reasons for folic acid treatment.”