In Eli Lilly & Co. v. Actavis Elizabeth, 435 Fed. App’x 917, 927 (Fed. Cir. 2011), the U.S. Court of Appeals for the Federal Circuit held that substantial, noninfringing “off-label” uses of an approved drug cannot defeat a claim of contributory infringement in an action brought under the Hatch-Waxman Act. This decision, along with its underlying rationale, took away from generic drug manufactures a bona fide and potent defense against contributory infringement claims in Hatch-Waxman litigation. Unfortunately for generic companies, this decision still stands—despite contravening U.S. Supreme Court precedent—allowing branded companies to continue pursuing otherwise spurious claims for contributory infringement.
This article discusses how Supreme Court precedent conflicts with the Federal Circuit’s decision in Eli Lilly, and why the Federal Circuit’s decision should be overturned.
The Federal Circuit’s Decision in ‘Eli Lilly’ and Its Underlying Rationale. In Eli Lilly, the drug at issue was one of Eli Lilly’s top selling drugs, Strattera (atomoxetine hydrochloride). 435 Fed. App’x at 919. Strattera has only one labeled FDA-approved use, treating ADHD, but is prescribed off-label as much as 29 percent of the time. Id. at 926. The only patent Eli Lilly asserted against the defendants seeking to market a generic Strattera was a method of treatment patent directed only to the labeled use of atomoxetine—treating ADHD. Id. at 919. The district court, though finding that the defendants would induce infringement of that patent if the patent were valid, found no contributory infringement under 35 U.S.C. § 271(c) in light of the frequent (and noninfringing) off-label uses of Strattera, which the district court recognized as a “substantial noninfringing use” for purposes of denying Eli Lilly’s claim of contributory infringement. 435 Fed. App’x at 919.
On appeal, the Federal Circuit reversed the district court’s finding of no contributory infringement. Id. The Federal Circuit reasoned that, because “the only authorized use of atomoxetine is the labeled patented use to treat ADHD” and because the “defendants are restricted from selling a federally regulated drug for unapproved uses,” whether third parties used the drug off-label is irrelevant when determining the defendants’ liability for contributory infringement. Id. at 927 (citing 21 C.F.R. §202.1(e)(4)). Stated another way, since the defendants are prohibited from promoting any use of a drug not specified on the drug’s label, then the defendants should likewise not escape liability for contributory infringement based on uses of a drug it is prohibited from promoting in the first instance, regardless of how frequent the off-label use occurred and no matter that these uses were carried out by physicians on their own accord. Id. The Federal Circuit’s decision essentially imposed a strict liability standard for contributorily infringing a method of use patent simply because generic manufacturers are prohibited by law from promoting off-label use.
Off-Label Use of Approved Drugs Is Lawful and Widespread. The FDA approves new drugs to treat specific conditions. These approved uses are specified on the drug’s label. While a pharmaceutical company cannot market its drugs for unapproved uses, physicians often prescribe drugs to do just that—to treat a condition that is different from the drug’s FDA-approved uses. This practice, known as “off-label prescribing” or “off-label use,” is very common. See Understanding Unapproved Use of Approved Drugs “Off Label”, FDA.Gov (Feb. 5, 2018). To some people’s surprise, off-label use is lawful. Buckman Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341, 351 (2001) (citing J.M. Beck & E.D. Azari, FDA, Off-Label Use, and Informed Consent: Debunking Myths and Misconceptions, 53 Food & Drug L.J. 71, 72 (1998)). In fact, physicians are sometimes encouraged to prescribe approved drugs off-label. Understanding Unapproved Use, supra. The Supreme Court also recognizes that off-label use is not only lawful, but such use is “widespread in the medical community and often is essential to giving patients optimal medical care, both of which medical ethics, FDA, and most courts recognize.” Buckman, 531 U.S. at 351 (citing Beck & Azari, supra, at 72).
Examples of off-label uses of blockbuster drugs are legion. For example, physicians had long prescribed Pfizer’s Lipitor, approved by the FDA to treat high cholesterol, off-label to treat symptoms associated with rheumatoid arthritis. E.g., Karim Mowla et al., Effect of Atorvastatin on the Disease Activity and Severity of Rheumatoid Arthritis: Double-Blind Randomized Controlled Trial, 10(5) J. Clinical & Diagnostic Res. OC32, OC32 (2016). Physicians also prescribe Abilify, which is approved to treat schizophrenia and other related neurological disorders, to treat Alzheimer’s disease. E.g., P.P. De Deyn et al., Aripiprazole in the Treatment of Alzheimer’s disease, 4 Expert Opinion on Pharmacotherapy 459, 459 (2013). Another well-known example of off-label use is Viagra, which—in addition to its famous FDA-approved use—has been prescribed off-label to treat pulmonary hypertension. Christopher F. Barnett & Roberto F. Machado, Sildenafil in the Treatment of Pulmonary Hypertension, 2(4) Vascular Health & Risk Mgmt. 411, 411 (2006).
The Federal Circuit’s Decision in ‘Eli Lilly’ Contravenes Supreme Court Precedent. The doctrine of contributory infringement, codified in 35 U.S.C. § 271(c), specifically absolves an accused infringer of any infringement liability if the accused product is a “staple article or commodity of commerce suitable for substantial noninfringing use.” The Supreme Court’s decision in Sony Corp. of America v. Universal City Studios, 464 U.S. 417, 441‑42 (1984), is the seminal case defining the legal standard for contributory infringement under 35 U.S.C. §271(c), even though the case itself concerned copyright infringement. The court in Sony held that there is no contributory infringement if the accused article is “capable of commercially significant noninfringing uses.” Id. at 442. The court further explained that “[a] sale of an article which though adapted to an infringing use is also adapted to other and lawful uses, is not enough to make the seller a contributory infringer. Such a rule would block the wheels of commerce.” Id. at 441‑42 (emphasis added).
Yet off-label uses, as common and lawful as they are, cannot constitute a substantial noninfringing use under Eli Lilly. This holding clearly conflicts with the court’s precedent under Sony in several respects. First, nothing in Sony suggests that, in a Hatch-Waxman litigation, the accused infringer must be authorized to market the substantial noninfringing use of the patented product. Rather, Sony requires only that the use of that product be adapted to other lawful uses. Id. at 441. Second, nothing in Sony suggests that a substantial noninfringing use of a drug must be the same use approved by the FDA. Third, physicians prescribing a drug off-label is undeniably a lawful use, irrespective of whether the generic drug manufacturer cannot legally market the drug for an unapproved use. Fourth, nothing in Sony suggests that the substantial noninfringing use must be carried out by the accused infringer. Such use can be carried out by any third party, such as physicians. Indeed, evidence of substantial noninfringing uses often include uses performed by third parties on their own volition. See id. at 441, 446‑47 (discussing how third parties used “time shifting” in VCR recordings).
Other Supreme Court and appellate precedents further demonstrate the fallacy of the Federal Circuit’s rationale in Eli Lilly. The court in Metro-Goldwyn-Mayer Studios v. Grokster, LTD, 545 U.S. 913, 932 (2005), another copyright infringement case citing patent law as its basis, noted that “where an article is ‘good for nothing else’ but infringement,” then the manufacturer and/or seller of that article is liable for contributory infringement. Likewise, in Dawson Chemical Co. v. Rohm & Hass Co., 448 U.S. 176, 198 (1980), the court espoused a similar principle that there is only contributory infringement where the commodity “has no use except through practice of the patented method.” Indeed, for over 100 years, circuit courts have applied this same principle when determining whether an accused infringer is guilty of contributory infringement. See, e.g., Alabastine Co. v. Payne, the 27 F. 559, 560 (C.C.N.D.N.Y. 1886) (contributory infringement found where the defendant was “selling a compound which he knows cannot be practically applied without making the user a trespasser [i.e., infringer]” (emphasis added)).
Based on precedent, the anomaly of the Federal Circuit’s decision in Eli Lilly is manifest. Of course, based on Supreme Court precedent, a generic manufacturer can be liable for contributory infringement if the only lawful use of a drug by physicians is the patented use on the drug’s label. But this reasoning is markedly inapposite to the reasoning set forth in Eli Lilly, where an accused generic drug manufacturer is liable for contributory infringement merely because the only lawful use it can put on the drug’s label is an infringing use—despite evidence showing a significant amount of lawful, noninfringing uses of the drug (i.e., off-label uses) by others. The paradox in the Federal Circuit reasoning is that it focuses only on what the accused infringer cannot do, namely promote off-label use. Such reasoning completely disregards the most important consideration in the contributory infringement inquiry, namely whether the approved drug is or can be used in a significant and lawful noninfringing manner by others (namely physicians). Sony, 464 U.S. at 421. That a generic drug manufacturer can promote off-label use is entirely irrelevant to this inquiry.
More specifically, under Sony, the question is not whether generic drug companies can promote off-label uses. Rather, under Sony, the question is whether the uses being performed or capable of being performed by others are lawful. If those uses are lawful, the question then becomes whether such uses are substantial—in other words, whether they are unusual, far-fetched, illusory, impractical, aberrant, or experimental. See Sony, 464 U.S. at 441‑42. The Federal Circuit in Eli Lilly made none of these findings required by Sony, and thus its analysis is wrong and should be overturned.
Over the years, several district courts have followed Eli Lilly, finding generic manufacturers liable for contributory infringement irrespective of the frequency of noninfringing off-label use. See, e.g., Forest Labs. Holdings Ltd. v. Mylan, 206 F. Supp. 3d 957 (D. Del. July 11, 2016), appeal dismissed (Oct. 6, 2016); Cephalon Inc. v. Mylan Pharm., 962 F. Supp. 2d 688, 711 (D. Del. 2013). However, at least one district court has cast doubt on reading Eli Lilly so broadly as to render evidence of significant off-label uses of an approved drug utterly irrelevant to the contributory infringement analysis. In Sanofi v. Glenmark Pharmaceuticals, USA, 204 F. Supp. 3d 665 (D. Del. 2016), the district court distinguished the Hatch-Waxman case at issue from Eli Lilly. Sanofi concerned a patent directed toward a method of reducing risk of cardiovascular hospitalization by administering the drug dronedarone to those with specific risk factors. Approximately 20 percent of patients receiving dronedarone, however, did not have a specific risk factor listed in the patent. Though the court declined to comment on whether this constituted off-label use, it rejected the notion that Eli Lilly stands for the proposition that “off-label uses cannot be considered substantial non-infringing uses as a matter of law, because it is illegal to market products for off-label uses.”
Off-label uses are lawful, widespread, and beneficial to patients who have exhausted other available treatment options. The doctrine of contributory infringement was never meant to impose liability on a generic drug manufacturer simply because it is restricted from promoting approved drugs off-label, and is certainly no reason to delay the availability of cheaper generic drugs to patients. With Eli Lilly, the Federal Circuit missed an opportunity to set the proper legal standard for contributory infringement in a Hatch-Waxman litigation. Hopefully, it will have another opportunity in the very near future to overturn its decision in Eli Lilly and limit the reach of contributory infringement in the pharmaceutical context such that significant off-label uses may constitute substantial noninfringing uses sufficient to rebuff contrived claims of contributory infringement brought against generic drug manufactures by branded drug makers.
Tom Parker is a partner, Stephen Yang is a senior associate, and Jacob Bass is an associate in Alston & Bird’s patent litigation group.