CAFC’s First Take on Divided Infringement for Method-of-Treatment Claims

On January 12, 2017, the Federal Circuit decided Eli Lilly & Co. v. Teva Parenteral Medicines, Inc., providing its first opinion on divided infringement for pharmaceutical method patents under the Akamai framework.

In June 2014, the Supreme Court decided Limelight Networks, Inc. v. Akamai Technologies, Inc. (“Akamai III”), which held that there can be no induced infringement under 35 U.S.C. § 271(b) without direct infringement under 35 U.S.C. § 271(a). 134 S. Ct. 2111, 2117 (2014). The Court further held that all claimed steps of a method patent must be attributable to a single person to support a finding of direct infringement of a method patent under § 271(a). Id. at 2118.  The Supreme Court then invited the Federal Circuit to revisit its § 271(a) case law on remand.

On remand, an en banc Federal Circuit accepted the Supreme Court’s invitation and unanimously set forth the law of divided infringement. Akamai Technologies, Inc. v. Limelight Networks, Inc., 797 F.3d 1020 (Fed Cir. 2015) (“Akamai V”). Direct infringement, the judges decided, “occurs where all steps of a claimed method are performed by or attributable to a single entity.” Id. at 1022.  An entity is responsible for others’ performance of infringing steps in two circumstances: “(1) where that entity directs or controls others’ performance, and (2) where the actors form a joint enterprise.” Id.

The Federal Circuit in Akamai V articulated a nonexclusive, two-part test for determining when a party is directing or controlling another’s actions, and is therefore committing direct infringement.  Specifically, a party can be liable for directing or controlling others’ performance: (1) when the party “conditions participation in an activity or receipt of a benefit” upon performance of a step or steps of a patented method, and (2) the party “establishes the manner or timing of that performance.” Id. at 1023. Akamai V broadened the circumstances under which others’ performance may be attributed to a single actor.

Eli Lilly v. Teva presented another case of divided infringement to the Federal Circuit, this time a method patent covering the administration of the chemotherapy drug pemetrexed disodium (“pemetrexed”).  845 F.3d at 1361.  The claimed method teaches that pemetrexed, an antifolate, should be administered following pretreatment with folic acid and vitamin B12.  The two vitamins help to reduce the toxicity of pemetrexed.  The prescribing information (also known as the product labeling) for pemetrexed instructs patients to take folic acid prior to and during treatment with pemetrexed.  The physician administers vitamin B12 and pemetrexed.  Thus, no single actor performs all steps of the asserted claims—both patients and physicians must act to satisfy every claim limitation.

The issue before the district court, then, was whether the physicians “direct or control” their patients’ administration of folic acid.  As announced in Akamai V, a two-prong test must be satisfied for determining if a party is directed or controlled.  First, an entity must condition participation in an activity or receipt for a benefit upon others’ performance of one or more steps of the patented method. Second, the entity must establish the manner and timing of that performance.

The district court found that both prongs of the Akamai V test were satisfied here.  Under the first prong, the “benefit” to be received was the pemetrexed treatment.  Id. at 1365.  The record was replete with evidence that physicians delineate the folic acid administration step and, further, that physicians often decline to provide pemetrexed if the folic acid regimen was not followed. Id. at 1366.  Defendants argued that the product labeling simply provided “guidance” and was insufficient to show “conditioning” under Akamai V. Id.  The district court disagreed, instead finding that where the administration of folic acid was so critical to the safe administration pemetrexed, the physician may be said to be conditioning treatment based on folic acid intake. Id.  The Federal Circuit determined that the district court’s findings were supported by the record and not clearly erroneous. Id.  Defendants further argued at the Federal Circuit that “conditioning” under Akamai V would require physicians to verify compliance, of which the record showed no evidence. Id.  The Federal Circuit rejected Defendants’ argument, however, concluding that “conditioning” “does not necessarily require double-checking another’s performance or making threats.” Id.  The Federal Circuit similarly rejected Defendants’ argument that a party may only condition performance of a step by imposing legal obligations or technological prerequisites. Id. at 1367. Rather, the “principles of attribution are to be considered in the context of the particular facts presented.” Id.

The second prong—establishing the manner and timing of performance—was also satisfied by the product labeling. The district court found that the physician is responsible for deciding how much folic acid the patient will take and the timing of the patient’s ingestion. Id.  The Federal Circuit found no clear error. Id.  Defendants argued that physicians are not the only source of information or assistance for folic acid administration, and, therefore, do not solely direct the manner and timing of performance. The Federal Circuit, however, rejected that argument because physicians, though they may not be the only resource, provide sufficient guidance to establish the manner and timing of performance for their patients.

The Federal Circuit declined to extend its holding under the manner-and-timing-of-performance prong to attribute patient action to the physician solely because of the established physician-patient relationship. The facts as presented here were sufficient to establish that the physicians were responsible for the patients’ performance. Id.  But the Federal Circuit left “to another day what other scenarios also satisfy the ‘direction or control’ requirement.” Id. at 1368.

The Federal Circuit concluded that the two-step Akamai V test was met here. But Eli Lilly still had the further burden of proving the intent element for induced infringement. That is “specific intent and action to induce infringement.” Takeda Pharm. USA, Inc. v. West-Ward Pharm Corp., 785 F.3d 625, 631 (Fed. Cir. 2015). The district court concluded that Defendants would induce infringement of the ’209 patent in light of two findings: (1) that the administration of folic acid was a “critical step” and (2) that Defendants induce physicians’ infringement because physicians are acting “in accordance with Defendants’ proposed labeling.” Eli Lilly Co., 845 F.3d at 1368.

At the Federal Circuit, Defendants argued that the product labeling does not induce infringement.  Defendants’ argued that they could not be inducing infringement because physicians must go further than the labeling instructions (by prescribing specific doses of folic acid) to infringe the patent. Id.  Defendants also argue that Plaintiffs failed to produce any evidence of what physicians do “in general.” Id.  The Federal Circuit first makes clear that the “intent” element is with respect to the actions of the underlying direct infringer; i.e., Defendants must intend that the physicians infringe. Id.  Additionally, the Federal Circuit does not require proof of a general prevalence of the induced activity. Id.  Rather, “when the alleged inducement relies on a drug label’s instructions the question is … whether the instructions teach an infringing use such that we are willing to infer from those instructions an affirmative intent to infringe the patent.” Id. (quoting Takeda, 785 F.3d at 631) (internal quotation marks omitted).

For pharmaceutical method patents, the product labeling is, typically, the best evidence to show that the generic company is encouraging, recommending, or promoting infringement to patients or physicians.  Indeed, the Federal Circuit determined that, depending on the preciseness of the instructions in the product labeling, the decision to seek FDA approval, alone, may be sufficient to establish specific intent to induce infringement. Id.  On the other hand, “vague instructions that require one to look outside the label to understand the alleged implicit encouragement” are insufficient to induce infringement. Id. (quoting Takeda, 785 F.3d at 632, 634). The evidence presented to the district court, here, supported a finding of induced infringement because the instructions would “inevitably” lead some physicians to infringe. Id. at 1369.

The Federal Circuit relied primarily on two bodies of case law—Akamai and Takeda—to hold that a pharmaceutical manufacturer may be liable for induced infringement through a divided-direct infringement theory between the physician and the patient.  Under Akamai, the physicians’ direction and control of patients’ folic acid administration in conjunction with physicians’ own actions satisfied each step of the claimed method, and, therefore, resulted in the physicians’ direct infringement.  The product labeling provided further evidence under the Takeda precedent that Defendants intended to induce the physicians to infringe the claimed method.  Thus, Defendants were held liable for inducing infringement under 35 U.S.C. § 271(b).

1 845 F.3d 1357 (Fed. Cir. 2017)