INDUCED INFRINGEMENT
All in the timing
When alleging induced infringement, the timing of the alleged acts is critical, explains MaryAnne Armstrong of Birch, Stewart, Kolasch & Birch.
In the pharmaceutical and diagnostic fields, the direct infringer, who is often a doctor or medical/testing facility, is typically not the entity that a patent owner is interested in for recovering damages. The doctor or medical/testing facility is but one of possibly hundreds of direct infringers of a pharmaceutical or diagnostic patent, making it neither feasible nor desirable to sue each direct infringer.
Instead, the holder of a pharmaceutical or diagnostic patent will sue the entity who is the source of the patented pharmaceutical compound or method of using the compound or diagnostic assay under the laws covering inducing infringement (although at least one direct infringer will also need to be sued to show direct infringement as required to support a claim for inducing infringement). Thus, an understanding of inducing infringement is a fundamental part of the pharma/diagnostic industry.
Industry thinking redefined
Inducement of infringement is defined in 35 USC § 271(b) which states: “Whoever actively induced infringement of a patent shall be liable as an infringer.”
“[I]nduced infringement under § 271(b) requires knowledge that the induced acts constitute patent infringement” (Global-Tech Appliances v SEB SA [US 2011]). The knowledge component can be met by actual knowledge or “willful blindness”. Generally, inducement to infringe requires proof the alleged inducer knowingly aided and abetted direct infringement by another of the patent (See, eg, CR Bard v Advanced Cardiovascular Systems [Fed Cir 1990]). Thus, to establish induced infringement, the patent owner must establish both direct infringement by a first party and knowledge by the second party that their acts would lead to the direct infringement.
The issue of induced infringement is an important one in the pharma/medical industry with regard to labels used by generic companies and there have been several cases in the past few years, which consider the issue of induced infringement.
In 2021, the Court of Appeals for the Federal Circuit (CAFC), fairly upended the industry understanding of the use of a skinny label to avoid inducing infringement in their decision in GlaxoSmithKline v Teva Pharmaceuticals USA (Fed Cir 2021). In GlaxoSmithKline v Teva, the CAFC held that simply omitting an approved indicated, which is listed in the FDA Orange Book through a use code (ie having a skinny label), is not an automatic defense against induced infringement. In GlaxoSmithKline v Teva the CAFC noted that Orange Book listings are in no way meant to replace the responsibility of an accused infringer to review the relevant patents in view of the activity that is taught by the label. For full details, see an earlier article published on WIPR.
”Roche did not argue that the alleged direct infringement occurred outside the six-year period. Rather, Roche argued that the alleged acts of inducement did.”
MaryAnne Armstrong
Field restriction controversy
More recently, the court in Roche Diagnostics v BioVeris (Fed Cir 2022), considered the timing of the alleged inducing activity. The background in Roche v BioVeris is somewhat complicated but relevant for understanding why the court reached their decision of no liability for inducing infringement.
The patents in Roche v BioVeris are directed to immunoassays that employ electrochemiluminescence (ECL). The patents in question are not owned by Meso, who brought the suit, but are, in fact, owned by appellant BioVeris (which is actually a Roche entity). However, Meso brought the suit on the basis that a prior owner of the patents, IGEN International (IGEN), granted it exclusive rights to the patent claims asserted against Roche for instruments and reagent packs for performing ECL immunoassays.
Briefly, Meso was formed in 1995 under a joint venture agreement between IGEN and Meso Scale Technologies. The joint venture agreement described a “research programme” for Meso to perform and included a licence agreement to use patents in the course of the research programme.
In 1998, Roche acquired Boehringer Mannheim (Boehringer), to which IGEN had previously, in 1992, licensed patents to develop, use, manufacture, and sell ECL assays and instruments in a particular field. Upon acquisition of Boehringer, Roche inherited Boehringer’s license rights, including that field restriction. Thus, Roche also had a licensing relationship with IGEN in the same field.
In 2003, IGEN and Roche terminated the 1992 agreement and executed a new agreement granting Roche a nonexclusive license to IGEN’s ECL technology in the field of “human patient diagnostics”. Under the provisions of the license Roche was required to note field restriction on its product packaging. However, the licence also permitted sales that resulted in incidental out-of-field use and allowed such sales to continue (absent express prohibition from IGEN) so long as IGEN received 65% of the resulting revenues.
IGEN then formed BioVeris and transferred the patents to the new company. In 2007, a Roche affiliate acquired BioVeris including the patents held by BioVeris. Roche announced the BioVeris acquisition in a press release stating it would now “own the complete patent estate of the electro-chemiluminescence (ECL) technology”, giving it “the opportunity to fully exploit the entire immunochemistry market” and ensuring its ability to “provide unrestricted access to all customers”.
Roche sent its customers a letter indicating that the field-restriction labels were “now obsolete” and would be “removed as soon as possible”, but that in the interim customers should “please ignore the restrictions”. Concomitant with that Roche began selling the products without field restrictions.
Inducing infringement within the damages period
Meso sued Roche alleging that Roche breached the 2003 license between Roche and IGEN by violating the field restriction. Roche brought this action seeking a declaratory judgment that it doesn’t infringe Meso’s rights arising from the 1995 joint venture license agreement. Meso counterclaimed for patent infringement.
Two of the patents in dispute were the ‘779 and ‘729 patents, which predated the research programme of the joint venture. The court affirmed a finding of direct infringement of the patents by the district court, but reversed the finding in induced-infringement.
At issue for the induced infringement liability was the timing of the alleged inducing acts by Roche. Roche argued that Meso did not show that Roche had committed any inducing acts within the patent-damages limitations period. The patent damages period is defined as, “Except as otherwise provided by law, no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action” (35 USC § 286). Here, that damages period began in April 2011.
”The alleged inducing acts were Roche’s press release, customer letter, and decision to stop affixing field-restriction labels all of which occurred solely in 2007, well before the damages period.”
As the court noted, Roche did not argue that the alleged direct infringement occurred outside the six-year period. Rather, Roche argued that the alleged acts of inducement did. Roche relied on the earlier case of Standard Oil v Nippon Shokubai Kagaku Kogyo [Fed Cir 1985]), in which Nippon was accused of “inducing infringement” by supplying a catalyst to another company that directly infringed a patented process.
However, the court held that the “determinate fact” was that “all of the acts Nippon complained of took place and were over and done with” more than six years before the infringement suit began. Since “[n]o act of Nippon within the six years prior to suit [was] complained of,…no recovery against Nippon [could] be had”. Similarly, Roche’s allegedly inducing acts occurred before the damages period.
The alleged inducing acts were Roche’s press release, customer letter, and decision to stop affixing field-restriction labels all of which occurred solely in 2007, well before the damages period. In addition, Meso did not provide evidence of causation between the allegedly inducing acts (which occurred before the damages period) and the direct infringement (which occurred within the damages period).
“Specifically, Meso put forward no evidence that any customers purchasing Roche’s products during the damages period received the 2007 communication and, in reliance on it, used the products out-of-field,” ruled the CAFC.
The CAFC thus, reversed the district court’s judgment that Roche induced infringement of the asserted ’779 and ’729 patent claims, based, in part, on the fact that there was an absence of an inducing act that could support liability during the damages period set forth in 35 USC § 286.
Thus, when alleging induced infringement the timing of the alleged acts is critical. If the alleged inducing acts took place well before (ie, more than six years) the suit is filed, the patent owner may be precluded from asserting a claim for induced infringement.
Alternatively, it may be possible to rely on such acts if the patent owner can show causation between the earlier acts of induced infringement and the continuing direct infringement. For example, if it can be shown that the direct infringer relied on the earlier acts of inducing infringement when committing the direct infringement.
MaryAnne Armstrong is a partner at Birch, Stewart, Kolasch & Birch. She can be contacted at: MAA@bskb.com
Images, from top: Shutterstock / Branko Devic
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