By Kevin E. Noonan –

On April 27, the Supreme Court heard oral argument in Hikma  v. Amarin, with Charles Klein, representing Hikma, Michael Huston representing Amarin, and Malcolm Stewart addressing the Court on behalf of the Government.

First, some statistics.  Charles Klein was questioned by the fewest Justices (Justices Thomas, Sotomayor, and Jackson), while Malcolm Stewart and Michael Huston were each questioned by seven of the Justices (Justices Thomas, Alito, Sotomayor, Kagan, Kavanaugh, Jackson, and Chief Justice Roberts questioning Stewart, and Justices Thomas, Alito, Kagan, Gorsuch, Kavanaugh, Barrett, and Jackson questioning Huston).

In his argument to the Court, Mr. Klein emphasized that “[Hikma’s] public statements entirely consistent with selling skinny-label generic drug products under Section viii cannot actively induce infringement,” which “requires a clear message that necessarily promotes infringement.”  Moreover, “[a]ctive inducement cannot depend on whether doctors might read infringing instructions into product descriptions that, on their face, are entirely consistent with non-infringing use.”  He concluded these remarks by warning that “under the decision below, patent lawsuits filed after skinny-label product launches will routinely survive a pleading challenge.”

Justice Thomas began by asking whether it would have been “safe” for Hikma to have said that its generic version of Vascepa was approved solely for the severe hypertriglyceridemia (SH) indication.  While responding to the question, Mr. Klein stated that the earliest press releases did make such statements but that they were not required under the law.  The Justice then asked whether Hikma would have been “baiting people into inducement” had they merely quoted Amarin’s comments regarding its indications for the drug, which Mr. Klein conceded could support a claim “if it’s a clear message that necessarily promotes infringement.”  The Justice concluded his questioning by asking whether “the only way to actively induce infringement is overstating or your own statements sound as though the patented use is covered by your product,” to which Mr. Klein responded by saying that “­if the generic basically adopts by reference statements by the brand that would encourage the infringing use, then that could plausibly state a claim.”

Justice Sotomayor asked whether Hikma was advocating any “special rules” for Section viii cases.  Mr. Klein responded that “the complaint does not pass the standard for plausibility under Twombly and Iqbal” and thus special rules are not necessary.  The Justice noted that such rules are “­almost impossible in this area because determining whether or not there’s active inducement is always contextual.”  The Justice further noted that it seems Hikma wants the Court to “change the words” the Court has used in earlier cases, but asks whether Hikma wants the Court to change the standards for finding inducement.  Mr. Klein responded that “there are obvious alternative explanations in view of the anodyne statements” made by Hikma and thus there is no need for a change in standards.

Justice Jackson, the last Justice to question Hikma’s counsel, asked for clarification that “generics have to have a label that essentially in all relevant circumstances mirrors the brand label, except for just admitting the patented indication.  Is that correct?” and that “even if Amarin is right that it thinks Hikma could have or should have excluded a certain study or included some other information, if those aren’t on the original label, Hikma can’t do that?”  Mr. Klein assured the Justice that a “generic can’t add new disclaimers or new labeling.”  In her follow-up, the Justice asked “it can’t be accused of inducing infringement by refusing to put things on the label that the brand didn’t have, right?” to which Mr. Klein answered the “statute doesn’t require active discouragement of infringement.”  Expounding on his answer, Mr. Klein stated that “under the decision below, you can get FDA approval of your skinny product label, but as soon as you put that product into commerce and you say anything about that product, anything, you call it a generic version, even if you have disclaimers, you can be sued.”  As a consequence, “[o]nce a generic launches its product, its profits will be much, much lower than the brand’s profits.  And so, if the generic gets hit for a lost profits damages award, it’s devastating,” something that has already happened in the GSK litigation against Teva, wherein “Teva got hit for hundreds of millions of dollars that dwarfed its actual profits.”

Mr. Stewart for the Government first stated that while “the label itself was not sufficient to get Amarin past 12(b)(6) in this case, we think the court of appeals erred in giving any weight at all to the label.”  He mentioned that “[t]he contents of a Hatch-Waxman skinny label are largely dictated by federal law and to treat the generic manufacturers’ compliance with those requirements as any evidence of intentional inducement to infringe would be wrong.”  With regard to Amarin’s explanation regarding the other generic manufacturers included in press releases that Amarin has not sued because they had expressed disclaimers that their product is not authorized for use to treat the cardiovascular (CV) indication, Mr. Stewart stated that “it’s a bedrock principle of inducement law that active inducement to infringe is required” and “[t]he question is not whether the defendant has adequately warned people away from infringement.”

Justice Thomas again posed the first questions to counsel, whether “in our world . . . not the Federal Circuit’s world . . . [w]hat would Respondent have to have alleged to survive a motion to dismiss?”  Mr. Stewart responded that “to identify statements or actions that had the clear purpose of causing others to infringe as something that the brand wanted to bring about” and “[under Grokster] by clear expression or other affirmative steps taken to foster infringement is liable for the resulting acts of infringement by third parties.”  The Justice next asked about the effect of state mandatory substitution laws, and Mr. Stewart said that the “difficulty of going after the direct infringer or getting the direct infringement to stop is not a justification for watering down inducement principles.”  He suggested that “Amarin and similarly situated companies could urge state legislatures to take measures to prevent this from happening” and that while branded drugmakers would not want to sue the doctors, “they could attempt informational campaigns to doctors and tell the doctors our product is the only one that is authorized to be used for the CV indication.”

Justice Alito asked about the effects on Hikma if they “had not just said its drug is generic Vascepa but went on to say that Vascepa is approved to treat cardiovascular risks?” and the Government’s counsel responded that if “it had said those two things in the same breath, that you would have a pretty strong case of active inducement,” whereas (responding to Justice Alito’s follow-up regarding statements that “studies have shown that icosapent ethyl, the active ingredient in our drug, reduces cardiovascular risks?”) Mr. Steward said “although probably closer to the line . . . when Hikma prepared its skinny label in conformity with the rules, kind of the most obvious thing it took off of Amarin’s label was the indication at the beginning [regarding the CV indication].”

Justice Sotomayor “asked the same question of you that I asked of Petitioners’ counsel” regarding whether the Court “need[ed] your new definition that you gave the Chief or saying again that following the label alone, exactly what the Federal Circuit said, is not enough?  Do we need any special rules?”  Mr. Stewart, consistent with Hikma’s position said no, that what was before the Court was “interpreting Section 271(b), which is not specific to Hatch-Waxman.”  Justice Sotomayor noted that she “always ha[s] problems when we use policy reasons to set a standard.  That’s not our job.  If they’re infringing a patent, they’re infringing a patent.  If they’re not infringing a patent, they’re not.  But why should we change our rules, narrow them or expand them – to avoid either result?”  Providing the Government’s position, Mr. Stewart answered that “if you sell something that can be used either in an infringing or a non-infringing way, then you still won’t be held liable for others’ infringement unless you’ve actively encouraged them to infringe.”

Justice Kagen asked her first questions about the FDA’s role and whether the reasonableness of Hikma’s actions depended on “how much patent review the FDA is doing when it approves the skinny label.”  Mr. Stewart gently disabused the Justice of any help available to the Court from the FDA by reminding her that “[t]he FDA has disclaimed patent expertise, and so it doesn’t purport to read patents.”  The extent of FDA’s involvement is that “the brand-name manufacturer will provide for the Orange Book what’s called a use code, which will describe what it believes its patents cover” and if the brand name is saying this wide range of uses would be patented, the FDA won’t look behind that.”

Justice Kavanaugh next asked questions, regarding “the United States’ concerns about the broader market implications of the decision?”  Mr. Stewart responded that of the evidence before the Federal Circuit the government was “most concerned with . . . the skinny label because all of the things that Amarin is complaining about are things that were on the brand name’s label, and the rule is the generic is supposed to use the same label as the brand unless there’s a good patent-specific reason to take things off.”  Moreover, “the flavor of [the Federal Circuit’s] opinion was that  [the skinny label] is almost enough, and if you have some pretty ethereal stuff at the — in addition, that will be enough to get you over the hump.”  The Government also thought the Federal Circuit “shouldn’t have attached any weight to the label” [because] Hikma” just did what it was supposed to do.”

Justice Jackson brought up the “the risk of liability and what it could do to a generic, I would think, would be pretty significant.”  Mr. Stewart responded that the risk “[is] very substantial in part because the generic is charging a lot -­ typically, a lot less for the drug than the brand name manufacturer is.”  Thus, “if the generic has to pay lost profits to the brand name, the profits that the brand name would have earned on a particular volume of sales would be much more than the generic has actually earned.”  He also noted that there was “more than an intimation in the Respondents’ brief that Hikma was doing something wrong by describing its drug in press releases as a generic version or a generic equivalent of Vascepa” although “that’s a normal thing to say.”  He also stated that it was not necessary for the Court to take state mandatory substitution laws into consideration.

The Chief Justice stated that the Government’s position regarding “that the generic person clearly reveal a purpose of infringement” is “a pretty broad safe harbor.”  Mr. Stewart responded that “it is supposed to be a difficult standard for the pleader to satisfy” and that “the Court has said in various contexts that when a product is capable of both infringing and non-infringing uses, it’s important that a patent on one method of use not become a de facto monopoly on the product as a whole.”  Further, Government’s counsel asserted that “it’s supposed to be feasible for people in Hikma’s position to market their product for the unpatented use without running afoul of liability for third parties who choose to use the product in infringing ways, unless they have affirmatively encouraged that to be done, the mere knowledge that it will be done or the expectation that some people will infringe is not.”

Amarin’s counsel, Mr. Huston, began his remarks by stating that “[t]he implications of this Court’s ruling in this case will go far beyond the pharmaceutical industry.”  Regarding Hikma, he said that in return for receiving the “full benefit of the Hatch-Waxman compromise” they were “required to promise not to promote its product for any still patented use of Amarin’s branded drug.”  This limitation is “absolutely vital” and is “the only thing that makes it economically rational for a branded company like Amarin to spend the $300 million that Amarin spent in the REDUCE-IT trial to discover that an existing drug, Vascepa, actually had life-changing implications to treat cardiovascular risk.”  While recognizing that most questions of inducing infringement involve evidence of intent, here Hikma has not contested intent at the pleadings stage.

Justice Thomas, responding to Amarin’s counsel’s reference to Hikma’s statements that “Hikma alone was the one who described its product as AB rated for ‘hypertriglyceridemia,’” asked whether there was anything inaccurate about that statement?  Mr. Huston said that “[y]es, there absolutely was” but he “also do[es]n’t think, frankly, it matters whether it was inaccurate” because “[a] statement can be absolutely true” but “truth is not a defense to liability in an induced infringement situation.”  Should Hikma simply quote Amarin, Mr. Huston responded that “­they cannot do that, Your Honor, because the whole point of the compromise is that Hikma is allowed to market its product but only for the unpatented use.”  Whereas “If Hikma comes on and quotes Amarin’s marketing of its product to treat for the patented purpose, that’s the most classic case of induced infringement.”  Mr. Huston also stated that “the key statement on which we rely here, the statement on Hikma’s website where it described what its drug is for, was not accurate.  Hikma said its product was for treating hypertriglyceridemia.  That’s misleading, if not false, because Hikma’s product was approved by FDA only to treat severe hypertriglyceridemia, and that’s a distinct medical condition that presents distinct medical risks.”

Justice Alito asked his only question, whether “just saying generic Vascepa would be enough?” Mr. Huston said it was not where it was “merely saying, one time, generic Vascepa is enough to state a claim for liability.”  Amarin’s allegation was that “Hikma said it over and over and over again [at a] key moment where there was a key market association between Vascepa and treating cardiovascular risk” [which] was the context.  Grokster says, of course, that induced infringement is a context-dependent analysis.”

Justice Kagan raised the issue that the press releases “were really issued for investors” and that “this was not the way the company marketed itself to doctors” but Mr. Huston challenged that conclusion, stating that “they’re not consciously directed at investors, not expressly directed at investors” and that at “the pleading stage . . . all inferences that are fair have to be taken in our favor.”  Justice Kagan persisted, asking for “any evidence at all [that] Hikma directed these to the medical community, that Hikma gave these press releases to doctors?” and Mr. Huston maintained that “this is advertising, Your Honor, which is, as Grokster said, a classic form of induced infringement since common law.”  He again asserted that at the pleading stage such evidence was not required, while noting that “evidence has come in in other cases where doctors have testified that they do pay attention to press releases and that they do pay attention to the announcements of when generics are coming online.”  The Justice also asked whether her apprehension was correct, that Amarin had “really dialed down your reliance on the skinny label” in its response to Hikma’s arguments to the Court, and asked whether Amarin agreed with the Government’s contention that the label “has no relevance?”  Counsel demurred, stating that “this Court is not accustomed in pleading cases and in Section 271(b) cases to saying there’s a category of evidence that’s sort of fundamentally off the table.  That to me sounds like the creation of a safe harbor, and I think that’s a legislative task fundamentally.”  Mr. Huston also argued that “the skinny label is not the heart of our case by any means,” being “one piece of evidence.”  Indeed, he also argued that the label was “an opportunity for Hikma to try to sort of mitigate the damage from its unlawful statements,” which Hikma did not take.

Procedurally Mr. Huston argued that “the Court’s far and away most common practice [in the event that the Justices rule against Amarin] would be to vacate the Federal Circuit’s opinion and remand” and “not . . . enter the form of judgment in this Court that Hikma requests, which would be to sort of declare the case over.”  One reason in support of this decision by the Court would be that “since Hikma did not stay the mandate, extensive discovery has occurred . . . that has revealed substantial new evidence of Hikma’s intent to infringe and the effect.”

Justice Gorsuch in his only line of questioning asked about the effect of “a further disclaimer on the website, saying that “Hikma’s generic version is indicated for fewer than all approved indications of the reference listed drug.”  Mr. Huston pointed out that the disclaimer appears “in quite tiny print” and that “It doesn’t disclaim that Hikma’s product can and should be used to treat the most famous use of Vascepa, the billion-dollar use, which is saving patients’ lives by treating cardiovascular risk.”  He also ascribed the disclaimer to being produced “by a clever lawyer to try to minimize Hikma’s liability while still sending the fundamental message that is coming across by all the collection of Hikma’s statements that says doctors can and should prescribe Hikma’s product anytime they would prescribe Vascepa.”  The Justice brought up the intent issue in the context of Twombly and Iqbal, which were antitrust cases, which is “a whole different world.”  Mr. Huston conceded that “it’s very hard for me sitting here in the Supreme Court of the United States to put myself in what arguments we would have made if Hikma in a motion to dismiss had said we want to contest our unlawful intent the same way the defendant in Twombly contested its intent” in this case, where “Hikma did not contest its unlawful intent at this stage.”  Counsel also took the opportunity to refute Hikma’s argument that deciding in Amarin’s favor would “devastate the generics market,” which he contended “is just factually untrue” saying “the surest reason you can know it’s not true is because there’s seven other generics in this market selling this product who know how to market their product lawfully.”

Mr. Huston also responded to Justice Gorsuch’s procedural question that Amarin should be able to ask the District Court for leave to amend if the Court rules against them.

Justice Kavanaugh asked Mr. Huston to address Hikma’s argument (echoed somewhat by Congressman Waxman’s amicus brief) regarding the potential, if affirmed, for this decision to “have some serious implications market wide.”  Mr. Huston relied on “the other side of that compromise [that] was about protecting the need to encourage branded drugs to take existing products and invest massive resources to discover how those drugs can be used for new cures” in response.  When the Justice responded to this argument by stating that he “take it seriously when someone says this is upsetting the compromise,” Mr. Huston in rejoinder stated that the Court can have “confidence” that this will not come to pass are the other generics who have taken advantage of the “ready road map to avoid induced infringement liability.”

In her only questioning of the day, Justice Barrett asserted that “this is a pretty fact-bound case about the plausibility standard” and that she didn’t know whether the Court had anything more to do than applying Twiqbal (Twombly and Iqbal) to the complaint?  Mr. Huston took this opportunity to reiterate Amarin’s position that “the Court [need] not adopt a new induced infringement standard with words like express promotion is required.”  In responding, Mr. Huston said (in addition to agreeing with the Justice) “the key question in the case is as in most cases of induced infringement, what was the message that the doctors who read these Hikma statements took away?” to which Justice Barrett agreed.

Mr. Huston took the opportunity to assert that, should the Court rule against Amarin and that their complaint does not state a claim for relief, then “that’s going to have serious implications” and “[i]t’s going to make it much, much harder to plead induced patent infringement.”  And the consequence of that decision would be that “would just be economically irrational to make that kind of investment that discovers a lifesaving cure” spending “five years, we spent $300 million, and we discovered something that is literally saving people’s lives.”

Mr. Huston also responded to the Justice’s procedural question by reiterating that Amarin intends to amend its complaint.

Justice Jackson, the last Justice to pose questions to Mr. Huston, contrasted the Government’s position, that would require evidence “for . . . an intent on the part of this manufacturer to be inducing people for the patented purpose” with Amarin’s standard (“as far as I can tell”) is “more just what message would the doctors have taken away from the marketing materials?”  The Justice asked “if the intention of the generic is to mention Vascepa and the size of the market, et cetera, et cetera, for the purpose of getting investment, not for the purpose of inducing doctor infringement, what do we do with that in terms of understanding whether active inducement liability lies?”  Mr. Huston replied that the Court should not accept Hikma’s assertion but the Justice replies that “it’s your burden,” Mr. Huston responding  that “the inducer has to both have the intent that that happen and take active steps.”

Mr. Klein in rebuttal (which drew no questioning from the Court) contested Amarin’s argument that additional evidence of intent to induce infringement arose during discovery (“Just to be clear, there is no such evidence”).  Procedurally, Hikma argues that should the Court reverse and remand, Amarin’s lone remedy was a Rule 60 Motion.  Hikma also argues that under Twombly and Iqbal “if there’s an obvious alternative explanation, a complaint doesn’t survive the pleadings stage just because maybe some physician out there might possibly read an instruction” (which there are in this case).

It is never wise to opine, or worse speculate on, how the Court will rule or even why the Justices granted certiorari (indeed, Justice Barrett herself states that “[before the Court in this case] is a fact question [as] Justice Alito observed the other day [and] I’m not sure why this case is here except four of my colleagues wanted it to be”), particularly under a very expedited briefing schedule as there was here).  Certain themes are evident:  for example, Justice Sotomayor is leery of the Court establishing new rules or standards for inducement of infringement outside the standards under current case law.  Certain of the Justices were asking for clarification of the statute or patent procedures while others were concerned about disruptions of the Hatch-Waxman regime that has promoted generic drug entry for over forty years.  There is even the barest of hints that the Court may decide that the opportunity certain of the Justices might have thought the case represented was in fact not the case.  The answer should be forthcoming in the next four to six weeks.