A skinny label is a regulatory strategy allowing generic drug manufacturers to omit patented indications (also known as carve-outs) when seeking FDA approval under the Hatch-Waxman Act, which enables earlier market entry. Further, skinny labeling balances patent protection and competition but can lead to induced infringement if marketing encourages patented uses. Legal disputes have intensified as brand-name manufacturers assert method-of-use patents, raising the question: Can generics be liable for induced infringement despite carve-outs?

What is induced infringement?

Induced infringement occurs when a party encourages patented use. To establish induced infringement, a plaintiff must prove: (1) direct infringement by a third party (e.g., prescribing a drug for patented uses), (2) the defendant knew about the patent, (3) the defendant knew or should have known that the induced acts constitute infringement, (4) the defendant specifically intended to encourage another's infringement, and (5) the defendant took an affirmative stepto encourage infringement (e.g., through marketing, labeling or public statements).

When assessing induced infringement, courts will examine evidence including marketing materials, press releases and public statements. Examples include:

1. Marketing products as the generic version of brand-name drugs without clarifying the excluded indication.
2. Removing disclaimers that discourage the patented use.
3. Sales data or prescribing patterns showing use of generics for the carved-out indication.

Key cases and their implications

Caraco Pharmaceutical Labs v. Novo Nordisk A/S (2012) – Generic win

The U.S. Supreme Court held that generics may challenge inaccurate use codes via statutory counterclaim. In other words, generics can countersue brands in an infringement case asserted by the brand. Novo had changed its use code to cover all three FDA-approved indications of repaglinide, thereby blocking Caraco’s attempt to carve out the patented use. The Court ruled that generics can countersue brands to correct Orange Book listings that misrepresent the scope of the patent,thereby preserving access to skinny labeling.

Bayer Schering Pharma AG v. Lupin Ltd. (2012) – Generic win

This case involved Bayer’s method-of-use patent for three simultaneous effects: contraceptive, antiandrogenic, and antialdosterone. The Federal Circuit held that there was no infringement because the generic sought approval only for contraception, and the FDA-approved labels reflected the same. The decision clarified that infringement applies only to uses for which approval is sought, and the label must reflect the patented method to trigger liability.

Takeda Pharmaceuticals v. West-Ward Pharmaceuticals (2015) – Generic win

The Federal Circuit found no induced infringement here because the defendant’s label avoided the patented method and included disclaimers about acute treatment.Further, the court also found that vague label language and mere knowledge of off-label use were insufficient to establish inducement, reinforcing that liability requires intent and active encouragement.

GlaxoSmithKline LLC v. Teva Pharmaceuticals USA Inc., (2021) – Brand win

A Federal Circuit jury found that Teva induced infringement of GSK’s patent for carvedilol. Teva marketed its generic as the AB-rated generic equivalent of Coreg® tablets, which were indicated for congestive heart failure. The jury found that Teva’s label and marketing encouraged physicians to prescribe the drug for the patented use. The court rejected Teva’s argument that its skinny label shielded it from liability and clarified that inducement can arise from conduct beyond the label. Although this decision was later replaced by the 2022 opinion (below), it highlighted that courts may find inducement based on marketing materials and labeling language, even when the patented use is carved out.

GlaxoSmithKline LLC v. Teva Pharmaceuticals USA Inc. (2022) – Brand win

On rehearing, the Federal Circuit reaffirmed a jury’s finding that Teva induced infringement of GSK’s patent. The court clarified that skinny labeling does not shield a generic from liability when other conduct encourages infringing use. The panel concluded that the jury could reasonably rely on Teva’s labels, press releases, testimony and marketing materials, as well as GSK’s representations, to find inducement. The court rejected Teva’s argument that its compliance with FDA labeling requirements and GSK’s representations to the FDA barred a finding of inducement. This decision highlighted that skinny labels do not shield against liability if other conduct promotes the patented use.

Genentech, Inc. v. Sandoz Inc. (2022) – Generic win

This case involved induced infringement of Genentech’s patents related to managing liver-related side effects. The Federal Circuit held that there was no induced infringement because Sandoz’s label did not actively promote the patented methods. The court emphasized that merely describing a method is not sufficient to establish infringement because the label must “encourage, recommend, or promote” the patented use, distinguishing between neutral safety information and active promotion and reinforcing that liability requires affirmative encouragement.

Lundbeck A/S v. Lupin Ltd. (2023) – Generic win

In this case, the Federal Circuit found no infringement because the generic did not seek approval for the patented uses, reaffirming that infringement requires seeking approval for the patented use. This decision confirmed that skinny labels are effective shields against liability when properly executed.

Amarin Pharma, Inc. v. Hikma Pharmaceuticals USA Inc. (2024) – Brand win

In this case, the Federal Circuit found that Hikma’s skinny label and public statements induced infringement of Amarin’s cardiovascular (CV) indication patents. Hikma had carved out the CV indication from its label but then removed a prior disclaimer that had disclaimed CV benefits.Additionally, Hikma’s press releases referred to their product as a generic version of Amarin’s drug while citing total sales figures that included CV use, which accounted for over 75% of the brand’s revenue. The court emphasized that induced infringement can be found based on the totality of conduct. This decision reinforced that conduct such as promotional language can trigger liability.

Legislative response: The skinny labels, big savings act

The Skinny Labels, Big Savings Act was introduced on January 9 in an effort to provide “a statutory safe harbor from patent infringement claims for generic or biosimilar manufacturers that seek or obtain approval for skinny labels of their drugs.” The act would create a safe harbor when generics:

• Seek FDA approval for skinny labels that omit patented indications.
• Market or promote the drug in compliance with FDA regulations.
• Describe the product as a generic or therapeutic equivalent.

Implications:

• For generics, the act reinforces the carve-out pathway and reduces litigation risks. Generics may market their products as therapeutically equivalent to brand-name products if the patented indications are excluded from the labels and promotional materials.
• For brands, the act may weaken enforcement of method-of-use patents and increase the burden of proving induced infringement.
• In general, the act shifts the current legal landscape where similar marketing would likely constitute induced infringement.

Takeaways

Skinny labels are lawful but are not absolute shields. They must be carefully drafted and supported by compliant marketing practices. Generics should avoid marketing their products as equivalent to brand-name products, at least for now. Moreover, promotional materials should focus on approved indications only.

Induced infringement is fact-specific and can extend beyond the label. Courts will examine the totality of the evidence. Even FDA-compliant labels may be scrutinized if they implicitly promote patented uses. Companies must consider their conduct as a whole when assessing risks.

Conclusion

Skinny labeling remains a critical mechanism for balancing patent protection and market competition. Further, courts will look beyond the label to assess induced infringement. Therefore, generics must exercise caution, and brands must remain vigilant.

Leanne Rakers is a principal at Harness IP and leader of the firm’s Chemical & Life Science practice group. In addition to obtaining patents for her clients, her practice includes IP portfolio strategy and management, freedom-to-practice opinions and due-diligence assessments.

Jeffrey Lin, an associate at Harness IP, handles patent prosecution, the preparation of legal opinions regarding patentability and infringement, and patent litigation preparation.