Supreme Court Clarifies Requirements For “Active Steps” In Induced Patent Infringement Claims

Key Takeaways:

• Induced infringement requires clear affirmative conduct. Actions required by law, standard industry practices and omissions do not count as “active steps.”
• The Court did not change the pleading standards but reinforced that the claim as a whole must be plausible, and that claim interpretation focuses on the defendant’s actions, not how others might interpret them.
• The decision clarifies the pleading bar for plaintiffs, especially in pharma, by excluding routine practices like skinny labels from liability unless conduct goes beyond ordinary industry behavior.

On June 4, the Supreme Court made clear that “active steps” for induced patent infringement do not include actions required by law, standard industry practices or omissions by the defendant. The Court applied well-settled law to reverse the court below and correct a recent “trend” of lower courts misapplying the pleading standards.

The dispute in Hikma Pharmaceuticals USA Inc. v. Amarin Pharma, Inc. (Docket No. 24-889) concerned generic drug manufacturers’ liability for induced patent infringement—that is, liability for knowingly encouraging others to infringe a patent, which is prohibited by 35 U.S.C. § 271(b). Dinsmore filed an amicus brief in the case on behalf of the Licensing Executives Society (U.S.A. and Canada), Inc., and the Supreme Court’s opinion aligns with the positions advanced in that brief.

The Court granted certiorari on two questions: one specific to generic pharmaceuticals and the other applicable to induced patent infringement more broadly. And because the case was decided at the pleading stage (that is, based only on the sufficiency of Hikma’s complaint), the case was closely watched for any suggestion that the Court might alter the pleading standards that apply to all federal civil suits. Instead, the opinion was tightly limited to the topic of induced patent infringement and did not claim to break any new legal ground.

This case emerged from the pharmaceutical industry, which involves the dual (but not equal) barriers patent rights and FDA approval requirements. When patents protect name-brand drugs’ uses for specific medical issues, generics are often approved for other uses—which are not protected by a patent. These limited FDA approvals “carve out” the patented uses from the generic’s label; they are sometimes called “skinny labels” and are permitted under the federal Hatch-Waxman Act. “Skinny label” generics are a compromise struck under federal law, permitting generics to enter the market while still respecting brand-name drugs’ patent rights.

In the decision on appeal to the Supreme Court in Hikma, the Court of Appeals for the Federal Circuit held that the generic drug’s manufacturer, Hikma, could be liable for induced infringement based on its generic-drug advertising. It held that Amarin plausibly pleaded induced infringement of its name-brand drug Vascepa® by Hikma’s broad statements that its drug was “generic Vascepa®” without limitation to the “skinny label” approved uses. Similarly, Hikma’s investor materials included sales data for brand-name Vascepa® generally—again, not limited to the “skinny label” approved uses. The Federal Circuit also considered Hikma’s statement of equivalence on the generic drug’s label, which was required by the FDA, in concluding that physicians might plausibly read Hikma’s statements as encouragement to infringe.

The Supreme Court reversed, finding insufficient “active steps” by Hikma to make induced infringement plausible. First, the Court excluded as an “active step” the legally required statement of equivalence on Hikma’s generic-drug label, because following the law could not be considered an “active step” in inducement. Op. at 11. The Court similarly excluded the “normal industry practice” of describing a generic drug as “generic” even if a patent prevented the drug’s approval for some uses. Id. The Court went on to exclude weighing any “omissions, inactions, or nonfeasance” as evidence of intentional inducement, as those are not “affirmative steps.” Id. at 12. After removing those facts from consideration, the Court found that Amarin’s remaining factual allegations of active inducement—the physicians’ potential understanding (which, additionally, was not “active,”), and various vague or equivocal statements by Hikma were not sufficient. Id. at 12–13.

The Court made clear that the pleading standards “[were] not up for debate in this case[,]” id. at 7, and it applied those standards faithfully in concluding that Amarin’s factual allegations did not render the claim of induced infringement “plausible,” as the standards require. Id. at 13.

Importantly, the Court also clarified that “plausibility” applies to the claims as a whole, not to the alleged impacts of Amarin’s statements on physicians. In the decision below, the Federal Circuit had found it plausible that physicians would understand Amarin’s statements as encouraging prescriptions of the generic drug for still-patented indications. 104 F.4th at 1378–80. The Supreme Court disagreed, expressly rejecting what it called a “trend” in misapplying the pleading standards. Op. at 9 n.3. As it clarified, “the key question is whether a defendant actively encouraged infringement through its statements, not merely how others may understand those statements.” Id. Plausibility, then, must be satisfied as to the entire claim—not as to component conclusions or factual allegations. And the focus of “active steps” is a defendant’s actions—not their impacts on others.

The key takeaway here is that induced infringement remains challenging to allege, as it should be. Defendants who induce infringement can be liable for the follow-on infringing acts, the damages for which could be monumental. By reaffirming that need for “active steps” beyond standard industry practices, the Supreme Court has limited these suits to only those where a defendant has surely gone beyond legal requirements and standard industry practices to induce others to infringe. However, future cases may need to closely consider what acts of a defendant are “standard industry practices” in other situations.

The case will be remanded to the Court of Appeals for the Federal Circuit and then to the District of Delaware, where it had previously been ordered dismissed.

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