Background
In 2016, Eli Lilly sued Teva Pharmaceuticals for patent infringement regarding the drug Forteo. The parties settled in 2018 with an agreement allowing Teva to enter the market by August 2019 in exchange for covenants, including Lilly’s promise not to block Teva’s approval. Lilly later sought additional regulatory exclusivity, delaying Teva’s entry. Teva sued for breach of contract, arguing the settlement remained in effect. The district court dismissed the claim, ruling the agreement expired when the patents expired in 2019.
The court’s reasoning
The Seventh Circuit held that the Settlement Agreement did not specify an expiration date, so it remains effective for a reasonable time. The court found that determining what is reasonable is a factual question, not a matter of contract interpretation resolvable at the pleading stage. The court noted that some provisions, such as covenants not to sue, clearly survived the patent expiration, implying the agreement as a whole remained in effect. The court rejected Lilly’s argument that Teva needed to specify an exact end date, stating that the burden of persuasion on a motion to dismiss lies with the defendant.
We cannot say that either theory succeeds as a matter of law.
TEVA PHARMACEUTICALS USA, INC v. ELI LILLY AND COMPANY, No. 25-2125 (7th Cir. July 13, 2026)
What it means going forward
Generic drug manufacturers may now pursue breach of contract claims against brand-name companies for actions taken after patent expiration if the settlement agreement lacks a specific termination date, provided they can plausibly allege the agreement was still in effect.