Case Explained: TEVA PHARMACEUTICALS USA, INC v. ELI LILLY AND COMPANY

Court: United States Court of Appeals for the Seventh Circuit

Filed: 2026-07-13

The Seventh Circuit reversed the district court’s dismissal of Teva Pharmaceuticals USA, Inc.’s breach-of-contract claim against Eli Lilly and Company, holding that Teva plausibly alleged breaches of contractual obligations that remained in effect after the relevant Forteo patents expired. The court determined that under Indiana law, a settlement agreement lacking an express termination date is effective for a “reasonable time,” a factual inquiry that cannot be resolved as a matter of law on a motion to dismiss. The court applied the de novo standard of review for Rule 12(b)(6) motions, accepting all well-pleaded factual allegations in Teva’s complaint as true and drawing reasonable inferences in its favor. The Seventh Circuit reasoned that the Settlement Agreement’s text did not explicitly tie the duration of Lilly’s covenants—specifically the promise not to block Teva’s market entry or waive regulatory exclusivities—to the expiration of the patents on August 19, 2019. While other provisions in the agreement were expressly limited by patent expiration dates, Section 5.2 referred generally to the agreement being “in effect” without specifying an end date. The court noted that certain substantive covenants, such as Teva’s covenant not to sue Lilly regarding Forteo-related intellectual property, logically survived the patents’ expiration, implying the broader agreement remained operative. Consequently, the court found it premature to conclude on the pleadings that the contract had expired or that the alleged breaches occurred outside the agreement’s duration. The practical consequence is that the case is remanded to the United States District Court for the Southern District of Indiana for further proceedings. The dismissal was vacated, allowing Teva to proceed with its breach-of-contract claim and pursue discovery to establish whether the Settlement Agreement remained in effect during the alleged breaches and whether Lilly’s actions constituted a violation of those terms.

Do It For The Case Law is a news reporting service. Nothing in this episode constitutes legal advice.