Antitrust – patents — generic drugs

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U.S. Supreme Court

Civil

Antitrust – patents — generic drugs

Reverse payment settlement agreements are not presumptively unlawful, but are subject to the rule of reason.

Although the anticompetitive effects of the reverse settlement agreement might fall within the scope of the exclusionary potential of Solvay’s patent, this does not immunize the agreement from antitrust attack. For one thing, to refer simply to what the holder of a valid patent could do does not by itself answer the antitrust question. Here, the paragraph IV litigation put the patent’s validity and preclusive scope at issue, and the parties’ settlement—in which, the FTC alleges, the plaintiff agreed to pay the defendants millions to stay out of its market, even though the defendants had no monetary claim against the plaintiff—ended that litigation. That form of settlement is unusual, and there is reason for concern that such settlements tend to have significant adverse effects on competition. It would be incongruous to determine antitrust legality by measuring the settlement’s anticompetitive effects solely against patent law policy, and not against procompetitive antitrust policies as well. Both are relevant in determining the scope of monopoly and antitrust immunity conferred by a patent, see, e.g., United States v. Line Material Co., 333 U. S. 287, and the antitrust question should be answered by considering traditional antitrust factors. For another thing, this Court’s precedents make clear that patent-related settlement agreements can sometimes violate the antitrust laws. See, e.g., United States v. Singer Mfg. Co., 374 U. S. 174; United States v. New Wrinkle, Inc., 342 U. S. 371; Standard Oil Co. (Indiana) v. United States, 283 U. S. 163. Finally, the Hatch-Waxman Act’s general procompetitive thrust—facilitating challenges to a patent’s validity and requiring parties to a paragraph IV dispute to report settlement terms to federal antitrust regulators—suggests a view contrary to the Eleventh Circuit’s.

677 F. 3d 1298, reversed and remanded.

12-416 FTC v. Actavis, Inc.

Breyer, J.; Roberts, C.J., dissenting.