The FTC Has a Dog in the Patent Monopoly Fight: Will Antitrust’s Bite Kill Generic Challenges?

By: Jennifer D. Cieluch

Antitrust laws have been notoriously lenient in the patent realm, the underlying reason being that patents’ grant of exclusion create monopolies that defy antitrust laws in order to incentivize innovation. Thus, antitrust violations have rarely been found in the patent cases. But after the Supreme Court’s holding in FTC v. Actavis, brand name pharmaceutical companies may need to be more cautious when settling Hatch-Waxman litigation with potential patent infringers. Both brand-name drug manufacturers and generic drug manufacturers have incentives to settle cases by having the brand-name pay the generic in exchange for delaying their entry into the market. While courts usually found that these reverse-payment settlements did not violate antitrust laws, the Supreme Court recently held that they sometimes can, even if the settlement’s anticompetitive effects fall within the scope of the exclusionary potential of the patent. The Court tried to take the middle ground after rejecting several bright line rules promulgated by appellate courts, including the Third Circuit’s “quick look” presumption against reverse payment settlements and the Second, Eleventh, and Federal Circuit’s “scope of the patent” test. This note finds that the Supreme Court’s ruling will make the Hatch-Waxman legal landscape murky and, therefore, difficult for district courts to rule on the legality of reverse-payment settlements in the future. The ruling may hinder generics from challenging brand-name manufacturers, a result that would certainly contravene the principle purpose behind the Hatch Waxman Act.

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Cite: 14 Duke L. & Tech. Rev. 1

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