Federal Trade Commission v. Actavis, Inc., 133 S. Ct. 2223 (2013) (Breyer; Roberts, dissenting). For the Court’s slip opinion, click here.FTCActivis06172013
Actavis arose when the Federal Trade Commission filed suit, asserting that a “reverse payment settlement agreement” of a patent infringement suit between a drug patent owner and a generic maker violated the antitrust laws.
EXAMPLE OF “REVERSE PAYMENT SETTLEMENT.” The Court provided a simple hypothetical of a reverse payment settlement as follows:
“Company A sues Company B for patent infringement. The two companies settle under terms that require (1) Company B, the claimed infringer,not to produce the patented product until the patent’s term expires, and (2) Company A, the patentee, to pay B many millions of dollars. Because the settlement requires the patentee to pay the alleged infringer, rather than the other way around, this kind of settlement agreement is often called a `reverse payment’ settlement agreement.”
The Court noted that “the basic question here is whether such an agreement can sometimes unreasonably diminish competition in violation of the antitrust laws. See, e.g., 15 U.S.C. §1 (Sherman Act prohibition of `restraint[s] of trade or commerce’). Cf. Palmer v. BRG of Ga., Inc., 498 U.S. 46 (1990) (per curiam) (invalidating agreement not to compete).”
The Eleventh Circuit held that the agreement in question was ” `immune from antitrust attack so long as its anticompetitive effects fall within the scope of the exclusionary potential of the patent.’ FTC v. Watson Pharms., Inc., 677 F.3d 1298, 1312 (2012).”
The Court held that the Eleventh Circuit erred. Instead of immunity, a rule of reason approach applies. Read CPLRG 0086