PATENTS and ANTITRUST

See http://thirdcircuitbar.org/newsletters/ThirdCircuitBarAssociationNewsletter_6-3_October_2012.pdf

The United States Court of Appeals for the Third Circuit recently ruled that a patent litigation settlement agreement that includes a “reverse payment”—a payment from a name-brand pharmaceutical maker to a generic company,

in exchange for the generic company’s promise
to delay manufacture of a generic version of a patented drug—is “prima facie evidence of an unreasonable restraint of trade” in violation of federal antitrust law. In re K-Dur Antitrust Litig., 686 F.3d 197, 218 (3d Cir. 2012). The opinion by Judge Sloviter—writing for a panel that also included Judge Vanaskie and Judge Stengel of the Eastern District of Pennsylvania, sitting by designation— revived a circuit split and rejected the more settlement-friendly “scope of the patent test” that has been adopted by the Second, Eleventh and Federal Circuits.

The Court’s decision reversed the District of New Jersey’s holding, in a case consolidated by the Judicial Panel on Multidistrict Litigation, that there was no antitrust violation. In re K-Dur Antitrust Litig., No. 01-1652, 2010 WL 1172995 (D.N.J.
Mar. 25, 2010) rev’d, 686 F.3d 197 (3d Cir. 2012). The Plaintiffs, pharmaceutical wholesalers and retailers, alleged that the Defendants, name-
brand and generic drug manufacturers, violated the Sherman Act by settling earlier patent cases involving the drug K-Dur 20 (“K-Dur”). Specifically, under the terms of the settlement agreement, the Defendants—Schering-Plough Corporation and two generic drug manufacturers—agreed that Schering would make payments to the generic manufacturers totaling $75 million, and the generic manufacturers would delay their manufacture of generic K-Dur. 

In light of FTC v. Activis (S. Ct.), K-Dur is worth a reread. 

http://www.scotusblog.com/case-files/cases/federal-trade-commission-v-watson-pharmaceuticals-inc/