WLF Brief Seeks High Court Review of Patent Settlement Case
Washington Legal Foundation (WLF) has filed an amicus brief calling on the U.S. Supreme Court to review and overturn a 6/2016 decision by the U.S. Court of Appeals for the Third Circuit that “requires exacting antitrust scrutiny for virtually any agreement between a brand-name drug company and a generic drug company to settle patent-infringement litigation.” The brief argues that the appeals court decision expands antitrust law dramatically and makes it almost impossible for litigants to settle drug-patent disputes. WLF’s brief was joined by the Allied Educational Foundation.
The 6/26 appeals court ruling in King Drug Co. v. SmithKline Beecham found that in addition to reverse cash payments, a settlement in which the innovator drug manufacturer agrees to relinquish its right to produce an “authorized generic” of the drug that would compete with a first-filing generic’s drug during the generic’s 180-day market exclusivity period could also be challenged as anticompetitive. The panel of judges said the “no authorized generic agreement ... falls under Actavis’s rule because it may represent an unusual, unexplained reverse transfer of considerable value from the patentee to the alleged infringer and may therefore give rise to the inference that it is a payment to eliminate the risk of competition.”
WLF contends that the high court’s Actavis decision held that a patent-litigation settlement is subject to antitrust scrutiny if the settlement includes a large and unexplained “payment” from the brand-name company to the generic company. “The Third Circuit dramatically expanded that ruling by holding that any benefit (even exclusive patent licenses) provided by the brand-name company triggers antitrust scrutiny,” the group says. It further argues that the appeals court’s decision conflicts with Actavis and will make it virtually impossible for parties to settle drug-patent disputes.
“Settling lawsuits ought to be encouraged because it is more economically efficient than having trials and saves judicial resources,” WLF concludes.