In stark contrast to recent decisions by other circuits, the Third Circuit holds that patent law does not insulate patent settlements from antitrust scrutiny.
On July 16, the U.S. Court of Appeals for the Third Circuit reversed a lower court's dismissal of a private antitrust challenge to a patent settlement agreement between Schering-Plough Corporation (Schering) and two generic competitors. In re K-Dur Antitrust Litig., Nos. 10-2077, 10-2078, 10-2079, 10-4571 (3d Cir. July 16, 2012), available here. The decision, while premised on a private suit, comes on the heelsof a series of defeats for the Federal Trade Commission (FTC) involving challenges to so-called "reverse payment settlements" or "pay-for-delay settlements" in the pharmaceutical industry. The Third Circuit rejected the notion that the settlement should be reviewed within the "scope of the patent" and instead upheld the view championed by the FTC that "any payment from a patent holder to a generic patent challenger who agrees to delay entry into the market [i]s prima facie evidence of an unreasonable restraint of trade." K-Dur, slip op. at 33.
Background
When a manufacturer wishes to commercialize a generic version of a product that is patent protected, it must either challenge the validity of the patent or state that its product does not infringe on the patent when making its Abbreviated New Drug Application (ANDA). Under the Drug Price Competition and Patent Term Restoration Act of 1984, 35 U.S.C. § 271(e)(1), commonly known as the Hatch-Waxman Act, the innovator patent holder is notified that an ANDA has been filed and has 45 days to file a patent...
