F.T.C. v. Actavis, Inc.
133 S. Ct. 2223
| SCOTUS | 2013Background
- Hatch-Waxman Act creates framework for patent disputes between brand-name and generic drug makers, including paragraph IV certifications.
- Solvay held a patent on AndroGel; Actavis, Paddock, Par filed paragraph IV challenges claiming non-infringement or invalidity.
- Paragraph IV litigation ensued; Actavis entered into a reverse payment settlement with Solvay, delaying generic entry and Promoting AndroGel to doctors in exchange for payments.
- FTC sued under §5 of the FTC Act alleging unlawful restraint and sharing in Solvay’s monopoly profits by the settling generics.
- Eleventh Circuit dismissed, holding reverse-payments immunized so long as anticompetitive effects fall within the patent's exclusionary potential.
- Supreme Court reversed, holding reverse payments can violate antitrust law and should be analyzed under the rule of reason; not inherently immune.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether reverse payments can violate antitrust law | FTC argued payments suppress competition beyond patent scope. | Actavis argued patent rights immunize settlements within patent scope. | Reverse payments can violate antitrust law. |
| What standard governs review of reverse payments | FTC urged presumptive unlawful treatment or quick-look approach. | Defendants urged within-patent-scope immunity with limited scrutiny. | Apply rule of reason; not presumptively unlawful or quick-look. |
| Scope of patent vs. antitrust evaluation | Antitrust analysis intertwined with patent validity and potential market power. | Patent scope alone determines immunization from antitrust liability. | Couple patent and antitrust policies; consider potential anticompetitive effects. |
Key Cases Cited
- United States v. Line Material Co., 333 U.S. 287 (1948) (balance patent monopoly with Sherman Act constraints)
- United States v. Singer Mfg. Co., 374 U.S. 174 (1963) (patent settlements can violate antitrust when outside patent scope)
- New Wrinkle, Inc., 342 U.S. 371 (1952) (patent-licensing arrangements can violate antitrust when fixing prices)
- Standard Oil Co. (Indiana) v. United States, 283 U.S. 163 (1931) (patent settlements affecting unpatented products may violate Sherman Act)
- California Dental Assn. v. FTC, 526 U.S. 756 (1999) (quick-look analysis only where clearly anticompetitive; here not applicable)
- FTC v. Indiana Federation of Dentists, 476 U.S. 447 (1986) (antitrust scrutiny of restraints that harm competition; rule of reason considerations)
- In re Ciprofloxacin Hydrochloride Antitrust Litigation, 544 F.3d 1323 (CA Fed. 2008) (drug-related settlements subject to antitrust scrutiny)