976 F.3d 327
3rd Cir.2020Background
- AndroGel (testosterone topical gel) was marketed under U.S. Patent No. 6,503,894 (the ’894 patent); owners included AbbVie and Besins; the patent expired August 30, 2020.
- Generic applicants Perrigo and Teva submitted paragraph IV notices; AbbVie/Besins sued both under the Hatch‑Waxman framework, triggering automatic 30‑month stays of FDA approval.
- Perrigo used isostearic acid and Teva used isopropyl palmitate as penetration enhancers; defendants relied on the doctrine of equivalents, plaintiffs relied on prosecution‑history estoppel (and tangentiality) defenses.
- AbbVie settled with Perrigo (license to enter Jan 1, 2015 or sooner; $2M expenses) and Teva (license to enter Dec 27, 2014), with a linked TriCor supply arrangement the FTC alleges was a reverse payment conceding valuable consideration to Teva.
- The FTC sued under Section 13(b) alleging monopolization via sham litigation (against Perrigo and Teva) and an anticompetitive reverse‑payment agreement (with Teva); the district court dismissed the reverse‑payment claim, found sham litigation (Perrigo) and monopolization, ordered $448M disgorgement, and denied injunctive relief.
Issues
| Issue | Plaintiff's Argument (FTC) | Defendant's Argument (AbbVie/Besins) | Held |
|---|---|---|---|
| Whether reverse‑payment claim survived dismissal | FTC alleged the TriCor deal + settlement with Teva constituted a large, unjustified reverse payment that delayed generic entry (Actavis theory) | AbbVie argued no reverse payment because no cash flowed to Teva and the agreements should be analyzed separately; settlement was procompetitive | Reversed district court: pleadings plausibly alleged a large, unjustified reverse payment; reverse‑payment claim reinstated |
| Whether suits against Teva and Perrigo were sham litigation (Noerr‑Pennington exception) — objective prong | FTC: both suits were objectively baseless because prosecution history estoppel foreclosed equivalents claims | AbbVie: reasonable prosecution‑history/tangentiality arguments supported filing; suits were not objectively baseless | Mixed: Teva suit — district court erred (reasonable litigant could expect success); Perrigo suit — district court correctly found objectively baseless |
| Sham litigation — subjective prong (intent to use litigation to block competition) | FTC: defendants sued to trigger delays and preserve monopoly (used 30‑month stay as weapon) | Defendants: suits filed in good faith by experienced patent counsel; settlements and petitions legitimate | Affirmed as to Perrigo: district court’s findings that Perrigo suit was motivated to delay were not clearly erroneous; Teva subjective prong not reached because objective prong failed |
| Remedies available under 15 U.S.C. § 53(b) (Section 13(b)) — disgorgement, injunction | FTC sought disgorgement ($448M) and injunctive relief (broad and certification remedies) | Defendants argued Section 13(b) does not authorize disgorgement; injunction unnecessary or overbroad; statutory scheme limits monetary remedies to administrative routes | Court held disgorgement under §13(b) was improper (no authority for disgorgement); denial of injunctive relief affirmed (no likelihood of recurrence; First Amendment/overbreadth concerns) |
Key Cases Cited
- FTC v. Actavis, Inc., 570 U.S. 136 (2013) (reverse‑payment “pay‑for‑delay” framework; large unjustified payments can violate antitrust law)
- Prof’l Real Estate Invs., Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49 (1993) (sham‑litigation Noerr‑Pennington exception: objective baselessness then improper motive)
- Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722 (2002) (doctrine of equivalents and prosecution‑history estoppel principles; tangentiality exception)
- King Drug Co. v. SmithKline Beecham Corp., 791 F.3d 388 (3d Cir. 2015) (Actavis applied to non‑cash/no‑AG forms of reverse payments; substance over form)
- In re Lipitor Antitrust Litig., 868 F.3d 231 (3d Cir. 2017) (pleading standard for reverse‑payment claims; economic substance governs)
- Gunn v. Minton, 568 U.S. 251 (2013) (federal‑patent jurisdiction: state claim with patent issues not necessarily vesting Federal Circuit jurisdiction)
- Liu v. SEC, 140 S. Ct. 1936 (2020) (disgorgement characterized as equitable restitution and limits on equitable remedies)
- Shire ViroPharma, Inc. v. FTC, 917 F.3d 147 (3d Cir. 2019) (interpretation of §13(b) and standard for injunctive relief likelihood of recurrence)
- Porter v. Warner Holding Co., 328 U.S. 395 (1946) (scope of equitable powers in statutory enforcement cases)
- Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288 (1960) (equity court may provide complete relief to effectuate statutory purposes)