In Re Lipitor Antitrust Litigation
855 F.3d 126
| 3rd Cir. | 2017Background
- Two consolidated sets of antitrust appeals (Lipitor and Effexor XR) challenge branded manufacturers’ settlements with first-filing ANDA generics (reverse payments) alleged to have delayed generic entry and maintained supracompetitive prices.
- Plaintiffs (direct purchasers, end-payors, retailers, and, in one Lipitor action, California pharmacists) pleaded §2 monopolization claims alleging an overarching scheme including Walker Process fraud (fraudulent patent procurement), sham litigation/Orange-Book listings, a sham FDA citizen petition (Lipitor), and reverse-payment settlements; separate §1 claims challenged the settlements as unlawful restraints.
- District Court dismissed most patent-related theories and ultimately dismissed or entered judgment for defendants on the reverse-payment challenges; plaintiffs appealed to the Third Circuit.
- Central jurisdictional question: whether plaintiffs’ antitrust claims “arise under” federal patent law such that exclusive Federal Circuit jurisdiction applies under 28 U.S.C. §1295(a)(1)/§1338(a), or whether the Third Circuit has jurisdiction because patent law is not a necessary element of the well-pleaded complaints.
- A subsidiary issue: in RP Healthcare (a Lipitor appeal originally filed in California state court and removed), whether federal jurisdiction existed (federal question or diversity) such that remand was improper, complicated by unclear citizenship of certain unincorporated Pfizer subsidiaries.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the antitrust claims "arise under" federal patent law (Federal Circuit exclusive jurisdiction) | Plaintiffs argue their claims are created by antitrust law; reverse-payment and other non-patent theories support relief without resolving patent validity | Defendants argue Walker Process, sham litigation, and related patent-based theories are necessary elements, invoking §1338(a) and transfer to the Federal Circuit | Third Circuit held the claims do not "arise under" patent law because antitrust law creates the claims and non-patent theories (reverse payments, sham FDA petition) suffice for relief; jurisdiction remains in Third Circuit |
| Whether reverse-payment antitrust claims necessarily require patent-law resolution | Plaintiffs: Actavis permits antitrust review of reverse payments without litigating patent validity; size of payment is surrogate for patent weakness | Defendants: resolving reverse-payment legality implicates patent scope/validity and thus patent law issues | Court relied on Actavis: reverse-payment claims typically do not require detailed patent adjudication; patent issues may arise but are not necessary to plaintiffs’ right to relief |
| Whether the RP Healthcare state-law Cartwright Act claim was properly removed to federal court | RP Healthcare: claim solely under California law; remand required because plaintiff’s complaint does not necessarily present patent-law questions | Defendants: removal proper because patent issues could arise as defenses; diversity may have existed at judgment after voluntary dismissals | Court held remand denial was error under well-pleaded complaint rule (patent defenses insufficient); however, because citizenship of certain unincorporated defendants at relevant times was unclear, the Court limited remand to the district court for jurisdictional discovery on diversity and amount-in-controversy |
| Whether appeals should be transferred to Federal Circuit because complaints include patent-based theories | Plaintiffs: patent theories are theories supporting overall antitrust claims, not separate patent-created claims | Defendants: patent-related theories are distinct claims requiring Federal Circuit review | Court rejected defendants’ divide-and-conquer; antitrust monopolization claim is evaluated as a whole (synergistic conduct); presence of non-patent theories defeats §1338(a) removal/transfer |
Key Cases Cited
- FTC v. Actavis, 133 S. Ct. 2233 (2013) (Supreme Court: reverse-payment settlements can violate antitrust law and ordinarily do not require full patent-validity litigation)
- Christianson v. Colt Indus. Operating Corp., 486 U.S. 800 (1988) (Supreme Court: §1338(a) jurisdiction requires that patent law create the claim or be a necessary element of the well-pleaded complaint)
- Gunn v. Minton, 133 S. Ct. 1059 (2013) (Supreme Court: certain state-law claims that entail hypothetical patent issues do not necessarily present substantial federal patent questions)
- Caterpillar Inc. v. Lewis, 519 U.S. 61 (1996) (Supreme Court: a district court’s erroneous failure to remand is not fatal if federal jurisdiction existed at the time judgment was entered)
- Holmes Grp. Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826 (2002) (Supreme Court: relevance of §1338(a) to Federal Circuit jurisdiction; whether an action "arises under" patent law controls)
- In re DDAVP Antitrust Litig., 585 F.3d 677 (2d Cir. 2009) (Second Circuit: retained jurisdiction where at least one non-patent theory—sham FDA petition—was pled, despite other patent-based theories)
- Unitherm Food Sys. v. Swift-Eckrich, 375 F.3d 1341 (Fed. Cir. 2004) (Federal Circuit: outlining elements of Walker Process fraud as involving substantial patent-law questions)