Carlton Varner writes in Sheppard Mullin's Antitrust Law Blog:
The Second Circuit recently weighed in with its view of the legality of reverse payment settlements in Hatch Waxman patent litigation. In re Tamoxifen Citrate Antitrust Litigation, 2005 U.S. App. LEXIS 23653 (2d. Cir 2005). The Sixth Circuit previously found such payments to be per se illegal as analogous to market allocation agreements among competitors. In re Cardizem, 332 F.3d 896 (6th Cir. 2003). By contrast, the Eleventh Circuit rejected per se treatment if such settlements did not restrict competition beyond the exclusionary scope of the patent themselves. Valley Drug Co. et al. v. Geneva Pharmaceuticals, 344 F.3d. 1294 (2003). See also Schering Plough Corp. v. FTC, 402 F.3d. 1056 (11th Cir. 2005), cert. petition pending 2005 U.S. LEXIS 7855. In Tamoxifen, the Second Circuit largely aligned itself with the Eleventh Circuit and affirmed dismissal of the Complaint at the pleading stage for failure to state a claim for relief under Federal Rule 12(b). There was no discovery and no trial. The Court accepted the allegations of the Complaint as true and accurate but nonetheless found them insufficient. It affirmed a judgment dismissing the Complaint.
The fact the Second Circuit affirmed dismissal at the pleading stage is quite significant, as in Valley Drug, the Eleventh Circuit remanded for further trial court proceedings. All this is not good news for the FTC enforcement actions in this area, as courts appear to be developing roadblocks to the Commission's liability theories in reverse payment cases.
Read the entire excellent in-depth discussion here.
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