The following is excerpted from an article by Thomas Carey appearing in Sunstein's July 2009 IP Update:
The Department of Justice now recommends strict scrutiny of “reverse payments” – settlements of patent litigation lawsuits in which the plaintiff, a pioneer drug manufacturer, pays the defendant, a generic drug maker, and the generic drug maker agrees to stay out of the market for some or all of the remaining term of the patent. For legal context, see sidebar.
In its brief of July 6, 2009, the DOJ has proposed an antitrust standard that is neither fish nor fowl. It departs from the Federal Trade Commission’s view that such settlements are per se antitrust violations. Yet the DOJ also dissociates itself from judicial endorsement of reverse payments under a so-called rule of reason. Instead, it proposes a presumption of illegality that might be rebutted under a narrow set of circumstances. Such a standard is novel in antitrust jurisprudence.
The DOJ filed its brief with the Second Circuit Court of Appeals in the Cipro litigation. In that case, consumer groups complained of a reverse-payment settlement in which Bayer paid nearly $350 million to Barr Laboratories to settle Barr’s patent challenge to Bayer’s drug, ciprofloxacin hydrochloride (Cipro). The Second Circuit had held, in a recent similar case--In re Tamoxifen -- that reverse-payment settlements are not unlawful if they do not seek to expand the patent rights granted to the patentee.
Read the full article here.