Monday, October 8, 2012, 10:04 AM

UPDATE: FTC Seeks Supreme Court Review of 11th Circuit's Decision in "Pay for Delay" Case

In a July 23 entry, we summarized the Eleventh Circuit's ruling upholding a "pay for delay" agreement between pharmaceutical companies to settle patent litigation.[1]  That agreement had been attacked by the Federal Trade Commission ("FTC") as violating antitrust laws.

We characterized conflicting approaches between federal appellate courts on how to analyze “pay for delay” agreements as “revealing a clear split of authority and setting the stage for eventual resolution by the Supreme Court.”

The FTC recently took the first step to seek such resolution by filing a petition with the Supreme Court, requesting review of the Eleventh Circuit’s decision.  In its petition, the FTC framed the issue presented as follows:

Whether reverse-payment agreements are per se lawful unless the underlying patent litigation was a sham or the patent was obtained by fraud (as the court below held), or instead are presumptively anticompetitive and unlawful (as the Third Circuit has held).

According to Alison Frankel of Thomson Reuters' On the Case blog, it will take “a few months” for the Supreme Court to decide the FTC’s petition.  Gene Quinn of the IPWatchdog® blog comments: “So flip a coin if you want to figure out what comes next.  History says the Supreme Court won’t get involved, but eventually this issue will be too tempting for this Court not to want to weigh in.  Is that time now?  Maybe.”

UPDATE:  On November 13, 2012, Watson responded to the FTC's petition, and 31 states jointly filed a brief on November 5, 2012 supporting the FTC's position (see our November 15 post).  The Supreme Court granted the FTC's petition on December 7, 2012 (see our December 10 post).


[1] The Eleventh Circuit defines “pay for delay agreements,” also called “reverse payment agreements,” as agreements in which a patent owner settles infringement litigation by paying “the allegedly infringing generic drug company to delay entering the market until a specified date, thereby protecting the patent monopoly against a judgment that the patent is invalid or would not be infringed by the generic competitor.”  Federal Trade Comm’n v. Watson Pharms., Inc., 677 F.3d 1298, 1301 (11th Cir. 2012), reh’g denied (11th Cir. Jul. 18, 2012).

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