Addressing questions of federal jurisdiction, the US Court of Appeals for the Third Circuit ruled that it, and not the US Court of Appeals for the Federal Circuit, had jurisdiction over two consolidated appeals arising from dismissals in a pay-for-delay litigation involving patented drugs. In re: Lipitor Antitrust Litig., Case Nos. 14-4202; -4203; -4204; -4205; -4206; -4602; -4632; 15-1184; -1185; -1186; -1187; -1274; -1323; -1342 (3d Cir., Apr. 13, 2017) (Fisher, J).
Defendants Teva Pharmaceutical and Wyeth make Effexor XR, and defendants Pfizer and Ranbaxy Laboratories make Lipitor. Plaintiffs filed suit, claiming that the defendant drug manufacturers unreasonably diminished competition, in violation of the Sherman Antitrust Act, by engaging in so-called “reverse” payment settlements. Plaintiffs also alleged patent fraud and sham litigation as related theories to their claims. The Third Circuit consolidated the cases for purposes of the appeal.
On appeal, the defendants argued that the cases should be transferred to the Federal Circuit because the Federal Circuit has exclusive jurisdiction over cases “arising under” federal patent law. The Third Circuit disagreed, explaining that where questions of patent law do not create the cause of action, but instead are related to a completely different form of relief, the claims do not “arise under” patent law. Here, the Third Circuit found that the plaintiffs’ primary claims in both cases arose under antitrust law, not patent law. The plaintiffs’ inclusion of patent fraud and sham litigation in their theory of an overarching anticompetitive scheme did not necessarily imply that there was an essential question of patent law that the Court was required to resolve. The Court reasoned that “patent law neither creates plaintiffs’ cause of action nor is a necessary element to any of plaintiffs’ well-pleaded claims” that the pharmaceutical companies sought to suppress competition by delaying generic competition for brand-name drugs. Relying on Supreme Court of the United States precedent, the Court reasoned that reverse-payment antitrust claims do not typically present a question of patent law. Jurisdiction, therefore, was appropriate in the Third Circuit.
Defendants also argued that the reverse payment allegation should be split from the patent fraud and sham litigation claims, and that the latter should be heard by the Federal Circuit. Again the Third Circuit disagreed, reasoning that it should not permit the defendants to re-write plaintiffs’ complaints, “which plead patent law-related theories as aspects of an overall monopolistic scheme.” The Court also noted that not all cases involving questions of patent law “arise under” patent law, as is required for exclusive jurisdiction to rest with the Federal Circuit.
Practice Note: Companies should be mindful that a cause of action alleging theories of patent law to support a claim created by an entirely different form of relief may not be transferred to the Federal Circuit. Instead, the court presiding over the litigation will likely have jurisdiction over the merits of the claims.