Professor Cotter’s post below on FTC v. Actavis, and his related SSRN paper both argue that the Court’s opinion all but in name adopt the presumptive-illegality approach that the decision purported to reject. Interestingly, the dissenting opinion has no mention of the presumption, favorably or unfavorably.
Chief Justice Robert’s dissent—joined by Justices Scalia and Thomas—does, however, argue that the correct approach should “be to ask whether the settlement gives Solvay monopoly power beyond what the patent already gave it….” Whether the dissent is legally correct, though, reverse payments are different than ordinary settlements in at least one respect.
Usually, a settling plaintiff claiming damages is paid by the defendant an amount equal to or less than the damages claimed. But in reverse-payment settlements, the money flows the opposite direction from traditional settlements: the plaintiff who claims its patent was infringed pays the defendant who allegedly infringed the patent. But simply, the alleged trespasser is paid by the property owner. This is odd. The dissent calls it “a distinction without a difference,” but I am not so sure, especially in light of the Hatch-Waxman Act’s provisions, which form the backdrop for these disputes.
Nonetheless, the clear winner is the FTC—not just in this case, but in the future cases it now can bring. Chairwoman Edith Ramirez issued this statement:
We look forward to moving ahead with the Actavis litigation and showing that the settlements violate antitrust law. We also are studying the Court’s decision and assessing how best to protect consumers’ interests in other pay for delay cases. Fighting anticompetitive patent settlements has been a priority for the Commission beginning under the Chairmanships of Robert Pitofsky, through Timothy J. Muris, Deborah Platt Majoras, William E. Kovacic, and culminating under the leadership of Chairman Jon Leibowitz.