Page 11 - 2015_0908Litigation

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Litigation | Tuesday, sepTember 8, 2015 | S11

‘Actavis’
sary to determine whether a reverse pay- 269-75 (granting motion for summary judg- *21, *26 (granting motion to dismiss where

ment settlement is anticompetitive. district ment for lack of causation where, for vari- plaintiff failed to provide a “reliable foun-
courts following this suggestion have opined ous reasons, the first-filer generic could not dation used within the industry to convert
« Continued from page S5
that the actual validity or infringement of have entered the market earlier regardless the non-monetary payment to a monetary
ic agrees to supply a good or service such the patent is not relevant because the anti- of the parties’ reverse payment settlement value).
as co-promotion to the patent owner, may competitive harm due to a reverse payment agreement.)
constitute a reverse payment. In Actavis, the settlement is that the parties seek to “prevent ‘cipro’ decision
supreme Court suggest that delayed entry the risk of competition” or the risk of patent
in exchange for such an agreement should invalidation. Aggrenox, 2015 wl 1311352, at dismissing claims Under ‘Actavis’
thus far, only one state high court has
be lawful, so long as the value of the pat- *9 (emphasis added); Niaspan, 42 f. supp. In the first decisions following Actavis, considered the applicability of Actavis to

ent owner’s payment was consistent with, 3d at 755-56. In a recent decision granting courts generally held that antitrust claims state law antitrust claims. In its decision in
or approximately equal to, the value of the interlocutory appeal in the Aggrenox antitrust based on allegations of a substantial reverse Cipro, the supreme Court of California held
product or service provided by the generic. litigation, the district court noted that any payment were sufficient to withstand a that “an agreement to exchange consider-
however, two recent district court decisions determination of patent validity is not conclu- motion to dismiss. see, e.g., In re Nexium ation for elimination of any portion of the
have held that the mere fact of such con- sive, but merely “probabalistic”—“the most (Esomeprazole) Antitrust Litig., 968 f. supp. period of competition that would have been
sistency or equality did not eliminate the that a favorable ruling for the patent owner 2d 367 (d. mass. 2013) (reverse money pay- expected had the patent been litigated” is
possibility of a reverse payment, where the can say is that the patent was not found to ment and nonmonetary consideration); In a violation of California’s antitrust statute,
plaintiff could show that the product or be invalid this time.” In re Aggrenox Antitrust re Lipitor Antitrust Litig., 2013 wl 4780496 the Cartwright act. In re Cipro Cases I & II,
service was both lucrative for the generic, Litig., 2015 wl 4459607, *10 (d. Conn. July 21, (d.n.J. sept. 5, 2013) (amendment to com- 61 Cal. 4th 116, 2015 wl 2125291, *17 (Cal.

and unneeded or unwanted by the patent 2015). for this reason, the court rejected the plaint alleging reverse payment based on may 7, 2015). It found that a plaintiff alleging
owner. Nexium, 42 f. supp. 3d at 263-64; defendant’s argument that the plaintiff could agreement to settle another case favorably a violation of the act must show only that
King Drug Co. v. Cephalon, __ f. supp. 3d. not sustain its burden of showing damages to generic party was not futile). however, the alleged settlement placed a limit on the
__, 2015 wl 356913, *15 (e.d. penn. Jan. 28, caused by a reverse payment settlement if the more recently, several courts have dismissed generic’s entry into the market, and that
2015).
defendant could show at trial on the antitrust claims based on alleged reverse payment the patent owner made a reverse payment
Courts have also considered whether claims that the patent would have likely been settlements either at the pleading stage or that exceeded the value of any goods or
traditional litigation compromises, such found valid and infringed in the underlying on summary judgment. In FTC v. Abbvie, __ f. service provided by the generic plus any
as forgoing a damages claim or dropping patent case. accordingly, the court found, supp. 3d. __, 2015 wl 2114380, *7 (e.d. penn. avoided litigation costs. the alleged reverse

a counterclaim, could constitute a reverse there would be no reason to litigate pat- may 6, 2015), the court dismissed claims payment is not limited to cash, and may
payment. In Actavis, the supreme Court indi- ent validity or infringement in the antitrust based on allegations that the patent owner include “creative variations in the form of
cated that such compromises should not be case.
provided a reverse payment in the form of consideration.” Id. at *18 n.11. to rebut the
considered reverse payments, and by and however, in FTC v. Cephalon, 36 f. supp. an agreement that gave the generic the abil- plaintiff’s case, a defendant must show “legit-
large courts have followed this suggestion, in 3d 327, 331-32 (e.d. penn. 2014), the court ity to sell an authorized generic version of imate” and “procompetitive” justifications
part because it is difficult to value such com- refused to read Actavis as precluding con- a second product, finding the settlement as for the settlement. the court also found that
promises. In Lipitor, for example, the district sideration of the patent, and indicated that a whole procompetitive. Courts have also it should not be necessary to litigate pat-
court concluded that a settlement involving there are likely to be “certain discrete cir- dismissed claims based on reverse pay- ent validity to establish a violation of the
forgone claims in litigation over three drugs, cumstances where the validity of the patent ment allegations where the plaintiff failed Cartwright act.

in both the u.s. and foreign jurisdictions, did should be litigated,” including potentially to plead the value of the alleged payment or
not constitute a reverse payment because the to show that the parties’ uncertainty about the value was difficult to determine, unreli- conclusion
plaintiff failed to provide any “reliable foun- the outcome of the litigation motivated able or speculative. see Lipitor, 46 f. supp.
dation” for the value of the forgone claims. their settlement. In Time Insurance, the 3d at 550 (dismissing claims with prejudice ultimately, the Actavis decision, and the
46 f. supp. 3d at 545, citing Actavis, 133 s. court suggested that litigation regarding where plaintiff failed to provide “any reli- flexibility of the rule of reason approach on
Ct. at 2233.
the validity of the patent might be neces- able foundation to estimate the value” of which it relies, create new uncertainty as
sary to establish that the plaintiff’s damages the alleged reverse payment); Loestrin, 45 to whether a given reverse-payment agree-
were caused by the settlement because, even f. supp. 3d at 191, 195 (dismissing claims ment is lawful or not. thus, Actavis will likely
Litigating Validity or infringement
in the absence of a settlement, the generic where “multifaceted and complex” non-cash
deter parties from including reverse
In Actavis, the supreme Court suggested could not have entered the market if the pat- settlement “is almost impossible to mea- payments in their settlements, making settle-
that litigation of the validity or infringement ent was valid and infringed. 52 f. supp. 3d sure” against the considerations mandated ment of hatch-waxman patent cases more
of the patent should not normally be neces-
at 710; see also Nexium, 42 f. supp. 3d at
by actavis); Effexor, 2014 wl 4988410, at
difficult.

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