Can Reverse Payments In Patent Settlements Constitute Criminal Cartel Conduct?

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It is a well-established and universally accepted principle of competition law that a payment by one competitor to another competitor not to enter a market is anticompetitive, and in Australia since 2010 a criminal offence. In the United States (US) over the past decade, drug companies, the Federal Trade Commission (FTC) and class action applicants have battled the question of whether this established principle of competition law applies in the context of a settlement of a patent dispute. The answer is now clearly and unequivocally yes.

Recent decisions of the US Supreme Court and the Director General (DG) of competition in the European Union (EU) have confirmed that reverse payments in patent settlements are subject to competition law and are potentially anticompetitive. If the Australian Federal Court were to follow these two clear decisions then a reverse payment could constitute criminal cartel conduct under the Competition & Consumer Act (CCA), in addition to potentially constituting an anticompetitive agreement...

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Topics:  ACCC, Cartels, Competition, European Commission, FTC, Patents, Reverse Payment Settlement Agreements

Published In: Antitrust & Trade Regulation Updates, General Business Updates, Criminal Law Updates, Intellectual Property Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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