Third Circuit Provides Friendly Environment for FTC and Plaintiffs Challenging Certain Patent Litigation Settlements


Originally published on The National Law Review.

On July 16, 2012, the U.S. Court of Appeals for the Third Circuit announced its decision in In Re K-Dur Antitrust Litigation, a case involving so-called "reverse payment" or "pay-for-delay" settlements. A pay-for-delay settlement resolves a patent infringement suit innitiated by a brand-name drug manufacturer against a generic drug manufacturer - a lawsuit that centers on the latter company's attempt to market a competing version of the established brand-name product. In the settlement, the brand pays a (substantial) sum of money to the generic not to market its product upon FDA approval, but instead delay until some time prior to patent expiration. The brand-name drug manufacturer settles because it does not want to risk a verdict rendering its patent invalid or non-infringed by the generic product, and the generic settles because it's gaining a positive result without the need to incur further, substantial litigation expenses. A 2010 analysis by the FTC found that reverse payments settlements cost consumers $3.5 billion annually. FTC, Pay-for-delay: How Drug Company Pay-Offs Cost Consumers Billions (2010)...

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