Key Points of This Alert:

- The U.S. Third Circuit in In re K-Dur Antitrust Litigation rejected the “scope of the patent” test that has been almost uniformly adopted by other courts of appeals, deepening the circuit split and making this issue ripe for Supreme Court review.

- The Third Circuit held that reverse payment settlement agreements must be reviewed under a quick look rule of reason test, under which the reverse payment constitutes prima facie evidence of an unreasonable restraint of trade, and a defendant can only rebut the presumption of illegality by showing that the agreement has a purpose other than delaying entry or that the agreement has some procompetitive benefit.

- The K-Dur decision makes it more difficult for parties to settle their patent disputes in circumstances where the settlement involves some form of payment from the brandname manufacturer to the generic challenger. The decision does not affect the analysis of settlements that merely allow the generic to enter at some point before patent expiration.