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Category: Intellectual Property & Licensing

FTC Sues Qualcomm for Using Anticompetitive Tactics to Maintain Chip Monopoly

Last week, the FTC filed a complaint against Qualcomm, a manufacturer of baseband processors, which are chips included in cell phones and other products with cellular connectivity that allow the devices to connect to cell networks.  Qualcomm holds patents to technologies incorporated in the standards that allow all cell phones to communicate with one another, referred to as standard-essential patents or SEPs.  Qualcomm’s patents mostly relate to older, 3G-CDMA cellular technologies, which are still necessary for modern cell phones to work as consumers expect.  As a condition of declaring its patents standard-essential, Qualcomm committed to the telecommunications industry’s standard-setting organizations that it would license its patents on a “fair, reasonable, and non-discriminatory” (FRAND) basis.

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Two reverse-payment appeals to watch

It has been over three years since the Supreme Court’s Actavis decision.  Since then, numerous putative class actions alleging harm to competition as a result of “reverse-payment” settlements have flooded the courts.  The complexity of these cases, along with the vague guidance provided by the Supreme Court, has given rise to intricate questions about how courts should apply Actavis and scrutinize settlements of Hatch-Waxman litigation.

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Searching for Causation in ACTOS Complaint

How explicitly must a complaint sounding in antitrust allege causation?  At oral argument last week, the Court of Appeals for the Second Circuit evaluated the sufficiency of the plaintiffs’ allegations that certain Takeda entities, in their representations to the FDA, falsely described patents for the antidiabetic drug ACTOS in order to delay the entry of generic competitors into the market—specifically, whether the plaintiffs had pleaded enough facts to show that these representations plausibly caused the delay.

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SanDisk defeats Walker Process Claim

The District Court for the Northern District of California granted defendant SanDisk’s motion for summary judgment yesterday in Giuliano, et al v. SanDisk Corp., et al, 4:10-cv-02787 (N.D. Cal. June 25, 2010).

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Better Early than Never: SDNY Dismisses Lawsuit over Patent Settlement where Generics were Granted Early-Entry Licenses with Acceleration Clauses

On September 22, Judge Ronnie Abrams of the Southern District of New York dismissed an antitrust lawsuit against Takeda Pharmaceuticals and three generic drug manufacturers based on settlements they had reached regarding a patent dispute over the drug ACTOS.  The court held that the settlements were not illicit “reverse payments” warranting scrutiny under the Sherman Act because there was no plausible basis for holding that the settlements reduced competition for the drug.  In the settlements, the generics did not receive any cash payments and primarily gained early entry licenses with acceleration clauses.

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Antitrust Inside Counsel Article Series

Our Antitrust practice group recently co-authored a series of articles in Inside Counsel discussing major antitrust issues facing in-house counsel today.  Our articles expand on topics that we have covered in this blog, including the Actavis litigation, the change in the competition landscape across the globe and antitrust reforms in Europe and Asia, antitrust enforcement in e-commerce, the implications of the Supreme Court’s decision in North Carolina State Board of Dental Examiners on antitrust liability for professional boards, and the Department of Justice’s recent guidance on antitrust compliance programs.

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FTC Commissioner Wright and D.C. Circuit Judge Ginsburg Criticize Second Circuit’s Actavis Ruling

We have been following developments in People of the State of New York v. Actavis, the New York Attorney General’s “product hopping” suit against Actavis and its subsidiary, Forest Laboratories LLC (together, “Actavis”).  Now, an FTC Commissioner and a D.C. Circuit Judge have weighed in as well—and they are criticizing a key portion of the Second Circuit’s ruling. 

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Second Circuit Denies Petition for Actavis Rehearing

We have previously posted about the New York Attorney General’s “product hopping” suit against Actavis and its subsidiary, Forest Laboratories LLC (together, “Actavis”), including our analysis of the District Court’s opinion enjoining Actavis from discontinuing sales of the Alzheimer’s drug Namenda IR, and of the Second Circuit’s decision affirming the district court’s ruling.  The Second Circuit panel that heard the appeal has now denied rehearing, and the active members of the Second Circuit have also denied rehearing en banc.

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Northern District of California Upholds Assignment of Antitrust Claims to Indirect Purchasers

Portions of a reverse payment suit against Endo Pharmaceuticals and others were recently dismissed by Judge William H. Orrick of the Northern District of California.  The case  was brought by plaintiffs who allege that a settlement agreement resolving a patent dispute over the drug Lidoderm illegally delayed the release of a generic version.

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EU Court: Standard Essential Patent Owners May Be Abusing Dominance

On July 16, the European Court of Justice issued a decision stating that standard essential patent (“SEP”) owners that seek injunctions against companies willing to license intellectual property on fair and reasonable terms may be illegally abusing their dominance. The dispute between Huawei Technologies Co. Ltd. (“Huawei”) and ZTE Corp. (“ZTE”) arises from Huawei’s patent on Long Term Evolution (“LTE”), a technology that is used in mobile phones and was developed by the European Telecommunications Standards Institute (“ETSI”).  

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Third Circuit Allows Pay-For-Delay Suit Despite No Cash Payment

On June 26, 2015, the Third Circuit extended Actavis to non-cash settlements and held that Actavis can cover a no-AG agreement – “a settlement in which the patentee drug manufacturer agrees to relinquish its right to produce an ‘authorized generic’ of the drug” during the statutorily guaranteed 180 days of market exclusivity for the first-filing generic drug manufacturer.

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Second Circuit Affirms Preliminary Injunction in People of the State of New York v. Actavis PLC

We’ve previously covered the New York State Attorney General’s (“NYS AG”) lawsuit against Actavis PLC and Forest Laboratories seeking to prevent them from discontinuing sales of the Forest drug Namenda IR, which is used to treat Alzheimer’s disease. New York has alleged that Actavis and Forest are engaging in “product hopping”—attempting to force prescribers and patients to switch to a new extended-release version of Namenda (Namenda XR) before a generic version can be launched. 

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Teva Agrees to Pay $1.2 Billion in FTC’s Pay-For-Delay Suit Against Cephalon

Yesterday, the FTC announced that it reached a settlement in its pay-for-delay lawsuit, FTC v. Cephalon Inc. in the U.S. District Court for the Eastern District of Pennsylvania, with Teva Pharmaceuticals Industries, Ltd., which acquired Cephalon in 2012.  This case is the first FTC case to be resolved since the Supreme Court’s 2013 decision in FTC v. Actavis, in which the Court announced that reverse-payment patent settlements could be subject to antitrust challenges.

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Following Actavis, California Supreme Court Crafts “Structured Rule of Reason” Test for Evaluating Pay-for-Delay Settlements

Last Thursday the Supreme Court of California decided In re Cipro Cases I & II, No. S198616 (Cal. May 7, 2015), holding that reverse payment, or “pay-for-delay,” settlements can be challenged as unreasonable restraints on trade.  In so doing, it followed the U.S. Supreme Court’s 2013 decision in Federal Trade Commission v. Actavis, Inc., 133 S.Ct. 2223 (2013).  

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Is the FRAND Regime Due for an Overhaul?

In today’s technology-heavy world, technical interoperability standards are quite common.  Because those standards are often patented, patent owners may have the ability to extract a monopoly price and some argue those owners can “reduce[] the number of competitors practicing the standard.” 

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Court Sacks Photographers’ Antitrust Claims Against the NFL and its Member Teams

Allegations of conspiracy to restrain trade and exclusive dealing may read like textbook antitrust claims, but if the allegations are made by a plaintiff who is not an “efficient enforcer” of the antitrust laws, the complaint is vulnerable to a motion to dismiss.  

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Plausibly Alleging Non-monetary Settlements as Reverse Payments After Actavis

In In re Lipitor Antitrust Litigation, No. 12 Civ. 2389 (D.N.J.), U.S. District Judge Peter G. Sheridan has confirmed his prior ruling that under the Supreme Court’s decisions in Twombly, Iqbal, and FTC v. Actavis, Inc., 133 S. Ct. 2223 (2013), plaintiffs claiming an antitrust violation based on a non-monetary settlement must allege the value of the settlement to survive dismissal of their complaint.

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Solicitor General Argues that Antitrust Principles Do Not Warrant Overturning Brulotte

On Friday the Solicitor General filed an amicus brief in Kimble v. Marvel Enterprises.  As we previously noted, in Kimble, the Supreme Court will consider whether to overturn Brulotte v. Thys Co., a 50-year-old precedent holding that “a patentee’s use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se.”  

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Will the European Court of Justice Conclude that Antitrust Law Prohibits Royalties for Invalid Patents?

The European Court of Justice recently announced that it will issue a decision in Genentech Inc. v. Hoechst GmbH, in response to a request from the Paris Court of Appeals for clarification on whether European antitrust law precludes payment of royalties on a patent licensing agreement after the invalidation of the patent. This case could have important implications for European antitrust law, particularly if the ECJ determines that the EU’s antitrust laws must be interpreted as curbing enforcement of private licensing agreements.  

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American Needle Settlement to End Nine-Year Litigation

On February 16, American Needle Inc. reached an agreement in principle with the National Football League to settle its claims.  A settlement between the parties would mark the end of an antitrust litigation that has been pending since 2004.

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Actavis Amici Briefs Don’t Support Injunction

The expedited appeal to the Second Circuit pits New York State’s arguments for facilitating competition in a “molecule market” (a product market defined by the active ingredient of a prescription drug) against the brand name manufacturer’s arguments about innovation and compelled support of potential competitors.  

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In re: Nexium Plaintiffs Seek a Permanent Injunction

As we reported earlier, the jury in In re: Nexium found that AstraZeneca had violated the antitrust laws by acting to keep generics off the market but that no generic would have been introduced earlier in the market even without the violation. Thus, the jury found that the plaintiffs were not entitled to relief. 

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Stay Denied; Expedited Appeal Granted in Namenda Product Hopping Suit

Following the S.D.N.Y.’s award to the New York State Attorney General of an injunction requiring Actavis to continue distributing the immediate-release tablet version of its dementia drug, Namenda, the Second Circuit Court of Appeals has denied Actavis’ request for a stay of the injunction pending appeal. 

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In re: Nexium Plaintiffs Seek New Trial

As reported previously, the first post-Actavis jury verdict in a “reverse payment” antitrust case handed a win to the defendants.  Now, plaintiffs in In re: Nexium (Esomeprazole) Antitrust Litigation have moved for a new trial, arguing that the Massachusetts federal district court committed error in formulating the jury charge and in excluding some of plaintiffs’ evidence.

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FTC Issues Report on ‘Pay-for-Delay’ Settlement Volume for FY 2013

The Federal Trade Commission staff recently issued a report detailing the number of “potential pay-for-delay settlements” that took place in fiscal year 2013.  The FTC is a staunch opponent of so-called “pay-for-delay”—also known as “reverse payment”—settlements. 

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Preliminary Injunction Order in Actavis Casts a Skeptical Eye Toward the “Hard Switch”

Last week, we briefly reported on the injunction granted by the U.S. District Court for the Southern District of New York in the New York Attorney General’s “product hopping” suit against Actavis and its subsidiary, Forest Laboratories LLC.  On Monday, the court held a hearing on the injunction and released a copy of its decision (portions of which are redacted from public view).  

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Lupin Appeals Fine Imposed by European Commission in “Pay-For-Delay” Crackdown

In July of this year, the European Commission imposed fines on French pharmaceutical company Servier and five generic drug makers, including Lupin Ltd., totaling €427.7 million. The fines were the result of a five-year investigation into alleged anticompetitive agreements that prevented generic versions of perindopril, Servier’s best-selling blood pressure medication, from entering the market.

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Preliminary Injunction Precludes Actavis from Pulling Current Version of Namenda off the Market

Yesterday, Judge Robert Sweet granted the New York Attorney General’s request to block Actavis and its New York-based subsidiary Forest Laboratories LLC from pulling Namenda, a dementia drug commonly used to treat Alzheimer’s, off the market.  In this “product hopping” case brought in the Southern District of New York, the Attorney General has alleged that the defendants are attempting to force prescribers and patients to switch to a new extended-release version of Namenda before a generic version of the drug can be introduced into the market.

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First Post-Actavis Jury Verdict Goes to Defendants on Causation Question

After six weeks of trial and two days of deliberation, the jury has returned its verdict in favor of the defendants in In re: Nexium.  This trial began as a challenge to the allegedly anticompetitive effects of the settlements of prior patent infringement litigations between AstraZeneca and Teva and between AstraZeneca and Ranbaxy concerning AstraZeneca’s Nexium.  

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District Court Reluctantly Allows Tying Claims Against Oracle to Go Forward

Last Friday, Magistrate Judge Paul S. Grewal of the Northern District of California denied a motion by Oracle to dismiss three counterclaims based on a tying theory in Oracle America, Inc. v. Terix Computer Co.  In doing so, the court followed (if begrudgingly) the Supreme Court’s decision in its seminal tying case, Eastman Kodak Co. v. Image Technical Services, Inc.

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Nexium District Court Takes Pioneering Approach to Preliminary Jury Charge

How does a court explain the complicated area of law at the intersection of patent settlements and antitrust law to a group of lay-jurors in the wake of Actavis? The district court’s approach to preliminary jury instructions in the on-going Nexium “reverse payment” trial provides one solution. The instructions also raise questions concerning the significance of direct evidence of market power that we previously discussed in connection with the Amex and Cephalon cases.

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Dr. Reddy’s Laboratories Settles on Eve of Trial – Agrees to Cooperate with Plaintiffs

Much has happened since our last post on the Nexium “pay for delay” class action lawsuit.  Jury selection began in the District of Massachusetts on Monday, October 20, 2014.  The day prior, one of the generic drug makers, Dr. Reddy’s Laboratories (“DRL”), settled with the plaintiffs and agreed to cooperate in plaintiffs’ case against AstraZeneca, Teva Pharmaceutical Industries, and Ranbaxy Inc.

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Reverse Payments, Actavis, and the Lower Courts at Sea, Part 2: The Brewing Conflict Over Non-Cash Settlements

Our first post in this series was titled “What Is a Reverse Payment?” As the recent cases discussed in today’s post show, the courts are struggling with a fundamental component of that question: What, for that matter, is a payment?

Among the issues left unresolved by the Supreme Court’s Actavis opinion is the question of whether a reverse payment settlement can run afoul of antitrust laws when no actual cash changes hands. Instead, these arrangements might include a promise by the brand name manufacturer to delay the introduction of an authorized generic, a settlement of unrelated litigation on terms beneficial to the generic manufacturer, or a licensing agreement whereby the generic manufacturer gains rights to market the brand name product overseas. These can be of tremendous value to the generic manufacturer, but they are different from the “pay[ment of] many millions of dollars” that was the focus of Justice Breyer’s opinion for the Actavis majority.

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“Free Sherlock” Litigation Raises Specter of Antitrust Liability for Distributors Cooperating With Intellectual Property Owners

Leslie Klinger, noted Sherlock Holmes scholar and lawyer, has waged a nearly all-out legal offensive against the Estate of Arthur Conan Doyle over the Estate’s assertion of a copyright in connection with certain works featuring the iconic Sherlock Holmes.  The lawsuit has been a media darling─reports have appeared in outlets such as Businessweek, The Hollywood Reporter, Reuters, and The New York Times─with the press often emphasizing the David-and-Goliath-like aspects of the litigation.   A website entitled Free Sherlock has chronicled the ups and downs of the lawsuit (mostly ups for Klinger), and the litigation also inspired its own Twitter hashtag: #freesherlock.  Judge Posner of the Seventh Circuit has stirred the copyright pot with an antitrust analysis that could ensnare distributors that refuse to distribute products that allegedly infringe the rights of an intellectual property owner.

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Challenge for ASCAP & BMI: Persuading the DOJ Their Consent Decrees are Obsolete

As we noted last month, the DOJ invited public comment last June on whether to modify its consent decrees with the music licensing firms ASCAP and BMI to respond to changes in the digital music business.  The DOJ review comes on the heels of decisions issued last year in the Southern District of New York, by Judges Cote and Stanton, holding that the consent decrees did not permit music publishers to partially withhold digital performance rights – which the publishers sold separately, at a premium, to  the streaming music service Pandora.  The challenge now will likely be convincing the DOJ (and, if necessary, the district court) – that the decrees have already achieved their purposes – or are no longer suited to do so – despite recent finding of coordinated, anticompetitive conduct by some of the key players in the dispute. 

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Direct Evidence of Patent Holder’s Pricing Power Doesn’t Lead to Summary Judgment on Existence of Monopoly Power

We wrote earlier about the DOJ’s efforts to use direct evidence to show that the rules Amex imposes on merchants harm competition.  The district court’s decision denying summary judgment to the plaintiff in Apotex v. Cephalon presents an apparently novel attempt to use direct evidence of market power to prove an antitrust case at the summary judgment stage and avoid tricky issues of market definition. 

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Reverse Payments, Actavis, and the Lower Courts at Sea, Part 1: What Is a Reverse Payment?

The intersection of IP and antitrust has always been fraught.  The raison-d’être of the Sherman, Clayton, and FTC Acts is to bust trusts and promote competition.  Meanwhile, intellectual property laws create lawful exclusionary rights.

This series will explore one particular point of tension: the battle over “reverse payment settlements” pursuant to which the plaintiff in a patent infringement action agrees to “pay” the alleged infringer to keep the infringer’s product off the market for a period of time.  In these “pay-for-delay” arrangements, the province of the pharmaceuticals industry, the settling parties are a brand-name drug manufacturer and the maker of a generic equivalent.

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ASCAP, BMI Comment Regarding DOJ Review of Consent Decrees

In June 2014, the DOJ announced that it planned to review the consent decrees with music licensing firms ASCAP and BMI.  These consent decrees were initially entered in 1941; the ASCAP consent decree was last amended in 2001 and the BMI consent decree was last amended in 1994.  The DOJ asked for comments concerning whether the consent decrees "need to be modified to account for changes in how music is delivered to and experienced by listeners."  On August 6, ASCAP and BMI filed public comments regarding the consent decree review.

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Oral Argument on “Pay for Delay” Class Action Certification Heard by First Circuit

A panel of the U.S. Court of Appeals for the First Circuit heard oral argument this week in In Re: Nexium (Esomeprazole) Antitrust Litigation in an appeal of a lower court’s decision certifying a class of drug consumers and third-party payors challenging AstraZeneca’s “pay-for-delay” patent suit settlements, as reported by the National Law Journal.

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Welcome to Our Blog

We are pleased to announce the launch of Antitrust Update, Patterson Belknap’s new resource for the latest news and happenings in the antitrust and competition law arena. 

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