C.A. Fed. Cir.’s judgment In re Ciprofloxacin Hydrochloride Antitrust Litigation

On 15 October 2008 the U.S. Court of Appeals for the Federal Circuit affirmed the grant of a summary judgment for federal antitrust claims and dismissal of state antitrust claims by the U.S. District Court for the Eastern District of New York in a case concerning reverse payments to generic manufacturers of pharmaceuticals by a patent holder as part of settlement agreements.

According to the Federal Circuit, the District Court did not err in its rejection of per se liability for reverse payments or in its rule of reason analysis of the agreements finding no anti-competitive effects outside of the “exclusionary zone” of the patent. In particular, the Federal Circuit held that in the absence of evidence of fraud before the PTO or sham litigation, the court need not consider the validity of the patent in the antitrust analysis of a settlement involving a reverse payment, citing agreement with the Second and Eleventh Circuits. The Federal Circuit thus refused to follow the suggestions by the FTC and the U.S. Solicitor General to take account of the strength of patent by considering the expected value of the lawsuit at the time of the settlement or the ex ante relative likelihood of success of the parties’ claims.