Ending Patent Exceptionalism & Structuring the Rule of Reason: The Supreme Court Opens the Door for Both

Abstract

A patent gives one an opportunity to exploit an idea. It is not intended as a universal pass for exploiting the legal system. Nevertheless, a notion I would call patent exceptionalism has been allowing patent holders to exercise free rein. It is a dangerous approach that fails to distinguish between deploying the right and deploying the system. This article describes patent exceptionalism and explains how the Supreme Court decision in FTC v. Actavis moves away from it.

The article also explains how the appeal of patent exceptionalism intertwines with antitrust. To put it bluntly, patent exceptionalism is alluring because it makes life so simple. Moving away from patent exceptionalism means worrying about the messy question of what is acceptable patent behavior for antitrust purposes, a question generally analyzed under the burdensome rule of reason. Once again, the Supreme Court in Actavis opens a door, although one could argue that the door was opened merely a crack. By suggesting that the lower courts “structure” antitrust litigation, the Court provides an opportunity to give form to the amorphous rule of reason, an apparition that has repelled the hardiest of antitrust warriors. This article discusses how a structured rule of reason can be developed.

The patent system is not a deity to which we must respectfully defer. It is a living, breathing part of the organism that is our legal system. If we continue to treat patents with exceptionalism, we have only ourselves to blame as we walk willingly into the volcano.

Keywords: reverse payments, patents, Hatch-Waxman, pay-for-delay, pharmaceutical, generic, patent trolls