FTC v Actavis, Inc: When is the Rule of Reason Not the Rule of Reason?
Thomas F. Cotter
University of Minnesota Law School
June 18, 2013
15 Minnesota Journal of Law, Science and Technology, 2013, Forthcoming
Minnesota Legal Studies Research Paper No. 13-20
The U.S. Supreme Court’s recent decision in FTC v. Actavis, Inc. brings some resolution to the decade-long dispute over the level of antitrust scrutiny that is appropriate for evaluating the legality of "reverse-payment" or "pay-for-delay" agreements settling pharmaceutical patent infringement litigation between brand-name and generic drug companies. Writing for a 5-3 majority in Actavis, Justice Breyer rejected both the scope-of-the-patent test and the presumptive illegality approach, and held instead that courts should review reverse-payment settlements under the rule of reason. Or say the opinion states. In reality, the Court appears to have all but in name adopted the presumptive illegality approach it purported to reject. One might speculate about the political or prudential considerations that went into the majority’s characterization of what it was actually doing, but as I read the opinion reverse-payment settlements of the type at issue in Actavis are now subject to a de facto regime of presumptive illegality. In my view, this is a welcome result.
Number of Pages in PDF File: 9
Keywords: Antitrust, Patents, Pay for Delay, Reverse Payments
Date posted: June 20, 2013