Reverse Payment Patent Settlements in the European Union and the United States

26 Pages Posted: 21 Sep 2015

See all articles by Damien Geradin

Damien Geradin

Tilburg Law & Economics Center (TILEC); University College London - Faculty of Laws; EUCLID Law

Douglas H. Ginsburg

U.S. Court of Appeals for the District of Columbia Circuit; George Mason University - Antonin Scalia Law School, Faculty

Graham Safty

Independent

Date Written: September 18, 2015

Abstract

In recent years, reverse patent settlement agreements — whereby a patent holder pays or gives other forms of value to an infringer in order to avoid or to settle patent litigation — have raised considerable debate in the pharmaceutical field in both the United States and the European Union, with the antitrust authorities and courts reaching different conclusions as to their compatibility with competition rules. In the United States, the Supreme Court addressed this matter in the Actavis case, in which it determined that reverse patent settlements should be assessed under the “rule of reason.” In contrast, the European Commission in its Lundbeck decision considered that reverse patent settlements were per object restrictions of EU competition law and therefore the effects of such agreements did not need to be analyzed. This decision is, however, being appealed before the General Court of the EU. In its more recent Servier decision, the Commission has modified its approach as, while it declared that the reverse patent settlements in question were per object restrictions, it also demonstrated that these agreements had anticompetitive effects. Against this background, we contrast the approaches taken in the US and the EU with respect to reverse patent agreements, and assess which approach makes the most sense. We also address a number of important questions, which are being looked at by lower courts in the US and may also be relevant in the EU.

Keywords: patent settlements, pharmaceuticals, Actavis, antitrust, competition, drugs

JEL Classification: H51, I11, K21, K41, L40

Suggested Citation

Geradin, Damien and Ginsburg, Douglas H. and Safty, Graham, Reverse Payment Patent Settlements in the European Union and the United States (September 18, 2015). George Mason Legal Studies Research Paper No. LS 15-22; George Mason Law & Economics Research Paper No. 15-38. Available at SSRN: https://ssrn.com/abstract=2662575

Damien Geradin

Tilburg Law & Economics Center (TILEC)

Tilburg, 5000 LE
Netherlands

University College London - Faculty of Laws ( email )

Gower St
London WC1E OEG, WC1E 6BT
United Kingdom

EUCLID Law ( email )

Brussels
Belgium

Douglas H. Ginsburg (Contact Author)

U.S. Court of Appeals for the District of Columbia Circuit ( email )

333 Constitution Ave NW
Room 5523
Washington, DC 20001
United States

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

Graham Safty

Independent ( email )

No Address Available

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