Causation in Reverse Payment Antitrust Claims
48 Pages Posted: 7 Dec 2017 Last revised: 6 May 2018
Date Written: April 1, 2018
Following the U.S. Supreme Court’s 2013 holding in FTC v. Actavis, Inc. that antitrust liability can attach to reverse payment patent settlements, courts have diverged about how to determine whether private parties who prove that such an agreement violates antitrust law are entitled to any relief. Unresolved issues about the private plaintiff causation requirement are likely to recur as more courts reach the issue.
This Note identifies two approaches to causation. Under a narrow approach adopted by the First and Third Circuits, private plaintiffs are required to piece together precise details about what would have happened if the patent litigation had not settled — including details the Supreme Court expressly held were usually unnecessary to pin down in government enforcement cases. In contrast, the California Supreme Court and several federal district courts have drawn a broader causal inference. For these courts, causation exists whenever a challenged settlement delays competition in expectation. This Note explains why the broader approach better aligns with the rationales undergirding private enforcement of the prohibition against certain reverse payment settlement agreements.
Keywords: patent, antitrust, pharmaceuticals, settlements, Actavis, reverse payment, private antitrust
JEL Classification: I18, K21, L40, L41, L43, L65, O34, O38
Suggested Citation: Suggested Citation