On March 23, the plaintiffs filed a petition for certiorari in the Cipro litigation seeking review of the Federal Circuit’s decision in In re Ciprofloxacin Hydrochloride Antitrust Litigation, 544 F.3d 1323 (Fed. Cir. 2008). The antitrust case involves so-called “reverse payment” settlements of patent infringement cases between innovator and generic pharmaceutical manufacturers under the Hatch-Waxman Act. The Federal Circuit affirmed the district court’s summary judgment holding that no antitrust violation occurred, stating that “any anti-competitive effects caused by the Agreements were within the exclusionary zone of the patent.” It answers the question whether case “under the Hatch-Waxman Act … a settlement agreement between a patent holder and a generic manufacturer violates the antitrust laws.” The US District Court for the Eastern District of New York granted the defendants’ motion for summary judgment, holding that any anti-competitive effects caused by the settlement agreements between the defendants were within the exclusionary zone of the patent, and thus could not be redressed by federal antitrust law.
Patentee Bayer and the generic manufacturers (“B&G”) of CIPRO®, a popular antibiotic, entered into a total of four settlement agreements to end patent infringement litigation in the US District Court for the Southern District of New York. These agreements, which were entered into before the Hatch-Waxman Act was modified to require settlement agreements to be filed with the FTC and Department of Justice for review, had Bayer, the patentee, paying the generic suppliers to not manufacture or distribute their generic drug until a certain date.
B&G got themselves sued over these agreements in the Eastern District of New York by several trade unions and HMOs, claiming that these agreements restricted free trade, inhibited competition, and thereby violated the Hatch-Waxman Act. The District Court issued a summary judgment that the agreements are fine under the Act (they do not violate antitrust because they fall within the exclusionary provisions of the patent), plaintiffs appealed to the Federal Circuit, and the Federal Circuit affirmed the District Court’s decision.
The US Supreme Court now has the case; their options are (1) deny cert, which would let the Federal Circuit’s ruling stand, or (2) grant cert, which would have the Nine Wise Ones review the case and act on the Federal Circuit’s ruling.
Meanwhile, the question stands unanswered: Do reverse payments of this type violate the antitrust laws of the United States? In other words, who trumps … the exclusionary patent laws (mandated by the US Constitution) under which the agreements were made, or the antitrust laws promoting free trade and fair market pricing of goods and services? I doubt the High Court will phrase its Questions Presented in that manner (if they grant cert), but answering this question is the gist of why the Court should grant cert on this case.
The Federal Circuit’s opinion is online here as a .pdf; the Supreme Court is not yet showing the case in its docket.