Hittinger and Grossberg Examine New Jersey Courts' Approaches to Cases Post-Actavis Decision

Articles / January 5, 2015

Carl Hittinger and Lesley Grossberg authored "NJ Federal Courts at Forefront Post-'Actavis'," published in New Jersey Law Journal on January 5. The article covers the U.S. Supreme Court's decision in FTC v. Actavis, 133 S. Ct. 2223, which settled the question of what the standard should be in the analysis of antitrust claims regarding "reverse payments" made to delay the generic drugs' entry into the market–antitrust law's traditional rule of reason should be applied in such cases and its influence on future cases. The majority opinion showed that the FTC should have been allowed to proceed with its antitrust claims because "(1) reverse payment, or 'pay for delay,' settlements may adversely affect competition; (2) these anticompetitive effects may sometimes be unjustified; (3) the patent holder likely has significant market power; (4) patent validity issues do not necessarily need to be addressed in an antitrust case; and (5) patent infringement suits can be settled without anticompetitive terms." While Actavis resolved a major circuit split, an intradistrict split has arisen, along with more questions, such as "…under what conditions does a settlement involve a 'payment'? Is cash changing hands a prerequisite to antitrust scrutiny? Or are all patent litigation settlements now fair game under the Sherman Act? Assuming nonmonetary settlements do, in fact, fall within the scope of Actavis, how are plaintiffs to plead the monetary value of the 'reverse payment' such that the rule of reason can be applied?"

The authors then examine the narrow view: "Actavis applies to patent settlements that contain an unjustified reverse payment of money" through In re Lamictal Direct Purchaser Antitrust Litigation, 18 F Supp. 3d 560 (D.N.J. Jan 24, 2014). During this case, the judge interpreted Actavis' holding as a three part test. Two steps determine when to apply the rule of reason, while the third step is to apply the rule of reason to the particular scenario. Following this view, the authors examine the qualified broader view: "Nonmonetary settlements may be subject to antitrust scrutiny, but a 'reliable estimate' of the monetary value of the settlement must be pleaded," through In re Effexor XL Antitrust Litigation, 2014 WL 4988410 (D.N.J. Oct. 6, 2014). But, there is difficulty in determining a reliable estimate of the value of a settlement, as shown by In re Lipitor Antitrust Litigation, which has seen two post-Actavis opinions regarding the pleading standard based on infringement settlements. 

In conclusion, Hittinger and Grossberg show that, in the post-Actavis world, there is certainty concerning the legal standards that courts apply to reverse payment antitrust claims, but not as to whether claims regarding nonmonetary settlements will survive motions to dismiss. 

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