FTC Petitions for Certiorari in Reverse Payments Dispute
As we anticipated, the Federal Trade Commission (“FTC”) filed a petition for certiorari yesterday with the Supreme Court in FTC v. Watson Pharmaceuticals, Inc.
In that case, the Eleventh Circuit upheld reverse payments (payments made by branded pharmaceutical patent holders to generic challengers to postpone market entry under the scope-of-the-patent approach, i.e., as long as the anti-competitive effects fall within the scope of the exclusionary potential of the patent, absent sham litigation or fraud), as lawful. The Second and Federal Circuits follow that approach. In contrast, the Third Circuit has held that such payments are presumptively anti-competitive under the “quick look rule of reason analysis” that may be rebutted by showing that the payments was for something other than delay or that the payment has a competitive benefit, and thereby increases competition.
The FTC’s petition, filed by the U.S. Solicitor General, exhorts the Supreme Court to take up the case to resolve this clear Circuit split. The FTC’s petition urges the Court to adopt the Third Circuit’s interpretation that reverse-payment agreements are presumptively anti-competitive.
Clearly, much is at stake here; Gibbons will continue to monitor developments.