Third Circuit Allows Pay-For-Delay Suit Despite No Cash Payment

On June 26, 2015, the Third Circuit extended Actavis to non-cash settlements and held that Actavis can cover a no-AG agreement – "a settlement in which the patentee drug manufacturer agrees to relinquish its right to produce an 'authorized generic' of the drug" during the statutorily guaranteed 180 days of market exclusivity for the first-filing generic drug manufacturer.

In Actavis, the Supreme Court held that "unexplained large reverse payment[s]" from a patent holder to an alleged infringer in order to settle patent litigation may violate the antitrust laws.  The Supreme Court reasoned that those large payments suggest that the patentee has serious concerns about its patent's viability and thus suggests that the patentee is merely sharing the supracompetitive prices with the challenger rather than allowing for a competitive market.