Third Circuit Creates Reverse Payments Split Among The Circuits

Rejecting the test established by three separate courts of appeal, the Third Circuit's recent decision in In re K-Dur Antitrust Litigation has created a circuit split regarding the legality of, and application of antitrust law to, "pay-for-delay" settlements to patent lawsuits. See 2012 WL 2877662 (3rd Cir. 2012). The case is significant because it represents a reversal of fortune for pharmaceutical companies that had sought to settle patent litigation, and had – to date – largely escaped antitrust liability. The newly-created split, however, is likely to garner attention from the Supreme Court.

"Pay-for-delay" or "reverse payments" suits arise when a branded pharmaceutical manufacturer and the generic manufacturer settle patent litigation. Many such settlements include a payment by the branded firm to the generic manufacturer and an agreement by the generic manufacturer to begin marketing before the expiration of the nominal term of the patent (but at a point later