FTC Notches Win In Fifth Circuit Reverse Payment Patent Settlement Case

In Short

The Background:  In the Supreme Court's landmark 2013 decision in FTC v. Actavis, the Court determined that large payments by branded drugmakers to potential generic entrants to settle patent disputes could be anticompetitive. It instructed district courts to apply the "rule of reason" standard to analyze whether particular settlements were illegal. 

The Development: The Actavis case left many unanswered questions about how courts would apply the rule of reason to settlements in pharmaceutical IP litigation. The recent Impax  decision is the first reverse payment case fully litigated by the FTC since Actavis  and resulted in a victory for the FTC. 

Looking Ahead: While injury and causation issues will continue to be a focus of private litigation, the Fifth Circuit's decision in this case involving a government injunction action sidesteps some of those defenses.