If At First You Don’t Succeed

Submitted by patentadmin on Wed, 05/27/2009 - 11:30

Often, a change in political administrations produces a change in interpretation of the anti-trust laws. Liberals see every act of large corporations as detrimental to the interests of the “working man” (what do politicians know about “working”) and, hence, seek to utilize an expansive enforcement of the anti-trust laws to control the corporations. Conservatives, not being so paranoid, favor a more limited application of the anti-trust laws. Liberals desire a “per se” application of the laws, where certain activities are automatically deemed illegal, while conservatives endorse a “rule of reason” application of the laws, where activities are examined to determine their actual economic impact.

All of the foregoing talk show-type commentary is cited as necessary background to a recently filed petition to the Supreme Court seeking “clarification” (liberal-talk for “a decision making it illegal”) of the legality of “an agreement by a patent owner to pay a potential competitor not to enter the market.”

The agreement in question is one settling litigation between Bayer AG (“Bayer”) and Barr Labs, Inc. Barr sought to market a generic version of ciprofloxacin hydrochloride – the “Cipro” that, among other things, is used to treat anthrax (if you live on planet Earth, you should have heard of it). Barr contended inter alia (lawyerspeak for “hey – I’m a lawyer”) that the patent on Cipro was invalid – it was “obvious” under 35 USC § 103 – and it was “unenforceable” because it had been procured through “inequitable conduct.” The parties ultimately settled. Under their settlement agreement, Barr agreed not to manufacture a generic version of Cipro and Bayer agreed, again inter alia, to either supply Barr with Cipro for resale or make periodic payments to Barr for a stated term. The parties then entered into a consent judgment wherein Barr affirmed the validity and enforceability of the patent and admitted infringement. (It may be of interest to note that Bayer paid Barr $398.1M under this agreement.)

In 2000 and 2001, several purchasers of Cipro brought suit, claiming that this agreement violated the anti-trust laws. They lost. The trial court held that “any adverse effects on competition stemming from the Agreement were within the exclusionary zone” of the patent and, therefore, were legal.

In October 2008 (under a Republican administration) the CAFC handed down its decision in In Re Ciprofloxacin Hydrochloride Antitrust Litigation (really, that is the name of the case), holding that “in the absence of fraud before the PTO or sham litigation, the court need not consider the validity of the patent in the anti-trust analysis of a settlement agreement involving a reverse payment.” “A settlement is not unlawful if it seems to protect that to which the patent holder is legally entitled – a monopoly over the manufacture and distribution of the patented invention.”

The plaintiffs, however, are nothing if not quitters. They have now petitioned the Supreme Court to consider the matter.

THE LESSON TO BE LEARNED: Medical cost containment is a political football which the liberals seek to kick into the patent field.

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