The Third Circuit is a prominent venue for antitrust litigation involving pharmaceuticals. The proximity of the industry and the large body of law ensure that there will be noteworthy developments each year. And plaintiffs continue to find creative antitrust claims to assert that raise novel questions of substantive and procedural law. This chapter describes, among other things, a novel and potentially problematic interpretation of the sham litigation exception to Noerr-Pennington immunity, causation challenges concerning hypothetical patent litigations in competitor lawsuits, and the use of averages in assessing class-wide injury.
FTC v AbbVie, Inc
The Third Circuit's highly publicized decision in FTC v AbbVie1 involves several topics of significance to antitrust litigants, including (1) interpretation of the seminal reverse-payment decision, Actavis,2 (2) application of the sham litigation exception to Noerr-Pennington immunity, which is currently before the Supreme Court on the drug manufacturers' petition for a writ of certiorari, and (3) the availability of disgorgement under section 13(b) of the Federal Trade Commission Act (the FTC Act).
The FTC litigation concerns a 2011 Abbott Laboratories settlement of patent infringement suits it brought against Perrigo and Teva relating to the testosterone-replacement therapy, AndroGel.3 The FTC alleged that, on the same day as its settlement with Teva, Abbott also entered into a supply agreement with Teva for the cholesterol drug, TriCor.4 The FTC claimed that the defendants filed sham patent-infringement suits against Teva and Perrigo, and entered into an anticompetitive reverse-payment agreement with Teva.5 The FTC filed suit against Abbott, AbbVie, Unimed, Besins (collectively, the defendants), and Teva in the Eastern District of Pennsylvania pursuant to section 13(b) of the FTC Act.6
The district court granted the defendants' motion to dismiss the FTC's claims based on its reverse-payment theory.7 The district court later granted summary judgment to the FTC on the objective-baselessness prong of Professional Real Estate Investors' (PRE) sham litigation exception to the Noerr-Pennington doctrine,8 and after holding a bench trial, the district court found for the FTC on the subjective-motivation prong of the sham litigation exception and on monopoly power.9 The court awarded $448 million in disgorgement but declined to order injunctive relief.10 Both the FTC and the defendants appealed to the Third Circuit. The FTC argued that the district court erred in dismissing its reverse-payment claims, in calculating the amount of disgorgement, and in denying injunctive relief.11 The defendants argued that the district court erred in finding that the sham litigation exception applied and that the defendants possessed monopoly power.12 The defendants further argued that the district court erred in ordering disgorgement and, alternatively, in calculating the amount of disgorgement.13
Third Circuit decision
The Third Circuit held that the district court erred both in granting the defendants' motion to dismiss the FTC's reverse-payment claims, and in its summary judgment decision for the FTC that the defendants' patent-infringement suit against Teva was a sham.14 The court affirmed the district court's findings that the suit against Perrigo was a sham, and also that the defendants possessed monopoly power.15 Finally, the Third Circuit panel vacated the district court's disgorgement order, holding that the FTC lacks authority to seek disgorgement under section 13(b) of the FTC Act.16
1 976 F.3d 327 (3d Cir. 2020).
2 FTC v. Actavis, Inc., 570 U.S. 136, 143–44 (2013).
3 AbbVie, 976 F.3d at 344.
5 Id. at 338.
6 FTC v. AbbVie Inc., No. 2:14-cv-05151-HB (E.D. Pa.).
7 AbbVie, 976 F.3d at 346.
8 Prof'l Real Estate Invs., Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60 (1993).
9 AbbVie, 976 F.3d at 346.
14 Id. at 351, 359.
15 Id. at 359, 371.
16 Id. at 374.
Reproduced with permission from Global Competition Review's US Courts Annual Review.
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