Supreme Court to Decide Legality of Reverse-Payment Settlements in Paragraph IV Disputes

Financier Worldwide Magazine
March 2013

This article discusses the U.S. Supreme Court’s grant of certiorari in FTC v. Watson Pharmaceuticals, Inc. (Actavis, Inc.), one in a line of cases upholding the legality of a “reverse payment” settlement of a Hatch-Waxman patent litigation in the face of an antitrust challenge. In Watson , the Eleventh Circuit joined the Federal and Second Circuits in finding that such settlements are legal if they do not grant the patent owner rights beyond the scope of the patent and there is no evidence of sham litigation or fraud. The Supreme Court has not yet ruled on the certiorari petitions filed following the Third Circuit’s July 2012 ruling in In re K-Dur Antitrust Litigation , which applied a stricter standard and held that such settlements are presumptively unlawful.

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