Patent Law

The following news item was posted on September 8, 2009 by Douglas "Doug" D. Salyers, Diane J. Romza-Kutz, and Albert Jacobs, Jr. of Troutman Sanders:

In what appears to be a case of first impression in the State of California, a California Superior Court judge has held that so-called ?reverse payments? made in settlement of ANDA drug litigation claims do not violate the Cartwright Act?California?s analog to the federal Sherman Antitrust Act.  Specifically, in Coordination Proceeding Cipro Cases I & II, California Superior Court Judge Richard E.L. Strauss held that payments made by brand name drug manufacturer Bayer AG to several generic drug manufacturers did not violate California?s antitrust laws or constitute unfair competition.  The California state court?s opinion relied heavily on a 2008 decision by the Federal Circuit that affirmed the legality of the exact same ?reverse payment? agreement between the same parties.   

Judge Strauss concluded that the California State antitrust laws and the Federal antitrust laws were not meaningfully different from each other, and found that, in light of the Federal Circuit?s decision in Cipro III, the payments made by Bayer AG to the generic drug manufacturers for the purpose of delaying the entry of a generic version of the antibiotic Cipro did not violate the state?s antitrust law. 

As discussed in our August 5, 2009 Advisory, the Federal Trade Commission (?FTC?) has brought a number of actions in the federal courts alleging that ?reverse payments? are illegal.  In one of those actions, brand name drug manufacturer Cephalon, Inc. has recently asked the U.S. District Court for the Eastern District of Pennsylvania to find as a matter of law that Cephalon?s ?reverse payment? agreement to keep generics off the market for its brand name drug Provigil until 2012 does not violate the Sherman Act.  Cephalon is relying on the previous federal court and Federal Circuit rulings finding such ?reverse payments? not to be illegal. 

Stay tuned for further developments, as the Department of Justice has shifted course and is now supporting the FTC in its effort to declare ?reverse payments? illegal.