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FEDERAL TRADE COMMISSION v. WATSON PHARMACEUTICALS

Docket No.: 12-416
Certiorari Granted: Dec 7 2012
Argued: March 25, 2013
Decided: June 17, 2013

Topics:

Sherman Act, antitrust, patent, resale price maintenance, rule of reason, trademark

PartyNames: Federal Trade Commission v. Actavis, Inc., et al.
Petitioner: Federal Trade Commission
Respondent: Actavis, Inc., et al.

Court Below: United States Court of Appeals for the Eleventh Circuit
Citation: 677 F.3d 1298
Supreme Court Docket

Federal Trade Commission
v.
Actavis, Inc., et al.
Background:

Federal competition law generally prohibits an incumbent firm from agreeing to pay a potential competitor to stay out of the market. See Palmer v. BRG of Ga., Inc., 498 U.S. 46, 49- 50 (1990). This case concerns agreements between (1) the manufacturer of a brand--name drug on which the manufacturer assertedly holds a patent, and (2) potential generic competitors who, in response to patent-infringement litigation brought against them by the manufacturer, defended on the grounds that their products would not infringe the patent and that the patent was invalid. The patent litigation culminated in a settlement through which the seller of the brand-name drug agreed to pay its would-be generic competitors tens of millions of dollars annually, and those competitors agreed not to sell competing generic drugs for a number of years. Settlements containing that combination of terms are commonly known as "reverse payment" agreement

Question Presented:

Whether reverse-payment agreements are per se lawful unless the underlying patent litigation was a sham or the patent was obtained by fraud (as the court below held), or instead are presumptively anticompetitive and unlawful (as the Third Circuit has held).

FEDERAL TRADE COMMISSION v. WATSON PHARMACEUTICALS
ORAL ARGUMENT

March 25, 2013

Listen to Oral Argument in FEDERAL TRADE COMMISSION v. WATSON PHARMACEUTICALS
Holding: REVERSED AND REMANDED (SAA no part)
Vote: 5-3
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