Supremes Grant Merck’s Certorari Petition; Then Summarily Remand K-Dur® Antitrust Case To Third Circuit


As I said last Friday, even though the Supremes have, in Actiavis, now adopted the “rule of reason” test in pay for delay cases, I suspect the outcome in the legacy Schering-Plough K-Dur® antitrust litigation will not change.

Just the same, this week the US Supreme Court summarily remanded the litigation to the Third Circuit Court of Appeals, for reconsideration, in light of the reasoning announced in Actavis. While the matter is not free from doubt, I don’t expect that Merck, as successor to legacy Schering-Plough, will be exonerated any time soon.

Why? Well, to my eye, the original 2012 analysis at the Third Circuit was pretty close to the rule of reason analysis (albeit travelling in a cloak called “quick look” — the then operative standard in the Third Circuit). The Supremes endorsed the rule of reason on June 17, 2013.

So, at the end of the reconsideration — briefings, oral arguments, and then a decision — I don’t foresee a change in outcome. While that might lead to a new trial, at the District Court level, I have grave doubts about any “settlement” which delayed the entry of generics beyond the life of the relevant patents. Doubly so, on a simple coated potasium chloride crystal — i.e., a weak-ish patent — where a “rule of reason” analysis even at the District Court level will require that the settlement reasonably relfect a reasonable compromise of the parties’ relative risks, in continuing the litigation. Where the generic is staying off the market past the end date of the patent, it is hard to see how that is a reasonable outcome — if the generic is getting paid to stay off market.

Moreover, I expect that the District Court will find in favor of the FTC, and then, some four years from now, the Third Circuit will resolve this as a matter of law, and hold that the rule of reason analysis mandates that “settlements” of weak patents that extend beyond the life of the putative patent are. . . anticompetitive, and violate the Sherman and Clayton Acts.

But, as I say, that’s just my educated guess. Here is the Supremes’ order (see page one of that PDF), from Monday, by the way.

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