“Reverse Payment” Settlements Subject to Greater Antitrust Scrutiny: Implications of Supreme Court FTC v. Actavis Ruling

by Jeffrey W. Brennan

By rejecting the “scope of the patent” test and holding that reverse payment patent settlements “can sometimes violate the antitrust laws,” the Supreme Court of the United States subjects such settlements to greater antitrust scrutiny.  But, by establishing the rule of reason as the operative standard for adjudicating the cases, with the burden of proof on the plaintiff, the Supreme Court rejected the Federal Trade Commission’s position that reverse payment settlements are “presumptively anticompetitive” and that the burden should be on defendants to overcome the presumption at trial.  Companies considering reverse payment settlements should evaluate a number of practical factors that may determine their level of antitrust risk.

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