by Dennis Crouch
As part of a litigation settlement agreement, GlaxoSmithKline LLC (“GSK”) granted an exclusive generic marketing license to the challenger Teva for sales of lamotrigine and also agreed not to introduce its own competitive ‘authorized generic’ version. The question in the case, now pending before the U.S. Supreme Court is whether that license structure can raise a plausible antitrust claim under F.T.C. v. Actavis, Inc., 133 S. Ct. 2223 (2013).
Following the settlement a set of direct purchasers (including King Drug) filed a class action lawsuit alleging that the exclusive license settlement was anticompetitive and in violated Sections One and Two of the Sherman Act. The N.J. Federal District Court sided with GSK/Teva and dismissed the case after interpreting the Actavis rule-of-reason approach to apply only to actual monetary reverse payments. On appeal, however, the Third Circuit reversed – finding that the exclusivity (including the authorized-generic restriction) should be subjected to a full rule-of-reason analysis to consider the harm done to consumers. The court wrote: “we think that a no-AG agreement, when it represents an unexplained large transfer of value from the patent holder to the alleged infringer, may be subject to antitrust scrutiny.”
In its petition for writ of certiorari, GSK asks the following question:
Whether the Third Circuit’s sweeping holding that a patentee’s grant of an exclusive license must undergo antitrust scrutiny by courts and juries – even though such a license is specifically permitted under the patent laws – is inconsistent with this Court’s decision in Actavis and decades of this Court’s earlier precedents.
Here, the contracting parties argue that the right to exclusively license a patent is a fundamental aspect of the bundle-of-rights associated with a patent and guaranteed by the Constitution, federal common law, and by statute. Further, GSK argues that these rights should be seen as “exceptions” to the monopoly laws even if they might restrict competition in the short-term and are simply “not subject to antitrust challenge.”
This will be an interesting case to follow. Kirkland & Ellis Supreme Court lawyer Jay Lefkowitz filed the petition with Bruce Gerstein on the other side. At the petition stage, briefs have also been filed by the Generic Pharmaceutical Association PhRMA, WLF, and the Nat’l Assn of Manufacturers.
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 King Drug Co. of Florence, Inc. v. SmithKline Beecham Corp., 791 F.3d 388 (3d Cir. 2015).
 Supreme Court Docket No. 15-1055.
 35 U.S.C. § 261 (patent holder “may … grant and convey an exclusive right under his application for patent, or patents, to the whole or any specified part of the United States”).