Antitrust Law Daily Wrap Up, ANTITRUST—NDGa.: Private Challenge to AndroGel Patent Settlements Turned Away, (Nov 1, 2012)

By E. Darius Sturmer, J.D.

The federal district court in Atlanta has ruled that branded AndroGel maker Solvay and three generic manufacturers—Watson Pharmaceuticals, Inc., Paddock Laboratories, Inc. and Par Pharmaceutical Companies, Inc.—did not engage in an unlawful conspiracy to monopolize or restrain trade in the market for the testosterone replacement drug by forestalling generic competition through settlements of sham patent infringement litigation that included reverse payment arrangements (In re AndroGel Antitrust Litigation (No. II), corrected October 30, 2012, Thrash, T.).

Because the underlying patent litigation was not shown to be objectively baseless, it was not sham activity excepted from the Noerr–Pennington doctrine, which provides antitrust immunity to those petitioning the government for redress. The court rejected contentions by the plaintiffs—putative classes of direct and indirect purchasers of the branded drug—that the patent at issue either was never infringed by the generic makers or was so facially invalid that an objective litigant would not have attempted to enforce it.

The branded manufacturer’s reliance upon a certificate of correction, which corrected fatal errors in the patent as issued, was not objectively reasonable, even though it issued after the cause of action accrued, in the court’s view. By extension, the generic makers acted as objectively reasonable litigants when they recognized that the certificate of correction might apply in the underlying suit and considered settlement. Because the certificate was entitled to a presumption of validity, the court rejected a contention that it should have appeared invalid on account of its apparent enlarging of the scope of the patent.

Alleged shortcomings in the written description for 30 of the claims in the patent did not make the manufacturer’s pursuit of a validity declaration a sham. Nor did the exclusion of several ingredients (water and sodium hydroxide) from another 12 of the patent claims render those claims objectively baseless, the court remarked. Also without merit were arguments that the underlying litigation was objectively baseless on the grounds that the patent was invalid pursuant to the "on-sale bar" and prior public use.

Admissibility of Expert Testimony

The court denied a motion by the complaining drug purchasers seeking to exclude portions of an expert report submitted on behalf of the manufacturer regarding the basic and novelty properties of the patent at issue in the underlying suit. The plaintiffs’ argument failed to address any of the grounds for exclusion under Federal Rule of Evidence 702—incompetence, unreliability, and irrelevance, the court stated. Alleged inconsistencies in the report affected the credibility, not the admissibility, of the expert’s opinion, noted the court.

David Balto for the plaintiffs. Teresa Thebaut Bonder and Matthew David Kent (Alston & Bird, LLP) for the defendants.

The case is 1:09-MD-2084-TWT.

Cases: Antitrust GeorgiaNews