IP Law Daily, PATENT—7th Cir.: AbbVie’s additional patents for Humira, settlements with potential competitors did not violate Sherman Act, (Aug 2, 2022)

By Christopher M. Longo, J.D.

The U.S. and E.U. settlements were normal resolutions of patent litigation, and the company did not pay the would-be entrants.

In a suit brought by welfare-benefit plans that pay for the drug Humira for their beneficiaries, claiming that additional patents obtained by AbbVie Inc., the drug’s manufacturer, and settlements with potential competitors about the patents, violated the Sherman Act, the Seventh Circuit affirmed the district court’s dismissal of the complaint. Although the court addressed the plans’ argument that the company had too many patents, and that the patents were “weak,” the court stated that the subject of the patents’ validity was between the company and the competitors. However, the court found that the settlements obtained in Europe and the United States were “normal” and “traditional resolutions of patent litigation,” and failed to state a claim under the Sherman Act. (Mayor and City Council of Baltimore v. AbbVie Inc., August 1, 2022, Easterbrook, F.).

Humira (the domestic brand name for adalimumab), a monoclonal antibody, is one of the world’s best-selling and most profitable drugs. The basic U.S. patent for Humira, No. 6,090,382, expired at the end of 2016, but biopharmaceutical company AbbVie, its owner, obtained 132 additional patents related to the medicine, for details such as manufacturing or administering the drug. The last of these expires in 2034. The welfare-benefit plans sued AbbVie, claiming that the 132 additional patents it obtained for Humira, and settlements it struck with potential competitors who would manufacture a biosimilar drug, violated sections 1 and 2 of the Sherman Antitrust Act, 15 U.S.C. §§ 1 and 2. The district court dismissed the plans’ complaint and they appealed.

The additional patents. On appeal before the Seventh Circuit, the plans argued that the 132 patents were “too many for anyone to hold,” were “weak and subject to challenge,” and established a “patent thicket” which violated section 2 of the Sherman Act. Elaborating, the plans contended that because none of the potential competitors risked patent litigation by launching a “biosimilar” drug, they must have been “scared off” by the “sheer number of arguably applicable patents,” and that this allowed AbbVie to collect monopoly profits.

The Seventh Circuit held that there was nothing wrong with “having lots of patents,” noting that the patent laws have not set a cap on the number of patents that one person can hold. Additionally, while the court noted that invalid patents cannot be used to “create or protect a monopoly,” the plans did not offer to prove that all 132 patents were invalid. The court found that the validity of the patents was a “subject for dispute between AbbVie and the potential competitors, with review in the Federal Circuit.”

Monopolization of sales by the “weak” patents. The plans argued that AbbVie’s patents were “too weak to monopolize the sales of such an important drug.” The court was unmoved, stating that “[w]eak patents are valid.” The court also noted that while the Patent and Trademark Office’s adjudicative arm, the Patent Trial and Appeal Board, found during examination of AbbVie’s patents that three of them were invalid, it also concluded that 13 of the patents “were solid enough not to need review.” The court noted that besides those 13 patents, the company also “prevailed before the Board” on others.

The settlements. The plans argued that the terms of the settlements between the potential manufacturers of biosimilar drugs and AbbVie, which permitted the drugs to enter the U.S. market during 2023, “established a cartel among AbbVie and the potential entrants.” The court noted that the settlements were “compromises,” and that while many of the 132 patents would extend beyond 2023, the company “threw in the towel” in exchange for promises by the would-be entrants that they would not enter the market before 2023.

The court took note that in the patent litigation in both the United States and the E.U., AbbVie took no payment from the potential entrants to settle the cases. While the plans argued that AbbVie, in settling the with the potential competitors in 2018, “gifted the biosimilar makers with 4+ years of profits in Europe, in exchange for their agreement not to enter the U.S. market until 2023,” and that this looked like a “reverse-payment deal,” the court of appeals agreed with the district court that the company struck a “normal settlement.” The court found that while the Supreme Court noted in FTC v. Actavis, Inc. that payment by a patent holder to a potential entrant to defer entry into the market could be unlawful “when the payment exceeds any reasonable estimate of the costs of litigation,” here, there was no such “reverse-payment deal,” because no payment was made the potential entrants.

Opportunity cost. The court stated that the plans’ claim “boil[ed] down” to a contention that AbbVie’s agreement to “fewer years of monopoly profit in Europe” was “equivalent to a payment out of pocket” to the potential competitors. The court noted that the Supreme Court in Actavis rejected the argument that this “opportunity cost” concept was the same as a reverse-payment settlement, finding the reverse-payment problem was “‘something quite different’ from an opportunity cost.”

The Seventh Circuit found that the U.S. and E.U. settlements were “traditional resolutions of patent litigation” and the plans failed to state a claim under section 1 of the Sherman Act. The court affirmed the district court’s decision.

The case is No. 20-2402.

Attorneys: Gregory S. Asciolla (Labaton Sucharow LLP) for Mayor and City Council of Baltimore. James F. Hurst (Kirkland & Ellis LLP) for AbbVie Inc. Steven J. Horowitz (Sidley Austin LLP) for Amgen Inc.

Companies: Mayor and City Council of Baltimore; AbbVie Inc.; Amgen Inc.

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