Antitrust Law Daily Wrap Up, TOP STORY—D. Ga.: Androgel patent settlement not shielded from FTC antitrust suit, (Apr 23, 2014)

By Jeffrey May, J.D.

A “reverse payment” settlement resolving patent infringement litigation between Solvay Pharmaceuticals—the marketer of brand-name testosterone replacement drug AndroGel—and would-be generic competitors Par Pharmaceutical Companies, Inc. and Paddock Laboratories, Inc. (ParPaddock) was not entitled to Noerr-Pennington immunity in an FTC antitrust action, even though the underlying patent litigation was terminated by a consent judgment, the federal district court in Atlanta has ruled. The court denied the defendant’s motion to dismiss the case, which is on remand from the U.S. Supreme Court (In re AndroGel Antitrust Litigation (No. II), April 18, 2014, Thrash, T.).

In June 2013, the U.S. Supreme Court ruled that the FTC could pursue the purported “pay-for-delay” settlements between Solvay and generic rivals Watson Pharmaceuticals (now Actavis, Inc.) and ParPaddock under a rule of reason analysis (FTC v. Actavis, Inc., 133 S.Ct. 2223, 2013-1 Trade Cases ¶78,419). Now on remand, the district court has ruled that “providing the consent judgment with Noerr-Pennington immunity would largely eviscerate the ruling in Actavis.”

ParPaddock and Solvay unsuccessfully argued that the case should be dismissed because the challenged conduct was legitimate petitioning for government action and thus protected by the Noerr-Pennington doctrine. They contended that their settlement arrangement was protected by the First Amendment because it was embodied in a consent judgment signed by the court. The Watson settlement was not before the court.

The Noerr-Pennington doctrine generally shields from antitrust liability a petitioner’s efforts to seek governmental action from the courts. However, the court concluded that the consent judgment, which included some of the private agreements between ParPaddock and Solvay, was not the type of judgment entitled to such protection.

The court discussed three cases that considered Noerr-Pennington immunity regarding consent judgments settling similar patent disputes. It concluded that the consent judgment in this case was more like the consent judgments in the two cases of the three cases that rejected Noerr-Pennington immunity.

The fact that the consent judgment between ParPaddock and Solvay did not include all the terms of the agreement counseled against extending Noerr-Pennington immunity to the agreement, the court decided. ParPaddock and Solvay entered into a series of agreements along with the consent judgment that together formed the basis for the FTC’s lawsuit. The court pointed out that the profit sharing agreements were not included in the consent judgment and that the court never approved the agreements setting forth the generic rival’s compensation for agreeing to stay out of the market.

The court refused to allow a court’s rubber-stamped approval of a private agreement to create antitrust immunity. In the case where immunity for the consent judgment was found, the judged had played a role in developing the consent judgment. Moreover, based on the Supreme Court’s language in FTC v. Actavis, “the settlement arrangement between ParPaddock and Solvay is precisely the type of agreement that should have its validity determined by the antitrust laws themselves.”

Lastly, the nature of consent judgments themselves counseled against extending Noerr-Pennington protection, the court concluded. The consent judgment was merely the defendants’ private agreement. Further, the consent judgment did not provide for issue preclusion in subsequent litigation with non-parties. Thus, the consent judgment was not the sort of government action typically due Noerr-Pennington immunity.

This is Case 1:09-md-02084-TWT (MDL Dkt. No. 2084).

Attorneys: Randall W. Weinsten for the FTC. Adam M. Acosta (White & Case, LLP) for Par Pharmaceutical Companies, Inc. and Paddock Laboratories, Inc. Adam R. Lawton (Munger Tolles & Olson) for Solvay Pharmaceuticals, Inc.

Companies: Actavis, Inc.; Solvay Pharmaceuticals, Inc.; Par Pharmaceutical Companies, Inc.; Paddock Holdings, Inc.

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