INTELLECTUAL PROPERTY FEATURED CONTENT
leged infringers in exchange for delayed entry and performance of certain marketing and promotional services for Solvay. The FTC alleged that these services had little value and that the payments were really made to compensate the generics for agreeing not to compete against Solvay’s AndroGel product. The district court dismissed the FTC’s complaint under the “scope of the patent” test, and the Eleventh Circuit affirmed, holding that “absent sham litigation or fraud in obtaining the patent, a reverse payment settlement is immune from antitrust attack so long as its anticompetitive effects fall within the scope of the exclusionary potential of the patent.” FTC v. Watson Pharma., 677 F.3d 1298, 1312 (11th Cir. 2012).2
power derived from the patent; a court, by examining the size of the payment, may well be able to assess its likely anticompetitive effects along with its potential justifications without litigating the validity of the patent; and parties may well find ways to settle patent disputes without the use of reverse payments,” id. at *13.
Payments May Be Justified By the Value of Goods or Services Provided By the Alleged Infringer
Importantly, the Court acknowledged that there may be legitimate justifications for a payment, such as where the payment “reflects compensation for other services that the generic promised to perform—such as distributing the patented item or helping to develop a market for that item.” Id. at *11. Yet the Court shifted the burden to the defendants in an antitrust suit to show that the payment aligns with the value of the goods and services being provided. Id. Thus, while the Actavis decision does not bar such deals in settlements, it certainly increases the associated risks. Now more than ever, it is important to make sure that any payments in such deals are consistent with the market value of the services or products being provided by the generic. Otherwise, such arrangements will be easier to characterize as involving a premium which is really a payment for delayed entry. Because, under Actavis, it is more likely that settling parties will be required to prove that the payments are aligned with the value provided, it is important for parties to thoroughly document the valuation. Moreover, such documentation should be created at the time of the settlement agreement, and any side deal should be valued in the same manner, and by the same people, who would evaluate such a deal in the ordinary cou '6R?b'W6??W72?gW'F?W"7W?'Bf?"F?R6WGF?V?V?Bw&VV?V?B??&Rv?V?VB'?6??&??rF?RFW&?2?b??6?FRFV?2v??7B?F?W"6???"FV?2V?FW&VB??F??WG6?FR?bF?R6WGF?V?V?B6??FW?B?7V6?&V6VFV?G26??V?B&RfW'??V?gV???&?f??rF?BF?R??V?G2&Vf?V7BF?Rf?VR?b6W'f?6W2&V?FW&VB?B&R??B?FRF?FV??vV?W&?2V?G'?????6F???2?bF?R7Ff?2FV6?6????F?R6?W'N( ?2FV6?6?????7Ff?2?2?V?&W"?b???6F???2f?"F?R?&?6WWF?6???GW7G'??&?F?v?F????B?WG6?FRF?R?F6??v???7Bg&?Wv?&??F?W27Ff?2&WV?&R???V?'???F?F?R?W&?G2?bF?RV?FW&???rFV?BF?7WFS??2F?R6?W'B&V6?v?VB??b'F?W2&Rf?&6VBF??F?vFRF?Rf?F?G??bF?RV?FW&???rFV?BF?FVfV?Bv??7B?F?G'W7B6???V?vW2F?FV?B6WGF?V?V?Bw&VV?V?G2?F?R??6V?F?fRF?6WGF?Rv?V?B&R6?v??f?6?F?F????6?VB?6VR?B?B??F?R6?W'B6???VB???vWfW"?F?B( ???&????( ??B?2( ???B?V6W76'?F??F?vFRFV?Bf?F?G?F??7vW"F?R?F?G'W7BVW7F???( ?&V6W6R( ???V?W????VB?&vR&WfW'6R??V?B?G6V?bv?V?B??&???7VvvW7BF?BF?RFV?FVR?26W&??W2F?V'G2&?WBF?RFV?N( ?27W'f?f???BF?Bf7B???GW&??7VvvW7G2F?BF?R??V?N( ?2?&?V7F?fR?2F????F??7W&6??WF?F?fR&?6W2F?&R6?&VB???rF?RFV?FVR?BF?R6???V?vW"&F?W"F??f6Rv?B?v?B?fR&VV?6??WF?F?fR?&?WN( GF?RfW'??F?6??WF?F?fR6??6WVV?6W2F?BV?FW&?W2F?R6????b?F?G'W7BV??vgV??W72?( ??B??V??6?2FFVB??F?R6?W'BF?B??B&?f?FR6?V"wV?F?6R????r??vW"6?W'G2&RF?F?7F??wV?6?( ??&v^( ???V?G2g&??( ?6???( ??"( ?&V6??&?^( ???V?G2????F?W"v?&G2??bV6?66R?2F?&R?VFvVB???G2?v?f7G2?F?V?v?Bf7F?'26?V?B6?W'B?Vv?F??FV?6??6?FW"??FWFW&????rv?WF?W"??V?B?2( ?F???&vR?( ??F?W"F??Wf?VF??rF?R6??R?bF?R??V?B&V?F?fRF?F?R7G&V?wF??bF?RV?FW&???rFV?B???R??&V?F?vF??rF?RV?FW&???rFV?B66R????&V?fW"?F?R6?W'N( ?2&V6????r7VvvW7G2F?BF?7G&?7B6?W'N( ?2FWFW&??F???F?B??V?B?2( ?F???&v^( ???V?FW&??RF?RFVfV?F?G>( ?&??G?F?FV???7G&FRF?BF?R??V?B?2???f7B??W7F?f?VB?6VR?B??7VvvW7F??rF?BF?R6??R?b&WfW'6R??V?B??W&?B6?W'BF?V?B?G2??V?'?v?F??WB( ?FWF??VBW???&F????bF?Rf?F?G??bF?RFV?B?G6V?n( ??@??F?R7W&V?R6?W'N( ?2FV6?6????7?BFV6?6???WF??&VB'??W7F?6R'&W?W"?F?R6?W'B?V?BF?B?F?G'W7B6???V?vW2F?&WfW'6R??V?B6WGF?V?V?Bw&VV?V?G26??V?B&R???VBV?FW"F?R'V?R?b&V6???2F?R6?W'B&V6?v?VBF?BF?R( ?66?R?bF?RFV?N( ?FW7Bv2w&?V?FVB??7G&??r??7?6??6?FW&F???ff?&??r6WGF?V?V?G2??BF?BF?R'V?R?b&V6??v?V?B??V?&VGV6RF?R?F?vF??r'F?W>( ???6V?F?fRF?6WGF?RFV?B??g&??vV?V?B7V?G2?6VR#2t?#?###"?B???"??WfW'F?V?W72?F?R6?W'Bw&VVBv?F?F?ReD2F?B( ?F?W&R?2&V6??f?"6??6W&?( ?F?B&WfW'6R??V?B6WGF?V?V?G2( ?fR6?v??f?6?BGfW'6RVffV7G2??6??WF?F????( ??BF?BF?R( ?66?R?bF?RFV?N( ?FW7BF?W&Vf?&RF?B??B7V&?V7B7V6?w&VV?V?G2F?7Vff?6?V?B??V?B?b?F?G'W7B67'WF?????B?F?R6?W'BW?&W76VB7V6??F?7F7FRf?"6WGF?V?V?Bw&VV?V?G2??v??6????VvVB??g&??vW"v??VB??&R?WB?b6WGF??rF?R66RF???Bv?V?B?fRv??VB?b?B?Bv??F?RV?FW&???rFV?B??g&??vV?V?B7F????F?R6?W'B&V?V7FVBF?ReD>( ?2&wV?V?BF?B&WfW'6R??V?Bw&VV?V?G2&R&W7V?F?fV?V??vgV??'WB?6?&V?V7FVBF?R( ?66?R?bF?RFV?N( ?FW7BF?B?B&VV?F?R7F?F&B?VB'?F?R???&?G??bF?R??vW"6?W'G2GW&??rF?R7B6WfW&??V'2???????r?G2FWFW&??F????F?R6?W'B7V6?f?6?????FVBF?( ?f?fR6WG2?b6??6?FW&F???2?( ??B?B??v??6??B7V??&??VB2f????w3?( ??&WfW'6R??V?B?v?W&R?&vR?BV??W7F?f?VB?6?'&??rv?F??BF?R&?6??b6?v??f?6?B?F?6??WF?F?fRVffV7G3???Rv????W27V6???V?B??&RV?&?RF?W?????BF??W7F?g??C?7V6?f?&??"??F?f?GV???vV???76W72?&?W@?3`??7Ff?2???V?F?RF??"F??F?G'W7B6???V?vW2F?FV?B6WGF?V?V?Bw&VV?V?G2F?BF???B6??F???7GV?( ???V?N( ???F&????6WGF?V?V?Bw&VV?V?B??f??fW26??R6?'B?b6??6?FW&F???F?F?RFVfV?F?N( Gv?WF?W"??F?Rf?&??b???WF'???V?B?"?F?W"&V?Vf?B??F?W'v?6R?F?W&R?2??&V6??F?6WGF?R?&V6W6RF?W&R?2????v?6?v?F?F?7F??wV?6?&WGvVV????WF'???V?G2?B?F?W"f?V&?R6??6?FW&F???W?6??vVB??F?R6?W'6R?b6WGF??r66R?F?R6?W'N( ?2F?F????b'V?R?b&V????r?dR44?T?4U2#0???