September 8, 2014

Another District Court Holds That “Reverse Payment” Means Cash Under FTC v. Actavis

Summary: On Thursday, September 4, the US District Court in Rhode Island held that FTC v. Actavis, 133 S. Ct. 2223 (2013) requires a monetary payment from the patent owner to the potential generic challenger to support a so-called “reverse payment” claim, dismissing direct and indirect purchaser putative class actions in which plaintiffs asserted that the patent owner provided noncash “value” to the potential generic entrant in the challenged settlement. See In re Loestrin 24 FE Antitrust Litig., MDL No. 13-2472-S, DKT No. 116 (D.R.I. Sept. 4, 2014). The court thus joined the debate among district courts as to the meaning of Actavis, siding with those that have construed it strictly and differing from those—including one within its own circuit—that have viewed it more flexibly. The court acknowledged that what the Supreme Court meant when it said that a “large and unjustified” payment from the patent owner to the accused infringer is required before a Hatch-Waxman settlement may be challenged under the antitrust laws is an unsettled question destined for appellate review.

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