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Actavis And Error Costs: A Reply To Critics, Aaron S. Edlin, C. Scott Hemphill, Herbert J. Hovenkamp, Carl Shapiro
Actavis And Error Costs: A Reply To Critics, Aaron S. Edlin, C. Scott Hemphill, Herbert J. Hovenkamp, Carl Shapiro
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The Supreme Court’s opinion in Federal Trade Commission v. Actavis, Inc. provided fundamental guidance about how courts should handle antitrust challenges to reverse payment patent settlements. In our previous article, Activating Actavis, we identified and operationalized the essential features of the Court’s analysis. Our analysis has been challenged by four economists, who argue that our approach might condemn procompetitive settlements.
As we explain in this reply, such settlements are feasible, however, only under special circumstances. Moreover, even where feasible, the parties would not actually choose such a settlement in equilibrium. These considerations, and others discussed in the reply, serve to …
Anticompetitive Patent Settlements And The Supreme Court's Actavis Decision, Herbert J. Hovenkamp
Anticompetitive Patent Settlements And The Supreme Court's Actavis Decision, Herbert J. Hovenkamp
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In FTC v. Actavis the Supreme Court held that settlement of a patent infringement suit in which the patentee of a branded pharmaceutical drug pays a generic infringer to stay out of the market may be illegal under the antitrust laws. Justice Breyer's majority opinion was surprisingly broad, in two critical senses. First, he spoke with a generality that reached far beyond the pharmaceutical generic drug disputes that have provoked numerous pay-for-delay settlements.
Second was the aggressive approach that the Court chose. The obvious alternatives were the rule that prevailed in most Circuits, that any settlement is immune from antitrust …
Activating Actavis, Aaron Edlin, C. Scott Hemphill, Herbert J. Hovenkamp, Carl Shapiro
Activating Actavis, Aaron Edlin, C. Scott Hemphill, Herbert J. Hovenkamp, Carl Shapiro
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In Federal Trade Commission v. Actavis, Inc., the Supreme Court provided fundamental guidance about how courts should handle antitrust challenges to reverse payment patent settlements. The Court came down strongly in favor of an antitrust solution to the problem, concluding that “an antitrust action is likely to prove more feasible administratively than the Eleventh Circuit believed.” At the same time, Justice Breyer’s majority opinion acknowledged that the Court did not answer every relevant question. The opinion closed by “leav[ing] to the lower courts the structuring of the present rule-of-reason antitrust litigation.”
This article is an effort to help courts and …