Defendants in 3rd Circuit Patent Antitrust Case Petition SCOTUS for Review

Calling judgments in favor of the Federal Trade Commission (FTC) “damaging to First Amendment rights and innovation” in a suit against AbbVie Inc. and others that alleged a previous patent infringement case constituted “sham litigation” and violated antitrust laws, AbbVie is leading the defendants in petitioning the Supreme Court of the United States to review the matter.

Thursday’s petition comes years after the FTC’s September 2014 suit against AbbVie Inc., Abbott Laboratories, Unimed Pharmaceuticals LLC, Besins Healthcare Inc., and Teva Pharmaceuticals USA Inc. (later dismissed as a party by the Third Circuit) in the Eastern District of Pennsylvania. The action was prompted by a patent infringement case by AbbVie and Besins against generic pharmaceutical competitors Teva and Perrigo, which concluded favorably for AbbVie.

The FTC claimed that AbbVie’s actions against Teva and Perrigo constituted “sham litigation” meant to monopolize the market and delay entry of the competitors’ products; in 2018, the district court sided with the FTC, finding that the suits against AbbVie’s generic competitors were baseless and violated antitrust laws. The court ordered $448 million in relief to consumers who had been overcharged for the patented drug product in dispute — the largest monetary award ever resulting from FTC antitrust litigation, according to the agency.

“Because the court had deemed the patent-infringement suits objectively baseless,” the petition said, “the (district) court found it ‘reasonable to conclude’ in those circumstances that the lawyers’ ‘subjective intent’ must have been ‘to file sham lawsuits.’”

The Third Circuit then entered judgment on the matter Sept. 30, 2020, partially affirming, partially reversing, and partially vacating the district’s ruling; most importantly, it found that AbbVie’s suit against Teva was not a sham, but the suit against Perrigo was a sham.

The petitioners said these judgments begged the question: “When may a patent owner be held liable under the antitrust laws for suing a competitor to enforce a valid patent?”

The Noerr-Pennington doctrine holds that private entities litigating generally are protected from liability under antitrust laws, covered under the First Amendment as analogous to petitioning the government. A litigant’s Noerr-Pennington immunity can be waived, however, if a court finds the complainant only is trying to interfere with a competitor’s business, such as through delaying or blocking market entry, rather than having earnest intentions. The burden is on the party lodging the antitrust claims to prove the malintent, according to the petition.

AbbVie contended that both the district and appeals courts’ reasonings reached too far in their inference that the company’s motivation for suing Teva and Perrigo was only to disrupt their competitors’ chance in the market. It said that the courts reasoned this through the fact that AbbVie’s lawyers, experienced in patent litigation, “knew that AbbVie would benefit financially if Perrigo was delayed from entering the market” and did not place the burden on the FTC to prove the motivation.

“That analysis conflicts with this Court’s precedent and stands in significant tension with decisions of other courts,” the petitioners argued. “Whereas this Court has held that a lawsuit can violate the antitrust laws only if a plaintiff proves the suit is a sham ‘both objectively and subjectively’ … the court of appeals relieved the FTC of its burden to prove the latter component, allowing subjective motivation to be inferred from the finding of objective baselessness.”

The petitioners claimed that such a decision will have “chilling” implications for companies litigating for their intellectual property rights unless SCOTUS enters judgment.

Wilmer Cutler Pickering Hale and Dorr LLP is representing the petitioners.