## Facts

- Glaxo owned U.S. Patent No. 4,721,723 covering crystalline paroxetine hydrochloride hemihydrate, marketed as Paxil.
- Pentech pursued a generic product using amorphous paroxetine hydrochloride; Asahi (a Japanese manufacturer) supplied the active ingredient to Pentech under contract.
- Glaxo sued Pentech for patent infringement before Pentech began U.S. sales, because Pentech lacked final FDA approval for its ANDA.
- Asahi was later joined as a defendant in the infringement action.
- The infringement litigation settled: Glaxo agreed to supply Paxil to Pentech so Pentech could sell an unbranded version in Puerto Rico and, under certain conditions, in the United States, in exchange for royalty payments.
- Asahi alleged the settlement displaced it as Pentech’s supplier and formed part of an anticompetitive scheme by Glaxo and Pentech to allocate markets and exclude Asahi from U.S. sales of paroxetine.
- Asahi filed this separate civil action asserting antitrust-based theories; defendants moved to dismiss for failure to state a claim.

## Issues

1. Whether allegations that a patent infringement settlement and related supply/entry arrangement divided markets and excluded an upstream supplier stated a plausible antitrust claim.
2. Whether the complaint adequately alleged sham litigation or knowing enforcement of an invalid patent (including a Walker Process–type theory) sufficient to strip the defendants’ conduct of antitrust immunity.
3. Whether Asahi, as an upstream ingredient supplier, plausibly alleged antitrust injury and standing rather than merely derivative loss of a customer.

## Decision

- The court granted defendants’ motion to dismiss.
- The court held that the complaint did not plausibly allege that the infringement suit was sham litigation or that the patent was knowingly invalid or fraudulently obtained.
- The court held that the settlement’s structured entry and supply arrangement did not plausibly restrain competition beyond what a valid, infringed patent could lawfully permit.
- The court concluded Asahi’s alleged harm (loss of Pentech’s purchases) was derivative of downstream arrangements and insufficiently tied to the type of market harm antitrust law targets.

## Legal Principles

- Patent litigation settlements are generally lawful; antitrust liability requires plausible allegations that the settlement or enforcement conduct extends exclusion beyond the patent’s legitimate scope.
- Sham-litigation and Walker Process–type theories require specific factual allegations that enforcement was not a genuine effort to vindicate patent rights (e.g., pursued despite knowing invalidity/noninfringement or procured by fraud).
- A patent may permit complete exclusion during its term if valid and infringed; an agreement allowing limited generic participation can be consistent with, and not exceed, that lawful exclusionary potential.
- Antitrust standing requires more than consequential business loss; injuries that are indirect and derivative (such as an upstream supplier losing a customer) may be insufficient absent a direct connection to competitive harm in the relevant market.

## Conclusion

The court dismissed Asahi’s antitrust-based challenge to a brand–generic patent settlement, finding no plausible allegations of sham enforcement or restrictions beyond the patent’s lawful scope and concluding that Asahi’s upstream supplier injury was too derivative to support antitrust relief.


Asahi Glass Co., Ltd. v. Pentech Pharms., Inc., 289 F. Supp. 2d 986 (N.D. Ill. 2003)