## Facts

- Solvay Pharmaceuticals developed AndroGel, obtained FDA approval, and later secured a patent covering the product.
- Actavis and other generic manufacturers filed ANDAs with paragraph IV certifications asserting Solvay’s patent was invalid or not infringed, triggering patent-infringement suits under the Hatch-Waxman framework.
- While litigation was pending, Solvay and the generic challengers entered settlements in which Solvay paid substantial sums to the generics.
- In exchange, the generics agreed to delay entry until 2015 (years before patent expiration) and to provide certain promotional services for AndroGel.
- The FTC alleged the agreements were “reverse payment” (pay-for-delay) settlements that preserved monopoly profits and delayed lower-priced generic competition.

## Issues

1. Whether reverse-payment settlements are immune from antitrust challenge so long as their effects fall within the patent’s exclusionary potential.
2. If not immune, what antitrust standard governs evaluation of such settlements.

## Decision

- The Supreme Court reversed the Eleventh Circuit and remanded.
- The Court held that reverse-payment settlements are not categorically immune from antitrust scrutiny.
- The Court rejected both presumptive legality under a “scope of the patent” approach and presumptive illegality.
- The Court held such agreements should be evaluated under the rule of reason, permitting the FTC to attempt to prove an antitrust violation.

## Legal Principles

- Patent ownership does not confer broad antitrust immunity; antitrust legality is not determined solely by reference to patent-law exclusionary potential.
- A large, unexplained reverse payment may indicate the patentee is sharing monopoly profits to avoid competition and may support an inference of anticompetitive effect.
- Rule-of-reason analysis should consider the payment’s size, its relation to anticipated litigation costs, whether it reflects fair value for services, and whether legitimate justifications exist.
- Courts may often assess competitive harm without fully litigating patent validity, using the payment’s magnitude and context as probative evidence.
- The Hatch-Waxman scheme is designed to encourage patent challenges and generic entry; pay-for-delay settlements may frustrate that objective and therefore warrant antitrust scrutiny.
- Parties may still settle patent disputes through means that do not involve large payments to delay entry, including negotiated earlier entry dates without such payments.

## Conclusion

Reverse-payment pharmaceutical patent settlements can violate antitrust law and must be analyzed under the rule of reason; they are not automatically lawful merely because they do not exceed the patent’s nominal scope.


Fed. Trade Comm’n v. Actavis, Inc., 570 U.S. 136 (2013)