The European Antitrust Review 2014 Section 3: Country chapters

Germany: IP & Antitrust

Patents add ‘the fuel of interest to the fire of genius’. These words, attributed to Abraham Lincoln,1 appropriately capture the economic perspective of patent grants. The patentee receives a legal monopoly2 permitting him to charge prices above competitive levels, simply because the competition cannot resort to imitation (always an obvious competitive means) but must find substitutes for the patented product. In theory, there is nothing objectionable in that. The very existence of a patent system would seem to imply that above-market compensation must be available to a successful innovator.

The Supreme Court decision in FTC v Actavis

In FTC v Actavis, Inc,3 a 5-3 majority4 of the United States Supreme Court was suddenly unsure, reversing the Eleventh Circuit’s view that patent law controls the inquiry. It held that certain settlements of patent litigation, especially if they involved the payment of ‘large’ sums of money by the patentee to a challenger, can ‘sometimes violate the antitrust laws’.5 Such settlements should therefore be subject to a rule of reason analysis. If genuine settlements of patent litigation – ie, where the settlement resolves the uncertainty surrounding the patent’s validity or the question of infringement – could expose the settling parties to antitrust liability, it follows that a patent of unproven validity should not shield the patentee from allegations of abuse of market power if he seeks to preserve the patent’s (potential) exclusionary scope.

This would have far-reaching consequences beyond the issue the Supreme Court resolved in Actavis, as it could fundamentally alter the relationship between patent and antitrust law. In fact, it is not too hard to think of other patent related agreements (namely royalty-bearing licences) that could ‘sometimes’ violate the antitrust laws unless the patent grant somehow insulated the parties from full antitrust scrutiny.

Immunity from antitrust liability

If the patent system were perfect in that only patentable inventions proceeded to a patent grant the fact of the patent grant alone would be the end of all discussions about antitrust law implications.

As the US Supreme Court held in Precision Instrument Mfg Co:6

A patent, by its very nature, is affected with a public interest. [It] is an exception to the general rule against monopolies, and to the right to access to a free and open market.7

Alas, the patent system is not, and in fact cannot be, perfect.8 Even though patents are only granted after due scrutiny by the competent patent authorities, they remain vulnerable to validity challenges. Patent examiners can only dedicate so much of their time to review an application and search for relevant prior art.9 It is also difficult for them to identify those applications that will be commercially significant. Such information asymmetries10 favour the grant of patents even where the underlying invention may – objectively – not be patentable.

Probabilistic patents

Patents are thus probabilistic rights.11 While they carry a rebuttable presumption of validity12 they are not immune from challenges. With that in mind, economists would likely disagree if lawyers contended that patents enable the patentee to actually exclude competition. An economist would rather say that patents permit a patentee to try and exclude competitors.

Viewing patents as mere ‘lottery tickets’13 would remove the justification for the special treatment of patent licence and settlement agreements under antitrust law. As true exclusionary rights, the patentee legitimately controls the product market downstream of his patent and any potential entrant into that market would be a potential infringer. His market entrance would not be legitimate competition but ‘theft’ of the patentee’s rights.

If one dropped the notion, though, that patents are actual exclusionary rights, any third party challenging a patent would seem, prima facie, as a legitimate competitor of the patentee on the product markets downstream of the patented technology.

Litigating probabilities

It is unsurprising that the uncertainty of probabilistic rights invites litigation, especially when the possible rewards justify the effort. A particularly lucrative field for patent challenges is the pharmaceutical sector. Generic drugs promise high profits while requiring comparatively moderate investment. It is thus understandable if generic manufacturers seek to get patents out of their way in order to commence their marketing of bio-equivalent generics. Even though the specific regulatory environment of the so-called Hatch-Waxman Act14 certainly fuelled the litigation spree that resulted in several high-profile cases, culminating in Actavis,15 the underlying issue of so-called ‘pay-for-delay’ agreements is viral on both sides of the pond.

Pay-for-delay agreements

While (valid) patents prevent unlicensed third parties from entering the product market downstream of the patented technology for the term of the patent, a risk or litigation-averse patentee may still choose to pay off potential challengers to enhance the exclusionary potential of his patent rather take his chances in court. This peculiar form of patent settlement has recently come under intense scrutiny by antitrust regulators in the United States and in Europe.

Terminology and substance

The term ‘pay-for-delay’ is, first of all, a term coined (or at least prominently used) by the US Federal Trade Commission (FTC) in the litigation that led to the Actavis opinion and in the battle before the court of public opinion that preceded and accompanies it. Pay-for-delay agreements are also known as ‘reverse payment’16 agreements because they provide for a payment by the patentee to the challenger while in a typical licensing situation the licence-seeker agrees to pay royalties to the patentee.

In its simplest form, the manufacturer of a brand-name or pioneer drug protected by patents settles (Hatch-Waxman-induced) patent litigation by paying a certain sum of money (sometimes ‘large’ sums) to a generic challenger who in turn agrees not to market his generic drug before a defined date. That defined date will typically be some time before the patent is due to expire.17 Accordingly, one could as well say that such a settlement actually accelerates (rather than delays) the generics manufacturer’s market entry. The term ‘reverse payments’ is thus probably more appropriate as it does not imply a pejorative connotation.

Paragraph IV statements

The Hatch-Waxman Act is a uniquely litigation-prone environment. It permits generic manufacturers to rely on the efficacy and safety data of brand-name manufacturers when seeking marketing authorisation for a bio-equivalent drug. This is achieved through an Abbreviated New Drug Application (ANDA) that references the existing efficacy and safety data of the pioneer drug but must include a certification by the applicant that any patents protecting the pioneer drug are either invalid or unenforceable, or both (a ‘paragraph IV statement’). Such paragraph IV statement is deemed a constructive infringement of the patents underlying the existing marketing authorisation of the pioneer drug.

Under the Hatch-Waxman Act, the brand-name manufacturer will then have the option to initiate patent infringement litigation against the ANDA applicant which will – if filed within 45 days after receipt of the ANDA paragraph IV notice – result in an automatic 30-month-stay of the generics application. After the expiry of the 30-month-stay the federal Food and Drug Administration (FDA) will grant the generic manufacturer permission to market the generic drug, albeit at the manufacturer’s own risk, unless the patent situation is clarified by then.

It is obvious that the availability of the 30-month stay in itself must be a great incentive for the brand-name manufacturer to commence patent infringement litigation. Equally obvious is the incentive for the generic manufacturer who must try and obtain clarity on the patent situation before marketing the generic drug because an ‘at risk launch’ could result in catastrophic damages if the patent(s) certified as invalid or not infringed subsequently turn out to be valid and infringed.

The paragraph IV statement will thus in many cases result in litigation. In this context the Hatch-Waxman Act provides a further incentive to both the brand-name and the generic manufacturer to settle their dispute. Under the Act, the first filer of a generic drug ANDA automatically gets a 180-day exclusivity period over other generic manufacturers thereby creating a legal duopoly (or oligopoly if there is more than one ‘first filer’18) between the manufacturer of the pioneer drug and the generics manufacturer(s).

Settlement incentives

The litigation invited under the Hatch-Waxman Act, however, increases the uncertainty that is already inherent in all patents, as the litigants cannot know how the court may decide the issue before it. Such litigation not only involves significant expenditure. It is also an unwelcome distraction for the patentee from his core business. This creates double incentives to avoid further uncertainty and to settle the dispute. In addition, courts are generally encouraged to foster settlements.19

Looking at the typical interests of the litigants in Hatch-Waxman litigation, it is obvious that the brand-name manufacturer wants to continue to enjoy his freedom from competition while the generics manufacturer seeks the earliest possible market entry. These typical interests are far from irreconcilable. Settlement is just a question of simple arithmetic.

The manufacturer of a pioneer drug will consider facilitating a settlement by making a reverse payment if the anticipated profits for the remaining term of the patent plus the profits during the duopoly (or oligopoly) period until further generics manufacturers enter the market are greater than the required payment after adjustment for litigation risks and costs.

The generics manufacturer will settle for a reverse payment if the payment plus the anticipated duopoly profits are greater than the possible duopoly profits generated after an invalidation of the patent followed by an immediate market entry (adjusted for litigation risks and costs).

Patent settlements and cartelisation

Looking at the parties’ interests and the dynamics of their relationship only would, however, leave an incomplete picture. Allocating markets and replacing competition with agreements would amount to cartelisation. As in most cases, cartelisation in itself will provide sufficient profits for the participants in the cartel making it worth their effort. It is also perfectly reasonable to avoid the expenditure of litigation costs and exchange a certain (reverse) payment for uncertain future profits. That, however, would put the public at large at a disadvantage.

The allocation of monopoly profits between cartel members will inevitably come at the expense of consumers who stand to pay higher prices than they could expect to pay without the restraint of competition.20 Antitrust laws are intended to prevent such an outcome, of course, and they must therefore generally take precedence over the parties’ private autonomy and interests.

The antitrust question

If one took the existence of patent rights out of the equation, a monetary compensation for a later market entry of a potential competitor would be squarely at odds with competition law,21 both under the Sherman Act22 and article 101 of the Treaty on the Functioning of the European Union (TFEU) in that it leads to a reduction of output and higher prices.

The question, however, is whether the existence of patents should in fact be taken out of the equation.

Patent litigation settlement and antitrust laws – the law in Europe and the US

The 2009 sector enquiry by the European Commission23 suggests that patent disputes in the pharmaceutical industry often end in settlements24 as does data published by the FTC.25 From practical experience it would be naive if one assumed that these settlements did not routinely involve monetary components.

At their core, patent settlements clarify the scope and/or validity of a patent. Given the probabilistic nature of patents, both their exact reach and their validity will be uncertain as at the date of the settlement. Accordingly, it is entirely possible that the settlement agreement extends the patent beyond its true scope or that a patent’s validity is acknowledged even though the patent should not have been granted in the first place. This begs the question whether patent settlement agreements should be invalidated because they may bolster a patent’s scope26 beyond what the patent office granted or should have granted.


Even in Germany with its specialised judges and, notably, the absence of a jury, patent litigation can involve uncertainties. It is not exactly like rolling the dice, but risks of course remain.

German case law permits settlement agreements if the agreed restrictions imposed under an agreement remain within the boundaries of objective uncertainty surrounding the scope of the patent in suit. This has been established through a series of cases27 dating back to the days of Allied-imposed decartelisation law. The most recent case28 affirmed that a settlement agreement was immune from antitrust challenges unless it led to restrictions beyond what the parties could have reasonably assumed to be in doubt regarding the patent. In this 2005 case (Abgasreinigungsvorrichtung),29 the settlement imposed a royalty on sales into a country not covered by the patent. As the territorial reach of the patent in suit was beyond doubt, the settlement agreement was held to be invalid.

Under the German approach, (patent) settlement agreements enjoy a partial exemption from antitrust scrutiny. It is believed to be unreasonable to require the parties to litigate an issue with an objectively uncertain outcome if both parties wish to settle.30 Looking at the parties’ interests only, cartelisation will always be a convenient alternative.31 The question thus remains why courts and regulators should look the other way if the parties wish to clarify the scope of a patent, potentially at the expense of the public interest in unrestrained competition. It is a question the Federal High Court has not – to date – conclusively answered.32

While German courts have not heard any ‘pay-for-delay’ cases, existing case law would in all likelihood permit such agreements. Antitrust scrutiny is focused on the scope of the patent and, assuming that its validity was uncertain, an agreement under which the challenger acknowledges the patent would likely survive antitrust challenges. Given the structure of the test applied by the Federal High Court, a facilitation payment would be deemed immaterial as it is only the flip-side of the uncertainty surrounding the patent and the patentee’s part of the deal.

EU law

The somewhat relaxed standard applied in Germany is contrasted by the principled stance taken by the Court of Justice of the European Union (CJEU). Interestingly, the CJEU expressly rejected the German approach upon referral by the Federal High Court in the Bayer v Süllhöfer case.33

Mr Süllhöfer and Bayer AG had both obtained patent protection relating to the manufacture of certain plastic panels. After a decade or so of litigation, they reached a settlement agreement, under which the parties each took a licence under the other’s patent and undertook not to challenge the validity of these patents. A few years later, Mr Süllhöfer changed his mind and sought a declaration that the settlement was void alleging that it ran afoul of antitrust laws. As the case reached the Federal High Court, the justices referred the matter to the CJEU seeking a ruling on the construction of (now) article 101 TFEU in the context of a settlement agreement.

The Commission had suggested that the CJEU accept the German approach and permit settlements of genuine patent disputes through no-challenge clauses. The court disagreed:

The point of view put forward by the Commission cannot be accepted. In its prohibition of certain ‘agreements’ between undertakings, Article [101] makes no distinction between agreements whose purpose is to put an end to litigation and those concluded with other aims in mind. It should also be noted that this assessment of such a settlement is without prejudice to the question whether, and to what extent, a judicial settlement reached before a national court which constitutes a judicial act may be invalid for breach of Community competition rules.’34

Under EU law, patent settlements do not benefit from a sector-specific approach.35 Rather, they are subject to the same level of scrutiny as any other potentially anti-competitive agreement.36 The CJEU did not expressly address in-court settlements thereby leaving a back door open. However, this exception is based on the notion that a settlement in court ought to be viewed as a ‘judicial act’ (which could not fall within the ambit of article 101 TFEU that is limited to agreements between undertakings). Even where a court may sanction a settlement, it is solely grounded in the parties’ agreement, however and does not take the form of a ‘judicial act’. It is thus unlikely that the exception for ‘judicial acts’ could save in-court settlements from EU antitrust scrutiny.

The Süllhöfer referral case came before the CJEU almost a quarter of a century ago. It may be that the CJEU would revisit its precedent.37 As of now, however, it remains the law of the Union. Interestingly, the German Federal High Court did not change its approach to patent settlements, the CJEU’s 1988 decision notwithstanding.38

Some commentators have suggested applying the Commission’s (current) guidelines on Technology Transfer Agreements39 so that settlement agreements may be exempt from article 101 TFEU if and when provided by the TTBE.40

This does not seem to be a viable approach either. A brand-name manufacturer relying on a patent will in most instances enjoy a market share above the levels provided for in article 3 TTBE (20 per cent with regard to competing undertakings, 30 per cent for non-competitors). Moreover, a typical reverse payment agreement will require the generic challenger to refrain from using his own technology until some defined future date. This would probably be deemed a ‘hardcore’ restriction under article 4 (1) lit. d) TTBE rendering the agreement ineligible for the safe harbour provided by the TTBE. The agreement to delay the market entry of the generic drug could also constitute an output restriction, likewise a ‘hardcore’ restriction under article 4 (1) lit a) TTBE.

Earlier this year the Commission issued a statement of objections against an agreement between Johnson & Johnson and Novartis concerning the marketing of a generic version of Fentanyl, a strong pain killer. Judging only from publicly available information, this agreement may have been a reverse payment agreement, albeit styled as a co-marketing agreement. It seems as though the Commission is adopting the strict standard that would follow from CJEU case law. Competition Commissioner Almunia is quoted as saying:41

The Commission is determined to fight undue delays in the market entry of generic medicines so that European citizens have access to affordable healthcare. It is also important to make sure that pharmaceutical companies do not free ride our welfare state and health insurance systems, especially in this period of constraints on public spending.

This suggests that the Commission is unlikely to condone reverse payment agreements.

US law

The Sherman Act prohibits ‘every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States’.42 It does not matter whether an agreement restricts competition or prevents it: ‘The antitrust laws are as much violated by the prevention of competition as by its destruction.’43

Given that it is the essence of patents to exclude others,44 section 1 of the Sherman Act cannot be taken to apply literally as it would then render it impossible to enter into a patent licence. It is therefore acknowledged that section 1 of the Sherman Act mandates a ‘rule of reason’ analysis in most instances because Congress must be presumed to have intended to outlaw only ‘unreasonable’ agreements.45 Some agreements, such as horizontal price fixing, are, however, deemed inherently anti-competitive.46 They are subjected to a rule of per se illegality.47 Even if the parties may point to certain pro-competitive effects, they will not be able to escape the verdict of illegality under the per se rule.48

The Circuit split leading to FTC v Actavis

Under a series of Eleventh and Second Circuit cases,49 patent settlements have been upheld applying what could be termed a limited rule of reason analysis even though the settlement has been facilitated through reverse payments. These courts held that a settlement agreement did not infringe the Sherman Act if the resulting restraint of competition remained within the (potential) exclusionary scope of the patent. Technically, the existence of a patent is deemed a defense to a claim that the Sherman Act is being infringed. Such defence is unavailable, however, if the patent was obtained through fraud on the patent office (known as Walker Process fraud)50 or if the litigation supposedly settled was a mere ‘sham’ to disguise an anti-competitive agreement.

The Sixth Circuit51 disagreed, which created the circuit split prompting the Supreme Court to grant certiorari in FTC v Actavis.52 In the Sixth Circuit’s view it is one thing to take advantage of the natural monopoly arising from a patent, but another to bolster a patent’s effectiveness through reverse payments. The Sixth Circuit would therefore subject reverse payment agreements to the per se rule.

The FTC’s position

The Federal Trade Commission has long taken issue with the practice of reverse payment agreements arguing that they would stifle generic competition and lead to unnecessarily high prices for consumers.53 The FTC proposes that such agreements should be subject to a ‘quick look’ scrutiny that would not automatically render them illegal (as would be the case under the per se rule) but permit the parties to submit arguments establishing that the pro-competitive effects of their agreement outweigh the resulting restraints of trade.54

FTC v Actavis

Unlike the Eleventh Circuit, the Supreme Court held that reverse payment agreements can be anti-competitive even where no sham litigation or Walker Process fraud is involved. Such agreements should therefore be subject to a rule of reason analysis under antitrust law:

In short, rather than measure the length or amount of a restriction solely against the length of the patent’s term or its earning potential, as the Court of Appeals apparently did here, this Court answered the antitrust question by considering traditional antitrust factors such as likely anti-competitive effects, redeeming virtues, market power, and potentially offsetting legal considerations present in the circumstances, such as here those related to patents.55

In the majority’s view, a ‘high’56 reverse payment to a generic challenger could, depending on the circumstances, merit a more detailed review of a settlement agreement to ascertain whether it had anti-competitive effects.57 The court therefore instructed the trial courts to look for possible ‘justifications’ underlying the reverse payment (such as genuine, valuable services rendered by the payment recipient) if the settlement agreement was to survive the rule of reason scrutiny.58Without such pro-competitive justifications, the majority suggests, the generic challenger would ‘[walk] away with money simply so it will stay away from the patentee’s market.’59

As a consequence of the Supreme Court’s opinion in Actavis, it must be assumed that the days of near-automatic immunity for genuine (non-sham) patent settlements involving reverse payments are over. While the majority declined to subject reverse payment agreements to ‘per se’ illegality or a ‘quick view’ analysis, and even though the elements making up the rule of reason remain to be developed through further precedents, the Actavis opinion clearly constitutes a paradigm shift. It is now a distinct possibility that antitrust considerations could take precedence over patent law in the area of reverse payment settlements and possibly beyond.

Recognising the state-sanctioned exclusionary potential

A settlement, like any other agreement, is intended to bridge different interests between private parties. It carries a presumption of legitimacy insofar as the interests of the contracting parties are concerned. Any private agreement may also further the public interest. However, there is no guarantee whatsoever that the parties’ interests and those of the public will align.

It is for this reason that antitrust law takes precedence over the freedom of contract: private parties cannot be trusted when it comes to the public interest. Any anti-competitive agreement can be presumed to benefit the parties who entered into it. The public at large or competitors are unlikely to feature prominently in the parties’ considerations, however. In fact, precisely because private agreements cannot be presumed to further the public interest when it comes to restraints of competition, antitrust laws are needed.60 The interest of the parties in settling their dispute – though undeniable – must therefore, as a matter of principle, be immaterial for the antitrust analysis. The Actavis majority deserves credit for putting the public interest in unrestrained competition above private settlement interests.

That notwithstanding, it would be unconvincing if antitrust regulators were given the authority to subject any patent-related settlement agreement to an unrestricted rule of reason scrutiny demanding that the parties put forward specific pro-competitive justifications for their settlement beyond the existence of an underlying (genuine) dispute about patent validity and/or infringement.

The application of the rule of reason and the economic analysis that accompanies it would be fundamentally unsound, though, if the legal aspects and legislative value judgments of the patent laws were disregarded.

Patents may be probabilistic rights and chances are that not all granted patents hold up in litigation. They are still, however, presumed valid.61 As a rule, the grant of the patent deserves all due respect normally accorded to a sovereign act. It may well be that patent enforcement involves an element of uncertainty or chance. If anything, however, the patentee has a vested interest in ‘rolling the dice’ with his patent, either through licensing or through patent infringement litigation. Patents have a state-sanctioned exclusionary potential.

As the dissent explains,62 in the absence of Walker Process fraud or sham litigation, the existence of a patent should shield the settlement of genuine disputes about its validity from antitrust challenges. Such immunity cannot be absolute, however. There is no denying that reverse payments from the patentee to a challenger indicate that the patentee is acutely aware of the uncertainty inherent with any patent grant.63Acknowledging what is self-evident anyhow cannot, of itself, determine the standard of review because the parties to any patent litigation bargain in probabilities. This is not an anomaly but follows from the nature of patents as probabilistic rights. The parties’ valuation of the relevant probability only decides the direction of the settlement payment.

Depending on the circumstances, the odds may favour the patentee, causing an accused infringer to opt for a licence under the patent rather than continuing validity litigation. If the odds favour the challenger, the patentee may choose to compensate the challenger rather than having to defend the patent in court. In both cases the result is a restraint of competition. It is impossible to distinguish licence and settlement agreements on this level of abstraction.

It may be that any such restraints of competition are reasonable because they further innovation by providing an incentive to obtain patent protection and to disclose inventions made to the public. If one looked to the market-distorting effect only, though, any patent agreement – reverse or otherwise – reduces output and leads to higher prices.

This is to be tolerated because any patent grant enables the patentee to try and exploit his invention within the potential exclusionary scope of the patent. The potential exclusionary scope of a patent is defined by the patent grant and not by the likelihood of successful enforcement.

The patent grant as a sovereign act ought to be distinguished from the factual uncertainties whether it may be successfully enforced. Any analysis of patent settlement agreements must therefore start with the assumption that the patentee will prevail in the litigation.

The challenger’s possible competition will, from this perspective be illegal competition and it would be incoherent if one viewed a restraint of illegal competition as a breach of antitrust laws.

This analysis rests on the presumption of validity accorded to a patent. It is self-evident that this presumption itself is vulnerable. When the capital fuelling this assumption of validity is spent it may become anti-competitive to hold on to exclusionary patent settlements.

Avoiding both absolute immunity of reverse payment agreements and a free-wheeling rule of reason analysis, adding a further perspective to the antitrust analysis of patent settlements should be considered: Since the presumption of validity in favour of a patent may erode over time, the immunity provided by a patent is thus not absolute. Instead, it should be time-qualified.

Bringing this perspective to patent settlements seems appropriate precisely because of the probabilistic nature of patents. With the benefit of hindsight – for instance after final conclusion of patent litigation – a patent will no longer be a probabilistic right: it will either be invalidated or upheld. Subsequent events may therefore shed new light on the actual exclusionary potential of a patent.

Since patent grants are sovereign acts, their exclusionary potential cannot be disregarded because third parties have brought validity challenges. Rather, another sovereign act – be it a court order or an administrative decree – is indispensable to counteract the effect of the patent grant. If, for instance, a third party obtains a verdict of invalidity affecting the same patent, previous settlement agreements must be revisited as of the date of such invalidity judgment.

Without the protection following from the patent’s presumption of validity, a settlement agreement will become subject to standard antitrust scrutiny. From the perspective of US law, this could mean that the settlement becomes subject to the per se rule as of such date. Until the exclusionary potential of a patent is exhausted, patent settlement agreements that remain within that defined potential cannot be deemed anti-competitive. However, their continued exercise could be.


Patents are probabilistic rights carrying a presumption of validity. They open up an exclusionary potential, but do not have a fixed exclusionary scope. The exclusionary potential, however, permits the patentee and potential challengers to bargain in probabilities. As with all probabilities, the benefit of hindsight may turn probabilities into certainties. When that happens, the exclusionary potential may evaporate exposing settlements to full antitrust scrutiny. As each patent grant constitutes a sovereign act, the exclusionary potential cannot be exhausted by private challenges. It takes another sovereign act (eg, a court order), to counteract the presumptive value of the original grant.

The majority in Actavis missed an excellent opportunity to introduce a third way of dealing with patent settlements beyond near-automatic immunity and full rule of reason scrutiny. It is to be hoped that the Supreme Court may, one day, revisit Actavis, perhaps when it becomes obvious that a rule of reason analysis of patent settlements that disregard the patent’s presumption of validity is not only unprecedented but also impracticable.


  1. Abraham Lincoln, Second lecture on discoveries and inventions, 11 February 1859,
  2. Dawson Chemical Co v Rohm, 448 US 176 (1980).
  3. 570 US ____(2013).
  4. Justice Alito took no part in the consideration or decision of this case.
  5. 570 US ____(2013) at ___ (emphasis added).
  6. Precision Instrument Mfg Co v Automotive Co, 324 US 806 (1945).
  7. 324 US 806, 816 (1945).
  8. Shapiro, Antitrust Analysis of Patent Settlements Between Rivals, Antitrust, 70 (Summer 2003); Chou/Haller, Reasonable Royalty and the Division of Profit for Probabilistic Patents (2008), 1.
  9. Mark Lemley & Carl Shapiro, Probabilistic Patents, Journal of Economic Perspectives, Spring 2005, at 75 [hereinafter Lemley/Shapiro, Probabilistic Patents (2005), 79.
  10. Lemley/Shapiro, Probabilistic Patents (2005), 83.
  11. Shapiro, Antitrust Limits to Patent Settlements, Rand Journal of Economics, 34:2, 391, 395 (Summer 2003); Lemley/Shapiro, Probabilistic Patents (2005), 76; Chou/Haller, Reasonable Royalty and the Division of Profit for Probabilistic Patents (2008), 1; McDonald, Hatch-Waxman Patent Settlements and Antitrust: On ‘Probabilistic’ Patent Rights and False Positives, Antitrust, 68, 69 (Spring 2003); Leffler/Leffler, The Probabilistic Nature of Patent Rights: In Response to Kevin McDonald, Antitrust, 77 (Summer 2003).
  12. 35 USC § 282; Doddridge v Thompson, 22 US 469, 483 (1822); Schering-Plough Corp. v FTC, 402 F.3d 1056, 1066 (11th Cir. 2005). McDonald, Hatch-Waxman Patent Settlements and Antitrust: On ‘Probabilistic’ Patent Rights and False Positives, Antitrust, 68, 71 (Spring 2003).
  13. Chou/Haller, Reasonable royalty and the division of profit for probabilistic patents (2008); Lemley/Shapiro, Probabilistic Patents (2005), 80 ff.
  14. 21 USC § 355; officially known as ‘The Drug Price Competition and Patent Term Restoration Act of 1984’, Pub. L. 98-417, 98 Stat. 1585 (1984).
  15. 570 US ____(2013) at ___.
  16. Gates, Reverse Payment Settlements: Exploring the Limits pf Patent Rights (2008), 1; Lemley/Shapiro, Probabilistic Patents (2005), 92; Shapiro, Antitrust Analysis of Patent Settlements Between Rivals, Antitrust, 71 (Summer 2003).
  17. Barons Pensabene/Butler, The Legality of Reverse Payment Settlements in Paragraph IV Disputes, Intellectual Asset Management, July/August, 133 (2012).
  18. The FDA considers all manufacturers who file on the first day as ‘first applicants’, thereby sharing the exclusivity period.
  19. Gambale v Deutsche Bank, 377 F.3d 133 (2nd Cir. 2004).
  20. See FTC Staff Study, Pay-for-Delay: How Drug Company Pay-Offs Cost Consumers Billions (2010), 8 ff.
  21. Lemley/Shapiro, Probabilistic Patents (2005), 92; Shapiro, Antitrust Analysis of Patent Settlements Between Rivals, Antitrust 70 (Summer 2003).
  22. 15 USC § 1: ‘Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.’
  23. European Commission, Executive Summary of the Pharmaceutical Sector Inquiry Report, 8 July 2009,
  24. European Commission, Executive Summary of the Pharmaceutical Sector Inquiry Report, 8 July 2009, 11 f.
  25. See for example the FTC, Agreements Filed with the Federal Trade Commission under the Medicare Prescription Drug, Improvement, and Act of 2003, 1, ‘During the fiscal year 2012 (October 1, 2011 to September 30, 2012), the Federal Trade Commission received 140 final resolutions of patent disputes between a brand and a generic, of which 40 settlements may involve pay-for-delay payments.’
  26. See the Sixth Circuit’s decision In re Cardizem CD Antitrust Litigation, 332 F.3d 896 (6th Cir. 2003), cert. denied, 125 S. Ct. 307, 308 (2004).
  27. BGH 5.10.1951 – I ZR 74/50 – GRUR 1952, 141 – Tauchpumpe; BGH 15.2.1955 – I ZR 86/53 – GRUR 1955, 418 – Rote Herzwandvase; BGH 22.5.1975 – KZR 9/74 – GRUR 1976, 323 – Thermalquelle; BGH 5.7.2005 – X ZR 14/03 – GRUR 2005, 845 – Abgasreinigungsvorrichtung.
  28. BGH 5.7.2005 – X ZR 14/03 – GRUR 2005, 845 – Abgasreinigungsvorrichtung.
  29. BGH 5.7.2005 – X ZR 14/03 – GRUR 2005, 845 – Abgasreinigungsvorrichtung.
  30. BGH 5.10.1951 – I ZR 74/50 – GRUR 1952, 141, 144 f. – Tauchpumpe.
  31. Mand in Voit (Ed.) Marktzugangsbedingungen und Marktzugangsschranken (2010), p. 73.
  32. Beater WuW 2000, 584.
  33. CJEU 27 September 1988 – Rs 65/86 – Official Reports 1988, 5281.
  34. CJEU 27 September 1988 – Rs 65/86 – Official Reports 1988, 5281, 5286, Tz. 15.
  35. Beater WuW 2000, 584.
  36. Lang, Immaterialgüterrechtliche Lizenzierung und kartellrechtliche Verhaltenskontrolle (2009), 66.
  37. Klöhn/Malkus in Voit (Ed.) Marktzugangsbedingungen und Marktzugangsschranken (2010), p. 63.
  38. BGH 5.7.2005 – X ZR 14/03 – GRUR 2005, 845 – Abgasreinigungsvorrichtung does not address the Bayer/Süllhöfer case.
  39. Technology Transfer Block Exemption (TTBE) Guidelines, Tz. 204 et seq.
  40. Lorenz PharmaR 2007, 221, 226.
  41. European Commission Press Release IP/13/81 (01/31/2013) (
  42. 15 USC § 1.
  43. United States v Griffith, 334 US 100, 107 (1948); see United States v Aluminium Co of America, 148 F.2d 416, 429 (2nd Circuit 1945),.
  44. Schering-Plough Corp v FTC, 402 F.3d 1056 (11th Cir. 2005); Alfonso/Foster/Reingold, The Antitrust Reviews of the Americas 2013, Section 2: United States, Chapter 3: IP and Antitrust (2013).
  45. State Oil Co v Khan, 522 US 3, 10 (1997); Arizona v Maricopa County Med Soc’y, 457 US 332, 342-343 (1982).
  46. Northern Pacific Railway Co v United States, 356 US 1, 5 (1958); United States v Socony-Vacuum Oil Co, Inc, 310 US 150, 212-213 (1940); National College Athletics Association v Board of Regents, 468 US 85, 100 (1984).
  47. Arizona v Maricopa County Med Soc’y, 457 US 332 (1982).
  48. Arizona v Maricopa County Med Soc’y, 457 US 332 (1982).
  49. Schering-Plough Corp v FTC, 402 F.3d 1056 (11th Cir. 2005); In re Tamoxifen Citrate Antitrust Litigation, 466 F.3d 187 (2nd Cir. 2006); Valley Drug Co v GenevaPharms, Inc., 344 F3d 1294 (11th Cir. 2003); Asahi Glass Co v Pentech Pharms., Inc., 289 F. Supp. 2d. 986, 994 (N.D. Ill. 2003).
  50. Walker Process Equipment v Food Machinery Corp, 382 US 172 (1965); cf. concurrence of Justice Harlan.
  51. In re Cardizem CD Antitrust Litigation, 332 F.3d 896 (6th Cir. 2003).
  52. FTC v Watson Pharm, Inc, 677 F.3d 1298 (11th Cir. 2012), cert. granted sub nom. FTC v Actavis, 133 S. Ct. 787 (US 2012) (No. 12-416).
  53. See FTC News Release (1/13/2010) (; FTC News Release (07/16/2012) (;
  54. See Deputy Solicitor General Malcolm Stewart in the FTC v Actavis hearing on March 26, 2013, Global Competition Review News Release, 26 March 2013.
  55. 570 US ____(2013) at ___.
  56. The Supreme Court left it to the District Courts to establish what precisely constitutes a ‘high’ amount or a ‘large’ sum of money.
  57. 570 US ____(2013) at ___.
  58. 570 US ____(2013) at ___.
  59. 570 US ____(2013) at ___.
  60. Shapiro, Antitrust Limits to Patent Settlements, Rand Journal of Economics, 34:2, 391, 395 (Summer 2003).
  61. 35 USC § 282; Doddridge v Thompson, 22 US 469 (1822), 483. German patent law has a similar presumption of validity.
  62. Chief Justice Roberts filed a dissenting opinion, in which Justices Scalia and Thomas joined. 570 US ____(2013) at ___.
  63. Shapiro, Antitrust Analysis of Patent Settlements Between Rivals, Antitrust, 71 f. (Summer 2003).

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