federal trade commission actavis et argued march decided june drug price competition patent term restoration act act act creates special procedures identifying resolving patent disputes generic drug manufacturers one requires prospective generic manufacturer assure food drug administration fda infringe patents one way provide assurance paragraph iv route certifying listed relevant patent invalid infringed manufacture use sale generic drug vii iv respondent solvay pharmaceuticals obtained patent approved drug androgel subsequently respondents actavis paddock filed applications generic drugs modeled androgel certified paragraph iv solvay patent invalid drugs infringe solvay sued actavis paddock claiming patent infringement see fda eventually approved actavis generic product instead bringing drug market actavis entered reverse payment settlement agreement solvay agreeing bring generic market specified number years agreeing promote androgel doctors exchange millions dollars paddock made similar agreement solvay respondent par another manufacturer aligned patent litigation paddock federal trade commission ftc filed suit alleging respondents violated federal trade commission act unlawfully agreeing abandon patent challenges refrain launching generic drugs share solvay monopoly profits district dismissed complaint eleventh circuit concluded long anticompetitive effects settlement fall within scope patent exclusionary potential settlement immune antitrust attack noting ftc alleged challenged agreements excluded competition greater extent patent valid affirmed complaint dismissal recognized parties sort case settle might declare patent invalid since public policy favors settlement disputes held courts require parties continue litigate order avoid antitrust liability held eleventh circuit erred affirming dismissal ftc complaint pp although anticompetitive effects reverse settlement agreement might fall within scope exclusionary potential solvay patent immunize agreement antitrust attack one thing refer simply holder valid patent answer antitrust question paragraph iv litigation put patent validity preclusive scope issue parties settlement ftc alleges plaintiff agreed pay defendants millions stay market even though defendants monetary claim plaintiff ended litigation form settlement unusual reason concern settlements tend significant adverse effects competition incongruous determine antitrust legality measuring settlement anticompetitive effects solely patent law policy procompetitive antitrust policies well relevant determining scope monopoly antitrust immunity conferred patent see line material antitrust question answered considering traditional antitrust factors another thing precedents make clear settlement agreements sometimes violate antitrust laws see singer mfg new wrinkle standard oil indiana finally act general procompetitive thrust facilitating challenges patent validity requiring parties paragraph iv dispute report settlement terms federal antitrust regulators suggests view contrary eleventh circuit pp eleventh circuit conclusion finds support general legal policy favoring settlement disputes related underlying practical concern consists fear antitrust scrutiny reverse payment agreement require parties engage complex expensive litigation demonstrate happened competition absent settlement however five sets considerations lead conclusion concern determine result ftc given opportunity prove antitrust claim first specific restraint issue potential genuine adverse effects competition ftc indiana federation dentists payment staying market keeps prices levels divides benefit patentee challenger consumer loses two act features advantage given first paragraph iv challenger win fda approval iv roughly period subsequent manufacturers required wait winning fda approval iii mean reverse settlement agreement first filer removes consideration manufacturer likely introduce competition quickly second anticompetitive consequences least sometimes prove unjustified may justifications reverse payment result sought brought anticompetitive consequences justify dismissing ftc complaint without examining potential justifications third reverse payment threatens work unjustified anticompetitive harm patentee likely power bring harm practice size payment branded drug manufacturer generic challenger strong indicator power fourth antitrust action likely prove feasible administratively eleventh circuit believed normally necessary litigate patent validity answer antitrust question large unexplained reverse payment provide workable surrogate patent weakness without forcing conduct detailed exploration patent validity fifth fact large unjustified reverse payment risks antitrust liability prevent litigating parties settling lawsuits industries may settle ways allowing generic manufacturer enter patentee market patent expires without patentee paying challenger stay prior point pp declines hold reverse payment settlement agreements presumptively unlawful courts reviewing agreements proceed applying rule reason rather quick look approach see california dental assn ftc pp reversed remanded breyer delivered opinion kennedy ginsburg sotomayor kagan joined roberts filed dissenting opinion scalia thomas joined alito took part consideration decision case opinion notice opinion subject formal revision publication preliminary print reports readers requested notify reporter decisions washington typographical formal errors order corrections may made preliminary print goes press federal trade commission petitioner actavis et al writ certiorari appeals eleventh circuit june justice breyer delivered opinion company sues company patent infringement two companies settle terms require company claimed infringer produce product patent term expires company patentee pay many millions dollars settlement requires patentee pay alleged infringer rather way around kind settlement agreement often called reverse payment settlement agreement basic question whether agreement sometimes unreasonably diminish competition violation antitrust laws see sherman act prohibition restraint trade commerce cf palmer brg per curiam invalidating agreement compete case eleventh circuit dismissed federal trade commission ftc complaint claiming particular reverse payment settlement agreement violated antitrust laws circuit stated reverse payment settlement agreement generally immune antitrust attack long anticompetitive effects fall within scope exclusionary potential patent ftc watson pharmaceuticals since alleged infringer promise enter patentee market expired patent term ended circuit found agreement legal dismissed ftc complaint view however reverse payment settlements agreement alleged complaint us violate antitrust laws consequently hold eleventh circuit allowed ftc lawsuit proceed apparently reverse payment settlement agreements arise context pharmaceutical drug regulation specifically context suits brought statutory provisions allowing generic drug manufacturer seeking speedy marketing approval challenge validity patent owned drug owner see brief petitioner areeda hovenkamp antitrust law ed hereinafter areeda hovenkamp sensible antitrust rules pharmaceutical competition rev consequently describe four key features relevant framework established drug price competition patent term restoration act stat amended act commonly known act first drug manufacturer wishing market new prescription drug must submit new drug application federal food drug administration fda undergo long comprehensive costly testing process successful manufacturer receive marketing approval fda see requiring among things full reports investigations safety effectiveness full list articles used components full description drug manufactured processed packed second fda approved drug marketing manufacturer generic drug obtain similar marketing approval use procedures act permits generic manufacturer file abbreviated new drug specifying generic active ingredients biologically equivalent drug caraco pharmaceutical laboratories novo nordisk slip citing ii iv way generic manufacturer obtain approval avoiding costly studies needed obtain approval pioneer drug see eli lilly medtronic process allowing generic pioneer approval efforts speed introduction generic drugs market caraco supra slip thereby furthering drug competition third act sets forth special identifying resolving related patent requires pioneer manufacturer list new drug application number expiration date relevant patent see requires generic manufacturer abbreviated new drug application assure fda generic infringe patents see caraco supra slip generic provide assurance one several ways see vii certify manufacturer listed relevant patents certify relevant patents expired request approval market beginning patents expire certify listed relevant patent invalid infringed manufacture use sale drug described abbreviated new drug application see vii iv taking route called paragraph iv route automatically counts patent infringement see supp often means provoking litigation caraco supra slip patentee brings infringement suit within days fda must withhold approving generic usually period parties litigate patent validity infringement courts decide matter within period fda follows determination fda may go forward give approval market generic product see iii fourth provides special incentive generic first file abbreviated new drug application taking paragraph iv route applicant enjoy period days exclusivity first commercial marketing drug see iv establishing exclusivity period period exclusivity generic compete drug generic manufacturer overcome patent obstacle bring generic market period exclusivity prove valuable possibly worth several hundred million dollars hemphill paying delay pharmaceutical patent settlement regulatory design problem rev indeed generic pharmaceutical association said majority potential profits generic drug manufacturer materialize exclusivity period brief petitioner quoting statement exclusivity period however belong first generic file generic forfeit exclusivity right one ways specified statute generic obtain see solvay pharmaceuticals respondent filed new drug application drug called androgel fda approved application solvay obtained relevant patent disclosed fact fda requires see requiring addition fda must publish new patent information upon submission later year another respondent actavis known watson pharmaceuticals filed abbreviated new drug application generic drug modeled androgel subsequently paddock laboratories also respondent separately filed abbreviated new drug application generic product actavis paddock certified paragraph iv solvay listed patent invalid drugs infringe fourth manufacturer par pharmaceutical likewise respondent file application joined forces paddock agreeing share patent litigation costs return share profits paddock obtained approval generic drug solvay initiated paragraph iv patent litigation actavis paddock thirty months later fda approved actavis generic product parties settled terms settlement actavis agreed bring generic market august months solvay patent expired unless someone else marketed generic sooner actavis also agreed promote androgel urologists generic manufacturers made roughly similar promises solvay agreed pay millions dollars generic million total paddock million total par estimated million annually nine years actavis see app complaint companies described payments compensation services generics promised perform ftc contends services little value according ftc true point payments compensate generics agreeing compete androgel see complaint january ftc filed lawsuit settling parties namely solvay actavis paddock par ftc complaint since amended alleged respondents violated federal trade commission act unlawfully agreeing share solvay monopoly profits abandon patent challenges refrain launching generic products compete androgel nine years app complaint see generally ftc indiana federation dentists section encompass es practices violate sherman act antitrust laws district held allegations set forth antitrust law violation androgel antitrust litigation ii supp nd accordingly dismissed ftc complaint ftc appealed appeals eleventh circuit affirmed district wrote absent sham litigation fraud obtaining patent reverse payment settlement immune antitrust attack long anticompetitive effects fall within scope exclusionary potential patent recognized antitrust laws typically prohibit agreements one company pays potential competitor enter market citing valley drug geneva pharmaceuticals see also palmer agreement divide territorial markets held unlawful face found reverse payment settlements patent litigation presen atypical cases one parties owns patent internal quotation marks second alteration omitted patent holders lawful right exclude others market ibid internal quotation marks omitted thus patent conveys right cripple competition internal quotation marks omitted recognized parties sort case settle might declare patent invalid light public policy favoring settlement disputes among considerations held courts require parties continue litigate order avoid antitrust liability ftc sought certiorari different courts reached different conclusions application antitrust laws patent settlements granted ftc petition compare case settlements generally immune antitrust attack ciprofloxacin hydrochloride antitrust litigation ca fed similar tamoxifen citrate antitrust litigation similar antitrust litigation settlements presumptively unlawful ii solvay patent valid infringed might permitted charge drug prices sufficient recoup reverse settlement payments agreed make potential generic competitors willing take fact evidence agreement anticompetitive effects fall within scope exclusionary potential patent agree fact characterization immunize agreement antitrust attack one thing refer circuit referred simply holder valid patent answer antitrust question patent may may valid may may infringed valid patent excludes except owner use protected process product line material emphasis added exclusion may permit patent owner charge price patented product invalidated patent carries right even valid patent confers right exclude products processes actually infringe paragraph iv litigation case put patent validity issue well actual preclusive scope parties settlement ended litigation ftc alleges substance plaintiff agreed pay defendants many millions dollars stay market even though defendants claim plaintiff liable damages form settlement unusual reasons discussed part infra reason concern settlements taking form tend significant adverse effects competition given factors incongruous determine antitrust legality measuring settlement anticompetitive effects solely patent law policy rather measuring procompetitive antitrust policies well indeed contrary circuit view pertinent question whether settlement agreement fall within legitimate scope patent exclusionary potential indicated patent antitrust policies relevant determining scope patent monopoly consequently antitrust law immunity conferred patent thus line material explained improper use patent monopoly invalid antitrust laws resolved antitrust question case seeking accommodation lawful restraint trade patent monopoly illegal restraint prohibited broadly sherman act strike balance asked questions whether patent statute specifically gives right restrain competition manner challenged whether competition impeded greater degree restraint issue restraints previously approved reasonable see also gypsum courts must balance privileges patent holder licensees patent grants prohibitions sherman act combinations attempts monopolize walker process equipment food machinery chemical nforcement patent procured fraud may violate sherman act short rather measure length amount restriction solely length patent term earning potential appeals apparently answered antitrust question considering traditional antitrust factors likely anticompetitive effects redeeming virtues market power potentially offsetting legal considerations present circumstances related patents see part infra whether particular restraint lies beyond limits patent monopoly conclusion flows analysis chief justice suggests starting point post dissenting opinion another thing precedents make clear settlement agreements sometimes violate antitrust laws singer mfg example two sewing machine companies possessed competing patent claims third company sought patent circumstances might lead disclosure information invalidate two firms patents three firms settled disagreements assigning broadest claims firm best able enforce patent yet potential competitors examine whether assumption three patents valid patent law allowed patents holders rather emphasizing sherman act imposes strict limitations concerted activities patent owners may lawfully engage held agreements although settling patent disputes violated antitrust laws important part public interest granting patent monopolies exists extent public given novel useful invention consideration grant white concurring see also new wrinkle applying antitrust scrutiny patent settlement standard oil indiana similarly within settlement context without struck overly restrictive patent licensing agreements irrespective whether agreements produced revenues concede general elec permitted single patentee grant single licensee license containing minimum resale price requirement line material supra held antitrust laws forbid group patentees owning one patents insist licensee maintain retail prices set collectively patent holders willing presume practice approved general electric reasonable restraint accords patent monopoly granted patent law declined extend conclusion agreements sherman act prohibits agreements fix prices arrangement patentees runs afoul prohibition outside patent monopoly ibid new wrinkle held roughly time respect similar arrangement settlement litigation two patentees contended patent gave exclusive right control production one company may presume right patent lead confer antitrust immunity far agreement found violate sherman act finally standard oil indiana upheld agreements among patentees settled actual impending patent litigation agreements set royalty rates charged third parties license practice patents issue divided resulting revenues justice brandeis writing warned arrangement violated sherman act patent holders thereby dominate industry curtail ed manufacture supply unpatented product cases simply ask whether hypothetically valid patent holder able charge high prices challenged term allowed rather seek patent antitrust policies finding challenged terms conditions unlawful unless patent law policy offsets antitrust law policy strongly favoring competition thus contrary dissent suggestion post nothing novel approach appear novel dissent suggestions patent holder may simply pa competitor respect patent quit patent invalidity noninfringement claim without antitrust scrutiny whatever post settlements feature intellectual property litigation post closer examination casts doubt claims dissent identify patent statute understands grant right patentee whether expressly fair implication difficult reconcile proposed right policy eliminating unwarranted patent grants public continually required pay tribute monopolists without need justification lear adkins authorities cited proposition none none antitrust case point say company sues company patent infringement demands say million damages uncommon defendant pay plaintiff amount less full demand part settlement million example see schildkraut settlements reverse payment fallacy antitrust suggesting hypothetical settlement includes implicit net payment million amount settlement discount cited authorities also indicate counterclaim damages original infringement plaintiff might end paying settle counterclaim cf mayer safety describing trademark dispute settlement insofar dissent urges settlements taking commonplace forms thought reason alone subject antitrust liability agree intend alter understanding dissent appears also suggest reverse payment settlements plaintiff pays money defendant purely give patent fight viewed antitrust purposes light familiar settlement forms see post agree traditional examples cited party claim counterclaim damages receives sum equal less value claim reverse payment settlements contrast party claim damages something usually true paragraph iv litigation defendant walks away money simply stay away patentee market think something quite different cf verizon communications law offices curtis trinko llp ollusion evil antitrust finally act embody statutory policy supports eleventh circuit view rather general procompetitive thrust statute specific provisions facilitating challenges patent validity see part supra provisions requiring parties patent dispute triggered paragraph iv filing report settlement terms ftc antitrust division department justice suggest contrary see stat interested legislative history may also wish examine statements individual members congress condemning reverse payment settlements advance amendments see cong rec remarks hatch clear act designed allow deals brand generic companies delay competition cong rec remarks waxman introducing bill deter companies strik ing collusive agreements trade multimillion dollar payoffs brand company delays introduction lower cost generic alternatives eleventh circuit conclusion finds degree support general legal policy favoring settlement disputes see also ftc tamoxifen citrate noting public interest complex expensive cases circuit related underlying practical concern consists fear antitrust scrutiny reverse payment agreement require parties litigate validity patent order demonstrate happened competition absence settlement litigation prove time consuming complex expensive antitrust game circuit may believe worth litigation candle recognize value settlements patent litigation problem nonetheless conclude factor determine result rather five sets considerations lead us conclude ftc given opportunity prove antitrust claim first specific restraint issue potential genuine adverse effects competition indiana federation dentists citing areeda payment effect amounts purchase patentee exclusive right sell product right already claims lose patent litigation continue patent held invalid infringed generic product suppose example exclusive right sell produces million supracompetitive profits per year patentee suppose patent years run continued litigation results patent invalidation finding noninfringement cost patentee million lost revenues sum flow large part consumers form lower prices concede settlement terms permitting patent challenger enter market patent expires also bring competition consumer benefit settlement terms said ftc issue payment return staying market simply keeps prices levels potentially producing full million monopoly return dividing return challenged patentee patent challenger patentee challenger gain consumer loses indeed indications patentees sometimes pay generic challenger sum even larger generic gain profits paragraph iv litigation entered market see hemphill see also brief law economics business professors et al amici curiae estimating true settlement challenged rationale behind payment size every case supported traditional settlement considerations payment may instead provide strong evidence patentee seeks induce generic challenger abandon claim share monopoly profits otherwise lost competitive market one might ask practical matter parties able enter anticompetitive agreement high reverse payment signal potential challengers patentee lacks confidence patent thereby provoking additional challenges perhaps many patentee buy two special features mean answer question necessarily first first challenger gains special advantage days exclusive right sell generic version product see part supra noted right proved valuable indeed worth several hundred million dollars see hemphill supra brief petitioner subsequent challengers secure exclusivity period thus stand win significantly less first bring successful paragraph iv challenge subsequent litigation results invalidation patent ruling patent infringed litigation victory free challenger compete potential competitors obtain fda approval potential reward available subsequent challenger significantly less patentee payment initial challenger return pressing patent challenge necessarily provoke subsequent challenges second generic files paragraph iv learning first filer settled sued wait stay period roughly months fda may approve application first filer see iii features together mean reverse payment settlement first filer case initial filers removes consideration motivated challenger one closest introducing competition hemphill supra dissent may doubt provisions matter post scholars field tell us one party owns patent virtually unheard outside pharmaceuticals party pay accused infringer settle lawsuit hovenkamp janis lemley leslie ip antitrust ed supp may well unique regulatory framework including special advantage exclusivity period gives first filers much explain context others patentee ordinary incentives resist paying challengers fear provoking myriad challengers appear frequently overcome see areeda ed noting provisions doubt unintentionally created special incentives collusion second anticompetitive consequences least sometimes prove unjustified see ed california dental assn ftc breyer concurring part dissenting part ftc admits offsetting redeeming virtues sometimes present brief petitioner reverse payment example may amount rough approximation litigation expenses saved settlement payment may reflect compensation services generic promised perform distributing patented item helping develop market item may justifications reverse payment reflects traditional settlement considerations avoided litigation costs fair value services concern patentee using monopoly profits avoid risk patent invalidation finding noninfringement cases parties may provided reverse payment without sought brought anticompetitive consequences mentioned possibility justify dismissing ftc complaint antitrust defendant may show antitrust proceeding legitimate justifications present thereby explaining presence challenged term showing lawfulness term rule reason see indiana federation dentists supra areeda ed third reverse payment threatens work unjustified anticompetitive harm patentee likely possesses power bring harm practice see least size payment branded drug manufacturer prospective generic strong indicator power namely power charge prices higher competitive level important patent helps assure power neither firm without power likely pay large sums induce others stay market ibid event commission referred studies showing reverse payment agreements associated presence profits strong indication market power see brief petitioner fourth antitrust action likely prove feasible administratively eleventh circuit believed circuit holding avoid need litigate patent validity also question infringement throws baby bath water need take drastic step normally necessary litigate patent validity answer antitrust question unless perhaps determine whether patent litigation sham see unexplained large reverse payment normally suggest patentee serious doubts patent survival fact turn suggests payment objective maintain supracompetitive prices shared among patentee challenger rather face might competitive market anticompetitive consequence underlies claim antitrust unlawfulness owner particularly valuable patent might contend course even small risk invalidity justifies large payment may payment otherwise unexplained likely seeks prevent risk competition said consequence constitutes relevant anticompetitive harm word size unexplained reverse payment provide workable surrogate patent weakness without forcing conduct detailed exploration validity patent areeda fifth fact large unjustified reverse payment risks antitrust liability prevent litigating parties settling lawsuit may industries settle ways example allowing generic manufacturer enter patentee market prior patent expiration without patentee paying challenger stay prior point although parties may reasons prefer settlements include reverse payments relevant antitrust question reasons basic reason desire maintain share monopoly profits absence justification antitrust laws likely forbid arrangement sum reverse payment large unjustified bring risk significant anticompetitive effects one makes payment may unable explain justify firm individual may well possess market power derived patent examining size payment may well able assess likely anticompetitive effects along potential justifications without litigating validity patent parties may well find ways settle patent disputes without use reverse payments view considerations taken together outweigh single strong consideration desirability settlements led eleventh circuit provide antitrust immunity reverse payment settlements iii ftc urges us hold reverse payment settlement agreements presumptively unlawful courts reviewing agreements proceed via quick look approach rather applying rule reason see california dental analysis effect shifts defendant burden show empirical evidence procompetitive effects areeda ed decline california dental held unanimously abandonment rule reason favor presumptive rules approach appropriate observer even rudimentary understanding economics conclude arrangements question anticompetitive effect customers markets breyer concurring part dissenting part believe reverse payment settlements context discuss meet criterion likelihood reverse payment bringing anticompetitive effects depends upon size scale relation payor anticipated future litigation costs independence services might represent payment lack convincing justification existence degree anticompetitive consequence may also vary among industries complexities lead us conclude ftc must prove case cases say require courts insist contrary said commission need litigate patent validity empirically demonstrate virtues vices patent system present every possible supporting fact refute every possible theory leading antitrust scholar pointed always something sliding scale appraising quality proof required vary circumstances california dental supra quoting approval areeda areas law trial courts structure antitrust litigation avoid one hand use antitrust theories abbreviated permit proper analysis consideration every possible fact theory irrespective minimal light may shed basic question presence unjustified anticompetitive consequences see therefore leave lower courts structuring present antitrust litigation reverse judgment eleventh circuit remand case proceedings consistent opinion ordered justice alito took part consideration decision case roberts dissenting federal trade commission petitioner actavis et al writ certiorari appeals eleventh circuit june chief justice roberts justice scalia justice thomas join dissenting solvay pharmaceuticals holds patent sued two generic drug manufacturers alleged infringing patent companies counterclaimed contending patent invalid event products infringe parties litigated three years settling terms solvay agreed pay generics millions dollars allow market five years patent set expire exchange generics agreed provide certain services help marketing manufacturing honor solvay patent federal trade commission alleges settlement violates antitrust laws question assess claim patent carves exception applicability antitrust laws correct approach therefore ask whether settlement gives solvay monopoly power beyond patent already gave however departs approach instead use antitrust law amorphous rule reason inquire anticompetitive effects settlements novel approach without support statute discourage settlement patent litigation respectfully dissent point antitrust law encourage competitive markets promote consumer welfare point patent law grant limited monopolies way encouraging innovation thus patent grants right exclude others profiting patented invention dawson chemical rohm haas provides exception antitrust law scope patent rights conferred patent forms zone within patent holder may operate without facing antitrust liability go without saying part said many times walker process equipment food machinery chemical patent exception general rule line material precise terms grant define limits patentee monopoly area patentee freed competition general elec patentee steps scope patent rights comes within operation sherman act simpson union oil similar thus although per se unlawful fix prices antitrust law long recognized patent holder entitled license competitor sell product condition competitor charge certain fixed price see general elec supra never held violates antitrust law competitor refrain challenging patent extension long recognized settlement patent litigation violate antitrust laws standard oil indiana legitimately conflicting claims threatened interferences settlement agreement rather litigation precluded sherman act like litigation patent litigation settled time settlements include agreements clearly violate antitrust law licenses fix prices agreements among competitors divide territory ordinarily subject litigants antitrust liability see hovenkamp janis lemley leslie ip antitrust pp ed hereinafter hovenkamp key course patent holder anything including settling must act within scope patent actions go beyond monopoly powers conferred patent held actions subject antitrust scrutiny see singer mfg actions within scope patent subject antitrust scrutiny two exceptions concededly applicable parties settle sham litigation cf professional real estate investors columbia pictures industries litigation involves patent obtained fraud patent trademark office walker process equipment supra thus precedent fairly case solvay paid competitor respect patent conduct exceed scope patent one alleges sham litigation solvay patent obtained fraud pto settlement solvay gave competitors something value money exchange competitors gave something value dropping legal claims put end litigation dragging three years ordinarily think good thing ii today however announces new rule willing accept solvay actions exceed scope patent ante agree enough immunize agreement antitrust attack ibid according majority patent holder settles litigation paying alleged infringer large unjustified payment exchange alleged infringer honor patent employ antitrust rule reason determine whether settlement violates antitrust law ante justifications holding unpersuasive first majority explains patent may may valid may may infringed ante uncertainty whether patent actually valid says questions regarding legality settlement measur ed procompetitive antitrust policies rather patent law policy ante simply conclusion difficulty approach patent holder acting within scope patent obvious defense antitrust suit patent allows engage conduct otherwise violate antitrust laws whole point patent confer limited monopoly problem correctly recognizes quite certain patent actually valid competitor infringing always case plainly question patent law majority however assess patent law issues according antitrust policies according majority line material accommodat ed antitrust principles struck balance patent antitrust law ante line material thing rather explained well settled possession valid patent patents give patentee exemption provisions sherman act beyond limits patent monopoly emphasis added next sentence stated aggregating patents one control holder patents escape prohibitions sherman act ibid second sentence follows conduct aggregation multiple patents goes beyond limits patent monopoly precisely concluded see suggestion patent statutes authority combine patent owners fix prices articles covered respective patents emphasis added stressed patent holder violate antitrust laws acts within scope patent see within limits patentee rights patent monopoly process product authorized patent statutes price limitations patented devices beyond limits patent monopoly violate sherman act emphasis added majority suggests hether particular restraint lies limits patent monopoly conclusion flows applying traditional antitrust principles ante seems mind regime courts ignore patent simply conduct antitrust analysis settlement without regard validity patent patent holder acting within scope patent engage unlawful anticompetitive behavior simply exercising monopoly rights granted government behavior unlawful patent invalid infringed scope patent rights conferred patent determined reference patent law conceivable set legal system assess validity patents questions infringement bringing antitrust suit neither majority government suggests congress done second majority contends precedents make clear settlement agreements sometimes violate antitrust laws ante carefully worded proposition cites singer manufacturing new wrinkle standard oil indiana cases stands uncontroversial point patent holder acts outside scope patent longer protected antitrust scrutiny patent begin majority description singer inaccurate singer several patent holders competing claims entered settlement agreement patents order disadvantage japanese competition see finding agreement common purpose suppress japanese machine competition omitted according majority singer examine whether assumption three patents valid patent law allowed patents holders ante rather majority contends singer held agreement violated laws important part public interest granting patent monopolies exists extent public given novel useful invention grant ibid quoting singer white concurring majority singer certainly ask whether patent law permitted arrangement concluding see reiterating equally well settled possession valid patent patents give patentee exemption provisions sherman act beyond limits patent monopoly holding limitations exceeded case emphasis added internal quotation marks omitted see also hovenkamp citing singer quintessential case patent holders subject antitrust liability settlement agreement went beyond scope patents thus conferred monopoly power beyond patent lawfully authorized even justice white concurrence majority relies emphasized conduct issue singer collusion patent holders exclude japanese competition prevent disclosure prior art authorized patent laws new wrinkle effect explained rice control barred beyond patent monopoly arrangement made patent holders pool patents fix prices products licensees plainly violate sherman act emphasis added explained patent holder may concert members industry issue substantially identical licenses members industry terms industry completely regimented production competitive unpatented products suppressed class distributors squeezed prices unpatented products stabilized quoting gypsum majority however ignores discussion instead categorizes case applying antitrust scrutiny patent settlement ante standard oil indiana parties settled claims regarding competing patented processes manufacturing unpatented product threatened create monopoly unpatented product explained exchange licenses purpose curtailing supply unpatented product beyond privileges conferred patents majority therefore right suggest precedents make clear settlement agreements sometimes violate antitrust laws ante emphasis added key word sometimes times spelled precedents cases made clear patent settlements matter agreements relating patents subject antitrust scrutiny confer benefits beyond scope patent makes sense patent exempts holder antitrust laws insofar holder operates within scope patent holder steps outside scope patent longer use patent defense majority points case patent settlement subject antitrust scrutiny merely validity patent uncertain one remarkable surely worth something years since sherman act passed never let antitrust law cross rubicon next majority points general procompetitive thrust act fact facilitat es challenges patent validity provisions requiring parties patent dispute report settlement terms ftc antitrust division department justice ante act surely seeks encourage competition drug market like every law accomplishes ends specific provisions provisions example allow generic manufacturers enter market without undergoing duplicative application process also grant monopoly first qualifying generic commercially market competing product see ii iv iv yes point provisions encourage competition trite unnecessary say legislation pursues purposes costs frustrates rather effectuates legislative intent simplistically assume whatever furthers statute primary objective must law rodriguez per curiam especially disturbing discerns specific provisions broad policy general procompetitive thrust words uses policy unsettle established relationship patent antitrust law ante indeed whatever may worth congress repeatedly declined enact legislation addressing issue takes today see brief actavis citing bills introduced house senate since addition consequence settlement terms must reported ftc department justice requirement increase role antitrust law scrutinizing patent settlements rather ensures terms scrutinized consistent existing antitrust law words ensures ftc antitrust division review settlements make sure confer monopoly power beyond scope patent majority suggests pparently reverse payment settlement agreements arise context pharmaceutical drug regulation ante claim supported empirically anything majority cites seems unlikely term reverse payment agreement coined create impression settlements unique simply highlights fact party suing ends paying anomaly evidence nefarious plot simply results fact patent holder plaintiff defendant invalidity counterclaim rare situation intellectual property litigation whatever one might call settlements paying alleged infringer drop invalidity claim feature intellectual property litigation reflect intuitive way settle disputes see mayer safety see also schildkraut settlements reverse payment fallacy antitrust brief actavis citing examples extent scores scores settlements point settlements outside context private agreements obvious reasons generally appealed publicly available majority suggests agreements distinct party claim damages walks away money simply stay away patentee market ante distinction without difference alleged infringer may suing patent holder money suing right use market intellectual property worth money finally majority complains nothing patent statute gives right settle faced allegations invalidity ante right settle generally accompanies right litigate first place one contends drivers automobile accident may settle competing claims merely statute grants authority majority suggests right makes harder eliminat unwarranted patent grants ibid may result true patent settlements reason adjudicate questions patent law antitrust principles cases establish antitrust law business prying patent settlement long settlement confers patent holder monopoly power beyond patent conferred unless course patent invalid question patent law antitrust law sum none reasons supports conclusion patent holder settling claim patent invalid immunized fact acting within scope patent fear attempt limit holding context patent settlements long hold iii majority rule discourage settlement patent litigation simply put incentive settle immediately settling parties litigate issue question patent validity part defense antitrust suit suit alleged infringer especially awkward position patent unfortunate patent litigation particularly complex particularly costly one treatise noted median patent case goes trial costs side million legal fees alone hovenkamp one study found cost litigation specific context generic challenging brand name pharmaceutical patent million per suit see herman note stay dilemma examining brand generic incentives delaying resolution pharmaceutical patent litigation colum rev citing goodman nachman chen morgan stanley equity research quantifying impact authorized generics acknowledges problems nonetheless offers five sets considerations tells us overcome concerns sometimes patent settlements adverse effects anticompetitive consequences least sometimes prove unjustified reverse payment threatens work unjustified anticompetitive harm patentee likely possesses power bring harm practice normally necessary litigate patent validity answer antitrust question unexplained large reverse payment normally suggest patentee serious doubts patent survival using payment prevent risk competition constitutes relevant anticompetitive harm parties may still settle ways allowing generic manufacturer enter patentee market prior patent expiration without patentee paying challenger stay prior point ante emphasis added almost unresponsive basic problem settling patent claim possibly impose unlawful anticompetitive harm patent holder acting within scope valid patent therefore permitted precisely antitrust suit claims unlawful means antitrust suit defendant patent holder want use validity patent defense words want say valid patent lets therefore see majority conclude wo normally necessary litigate patent validity answer antitrust question ante unless means suggest defendant patent holder raise patent defense antitrust suit depriving defense majority means defeats point patent confer lawful monopoly holder majority seems think even patent valid patent holder violates antitrust laws merely settlement took away chance patent declared invalid see ante payment prevent risk competition constitutes relevant anticompetitive harm emphasis added flawed several reasons first patent either valid invalid parties course know answer certainty outset litigation hence litigation true hard legal question yet adjudicated people know answer mean answer declares one yet majority impose antitrust liability based parties subjective uncertainty legal conclusion assumption offering large sum reliable evidence patent holder serious doubts patent true patent holder may sure validity patent particularly risk averse litigation averse willing pay good deal money rid chance finding invalidity actually motivating patent holder apparently question district courts resolve basis task trying discern whether patent holder motivated uncertainty patent legitimate factors like risk aversion made difficult fact much evidence party motivation may embedded legal advice attorney presumably shielded discovery second majority position leads absurd results let say patent holder sues competitor infringement faces counterclaim patent invalid patent holder determines risk losing question validity low year litigating grows increasingly risk averse tired litigation concerned company image pays competitor large payment ante exchange competitor honor patent let say different competitor inspired first competitor success sues patent holder seeks similar payment patent holder recognizing dynamic unsustainable litigates suit conclusion way unanimously decides patent valid according majority first settlement violate antitrust laws even though patent ultimately declared valid first settlement took away chance patent invalidated first go around approach patent holder may found liable antitrust law perfectly valid patent allowed first place sin settle rather prove correctness position litigating bitter end third logic taking away chance patent invalidated antitrust problem possibly limited agreements large ibid government brief acknowledges much suggesting antitrust invited cash payments may also required consideration alternative brief petitioner example patent holder licenses product licensee fixed monopoly price surely takes away chance patent challenged licensee according majority reasoning antitrust problem must analyzed rule reason see general elec holding patent holder may license invention fixed price indeed solution patent holders negotiate allow generics market sooner rather paying money also takes away chance generic litigated patent invalidated thus although question posed case fundamentally question patent law whether solvay patent valid therefore permitted solvay pay competitors honor scope patent majority declares questions henceforth scrutinized antitrust law unruly rule reason good luck district courts must faced patent settlement weigh likely anticompetitive effects redeeming virtues market power potentially offsetting legal considerations present circumstances ante see pacific bell telephone linkline communications repeatedly emphasized importance clear rules antitrust law iv majority invokes procompetitive antitrust policies ante misses basic point patent laws promote consumer interests different way protection competition one treatise explains purpose rule reason determine whether balance practice reasonably likely anticompetitive competitively harmless whether yields lower higher marketwide output contrast patent policy encompasses set judgments proper tradeoff competition incentive innovate long run antitrust rule reason designed judgments adept making hovenkamp omitted majority recognizes high reverse payment may signal potential challengers patentee lacks confidence patent thereby provoking challenges ante brushes two features make necessarily ibid first points first challenger gets exclusive period market generic version brand name drug subsequent challengers secure exclusivity period meaning patent holder buys first challenger bought motivated competitor two problems argument first according food drug administration manufacturers file first day considered first applicants share exclusivity period thus ten generics file application market generic drug first day considered first applicants see iv ii bb see also fda guidance industry exclusivity multiple andas submitted day july unusual occurrence see brief generic pharmaceutical association amicus curiae citing ftc data indicating drugs subject many sixteen generic applications average number applications per drug yearly average never dropped three applications per drug second fundamentally days exclusivity simply provides incentive generic challenges even subsequent generic entitled additional incentive much nearly much incentive challenge patent potential challenger context outside exclusivity period patent holder gives away notably large sums money majority surmises concerned strength patent putting blood water sharks always near majority also points fact fda enjoined approving generic application market drug months brand name sues generic patent infringement within days application filed ante citing iii according majority provision chill subsequent generics challenging patent wait months receiving fda approval market drug overlooks important feature law fda may approve application months expiration months district decides patent invalid infringed iii even fda wait months far clear generic want market drug prior obtaining judgment invalidity noninfringement may expose ruinous liability infringement irony majority decision may well discourage generics challenging pharmaceutical patents first place patent litigation costly time consuming uncertain see cybor fas ca fed opinion rader en banc discussing study showing federal circuit wholly partially reversed almost percent claim construction appeals period brief generic pharmaceutical association amicus curiae citing study analyzing prior decade cases showing generics prevailed cases lost cases generics enter risky terrain careful analysis potential gains prevail potential exposure lose taking prospect settlements table limiting settlements earlier entry date generic may still many years future puts damper generic expected value going litigation decreases incentive sue first place majority assures us support everything okay parties settle simply negotiating earlier entry date generic drug manufacturer rather settling money ante matter common sense confirmed experience parties likely settle broader set valuable things trade see brief mediation negotiation professionals amici curiae majority today departs settled approach separating patent antitrust law weakens protections afforded innovators patents frustrates public policy favor settling likely undermines policy seeks promote forcing generics step litigation ring without prospect cash settlements keep things subject basic questions patent law unbounded inquiry antitrust law treble damages famously burdensome discovery see bell atlantic twombly respectfully dissent