‘Reverse-payment’ patent settlement agreements: non-cash value transfers are not immune from competition law scrutiny

22.01.2018

Sophie Lawrance and Edwin Bond have analysed the key points arising from ‘Reverse-payment’ patent settlement agreements, in an article published by the Journal of Intellectual Property Law and Practice.
About this article:
• In the last decade, competition authorities in the US and the EU have paid particular attention to ‘reverse payment’ patent settlement agreements in the pharmaceutical sector.
• In the US, both the Federal Trade Commission and the courts have grappled with a specific species of patent settlement agreement which involves a commitment by the patent owner not to launch an authorised generic version of its brand-name drug (known as a ‘no-AG agreement’). In King Drug v SmithKline Beecham, the US Court of Appeals for the Third Circuit held that non-cash value transfer settlements generally and no-AG agreements in particular should be subject to the same rule-of-reason analysis as transfers of cash.
• In the EU, no-AG agreements have received much less attention from the competition authorities and the courts. In the current state of evolution of the law, however, it seems clear that non-cash value transfers are no more immune from scrutiny under EU competition law than they are under the US competition rules. Nevertheless, the different legal framework means that effects on competition should not be assumed.
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Edwin Bond

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