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Brief of Amici Curiae 49 Professors in Support of Petitioners

 |  March 24, 2014

Posted by Social Science Research Network

Brief of Amici Curiae 49 Professors in Support of Petitioners – Michael A. Carrier (Rutgers University School of Law – Camden) and Judith Zahid (Zelle Hofmann Voelbel & Mason LLP)

ABSTRACT: In FTC v. Actavis, the U.S. Supreme Court held that a brand-name drug company’s payment to a generic firm to delay entering the market could violate the antitrust laws. What does that mean for the earlier opinion of the California Court of Appeal in the “Cipro” case that had upheld Bayer’s payment of $398 million to generics? This amicus brief, filed in the California Supreme Court on behalf of 49 Professors, answers that question in three steps.

The first explains how the Actavis ruling knocked out each of the six pillars that had supported the California Court of Appeal’s decision. These pillars were based on (1) exclusion payments’ supposed lack of anticompetitive effects, (2) the toothless “scope of the patent” test, (3) a dispositive public policy favoring settlement, (4) the public policy (or at least one strand) underlying patent law, (5) the alleged need for exclusion payments to attain settlements, and (6) the “natural” status of exclusion payments.

The second step concludes, based on the Cartwright Act, section 16600 of the Business and Professions Code, and the Unfair Competition Act, that California law reaches beyond federal law in its emphasis on consumer welfare and condemnation of trusts.

And the third explains that preemption doctrine does not prevent California courts from rigorously analyzing settlements like the one in this case.