What if a patent settlement agreement risks being illegal?
Several weeks ago, I came across an exciting article by Frances Murphy and Francesco Liberatore of Jones Day’s London office, that I wanted to blog about, but did not get around to. By pure coincidence, I looked at it again today, and concluded I still want to blog about it! Why? Because I believe it is an important subject that every IP mediator and every mediation participant needs to be aware of!
The article alerts us to the fact that recently the European Commission began a process of checking whether patent settlements concluded among a number of pharmaceutical companies infringe EU Antitrust laws.
In this particular case, the Commission had sent an information request in January of this year as a follow-up to its inquiry into the pharmaceutical sector. As Frances and Francesco point out, “The Commission is in particular looking at patent settlements where an originator company pays off a generic competitor in return for delayed market entry of a generic drug (so-called “reverse payments patent settlements”).”
This suggests, the authors write, “that the Commission may be initiating a program to periodically monitor settlement agreements and could launch infringement proceedings against settlements it finds anticompetitive.”
The authors then go into the details of the antitrust rules regarding reverse payments patent deals, and analyze how they compare to the law in the United States as it is developing between the FTC and the US courts.
What interests me is how the eternal conflict between the antitrust laws and the “carve-out” created by patent protection may affect mediation.
Clearly, the parties, and hopefully also the mediator, need to be on the lookout for how patent laws interact with the antitrust laws of the United States and the European Union. Of course, while the mediator should not ever be tempted to give legal advice, it would be entirely within his province to raise the issue as a question as he/she helps the parties as they explore settlement options.
What should the mediator do if the parties agree on a settlement that he knows will violate antitrust laws? What if he only suspects it may violate antitrust laws? I welcome your input!
by Eric van Ginkel