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The Seventh Circuit Court of Appeals’ rejection of novel antitrust claims made against AbbVie Inc. for its arthritis treatment Humira is a win for prescription drug manufacturers, who may now seek to obtain multiple patents without the fear of antitrust liability.
The court made clear that simply having a large number of patents on a single product is not in itself a violation of US antitrust laws as the patent laws set no limit on the number of patents an entity can hold.
The court likewise noted that technology companies such as Apple, Intel, and Microsoft routinely make products with many more patents than Humira.
The Humira case presents an issue of first impression and could now pose a serious hurdle going forward for generic manufacturers, especially in the biologics space. In a climate of heavy antitrust scrutiny, pharmaceutical and biologics companies have been counseled to proceed with caution in how aggressively they seek layered patent protection on single products.
Up to this point, there is a real possibility that pharmaceutical and biologics manufacturers have refrained from acquiring a thick patent protection like AbbVie did for Humira. Now, that conduct carries substantially less risk.
This decision also recognizes patents as an achievement for innovation and embraces the view that more patents on a particular product represent greater innovation. On the heels of this decision, we should expect to see more products, especially biologics, driving for more patents.
Of note, there was no dispute in this case that Humira’s defense posed a significant obstacle to the generic manufacturers—but that is the result of patents, and not disturbed by antitrust.
For many years Humira was the world’s top-selling drug, but the principal US patent expired in 2016. AbbVie obtained an additional 132 patents related to ancillary uses, such manufacturing methods and administering Humira. These actions extended the patent out to 2034.
In 2019, indirect purchasers of Humira claimed that AbbVie’s vast portfolio of patents covering Humira and settlements over those patents violated US antitrust law. The attack on the Humira patent estate for the sheer numerosity of its patents was the first of a kind.
The plaintiffs argued that this so-called “patent thicket,” where AbbVie obtained and asserted large swaths of patents against biosimilar manufacturers, violated Section 2 of the Sherman Act.
At the core of the Seventh Circuit’s discussion was this question: “If AbbVie made 132 inventions, why can’t it hold 132 patents?”
The Seventh Circuit noted that the plaintiffs “abjured” any reliance on Walker Process Equipment Inc. v. Food Machinery & Chemical Corp. or sham litigation, one of which may be a prerequisite to challenging the sheer numerosity of patents protecting a single product.
Under the Walker Process doctrine, a party that knowingly asserts a fraudulently procured patent in an attempt to monopolize a market may be liable under the antitrust laws.
Antitrust laws also prohibit sham litigation, which involves objectively baseless lawsuits to interfere with a competitor’s business. While a specific Walker Process claim might not have been available to the plaintiffs here, the absence of sham litigation and/or fraud charges left no allegation that AbbVie engaged in misconduct.
To the extent patents are directed to technological advancements “too marginal to justify legal protection,” those patents should be individually challenged at the US Patent and Trademark Office, where, it turns out, AbbVie has successfully defended the validity of its patents before the Patent Trial and Appeal Board.
The Seventh Circuit also noted that AbbVie had been successful at obtaining patents before the PTO, finding AbbVie’s “batting average” of 0.534 to be “stellar in patent practice and unheard-of in baseball.”
AbbVie’s success before the PTO, and the lack of evidence that AbbVie asserted an unreasonable number of possibly irrelevant patents against biosimilar manufacturers, militated against a finding of anticompetitive conduct to support a Section 2 claim.
The settlements AbbVie entered into were also a focus of the lawsuit. AbbVie settled with various US competitors to allow the entry of Humira biosimilars into the US market in 2023, while settlements in Europe allowed for an earlier entry date in 2018.
This earlier entry date in Europe was quid pro quo for delaying competitive entry in the US, according to the lawsuit. The plaintiffs claimed these settlements amounted to a reverse payment from AbbVie to biosimilar manufacturers, a potential violation of Section 1 of the Sherman Act, which prohibits contracts that unreasonably restrain competition.
While contemporaneous uneven settlement of a separate litigation may constitute a payment under FTC v. Actavis, plausible allegations cannot simply point to a different date to suggest that the settlement at issue includes a payment.
A single product may have different patent terms in different jurisdictions, and reasonable settlement terms in each jurisdiction will depend on the strength of the patent claims at issue in each.
This can result in different generic or biosimilar entry dates for different countries, even when the same exact products are involved. Absent a large payment from the brand to the follow-on manufacturer, the settlement at issue is lawful.
Different laws and patent expiration dates govern across the two continents, and no biosimilar manufacturer was paid to postpone market entry despite lacking a plausible monetary claim against AbbVie.
Since AbbVie negotiated normal settlements without payment to U.S. biosimilar competitors to delay entry and struck “the same kind of deal” across Europe—allowing competitive entry before the last patents expired—the combination of two permissible patent litigation settlement schemes could not amount to a reverse payment.
Antitrust suits should not be invoked as a backdoor to attacking patent claims that are supposedly weak. The proper venues for invalidating weak or marginal patents remain patent suits in the federal district courts and the Patent Trial and Appeal Board.
What’s clear from the Seventh Circuit’s opinion is that the value of a strong patent portfolio cannot be understated, and prescription drug manufacturers may legitimately strive to obtain as many patents as possible without fear of antitrust liability.
Original article published on Bloomberg Law available here.
Reproduced with permission. Published Sept. 2, 2022. Copyright 2022 The Bureau of National Affairs, Inc. 800-372-1033. For further use, please visit http://www.bna.com/copyright-permission-request/.