The Role of Regulatory Agencies and Intellectual Property: Part II

Patent law and antitrust law have traditionally been areas of the law involving at least some inherent tension. Champions of antitrust argue that the patent "monopoly" must be strictly limited as an exception to the general legal principle that competition should be unfettered. Patent lawyers argue that patents are the result of an exercise of congressional authority, enshrined in the Constitution, reflecting the policy decision by the Founders that granting a limited exclusionary right was justified by the public benefits derived from full disclosure of the patented invention. In the modern era these competing values have played out in the context of so-called ANDA litigation, involving disputes between branded pharmaceutical companies and generic competitors. Settlement of such litigation has been identified by the Federal Trade Commission (FTC), and private parties encouraged by the FTC's position, as an antitrust violation, in large part because such settlements are viewed as frustrating the congressional purpose in promoting early generic competition. After almost a decade of fighting these battles in the federal courts, the Supreme Court addressed the issue directly. The result is that such settlements are not per se illegal but are also not protected by the presumption of patent validity for activities within the "scope of the patent." Rather, the court decided that these agreements should be assessed for antitrust liability under the "rule of reason" used in other antitrust contexts.