Biocad JSC v. F. Hoffmann-La Roche Ltd. ( 2019 )

17‐3486‐cv
Biocad JSC v. F. Hoffmann‐La Roche Ltd.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term 2018
(Argued: October 23, 2018 Decided: November 5, 2019)
Docket No. 17‐3486
BIOCAD JSC,
Plaintiff‐Appellant,
‐ against ‐
F. HOFFMANN‐LA ROCHE, GENENTECH, INC., R‐PHARM JSC, ROCHE HOLDING AG,
Defendants‐Appellees.*
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
Before:
KATZMANN, Chief Judge, and KEARSE and CHIN, Circuit Judges.
Appeal from a judgment of the United States District Court for the
Southern District of New York (Sullivan, J.) dismissing plaintiff‐appellantʹs
antitrust claims for lack of subject matter jurisdiction and failure to state a claim.
* The Clerk of the Court is directed to amend the caption to conform to that above.
Plaintiff‐appellant is a private pharmaceutical company based in Russia. It seeks
damages and other relief for anticompetitive conduct by foreign entities in a
foreign country that purportedly has delayed or prevented its entry into the
United States market for cancer treatment drugs. The district court dismissed the
claims principally because (1) plaintiff‐appellant failed to sufficiently plead
antitrust standing and (2) its claims are barred by the provisions of the Foreign
Trade Antitrust Improvements Act that exclude from the scope of antitrust laws
ʺconduct involving trade or commerce . . . with foreign nations.ʺ 15 U.S.C. § 6a.
For the reasons set forth below, we agree that the claims do not fall within the
reach of United States antitrust laws.
AFFIRMED.
Chief Judge KATZMANN concurs in a separate opinion.
DAVID C. FREDERICK (Gregory G. Rapawy and Julius P.
Taranto, on the brief), Kellogg, Hansen, Todd,
Figel & Frederick, P.L.L.C, Washington, DC, and
Albert Feinstein, Feinstein & Partners, P.L.L.C.,
New York, New York, for Plaintiff‐Appellant.
-2-
DANIEL M. WALL (Amanda P. Reeves, Roman Martinez,
Benjamin W. Snyder, and Lawrence E. Buterman,
on the brief), Latham & Watkins LLP, New York,
New York; San Francisco, California; and
Washington, DC, for Defendant‐Appellee Genentech,
Inc.
PAUL SPAGNOLETTI (Andrew S. Gehring, on the brief),
Davis Polk & Wardell LLP, New York, New York,
for Defendants‐Appellees F. Hoffmann‐La Roche Ltd
and Roche Holding AG.
Caitlin J. Halligan, Eric J. Stock, and Alejandro A.
Herrera, Gibson, Dunn & Crutcher LLP, New
York, New York, for Defendant‐Appellee R‐Pharm
JSC.
CHIN, Circuit Judge:
Plaintiff‐appellant Biocad JSC (ʺBiocadʺ) and defendants‐appellees
Roche Holding AG (ʺRocheʺ), F. Hoffmann‐La Roche Ltd. (ʺLa Rocheʺ),
Genentech, Inc. (ʺGenentechʺ), and R‐Pharm JSC (ʺR‐Pharmʺ) (collectively,
ʺDefendantsʺ) are manufacturers of cancer treatment drugs. Biocad alleges that
Defendants engaged in anticompetitive conduct in Russia ‐‐ price fixing, illegal
tying, and price discrimination ‐‐ that was intended to interfere with its ability to
enter the pharmaceutical market for cancer treatment drugs in the United States.
-3-
Biocad commenced this action pursuant to the Sherman Act, 15
U.S.C. §§ 1 and 2; the Clayton Act, 15 U.S.C. §§ 15 and 26; the Robinson‐Patman
Act, 15 U.S.C. § 13; and the Donnelly Act, N.Y. Gen. Bus. Law § 340 et seq. The
district court granted Defendantsʹ motions to dismiss all of Biocadʹs claims for
lack of subject matter jurisdiction and failure to state a claim, pursuant to Federal
Rules of Civil Procedure 12(b)(1) and 12(b)(6). The district court dismissed
Biocadʹs Sherman Act claims because it concluded that Biocad had not
sufficiently pleaded antitrust injury. The district court also ruled that Biocadʹs
Sherman Act claims were barred by the Foreign Trade Antitrust Improvements
Act (the ʺFTAIAʺ), 15 U.S.C. § 6a, because the foreign nature of its claims placed
them beyond the reach of United States antitrust laws. The district court
dismissed the claims under Section 16 of the Clayton Act and the Donnelly Act
for largely the same reasons.2 On review, we agree that Biocadʹs claims are
barred by the FTAIA. Accordingly, the judgment of the district court is affirmed
on that basis.
2 The district court also dismissed claims under the Robinson‐Patman Act and Section 4 of the
Clayton Act. Biocad does not appeal from those rulings.
-4-
BACKGROUND
A. The Allegations of Anticompetitive Conduct3
Biocad is a pharmaceutical company with its principal place of
business in Saint Petersburg, Russia. It also has a subsidiary in the United States.
Roche is a Swiss, multinational healthcare corporation, which owns Switzerland‐
based La Roche as well as La Rocheʹs American‐based affiliate Genentech. In
Russia, Roche distributes its drug products through the independent and Russia‐
based pharmaceutical company, R‐Farm JSC (ʺR‐Farmʺ). In turn, R‐Farm
conducts business in the United States through its own subsidiary, R‐Pharm US
LLC. La Roche conducts all of its American business operations and activities
through Genentech.
In recent years, monoclonal antibodies (ʺmAbsʺ) ‐‐ laboratory‐
produced molecules that mimic naturally produced antibodies ‐‐ have been used
successfully in cancer treatment in the United States. Roche is the sole United
States seller of three key mAbs, bevacizumab, trastuzumab, and rituximab
(collectively, the ʺDrugsʺ), the patents for which have expired or will expire soon.
3 The facts alleged in the First Amended Complaint (the ʺComplaintʺ) are assumed to be true on
this review of a motion to dismiss. Biro v. Conde Nast, 807 F.3d 541, 544 (2d Cir. 2015) (ʺWe . . . accept[] as
true the factual allegations in the complaint.ʺ).
-5-
Biocad has created biosimilar drugs to compete with existing, brand name mAbs
that are produced by companies like Roche.4 Biosimilars are priced substantially
below their brand‐named counterparts, and price competition ensues once the
first biosimilar product enters the market.
As of 2016, Biocad was the only pharmaceutical company to
successfully produce biosimilars of the Drugs and it ʺintended and [was]
prepared to enter the U.S. marketʺ for mAbs once Rocheʹs exclusivity rights
expired. J. Appʹx 128‐29. Biocad, however, has never participated in the
American market for mAbs.
Faced with impending competition from Biocad, Defendants
ʺhatched a scheme to restrict [the] U.S. marketʺ and ʺdelay or preclude altogether
[Biocadʹs] imports into [the] U.S.ʺ so that Roche could maintain its control over
the Drugs beyond the exclusivity period. J. Appʹx 142‐43. The conspiracy
included the following: (1) creating a predatory and discriminatory pricing
scheme by increasing Rocheʹs American prices for the Drugs by on average 19%
while decreasing costs in Russia by on average 76%; (2) underwriting the
4 A ʺbiosimilarʺ is a ʺbiological product [that] is highly similar to the reference product
notwithstanding minor differences in clinically inactive componentsʺ; and a biosimilar has ʺno clinically
meaningful differences between the biological product and the reference product in terms of the safety,
purity, and potency of the product.ʺ 42 U.S.C. § 262(i)(2)(A)‐(B).
-6-
independent, third‐party distributor R‐Farm by permitting R‐Farm to sell the
Drugs at below Rocheʹs costs incurred for distribution in Russia; (3) operating an
illegal kickback system involving the Russian governmentʹs hospitals, doctors,
and other healthcare professionals to bolster Rocheʹs drug sales while excluding
Biocad from Russian government programs; (4) limiting Genentechʹs United
States distribution of Rocheʹs drug samples, which Biocad needed for pre‐Food
and Drug Administration approval testing of its biosimilars; (5) maintaining an
illegal tying and bundling scheme between trastuzumab and another Roche‐
manufactured drug sold in Russia; (6) submitting fraudulent, below‐cost bids at
Russian government auctions; and (7) globally manipulating drug dosages to
force patients into purchasing and eventually discarding more drugs than
necessary. Defendantsʹ goal was to cripple Biocad financially so that Biocad
could not afford to enter the United States market. Biocad recognizes that
Rocheʹs alleged anticompetitive behavior was conducted through its foreign
operations, acknowledging that ʺBiocad had no active U.S. business with which
to interfereʺ because of Rocheʹs patent‐based monopolies. Pl. Appellantʹs Br. at
17.
-7-
B. The District Court Proceedings
Biocad commenced this action on June 7, 2016, and filed the
Complaint on October 24, 2016. On December 12, 2016, Defendants moved to
dismiss the Complaint pursuant to Rules 12(b)(1) and 12(b)(6). The district court
issued an Opinion and Order on September 30, 2017, dismissing the Complaint
and denying Biocadʹs request for leave to amend.
The district court ruled that Biocad failed to state a claim as a matter
of law because it failed to sufficiently allege antitrust standing. The district court
also ruled that, even assuming Biocad had adequately pleaded antitrust injury,
ʺthe foreign locus of [Biocadʹs] allegations would still defeat each of its causes of
action.ʺ S. Appʹx 7. Thus, the district court dismissed Biocadʹs claims.
As relevant here, in considering Biocadʹs Sherman Act claims, the
district court ruled that the claims were effectively barred under the import
exclusion and domestic effects exception to the FTAIA. See 15 U.S.C. § 6a. With
respect to the import exclusion, the district court concluded that the relationship
between Defendantsʹ acts and their effect on American import commerce was
ʺtoo attenuated for Defendantsʹ acts to be considered ʹdirected atʹ a U.S. import
market,ʺ and Biocadʹs allegations instead indicated that ʺDefendantsʹ alleged
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conduct was targeted at the domestic Russian pharmaceutical market.ʺ S. Appʹx
10. With respect to the domestic effects exception, the district court noted that
Biocad expressly waived that argument, S. Appʹx 12 & n.7, but still reached the
question, reasoning that Biocadʹs ʺalleged injuries flow from Defendantsʹ
allegedly anticompetitive foreign conduct, not the domestic effect of that
conduct, and is therefore the type of ʹindependently caused foreign injuryʹ that
falls outside of the reachʺ of the exclusion, S. Appʹx 13 (quoting Lotes Co. v. Hon
Hai Precision Indus. Co., 753 F.3d 395, 414 (2d Cir. 2014)). Biocadʹs Donnelly Act
claim and request for injunctive relief under the Clayton Act were also dismissed
based largely on the same reasoning.
This appeal followed.
DISCUSSION
We review the grant of a motion to dismiss for failure to state a
claim de novo, accepting all factual allegations in the complaint as true and
drawing all reasonable inferences in favor of the plaintiff. Mantikas v. Kellogg Co.,
910 F.3d 633, 636 (2d Cir. 2018); see Fed. R. Civ. P. 12(b)(6). Dismissal is
appropriate when ʺit is clear from the face of the complaint . . . that the plaintiffʹs
claims are barred as a matter of law.ʺ Parkcentral Glob. Hub Ltd. v. Porsche Auto.
-9-
Holdings SE, 763 F.3d 198, 208‐09 (2d Cir. 2014) (quoting Conopco, Inc. v. Roll Intʹl,
231 F.3d 82, 86 (2d Cir. 2000)).
The FTAIA sets substantive limitations on Sherman Act claims, and
ʺthe requirements of the FTAIA go to the merits of an antitrust claim rather than
to subject matter jurisdiction.ʺ Lotes, 753 F.3d at 405. Hence, if a plaintiffʹs claims
are barred by the FTAIA, the plaintiff has failed to state a claim for relief as a
matter of law.
On appeal, Biocad contends that the district court erred in
dismissing the Complaint on the grounds that (1) Biocad lacks antitrust standing,
and (2) the antitrust claims are barred by the FTAIA. We do not reach the
question of antitrust standing as we agree with the district court that the foreign
nature of Biocadʹs alleged injuries places its claims beyond the reach of United
States antitrust laws.5
5 While the term ʺantitrust standingʺ may give the impression of a jurisdictional obligation, ʺthe
proximate causation requirement in antitrust standing requires a court to evaluate the merits of the
action,ʺ and therefore ʺits absence is not a jurisdictional bar to suit, but a failure to state a claim.ʺ Lerner v.
Fleet Bank, N.A., 318 F.3d 113, 129 (2d Cir. 2003), abrogation on other grounds recognized by Am. Psych. Assʹn
v. Anthem Health Plans, Inc., 821 F.3d 352 (2d Cir. 2016); see Am. Psych Assʹn, 821 F.3d at 359 (ʺThe Supreme
Court has recently clarified . . . that what has been called ʹstatutory standingʹ in fact is not a standing
issue, but simply a question of whether the particular plaintiff ʹhas a cause of action under the statute.ʹʺ
(quoting Lexmark Intʹl, Inc. v. Static Control Components, Inc. 572 U.S. 118, 128 (2014))). We therefore need
not pass upon the antitrust standing question before determining the applicability of the FTAIA.
- 10 -
I. Applicable Law
A. The FTAIA Generally
The FTAIA ʺexcludes from the Sherman Actʹs reach much
anticompetitive conduct that causes only foreign injury.ʺ F. Hoffmann‐La Roche
Ltd. v. Empagran S.A., 542 U.S. 155, 158 (2004). It does so first by ʺlay[ing] down a
general rule placing all (nonimport) activity involving foreign commerce outside
the Sherman Actʹs reach.ʺ Id. at 162. The FTAIA then creates exceptions to the
general rule, bringing back within the Sherman Actʹs reach conduct that meets
certain statutory requirements. Id. at 161‐62 (quoting 15 U.S.C. § 6a). See
generally Lotes, 753 F.3d at 404.
The FTAIA provides:
[The Sherman Act] shall not apply to conduct involving
trade or commerce (other than import trade or import
commerce) with foreign nations unless ‐‐
(1) such conduct has a direct, substantial, and reasonably
foreseeable effect‐‐
(A) on trade or commerce which is not trade or
commerce with foreign nations, or on import trade
or import commerce with foreign nations; or
(B) on export trade or export commerce with
foreign nations, of a person engaged in such trade
or commerce in the United States; and
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(2) such effect gives rise to a claim under the provisions
of sections 1 to 7 of this title, other than this section.
15 U.S.C. § 6a.
In simpler terms, the FTAIA creates two exceptions to the general
bar on the extraterritorial application of the Sherman Act: (1) the import
exclusion, which applies to ʺconduct involving . . . import trade or import
commerce,ʺ 15 U.S.C. § 6a; and (2) the domestic effects exception, which applies
to other foreign conduct that has a direct, substantial, and reasonably foreseeable
effect on import or domestic commerce and that gives rise to a Sherman Act
claim, id. § 6a(1)‐(2); see Maricultura Del Norte v. World Bus. Capital, Inc., 159 F.
Supp. 3d 368, 382 (S.D.N.Y. 2015) (citing courts referring to ʺthe ʹimport
exceptionʹ (or ʹimport exclusionʹ) and the ʹdomestic effects exceptionʹʺ); see also
Minn‐Chem, Inc. v. Agrium, Inc., 683 F.3d 845, 855 (7th Cir. 2012) (referring to
ʺimport commerce exclusionʺ); Animal Sci. Prods. Inc. v. China Minmetals Corp.,
654 F.3d 462, 471 n.11 (3d Cir. 2011) (referring to ʺimport exceptionʺ). Courts
have understood this statutory scheme ʺto clarify, perhaps to limit, but not to
expand in any significant way, the Sherman Actʹs scope as applied to foreign
commerce.ʺ Lotes, 753 F.3d at 404 (quoting Empagran, 542 U.S. at 169).
- 12 -
The conduct at issue here clearly ʺinvolv[es] trade or commerce . . .
with foreign nations,ʺ 15 U.S.C. § 6a, as Biocad complains principally of actions
by foreign entities in a foreign country. Consequently, the question is whether
the challenged conduct falls within either the import exclusion or the domestic
effects exception to the general bar on the application of the Sherman Act to
foreign commerce.
In the district court, however, Biocad waived its reliance on the
domestic effects exception by expressly arguing that it was not relevant to this
case. ʺIt is a well‐established general rule that an appellate court will not
consider an issue raised for the first time on appeal.ʺ Moll v. Telesector Res. Grp.,
Inc., 760 F.3d 198, 204 (2d Cir. 2014) (brackets omitted). While we have the
discretion, as a prudential matter, to consider arguments not raised below, Sniado
v. Bank Austria AG, 378 F.3d 210, 213 (2d Cir. 2004), we have disfavored ʺan
exercise of discretion to address new arguments on appeal where those
arguments were available to the parties below and they proffer no reason for
their failure to raise the arguments below,ʺ United States ex rel. Keshner v. Nursing
Pers. Home Care, 794 F.3d 232, 234 (2d Cir. 2015) (quoting In re Nortel Networks
Corp. Sec. Litig., 539 F.3d 129, 133 (2d Cir. 2008)). Here, while Biocad urges this
- 13 -
Court to consider its claims under the domestic effects exception because the
district court passed upon the issue, it does not explain why it failed to press the
argument below. Accordingly, we decline to consider Biocadʹs theory of injury
under the domestic effects exception, and we limit our discussion to whether
Defendantsʹ conduct falls within the import exclusion.
B. The Import Exclusion
Biocad argues that the conduct here was ʺdirected at import
commerce and was intended to (and did) have a substantial effect in the United
Statesʺ in that it was intended to prevent or delay Biocad ʺfrom entering the U.S.
import market for pharmaceuticals.ʺ Pl. Appellantʹs Br. at 44. The argument
thus raises the issue of whether foreign conduct involves import trade or
commerce where there is no actual current effect on United States markets, but
where the defendant intends to impact import commerce in the future. We
conclude, based on the language, structure, and purpose of the FTAIA, that the
import exclusion applies when a defendantʹs actions immediately impact the
United States import market and not merely when a defendant subjectively
intends to affect the United States import market in the future. See, e.g., Abramski
v. United States, 573 U.S. 169, 179 (2014) (ʺ[W]e must (as usual) interpret the
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relevant words not in a vacuum, but with reference to the statutory context,
ʹstructure, history, and purpose.ʹʺ (quoting Maracich v. Spears, 570 U.S. 48, 76
(2013)).
1. Statutory Language
We start with the words of the statute. The FTAIA is cumbersomely
worded, as it provides that the Sherman Act ʺshall not apply to conduct
involving trade or commerce (other than import trade or import commerce) with
foreign nations.ʺ 15 U.S.C. § 6a.
The relevant ʺconductʺ is the defendantʹs conduct. Kruman v.
Christieʹs Intʹl PLC, 284 F.3d 384, 398 (2d Cir. 2002), abrogated on other grounds by
Empagran, 542 U.S. 155. The word ʺimportʺ refers to the movement of goods into
the United States from a foreign country. See Minn‐Chem, 683 F.3d at 855. The
word ʺinvolvingʺ is less clear. The most common meaning of ʺinvolvingʺ is
including (or having) as a necessary feature, accompaniment, or consequence,
but ʺinvolvingʺ could also mean influencing or affecting. See Involve, Oxford
English Dictionary (2d ed. 1989) (defining ʺinvolveʺ as ʺ[t]o include as a
necessary (and therefore unexpressed) feature, circumstance, antecedent
condition, or consequenceʺ or ʺ[t]o include or affect in its operationʺ); Involve,
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American Heritage College Dictionary (3d ed. 1997) (defining ʺinvolveʺ as ʺ[t]o
have as a necessary feature or consequenceʺ or ʺ[t]o influence or affectʺ). Hence,
the words ʺconduct involving . . . import trade or import commerceʺ could
encompass, as Biocad argues, foreign conduct intended to influence or affect
domestic markets; or the words could mean, as Defendants argue, conduct that
constitutes or directly acts upon import commerce.
We think the latter is the more natural reading of the words. Taken
together, the words suggest that the Sherman Act applies to a defendantʹs
conduct abroad that constitutes, includes, or has as a necessary consequence the
movement of goods into this country. See Minn‐Chem, 683 F.3d at 854 (ʺThe
applicability of U.S. law to transactions in which a good or service is being sent
directly into the United States, with no intermediate stops, is both fully
predictable to foreign entities and necessary for the protection of U.S.
consumers.ʺ). That the statutory language contemplates conduct that directly
interferes with the act of importing goods or services to the United States is
supported by the legislative history, as the House Report repeatedly refers to
import ʺtransactionsʺ in its discussion of the import exclusion. See H. R. Rep. No.
97‐686, at 2‐3, 9‐10 (1982), 1982 U.S.C.C.A.N., 2487, 2488, 2494–2495 (ʺHouse
- 16 -
Reportʺ).6 Indeed, courts have applied the import exclusion where plaintiffs
alleged that defendants interfered with the introduction of goods or services into
the United States. See, e.g., Minn‐Chem, 683 F.3d at 855 (holding that import
exclusion applied because transactions in which plaintiffs purchased potash
directly from foreign cartel members constitute import commerce); Carrier Corp.
v. Outokumpu Oyj, 673 F.3d 430, 438 n.3, 440 (6th Cir. 2012) (holding that import
exclusion applied because ʺthe result of that agreement [with foreign
conspirators] was to raise prices artificially for ACR copper tubing for
transactions between the co‐conspirators and buyers in the United Statesʺ);
Maricultura, 159 F. Supp. 3d at 384 (holding that the import exclusion applied
6 As the Supreme Court explained in Empagran, the FTAIA originated in a bill that
initially referred only to ʺexport trade or export commerce.ʺ 542 U.S. at 163 (quoting H.R. 5235,
97th Cong., 1st Sess., §1 (1981)). The House Report states:
The Subcommitteeʹs ʺexportʺ commerce limitation appeared to make the
amendments inapplicable to transactions that were neither import nor export,
i.e., transactions within, between, or among other nations.
. . . . Such foreign transactions should, for the purposes of this
legislation, be treated in the same manner as export transactions ‐‐ that is, there
should be no American antitrust jurisdiction absent a direct, substantial and
reasonably foreseeable effect on domestic commerce or a domestic competitor.
The Committee amendment therefore deletes references to ʺexportʺ trade, and
substitutes phrases such as ʺother than importʺ trade. It is thus clear that wholly
foreign transactions as well as export transactions are covered by the
amendment, but that import transactions are not.
House Report at 9‐10 (citations omitted).
- 17 -
because ʺPlaintiffs allege[d] that Defendantsʹ actions . . . substantially impaired
Plaintiffsʹ exports of Bluefin Tuna into the United States thereby impacting
United States import trade and commerceʺ (internal quotation marks and
emphasis omitted)). Conduct does not ʺinvolveʺ import commerce if it has no
direct or immediate consequence for domestic markets and is intended merely to
have a domestic impact in the future. Nothing in the text of the FTAIA otherwise
suggests an intent‐based analysis.
As suggested above, the word ʺinvolvingʺ can be read more
expansively and, in some circumstances, we have interpreted statutory
provisions using the word more broadly. See, e.g., United States v. King, 325 F.3d
110, 113 (2d Cir. 2003) (ʺThe word ʹinvolvingʹ has expansive connotations.ʺ). And
both the Department of Justice and the Federal Trade Commission endorse a
somewhat broader reading of the import exclusion to include conduct that does
not immediately act upon import transactions. According to the governmentʹs
reading of the import exclusion, ʺ[c]onduct may ʹinvolveʹ import commerce even
if it is not directed specifically or exclusively at import commerce.ʺ See U.S. Depʹt
of Justice & Fed. Trade Commʹn, Antitrust Guidelines for International Enforcement
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and Cooperation 19 (Jan. 13, 2017) (ʺGuidelinesʺ), https://www.justice.gov/
atr/internationalguidelines/download.
That may be so, as it is possible that conduct specifically directed at
foreign commerce can have a direct impact on domestic commerce. Foreign
conduct that is ʺclosely connected to the importation of goods into the United
States,ʺ id. at 20, such as, for example, foreign defendants fixing global shipping
prices, could fall within the import exclusion even though it is not directed
specifically at import commerce, as such conduct could have a direct effect on
domestic competition for imported goods, see id. at 19‐20. The import exclusion,
however, would not include cases where a foreign defendant fixes the price of
goods sold to a foreign intermediary, with an intent to interfere with that
competitorʹs American business, but with no demonstrable effect on the United
States. Cf. Empagran, 542 U.S. at 164 (holding domestic effects exception does not
apply where ʺprice‐fixing conduct significantly and adversely affects both
customers outside the United States and customers within the United States, but
the adverse foreign effect is independent of any adverse domestic effectʺ). In
such a case, the intended effect is too removed, and the word ʺinvolvingʺ cannot
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be read so broadly as to encompass conduct that is undertaken with the
subjective hope or desire to have a domestic impact at some point in the future.
In arguing for an intent‐based test, Biocad relies on our decision in
Kruman, where we noted that the alleged conspiracy was not ʺdirected at an
import marketʺ and imports were not ʺthe object of the conspiracy.ʺ 284 F.3d at
395‐96. While the use of the words ʺdirected atʺ and ʺobject of the conspiracyʺ in
the decision arguably suggest an intent‐based analysis, we did not adopt such a
test in Kruman. Rather, we evaluated the nature and effect of the conduct at issue
and recognized that the commerce concerned fixed commissions on goods
purchased and sold in foreign auctions, and not the trade in or movement of
those goods after purchase and sale even though some of the goods might
eventually be imported into the United States. Id. The import exclusion did not
apply, we concluded, because ʺthe object of the conspiracy was the price that the
defendants charged for their auction services, not any import market for those
goods.ʺ Id. at 396. This reasoning is consistent with our historical view that ʺit is
the situs of the effects, as opposed to the conduct, that determines whether
United States antitrust law applies.ʺ Id. at 395 (quoting House Report at 5, and
citing United States v. Aluminum Co. of Am., 148 F.2d 416, 444 (2d Cir. 1945) (ʺ[W]e
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shall assume that ʺ[The Sherman Act] does not cover agreements, even though
intended to affect [American] imports or exports, unless its performance is
shown actually to have had some effect upon them.ʺ); accord Turicentro, S.A. v.
Am. Airlines Inc., 303 F.3d 293, 305 (3d Cir. 2002), overruled on other grounds by
Animal Sci. Prod., 654 F.3d 462; see Republic of Philippines v. Marcos, 818 F.2d 1473,
1491 (9th Cir. 1987) (Hall, J., concurring in part and dissenting in part). The
conclusion that the statutory text supports an effects‐based rather than an intent‐
based analysis is confirmed by the FTAIAʹs structure and Congressʹs goals in
enacting the statute.
2. Structure of the FTAIA
The structure of the FTAIA also provides us with guidance as to the
interpretation of the import exclusion. We conclude that an interpretation of the
exclusion that turns on the subjective intent of the defendant is inconsistent with
the statutory scheme. See Abramski, 573 U.S. at 179.
The FTAIA provides two exemptions from its general rule that the
Sherman Act does not apply to conduct involving foreign trade or commerce.
The first is for import trade or commerce and the second is for certain nonimport
trade or commerce. See Lotes, 753 F.3d at 404. The first exemption is the simpler
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of the two ‐‐ described simply as ʺimport trade or import commerce,ʺ or, more
fully, as ʺconduct involving . . . import trade or import commerce.ʺ 15 U.S.C. §
6a. The domestic effects exception is more complicated as it encompasses other
foreign conduct that has ʺa direct, substantial, and reasonably foreseeable effectʺ
on the United States market. Id. § 6a(1). It is apparent that Congress had in mind
a simple, bright‐line exception for import trade and commerce and an additional,
more flexible exception for other conduct that would require a more fact‐specific
analysis.
Biocadʹs intent‐based analysis would blur the two exceptions. If we
read ʺinvolvingʺ as expansively as Biocad suggests, to include foreign conduct
merely intended to have a domestic impact in the future, the direct effects
exception would be rendered superfluous. See, e.g., Bilski v. Kappos, 561 U.S. 593,
607‐08 (2010) (stating that courts should not ʺinterpret[] any statutory provision
in a manner that would render another provision superfluousʺ); see also Marx v.
Gen. Revenue Corp., 568 U.S. 371, 386 (2013) (ʺ[T]he canon against surplusage is
strongest when an interpretation would render superfluous another part of the
same statutory scheme.ʺ). Under Biocadʹs suggestion, any conduct intended to
have a domestic impact would be excepted from the coverage of the Sherman
- 22 -
Act, even if the conduct did not in fact have a ʺdirect, substantial, and reasonably
foreseeableʺ effect on domestic, import, or export commerce.
In Lotes, we cautioned against ʺcollaps[ing] the FTAIAʹs domestic
effects exception into its separate import exclusion.ʺ 753 F.3d at 411. For that
reason, we held that ʺdirect,ʺ within the meaning of the domestic effects
exception, only requires ʺa reasonably proximate causal nexus,ʺ akin to common‐
law proximate causation principles. Id. We distinguished that interpretation of
ʺdirectʺ from one that required the effect on commerce to occur as an immediate
consequence of the defendantʹs conduct because the latter interpretation was
narrowly focused on the ʺspatial and temporal separation between the
defendantʹs conduct and the relevant effect.ʺ Id. at 412. We thereby implied that
the import exclusion requires ʺthat any domestic effect must follow as an
immediate consequence of a defendantʹs foreign anticompetitive conduct.ʺ Id. at
411.
Indeed, Congress accounted for conduct that immediately affects
domestic commerce by excluding import commerce from the FTAIA at the
outset. See id. An intent‐based test would require courts to probe defendantsʹ
remote, as opposed to direct, conduct targeted at foreign markets to discern
- 23 -
whether it was aimed at affecting American imports. But, as discussed above,
foreign commercial conduct that does not immediately affect domestic commerce
would be covered by the separate domestic effects exception for conduct that
might have a substantial downstream effect on domestic, import, or export
commerce and give rise to a Sherman Act claim. See 15 U.S.C. § 6a (1)‐(2).
Finally, we note that an intent‐based test could place domestic
anticompetitive conduct outside the reach of the Sherman Act. The word
ʺinvolvingʺ is not limited to the import exclusion as it appears in the
introductory language of Section 6a and therefore applies to the FTAIA,
including the domestic effects exception. Under an intent‐based test, conduct
that occurred domestically could conceivably fall outside the scope of the
Sherman Act if the intent was to affect trade with foreign nations, and the
conduct did not have a ʺdirect, substantial, and reasonably foreseeableʺ effect on
the markets. While such conduct could be characterized in some cases as
conduct directed toward an export market, the anticompetitive conduct would
occur domestically, and we cannot endorse an interpretation of ʺinvolvingʺ that
could exempt such anticompetitive activities from the Sherman Actʹs reach.
- 24 -
3. Purposes of the FTAIA
Finally, an intent‐based test is inconsistent with the FTAIAʹs
purposes. First, Congress enacted the FTAIA in part ʺto boostʺ American exports
by making it clear to American exporters and to firms doing business abroad that
the Sherman Act does not prevent them from entering into anticompetitive
business arrangements as long as only foreign markets are adversely affected.
Lotes, 753 F.3d at 404 (citing Empagran, 542 U.S. at 161). Second, Congress sought
to clarify when American antitrust laws govern foreign conduct, ʺto promote
certainty in assessing the applicability of American antitrust law to international
business transactions.ʺ House Report at 9; see Lotes, 753 F.3d at 404.
An intent‐based test would inject further uncertainty into an already
complex statutory scheme. Significantly, there is some evidence that Congress
was keen on adopting an objective jurisdictional test for the FTAIA. House
Report at 9. For instance, Congress used the ʺreasonable foreseeabilityʺ standard
for the domestic effects exception to avoid complicated inquiries into intent. Id.
(ʺThe Subcommittee chose a formulation based on foreseeability rather than intent
to make the standard an objective one and to avoid ‐‐ at least at the jurisdictional
stage ‐‐ inquiries into the actual, subjective motives of defendants.ʺ). Congress
- 25 -
was also concerned about practicality. Id. (explaining that the term ʺ[r]easonably
connotes . . . practicalityʺ and ʺ[t]he test is whether the effects would have been
evident to a reasonable person making practical business judgments, not whether
. . . intent can be shownʺ). These considerations of clarity, objectivity, and
practicality would be undermined if the applicability of the import exclusion
turned on the subjective intent of companies doing business abroad.
* * *
Accordingly, we hold that ʺconduct . . . involving import trade or
import commerceʺ is not determined by reference to a defendantʹs subjective
intent to affect import commerce. Rather, the import exclusion applies to
conduct by a defendant that has a direct or immediate effect on import
commerce.
II. Application
A. The Sherman Act
We conclude that Biocad has not plausibly alleged that Defendantsʹ
purportedly anticompetitive conduct in Russia falls within the exception for
conduct involving import commerce.
- 26 -
As a threshold matter, the alleged anticompetitive conduct does not
directly involve the importing of drugs into the United States. Rather, the bulk
of the alleged conduct occurred in Russia, consisting of actions taken by foreign
entities in combination with, or against, other foreign entities.7 For instance,
Biocad accuses Roche, a Swiss company, of underwriting R‐Farm, an
independent Russian distributor, and engaging in illegal kickback and auction‐
rigging schemes in Russia orchestrated by the Russian government. None of this
conduct has a nexus to imports into the United States. In fact, Biocad has not
alleged that it has ever imported any product or biosimilar to the United States
and admits that it ʺhad no active U.S. business with which to interfereʺ because
Rocheʹs exclusivity periods had not yet expired. Pl. Appellantʹs Br. at 17; see
Turicentro, 303 F.3d at 303 (holding that defendants were not engaged in import
trade or commerce because conspiring to set rates that foreign travel agents
could charge for their services did not include directly bringing items or services
into the United States).
7 As the district court noted, the Complaint does refer to conduct that allegedly occurred
in the United States, but it does not allege that those activities caused an injury in the United
States import market.
- 27 -
Moreover, even assuming the ʺsole purposeʺ of Defendantsʹ actions
was to delay Biocadʹs entry into the United States market, Biocad has not alleged
that Defendants engaged in any conduct that otherwise immediately or directly
affected import trade or commerce. Pl. Appellantʹs Br. at 44; see Carpet Grp. Intʹl
v. Oriental Rug Importers Assʹn, Inc., 227 F.3d 62, 72 (3d Cir. 2000) (holding that
import exclusion applied to defendantsʹ attempts at foreign trade shows to
exclude American retailers from importing rugs to the United States), overruled
on other grounds by Animal Sci. Prods., Inc. v. China Minmetals Corp., 654 F.3d 462
(3d Cir. 2011); Maricultura, 159 F. Supp 3d at 383‐84 (import exclusion applied
where defendantsʹ actions limited plaintiffʹs ability to capture, farm, and export
tuna to the United States). Defendantsʹ immediate objective was to impair
Biocadʹs ability to compete in the Russian market for the Drugs. The possibility
that Defendantsʹ conduct would diminish Biocadʹs financial circumstances, and,
in turn, prevent it from engaging in business in the United States when it was at
some point ready to do so is too remote and speculative to plausibly affect
imports to the United States with the directness necessary to invoke the import
exclusion. Further, as in Kruman, the fact that some of Defendantsʹ goods might
end up in the stream of imports to the United States is insignificant because the
- 28 -
effect on import trade is too removed and the harm to the Russian markets
precedes any eventual effect on American imports. See 284 F.3d at 395‐96; see also
Empagran, 542 U.S. at 164. In short, Biocadʹs claims do not fall within the import
exclusion to the FTAIA, and, therefore, its claims fall outside the scope of the
Sherman Act.
B. The Donnelly and Clayton Act Claims
Biocad cannot advance its claims under New Yorkʹs Donnelly Act
because the state statute is modeled after the Sherman Act and ʺshould generally
be construed in light of Federal precedent.ʺ Gatt Commcʹns, Inc. v. PMC Assocs.,
LLC, 711 F.3d 68, 81 (2d Cir. 2013) (quoting X.L.O. Concrete Corp. v. Rivergate
Corp., 83 N.Y.2d 513, 518 (1994)); see also Global Reins. Corp. U.S. Branch v. Equitas
Ltd., 18 N.Y.3d 722, 735 (2012). As Biocad has not stated a plausible claim for
relief under the Sherman Act, its Donnelly Act claim similarly fails.
Further, Biocad briefly argues that we should reinstate its claims for
injunctive relief under Section 16 of the Clayton Act because ʺneither [the]
antitrust standing doctrine nor the FTAIA bars Biocadʹs claims.ʺ Pl. Appellantʹs
Br. at 53‐54. Biocad, however, is not entitled to injunctive relief pursuant to
Section 16 of the Clayton Act because the FTAIA bars Biocadʹs Sherman Act
- 29 -
claims, and, consequently, Biocad cannot point to a violation of antitrust laws
that would cause it injury, actual or threatened. See 15 U.S.C. § 26; Zenith Radio
Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 130 & n.24 (1969) (holding that even
where a plaintiff ʺhas not yet suffered actual injury,ʺ injunctive relief is available
if the plaintiff ʺdemonstrate[s] a significant threat of injury from an impending
violation of the antitrust laws or from a contemporary violation likely to
continue or recur.ʺ); Kruman, 284 F.3d at 397 (ʺ[The Clayton Act] sets forth the
requirement that a plaintiff must suffer an injury or be threatened with an injury
caused by a Sherman Act violation in order to bring suit.ʺ). Thus, the claim
under Section 16 of the Clayton Act fails as well.
CONCLUSION
For the reasons set forth above, we AFFIRM the judgment of the
district court.
- 30 -
KATZMANN, Chief Judge, concurring:
I agree that Biocadʹs claims are barred by the FTAIA, and I join in
full the excellent majority opinion. I also agree that we can affirm the district
court without reaching the issue of antitrust standing. Were we to reach that
issue, however, I would respectfully have to part company with the district
courtʹs determination that a potential entrant to a pharmaceutical market must
show at the motion to dismiss stage that FDA approval of its products was
probable. I write separately to explain why the probability of FDA approval
should be considered as a significant, but not dispositive, factor in a broader
preparedness inquiry at the motion‐to‐dismiss stage.
I.
Antitrust plaintiffs must plead both constitutional and antitrust
standing. Gelboim v. Bank of Am. Corp., 823 F.3d 759, 770 (2d Cir. 2016), cert.
denied, 137 S. Ct. 814 (2017). To plead antitrust standing, ʺa private antitrust
plaintiff must plausibly allege that (i) it suffered an antitrust injury and (ii) it is
an acceptable plaintiff to pursue the alleged antitrust violations.ʺ In re Aluminum
Warehousing Antitrust Litig., 833 F.3d 151, 157 (2d Cir. 2016). Only the first prong,
antitrust injury, is at issue in this case.1 ʺCongress did not intend to allow every
person tangentially affected by an antitrust violation to maintain an action to
recover threefold damages for the injury to his business or property.ʺ Blue Shield
of Va. v. McCready, 457 U.S. 465, 477 (1982). Hence, Biocad must plausibly allege
that the injury it suffered is ʺof the type the antitrust laws were intended to
prevent and that flows from that which makes [Defendantsʹ] acts unlawful.ʺ
Brunswick Corp. v. Pueblo Bowl‐O‐Mat, Inc., 429 U.S. 477, 489 (1977). The question
is whether Biocad must allege that its biosimilars had come far enough along in
the FDA process that approval was probable, or whether actions beyond that
1 The antitrust injury requirement stems from Section Four of the Clayton Act,
which provides the right of action that allows private parties to sue for antitrust
violations. Section Four reads, in relevant part:
[A]ny person who shall be injured in his business or property by reason of
anything forbidden in the antitrust laws may sue therefor in any district
court of the United States . . . without respect to the amount in controversy,
and shall recover threefold the damages by him sustained, and the cost of
suit, including a reasonable attorney’s fee.
15 U.S.C. § 15(a).
2
process suffice to show that Biocad was prepared to receive approval and enter
the market.
Usually, antitrust injury is limited to active ʺparticipantsʺ in the
defendantʹs market. In re Aluminum Warehousing, 833 F.3d at 158. Yet this court
has long held that ʺit is as unlawful to prevent a person from engaging in
business as it is to drive a person out of business.ʺ Am. Banana Co. v. United Fruit
Co., 166 F. 261, 264 (2d Cir. 1908) (quoting Thomsen v. Union Castle Mail S.S. Co.,
166 F. 251, 253 (2d Cir. 1908)), affʹd 213 U.S. 347 (1909). Thus, nascent businesses
or potential market entrants may also demonstrate antitrust injury. To do so, the
plaintiff must ʺstate facts showing an intention and preparedness to engage in
business.ʺ Id. Defendants and the district court both faulted Biocad on
preparedness grounds.
As with many totality‐of‐circumstances tests, the American Banana
standard requires courts to gather together the many dots of information spread
across the canvas of a plaintiffʹs complaint and ask whether, like a pointillist
painting, the dots resolve themselves into a coherent image. Cf. Stephen
Sondheim & James Lapine, Sunday in the Park with George (1984) (ʺWhite. A blank
3
page or canvass. The challenge: bring order to the whole.ʺ). We have provided
few guideposts to channel this inquiry—in the 111 years since American Banana,
this Court has not fleshed out the ʺintention and preparednessʺ standard any
further.2 But American Banana itself, as well as a companion case decided the
same day, Pennsylvania Sugar Refining Co. v. American Sugar Refining Co., 166 F.
254 (2d Cir. 1908), provided some factual analysis to undergird the standard.
The Pennsylvania Sugar Refining plaintiff had previously been in the
market and had bought a sugar refining facility in anticipation of rejoining that
market. Id. at 260. The court contrasted this situation with that of the American
Banana plaintiff, which did not allege that it ʺhad made any preparations to
engage in the business of buying bananas . . . as a separate and independent
business,ʺ or that it had ʺinvested any money in preparing to engage in any such
independent business.ʺ Am. Banana, 166 F. at 264. The American Banana plaintiff
also did not allege ʺthe extent to which, nor even the country in which, it desired
or intended to engageʺ in business. Id. The result: a cause of action in
2 This Court has only cited American Banana once, for an unrelated proposition
related to international comity. See Hewitt v. Speyer, 250 F. 367, 370 (2d Cir. 1918).
4
Pennsylvania Sugar Refining, 166 F. at 260, and none in American Banana, 166 F. at
264. Thus, allegations of investment, and details regarding where and how the
plaintiff intends to enter the market, are relevant to the antitrust injury analysis.
While we have not since addressed the standing requirements for
potential market participants, other circuit courts have adopted the American
Banana standard, looking at both the ʺsincerity of [the plaintiffʹs] ambitionsʺ to
enter the market and the plaintiffʹs ability to act on its intent. E.g., Sanger Ins.
Agency v. HUB Intʹl, Ltd., 802 F.3d 732, 738 (5th Cir. 2015). Those circuits have
identified four indicia of preparedness: (1) the plaintiffʹs background and
experience in the prospective business; (2) the ability to finance entry, and
particularly to finance facilities and equipment; (3) the consummation of
contracts related to the potential entry; and (4) other affirmative action by the
plaintiff to engage in the proposed business or new market.3 See 2A Phillip E.
3 See Sanger, 802 F.3d at 739; Ashley Creek Phosphate Co. v. Chevron USA, Inc., 315
F.3d 1245, 1254‐55 (10th Cir. 2003); Andrx Pharms., Inc. v. Biovail Corp. Intʹl, 256 F.3d 799,
806‐07 (D.C. Cir. 2001); In re Dual‐Deck Video Cassette Recorder Antitrust Litig., 11 F.3d
1460, 1465 (9th Cir. 1993); Gas Utils. Co. of Ala. v. S. Nat. Gas Co., 996 F.2d 282, 283 (11th
Cir. 1993) (per curiam) (focusing on first three factors); Bubis v. Blanton, 885 F.2d 317, 319
(6th Cir. 1989); see also Cent. Telecommcʹns, Inc. v. TCI Cablevision, Inc., 800 F.2d 711, 728‐
29 (8th Cir. 1986) (recognizing these standards as the ʺmajority view,ʺ with which a
5
Areeda et al., Antitrust Law: An Analysis of Antitrust Principles and Their
Application ¶ 349, at 260‐61 (4th ed. 2014) (summarizing the requirements for
nascent‐firm antitrust injury using these tests). A succession of district courts in
this Circuit have looked to the same indicia. See, e.g., Fidoʹs Fences, Inc. v. Radio
Sys. Corp., 999 F. Supp. 2d 442, 450 (E.D.N.Y. 2014); Jade Aircraft Sales, Inc. v. City
of Bridgeport, No. CIV. B‐83‐454 WWE, 1990 WL 128573, at *2 (D. Conn. July 9,
1990); Indium Corp. of Am. v. Semi‐Alloys, Inc., 611 F. Supp. 379, 385 (N.D.N.Y.
1985), affʹd, 781 F.2d 879 (Fed. Cir. 1985); Waldron v. British Petro. Co., 231 F. Supp.
72, 81‐82 (S.D.N.Y. 1964). In an appropriate case, this Court should join the other
circuits that have adopted this four‐factor standard, which grew out of and
elucidates our decision in American Banana.
II.
In its thoughtful opinion, the district court did not rely on these four
factors to analyze antitrust injury. Rather, it determined that Biocad could not
prior Eighth Circuit case ʺis consistentʺ); Grip‐Pak, Inc. v. Illinois Tool Works, Inc., 694 F.2d
466, 475 (7th Cir. 1982) (adopting the intention and preparedness test without ʺhaving
to explore its precise dimensionsʺ), disapproved of on other grounds by Profʹl Real Estate
Invʹrs, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49 (1993).
6
establish injury because it had not plausibly alleged that FDA approval of its
biosimilars was probable. As the district court understood, this Court has never
held that plaintiffs seeking antitrust standing as entrants into the pharmaceutical
market must make such a showing, and neither has the Supreme Court. The
district court instead relied principally on a D.C. Circuit case, Andrx
Pharmaceuticals, Inc. v. Biovail Corp. International, 256 F.3d 799, to support two
propositions that were key to the district courtʹs decision: first, that ʺ[c]ourts . . .
require a plaintiff to allege that FDA approval of the potential drug is at least
ʹprobable,ʹʺ Biocad, JSC v. F. Hoffman‐La‐Roche, Ltd., No. 16 CIV. 4226, 2017 WL
4402564, at *4 (S.D.N.Y. Sept. 30, 2017); and second, that ʺplaintiffs alleging intent
and preparedness to enter a pharmaceutical market typically include facts
regarding the stage of the FDA‐approval process their product has reached or the
steps the plaintiff has taken (or plans to take) to secure approval,ʺ id. at *5.
However, Andrx arguably does not stand for these propositions. In
Andrx, a district court dismissed an antitrust counterclaim with prejudice,
holding that Biovail could not plead antitrust injury because the FDA had not yet
approved its biosimilar. See 256 F.3d at 807. The D.C. Circuit reversed, finding
7
that Biovail ʺcan allege facts sufficient to indicate its intent and preparedness.ʺ Id.
at 808. The court then noted that, even before the FDA approved Biovailʹs drug,
Biovail ʺcould have alleged its intent and preparedness to enter the market by
claiming that FDA approval was probable.ʺ Id. This statement is the source of
the supposed rule that the district court adopted below. As other courts have
noted, though, the Andrx decision ʺdoes not declare that a specific allegation
regarding probability of FDA approval is an absolute requirement of the intent
and preparedness standard.ʺ Roxane Labs., Inc. v. SmithKline Beecham Corp., No.
CIV.A. 09‐CV‐1638, 2010 WL 331704, at *3 (E.D. Pa. Jan. 26, 2010); accord BNLfood
Invs. Ltd. SARL v. Martek Biosciences Corp., No. CIV. WDQ‐11‐0446, 2011 WL
6439451, at *4 & n.17 (D. Md. Dec. 14, 2011); see Amgen, Inc. v. F. Hoffmann‐La
Roche Ltd., 480 F. Supp. 2d 462, 468 (D. Mass. 2007) (stating that Andrx ʺclarified
that the anticipation of FDA approval may suffice since all that is necessary is
demonstration of intent and preparedness to enter a marketʺ (emphasis added)).
It stated that an allegation of probable approval was sufficient, not that it was
necessary.
8
Other statements in Andrx underscore this point. The Andrx court
faulted Biovailʹs initial counterclaim in part because Biovail ʺdid not explicitly
allege . . . that it anticipated FDA approval,ʺ Andrx, 256 F.3d at 807 (emphasis
added), a standard more subjective and less demanding than probable approval.
The court also suggested, directly after its probable approval language, that the
defendant’s beliefs can prove intention and preparedness. Id. at 808 (ʺAndrxʹs
original suit . . . to enjoin the FDA from approving Biovailʹs ANDA, suggests that
Biovail (or so Andrx believed) may have intended and been sufficiently prepared
to enter the market.ʺ). Read as a whole, Andrx requires neither probable
approval nor specific facts about the plaintiff’s approval process.
Even if it did, though, this Court should not adopt a rigid probable
FDA approval requirement. True, there is some logic to the idea. ʺThat a
regulatory or legislative bar can break the chain of causation in an antitrust case
is beyond fair dispute.ʺ In re Wellbutrin XL Antitrust Litig. Indirect Purchaser Class,
868 F.3d 132, 165 (3d Cir. 2017). Courts often find a lack of antitrust injury when
it views a regulatory barrier, rather than the defendantʹs alleged anticompetitive
activities, as the cause of the plaintiffʹs inability to enter the market. See, e.g., In re
9
Canadian Imp. Antitrust Litig., 470 F.3d 785, 791 (8th Cir. 2006); RSA Media, Inc. v.
AK Media Grp., Inc., 260 F.3d 10, 15 (1st Cir. 2001); City of Pittsburgh v. W. Penn
Power Co., 147 F.3d 256, 268 (3d Cir. 1998). And ʺthe Supreme Court has made
clear that ʹ[a]ntitrust analysis must always be attuned to the particular structure
and circumstances of the industry at issue.ʹʺ New York ex rel. Schneiderman v.
Actavis PLC, 787 F.3d 638, 658 (2d Cir. 2015) (quoting Verizon Commc’ns Inc. v.
Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 411 (2004)). As the Andrx court
notes, ʺFDA approval is a prerequisite to enter any drug market.ʺ 256 F.3d at 807;
see 21 U.S.C. § 355(a); 42 U.S.C. § 262(a)(1)(A). It is therefore unlikely that a
pharmaceutical company could prove that it is prepared to enter the market
unless it pleads facts showing that it can surpass the FDAʹs barriers. Cf. 2A
Areeda et al., supra, ¶ 349, at 264 (ʺ[T]he absence of a license should not block
recovery when the plaintiff can show that it very likely would have received the
license.ʺ).
However, the Supreme Court has also emphasized that ʺantitrust
standing . . . was developed by courts over time in response to myriad concerns
presented in particular casesʺ and thus ʺcannot easily be reduced to a ʹblack‐letter
10
rule that will dictate the result in every case.ʹʺ Daniel v. Am. Bd. of Emergency
Med., 428 F.3d 408, 437 (2d Cir. 2005) (quoting Associated Gen. Contractors of Cal.,
Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 536 (1983)); see Steamfitters
Local Union No. 420 Welfare Fund v. Philip Morris, Inc., 171 F.3d 912, 922 (3d Cir.
1999) (stating that ʺlower courts should avoid applying brightline rulesʺ to the
antitrust injury question ʺand instead should analyze the circumstances of each
case, focusing on certain key factorsʺ). Application of the four‐factor test
outlined above seems a better way to achieve the fact‐bound analysis required
for antitrust cases than does a rigid rule setting some threshold probability of
approval. This is particularly so ʺ[b]ecause licensors seldom address the
suitability of firms not then seeking a license.ʺ 2A Areeda et al., supra, ¶ 349, at
264. Given that reality, ʺthe antitrust tribunal can only estimate the likelihood of
such a license.ʺ Id. This factual inquiry may be difficult for a court to undertake
without discovery.4
4 The Seventh Circuit allowed a case similar to this one to move forward for
precisely that reason. See Xechem, Inc. v. Bristol‐Myers Squibb Co., 372 F.3d 899, 902 (7th
Cir. 2004) (ʺ[A company] cannot recover damages unless it can show that (and when) it
would have entered the market in the absence of anticompetitive practices, and how
much money it would have made. . . . But a prediction that the plaintiff will be unable
11
Rather than a strict requirement, probability of FDA approval
should be treated simply as a significant factor in the broader preparedness
inquiry. At the motion‐to‐dismiss stage, preparedness is best inferred from the
four‐factor test itself, which already asks about the very indicia that would best
predict whether a pharmaceutical company is likely to seek and receive FDA
approval. The standard on a motion to dismiss is whether the plaintiff’s factual
allegations give rise to a plausible claim of antitrust injury, not a probable one.
See In re Aluminum Warehousing, 833 F.3d at 157. The proper test at this stage,
then, is whether the allegations in the complaint, taken as true, create a plausible
inference that Biocad intended to, and would be able to, receive FDA approval
and enter the market but for Defendantsʹ alleged actions. Claims that a plaintiff
filed for approval, or specifics about where the plaintiff stands in the approval
process, are particularly probative of this question. But ʺthe pleading standard
Rule 8 announces does not require ʹdetailed factual allegations,ʹʺ Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (citation omitted), and a complaint should not be thrown
to meet its challenges is not a good reason to dismiss a complaint . . . .ʺ).
12
out for lacking these particular forms of evidence. Even more so since ʺearly
exclusion may be far cheaper than ruining or disciplining a recent entrant who
has become established.ʺ 2A Areeda et al., supra, ¶ 349, at 258. Too strict a
pleading requirement for preparedness could make it easier for monopolistic
firms to avoid antitrust liability by identifying and undermining potential
competitors before they can file with the FDA.
***
For these reasons, I would not impose a rigid ʺprobable FDA
approvalʺ requirement for nascent pharmaceutical market participants to plead
antitrust injury.
13