DocketNumber： Docket No. 03-7641
Citation Numbers： 429 F.3d 370
Judges： Pooler, Raggi, Sack
Filed Date： 11/2/2005
Status： Precedential
Modified Date： 11/5/2024
This appeal, arising out of - circumstances surrounding a lawsuit in which a drug manufacturer alleged that its patent for the drug tamoxifen citrate (“tamoxifen”) was about to be infringed, and the suit’s subsequent settlement, requires us to address issues at the intersection of intellectual property law and antitrust law. Although the particular factual circumstances of this case are unlikely to recur, the issues presented have been much litigated and appear to retain their vitality.
The plaintiffs appeal from a judgment of the United States District Court for the Eastern District of New York (I. Leo Glasser, Judge) dismissing their complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). The plaintiffs claim that the defendants conspired, under an agreement settling a patent infringement lawsuit among the defendants in 1993 while an appeal in that lawsuit was pending, to monopolize the market, for tamoxifen — -the most widely prescribed drug for the treatment of breast cancer — by suppressing competition from generic versions of the drug. The settlement agreement included, among other things, a so-called “reverse payment” of $21 million from the defendant patent-holders Zeneca, Inc., AstraZeneca Pharmaceuticals LP, and AstraZeneca PLC (collectively “Zeneca”) to the defendant generic manufacturer Barr Laboratories, Inc. (“Barr”), and a license from Zeneca to Barr allowing Barr to sell an unbranded version of Zeneca-manufactured tamoxifen. The settlement agreement was contingent on obtaining a vacatur of the judgment of the district court that had heard the infringement action holding the patent to be invalid.
The district court in the instant case concluded that the settlement did not restrain trade in violation of the antitrust laws, and that the plaintiffs suffered no antitrust injury from that settlement. Because we conclude that we have jurisdiction- to hear the appeal and that the behavior of the defendants alleged in the complaint would not violate antitrust law, we affirm the judgment of the district court.
REGULATORY BACKGROUND
Before setting forth the salient facts of this case and addressing the merits of the plaintiffs’ appeal, it may be helpful to outline the relevant regulatory background.
The Federal Food, Drug, and Cosmetic Act, ch. 675, 52 Stat. 1040 (1938) (codified at scattered sections of title 21 of the United States Code), prohibits the introduction or delivery for introduction into interstate commerce of “any new drug, unless an approval of an application filed pursuant to subsection (b) or (j) of [21 U.S.C. § 355] is effective with respect to such drug.” 21 U.S.C. § 355(a). Subsection (b) describes the process of filing a New Drug Application (“NDA”) with the United States Food and Drug Administration (“FDA”), which is typically a costly and time-consuming procedure in which the applicant attempts to establish the safety and effectiveness of the drug. Id. § 355(b). In 1984, in order to accelerate the approval process for low-cost generic versions of established drugs, Congress enacted the Drug Price Competition and Patent Term Restoration Act of 1984 (the
An ANDA filer must certify, with respect to each patent that claims the listed drug for the bioequivalent of which the ANDA filer is seeking approval,
An ANDA filer that elects a paragraph IV certification must notify each affected patent owner of the certification. Id. § 355(j)(2)(B)(i). The patent owner then has forty-five days after the date it receives such notice to bring suit against the ANDA filer for patent infringement. Id. § 355(j)(5)(B)(iii). If no patent owner brings such a lawsuit during this period, the FDA may immediately approve the ANDA. Id. If, however, the patent owner brings suit during this period, the FDA’s final approval of the ANDA is stayed for thirty months after the date the patent owner received the requisite notice or until a district court
Any approval letter sent by the FDA before the expiration of the prescribed stay and before a court ruling of patent invalidity or non-infringement is tentative. See 21 C.F.R. § 314.105(d). If before the thirty months expire a court rules that the patent is either invalid or not infringed, the tentative approval, of the ANDA is made effective as of the date of judgment. 21 U.S.C. § 355(j)(5)(B)(iii)(I). If after thirty months there has been no ruling on patent validity or infringement and the stay expires, the ANDA filer can distribute and market the drug but, depending on the court’s later patent ruling, an ANDA filer that chooses to follow this course may thereafter become liable for infringement damages if infringement is found. See In re Ciprofloxacin Hydrochloride Antitrust Litig., 166 F.Supp.2d 740, 744 (E.D.N.Y. 2001) (“Cipro I”).
As an incentive for generic manufacturers to choose the paragraph IV certification route and, in the course of pursuing such applications, to challenge weak patents, the Hatch-Waxman Act offers the first ANDA filer with a paragraph IV certification, under certain conditions, the opportunity to market its generic drug exclusively for 180 days. To this end, the FDA may not approve the ANDA of a subsequent filer until 180 days after the earlier of the date (1) the first ANDA filer commercially markets the generic drug or (2) a court of competent jurisdiction concludes that the patent in question is invalid or not infringed.
Until 1998 (and, therefore, at the time of the settlement that is the subject of this appeal), the 180-day exclusivity period was available to the first ANDA filer to elect a paragraph IV certification, but only if the ANDA filer successfully defended against a lawsuit for infringement of the relevant patent. See 21 C.F.R. § 314.107(c)(1) (1995). This so-called “successful defense” requirement was challenged in 1997 in two separate lawsuits. In each, the circuit court rejected the requirement as inconsistent with the Hatch-Waxman Act. See Mova Pharm. Corp. v. Shalala, 140 F.3d 1060, 1076 (D.C.Cir.1998); Granutec, Inc. v. Shalala, 139 F.3d 889, 1998 WL 153410, at *7 (4th Cir. Apr.3, 1998), 1998 U.S.App. LEXIS 6685, at *19-*21 (unpublished opinion).
In June 1998, in response to these decisions, the FDA published a “Guidance for Industry.” See Ctr. for Drug Evaluation & Research, Food & Drug Admin., U.S. Dep’t of Health and Human Servs., Guidance for Industry: 180-Day Generic Drug Exclusivity Under the Hatclu-Waxman Amendments to the Federal Food, Drug, and Cosmetic Act (June 1998), available at http://www.fda.gov/cder/guidance/2576fnl.pdf (last visited May 12, 2005). In the “Guidance,” the FDA expressed its intention to remove the “successful defense” requirement formally through rulemaking and .made clear that thereafter even ANDA paragraph IV filers that are not the subject of lawsuits will be eligible for the 180-day exclusivity period.
FACTUAL AND PROCEDURAL BACKGROUND
Tamoxifen, the patent for which was obtained by Imperial Chemical Industries, PLC, (“ICI”) on August 20, 1985, is sold by Zeneca (a former subsidiary of ICI which succeeded to the ownership, rights of the tamoxifen patent) under the trade name Nolvadex®.
In response, on November 2, 1987— within the required forty-five' days of Barr’s amendment of its ANDA to include a paragraph IV certification — ICI filed a patent infringement lawsuit against Barr and Barr’s raw material supplier, Heumann Pharma GmbH & Co. (“Heumann”), in the United States District Court for the Southern District of New York.
ICI appealed the district court’s judgment to the United States Court of Appeals for the Federal Circuit. In 1993, while the appeal was pending, the parties entered into a confidential settlement agreement’ (the “Settlement Agreement”) which is the principal subject of this appeal. In the Settlement Agreement, Zene-ca (which had succeeded to the ownership rights of the patent) and Barr agreed that in return for $21 million and a non-exclusive license to sell Zeneca-manufactured tamoxifen in the United States under Barr’s label, rather than Zeneca’s trademark Nolvadex®, Barr would change its ANDA paragraph IV certification to a paragraph III certification, thereby agreeing that it would not market its own generic version of tamoxifen until Zeneca’s patent expired in 2002. See In re Tamoxifen Citrate Antitrust Litig., 277 F.Supp.2d 121, 125-26 (E.D.N.Y.2003) (“Tamoxifen II ”). Zeneca also agreed to pay Heumann $9.5 million immediately, and an additional $35.9 million over the following ten years.
The plaintiffs allege that as a part of the Settlement Agreement, Barr “understood” that if another generic manufacturer attempted to market a version of tamoxifen, Barr would seek to prevent the manufacturer from doing so by attempting to invoke the 180-day exclusivity right possessed by the first “paragraph IV” filer. Compl. ¶ 58. According to the plaintiffs, this understanding among the defendants effectively forestalled the introduction of any generic version of tamoxifen, because, five years later — only a few weeks before other generic manufacturers were to be able to begin marketing their own versions of tamoxifen — Barr did in fact successfully claim entitlement to the exclusivity period. It thereby prevented those manufacturers from entering the tamoxifen market until 180 days after Barr triggered the period by commercially marketing its own generic version of the drug. In fact, Barr had not yet begun marketing its own generic version and had little incentive to do so because, pursuant to the Settlement Agreement, it was already able to market Zeneca’s version of tamoxifen.
Meanwhile, pursuant to the Settlement Agreement which was contingent on the vacatur of the district court judgment in Tamoxifen I, Barr and Zeneca filed a “Joint Motion to Dismiss the Appeal as Moot and to Vacate the Judgment Below.” See Tamoxifen II, 277 F.Supp.2d at 125. The Federal Circuit granted the motion, thereby vacating the district court’s judgment that the patent was invalid. See Imperial Chem. Indus., PLC v. Heumann Pharma GmbH & Co., 991 F.2d 811, 1993 WL 118931, at *1 (Fed.Cir. Mar. 19, 1993) (unpublished opinion). Such a vacatur, while generally considered valid as a matter of appellate procedure by courts at the time of the Settlement Agreement, see U.S. Philips Corp. v. Windmere Corp., 971 F.2d 728, 731 (Fed.Cir.1992), was shortly thereafter held to be invalid in nearly all circumstances by the Supreme Court, see U.S. Bancorp Mortgage Co. v. Bonner Mall P’ship, 513 U.S. 18, 27-29, 115 S.Ct. 386, 130 L.Ed.2d 233 (1994).
In the years after the parties entered into the Settlement Agreement and the Federal Circuit vacated the district court’s judgment,
While Mylan and Pharmachemie’s lawsuits were pending in district court, the FDA’s “successful defense” rule, requiring that a generic manufacturer seeking to market an allegedly patented drug “successfully defend” its patent infringement lawsuit in order to receive the 180-day exclusivity period — which- at the time the Settlement Agreement was entered into would have excluded Barr from benefitting from the exclusivity period — was, as noted, held invalid. See Mova Pharm. Corp. v. Shalala, 955 F.Supp. 128, 130-32 (D.D.C. 1997), aff'd in part and rev’d in part on other grounds, 140 F.3d 1060 (D.C.Cir. 1998); Granutec, Inc. v. Shalala, 139 F.3d 889, 1998 WL 153410, at *7 (4th Cir. Apr.3, 1998), 1998 U.S.App. LEXIS 6685, at *19-*21 (unpublished opinion). In June 1998, at the time the FDA removed the requirement, Barr — armed with the new rule rendering the first AND A. paragraph IV filer eligible for- the 180-day exclusivity period even if it had not successfully defended a patent infringement suit — attempted to block final FDA approval of other generic versions of tamoxifen by claiming entitlement to the 180-day exclusivity period. See Tamoxifen II, 277 F.Supp.2d at 127 (citing “Petition for Stay of Action” filed with the FDA on June 26, 1998).
At the time, Pharmachemie had received tentative approval from the FDA to distribute its version of the drug, Mylan was awaiting approval to do the same, and both Pharmachemie and Mylan’s thirty-month stays under section 355(j)(5)(B)(iii), triggered by Zeneca’s infringement lawsuits, were soon to expire. See Compl. ¶¶ 61-63 (noting that the 30-month stay for Mylan was scheduled to expire on July 10, 1998, and for Pharmachemie in August 1998); Pharmachemie B.V. v. Barr Labs., Inc., 276 F.3d 627, 630 (D.C.Cir.2002) (noting that Pharmachemie was granted tentative approval on April. 3, 1997); Mylan Pharms. Inc. v. Henney, 94 F.Supp.2d 36, 44 (D.D.C.2000), vacated and dismissed as moot sub nom. Pharmachemie B.V. v. Barr Labs., Inc., 284 F.3d 125 (D.C.Cir. 2002) (per curiam). Because of the rule
Pharmachemie and Mylan challenged the FDA’s decision. On March 31, 2000, in Mylan Pharmaceuticals, the United States District Court for the District of Columbia ruled in Pharmachemie’s and Mylan’s favor. 94 F.Supp.2d at 54. It concluded that, although Judge Broderick’s ruling of invalidity in Tamoxifen I had been vacated by the Settlement Agreement, that ruling was still a court decision sufficient to trigger Barr’s 180-day exclusivity period, which therefore had already expired. See Mylan Pharms., 94 F.Supp.2d at 54. As a result, on June 26, 2000, the FDA revoked Barr’s claim to the 180-day exclusivity period. See Tamoxifen II, 277 F.Suppüd at 127.
On appeal, however, the District of Columbia Circuit vacated the district court’s decision as moot. Pharmachemie, 276 E.3d at 634; Pharmachemie, 284 F.3d at 125. The court noted that subsequent to the FDA’s decision to approve Barr’s application, the district court had ruled against Pharmachemie in Zeneca’s patent infringement lawsuit against it. See Pharmachemie, 276 F.3d at 629. Thus, even if, as the district court held in Mylan, Barr’s 180-day exclusivity period had run, Phar-machemie and Mylan
. Proceedings in the District.Court
While these generic manufacturers were litigating the validity of Zeneca’s patent on tamoxifen, consumers and consumer groups in various parts of the United States filed some thirty lawsuits challenging the legality of the 1993 Settlement Agreement between Zeneca and Barr. See Tamoxifen II, 277 F.Supp.2d at 127. Those lawsuits were subsequently transferred by the Judicial Panel on Multidis-trict Litigation to the United States District Court for the Eastern District of New York. Subsequently, a consolidated class action complaint embodying the claims was filed. In re Tamoxifen Citrate Antitrust Litig., 196 F.Supp.2d 1371 (2001); Tamoxifen II, 277 F.Supp.2d at 127. In the consolidated lawsuit, the plaintiffs alleged that the Settlement Agreement unlawfully (1) enabled Zeneca and Barr to resuscitate a patent that the district court had already held to be invalid and unenforceable; (2) facilitated Zeneca’s continuing monopolization of the market for tamoxifen; (3) provided for the sharing of unlawful monopoly profits between Zeneca and Barr; (4) maintained an artificially high price for tamoxifen; and (5) prevented competition from other generic manufacturers of tamoxifen. See Tamoxifen II, 277 F.Supp.2d at 127-28. At the heart of the lawsuit was the contention that the Settlement Agreement enabled Zeneca and Barr
On May 15, 2003, in a thorough and thoughtful opinion, the district court granted the defendants’ motion to dismiss. See id. at 140. The court noted that although market-division agreements between a monopolist and a potential competitor ordinarily violate the Sherman Act, they, are not necessarily unlawful when the monopolist is a patent holder. Id. at 128-29. Pursuant to a patent grant, the court reasoned, a patent holder may settle patent litigation by entering into a licensing agreement with the alleged infringer without running afoul of the Sherman Act. Id. at 129. Yet, the court continued, a patent holder is prohibited from acting in bad faith “beyond the limits of the patent monopoly” to restrain.or monopolize trade. Id. (quoting United States v. Line Material Co., 333 U.S. 287, 308, 68 S.Ct. 550, 92 L.Ed. 701 (1948) (internal quotation marks omitted)). . •
Analyzing the terms and impact of the Settlement Agreement, the district' court concluded that the agreement permissibly terminated the litigation between the defendants, which “cleared the field for other generic manufacturers to challenge the patent.” Id. at 133. “Instead of leaving in place an additional barrier to subsequent ANDA filers, the Settlement Agreement in fact removed one possible barrier to final FDA approval — namely, the existence of ongoing litigation between an existing ANDA filer and a subsequent filer.” Id. To the court, this factor distinguished the case from similar cases in which other circuits, had held settlement agreements to be unlawful, where the agreement in question did not conclude the underlying litigation and instead prolonged the period during which, other generic manufacturers co.uld not. enter the market. Id. (distinguishing the Settlement Agreement from the agreements addressed in In re Terazosin Hydrochloride Antitrust Litig., 164 F.Supp.2d 1340, 1346-47 (S.D.Fla.2000), rev’d sub nom. Valley Drug Co. v. Geneva Pharms., Inc., 344 F.3d 1294 (11th Cir. 2003), cert. denied 125 S.Ct. 308 (2004), and In re Cardizem CD Antitrust Litig., 105 F.Supp.2d 618, 632 (E.D.Mich.2000), aff'd, 332 F.3d 896 (6th Cir.2003), cert. denied sub nom. Andrx Pharms., Inc. v. Kroger Co., 543 U.S. 939, 125 S.Ct. 307, 160 L.Ed.2d 248 (2004)).
The district court was also of the view that the defendants could not be held liable for Barr’s FDA petition to preserve its 180-day exclusivity period even if this was a term of "the defendants’ negotiated Settlement Agreement. Id. at 135. It reasoned that at the time of settlement, Barr could not have successfully pursued its FDA application because the FDA continued to apply the “successful defense” rule
an attempt to petition a governmental ■body in order to protect an arguable interest in a statutory right, based on recent developments in the court and at the FDA. As such, the FDA Petition was protected activity under the First Amendment, and long-settled law established that the Sherman Act, with limited exceptions, does not apply to .petitioning administrative agencies.
Id. at 135. The court concluded that the plaintiffs’ complaint therefore did not sufficiently allege a bad-faith settlement in violation of the Sherman Act. Id. at 136.
The district court also concluded that even if the plaintiffs had stated an antitrust violation, they did not suffer antitrust injury from either Barr’s exclusivity period or the Settlement Agreement and the resulting vacatur of the district court’s judgment in Tamoxifen I invalidating the tamoxifen patent. Id. at 136-38. The court noted that “[antitrust injury ... must be caused by something other than the regulatory action limiting entry to the market.” Id. at 137. The court attributed “the lack of competition in the market” not to “the deployment of Barr’s exclusivity period, but rather [to] the inability of the generic companies to invalidate or design around” the tamoxifen patent, and their consequent loss of the patent litigation ágainst Zeneca. Id. This was so, the district court concluded, even if Barr’s petition to the FDA had delayed the approval of Mylan’s ANDA. Id. at 137. Any “injury” suffered by the plaintiffs, said the court, “is thus not antitrust injury, but rather the result of the legal monopoly that a patent holder possesses.” Id. at 138.
The district court also' rejected the plaintiffs’ contention that “the settlement and vacatur deprived other generic manufacturers of the ability to make the legal argument that the [Tamoxifen I ] judgment (if affirmed) would collaterally estop Zeneca from claiming the [tamoxifen] patent was valid in future patent litigation with other ANDA filers.” Id. It reasoned that there is no basis for the assertion that “forcing other generic manufacturers to litigate the validity of the [tamoxifen] patent ] is an injury to competition.” Id. The court also referred to the other generic manufacturers’ subsequent litigation against Zeneca over the validity of the tamoxifen patent, in which Zeneca prevailed, as additional reason to reject the plaintiffs’ assertion that the Federal Circuit would have affirmed Judge Broder-ick’s judgment invalidating the tamoxifen patent. Id.
The district court therefore dismissed the plaintiffs’ Sherman Act claims. Id. It also dismissed the plaintiffs’ state-law claims, which had alleged violations of the antitrust laws of seventeen states and violations of consumer protection and unfair competition laws of twenty-one states, because those claims were based on the same allegations as the plaintiffs’ federal antitrust claims. Id. at 138-40. The plaintiffs appeal the dismissal of their claims.
On July -28, 2003, the defendants moved in this Court to transfer the appeal to the Federal Circuit on the ground that that court alone has jurisdiction to entertain this appeal. For the reasons stated below, we deny the defendants’ motion and affirm the district court’s judgment dismissing the plaintiffs’ complaint.
DISCUSSION
I. Jurisdiction
The defendants argue that this Court does not have jurisdiction to hear this appeal' because the case arises under federal
The United States Court of Appeals for the Federal Circuit has exclusive jurisdiction over an appeal from a federal district court “if the jurisdiction of that court was based, in whole or in part, on section 1338 of [title 28],” with exceptions not pertinent here. 28 U.S.C. § 1295(a)(1). Section 1338, in turn, provides that federal district courts shall have original and exclusive jurisdiction “of any civil action arising under any Act of Congress relating to patents.” Id. § 1338(a). Therefore, whether the Federal Circuit has jurisdiction over the instant case “turns on whether this is a case ‘arising under’ a federal patent statute.” Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 807, 108 S.Ct. 2166, 100 L.Ed.2d 811 (1988).
A case “arises under” federal patent law if “a well-pleaded complaint establishes either that federal patent law creates the cause of action or that the plaintiffs right to relief necessarily depends on resolution of a. substantial question of federal patent law, in that patent law is a necessary element of one of the well-pleaded claims.” Id. at 809, 108 S.Ct. 2166.
Moreover, even if one theory supporting a claim essentially turns on an issue arising under patent law, as long as there is at least one alternative theory supporting the claim that does not rely on patent law, there is no “arising under” jurisdiction under 28 U.S.C. § 1338. In that case, as the Supreme Court concluded in Christianson: “Since there are reasons completely unrelated to the provisions and purposes of federal patent law why petitioners may or may not be entitled to the relief they seek under their monopolization claim, the claim does not arise under federal patent law.” Id. at 812, 108 S.Ct. 2166 (internal quotation marks, citation, and alterations omitted); see also id. at 810, 108 S.Ct. 2166 (“[A] claim supported by alternative theories in the complaint may not form the basis for §. 1338(a) jurisdiction unless patent law is essential to each of those theories.”).
Applying these principles to the case at hand, we conclude that we have jurisdiction to entertain this appeal. As we explain below, the defendants’ contention that “all of [plaintiffs’ claims arise
If the plaintiffs alleged facts that, if proved, would establish that the Settlement Agreement provided the defendants with benefits exceeding the scope of the tamoxifen patent, they would succeed in alleging an antitrust violation. And if the plaintiffs plausibly alleged that the defendants entered into an agreement to manipulate the 180-day exclusivity period to the defendants’ joint benefit, and if they were able to prove based on the facts alleged that they suffered antitrust injury as a result of that agreement, then that, too, would likely be sufficient to state an antitrust violation. Were they to allege and then prove facts sufficient to support either of these theories, the argument that the Settlement Agreement was unlawful “[e]ven if the [tamoxifen pjatent is presumed valid and enforceable,” Compl. ¶ 55, would, in our view, be persuasive.
Because we conclude that there are “reasons completely unrelated to the provisions and purposes of the patent laws why the plaintiff[s] may or may not be entitled to the relief [they] seek[ ],” Christianson, 486 U.S. at 810, 108 S.Ct. 2166 (internal quotation marks, citation, and alterations omitted), we have jurisdiction to entertain this appeal.
II. Standard of Review
We review a decision on a motion to dismiss de novo. Gregory v. Daly, 243 F.3d 687, 691 (2d Cir.2001).
“A pleading which sets forth a claim for relief ... shall contain ... a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). “Given the Federal Rules’ simplified standard for pleading, a court may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.” Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002) (internal quotation marks, citation, and alteration omitted). There is no heightened, pleading requirement in antitrust cases. See Twombly v. Bell Atl. Corp., 425 F.3d 99, 108-13 (2d Cir.2005).
In reviewing a decision on a motion to dismiss under Federal Rule of Civil Procedure12(b)(6), we “must accept as true all the'factual allegations in the complaint,” Leatherman v. Tarrant County Narcotics Intelligence & Coordination Unit; 507 U.S. 163, 164, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993), and “draw all reasonable inferences in plaintiffs’ favor,” Freedom Holdings Inc. v. Spitzer, 357 F.3d 205, 216 (2d Cir.2004). To survive a motion to dismiss, a plaintiff bringing suit under section 1 of the Sherman Act need not allege facts that exclude the possibility that the behavior of which complaint is made is legal. See Twombly, 425 F.3d at 111 (“[S]hort of the extremes of ‘bare bones’ and ‘implausibility,’ a complaint in an antitrust case need only contain the ‘short and plain statement of the claim showing that the pleader is entitled to relief that Rule 8(a) requires.” (citation omitted)). However, “bald assertions and conclusions of law are not adequate [to state a claim] and a complaint consisting only of naked assertions, and setting forth no facts upon which a court could find a
III. The Plaintiffs’ Antitrust Claims
A. The Tension between Antitrust Law and Patent Law
With the ultimate goal of stimulating competition and innovation, the Sherman Act prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States,”
B. The Plaintiffs ’ Allegations
1. Settlement of a Patent Validity Lawsuit. The plaintiffs contend that several factors — including that Tamoxifen I was settled after the tamoxifen patent had been held invalid by the district court, making the patent unenforceable at the time of settlement — indicate that if their allegations are proved, the defendants violated the antitrust laws. They argue that the district court in the case before us erred by treating the tamoxifen patent as valid and enforceable. Instead, they say, in accordance with the never-reviewed judgment in Tamoxifen I, the district court in this case should have treated the patent as presumptively invalid for purposes of assaying the sufficiency of the plaintiffs’ complaint.
We begin our analysis against the backdrop of our longstanding adherence to the principle that “courts are bound to encourage” the settlement of litigation. Gambale v. Deutsche Bank AG, 377 F.3d 133, 143 (2d Cir.2004). ‘Where a case is complex and expensive, and resolution of the case will benefit the public, the public has a strong interest in settlement. The trial court must protect the public interest, as well as the interests of the parties, by encouraging the most fair and efficient resolution.” United States v. Glens Falls Newspapers, Inc., 160 F.3d 853, 856-57 (2d Cir.1998). As the Eleventh Circuit recently noted in drug patent litigation similar to the one before us, “There is no question that settlements provide a number of private and social benefits as opposed to the inveterate and costly effects of litigation.” Schering-Plough, 402 F.3d at 1075.
It is well settled that “[w]here there are legitimately conflicting [patent] claims ..., a settlement by agreement, rather than litigation, is not precluded by the [Sherman] Act,” although such a settlement may ultimately have an adverse effect on competition. Standard Oil Co. v. United States, 283 U.S. 163, 171, 51 S.Ct. 421, 75 L.Ed. 926 (1931); cf. Flex-Foot, Inc. v. CRP, Inc., 238 F.3d 1362, 1369 (Fed.Cir.2001) (“[W]hile the federal patent laws favor full and free competition in the use of ideas in the public domain over the technical requirements of contract doctrine, settlement of litigation is more strongly favored by the law.”); Nestle Co. v. Chester’s Mkt., Inc., 756 F.2d 280, 284 (2d Cir.1985) (“[T]he district court imposed the heavy burden on trademark defendants of having to continue to litigate when they would prefer to settle, a ruling without precedent.”), overruled on other grounds, U.S. Bancorp Mortgage Co. v. Bonner Mall P’ship, 513 U.S. 18, 27-29,
Rules severely restricting patent settlements might also be contrary to the goals of the patent laws because the increased number of continuing lawsuits that would result would heighten the uncertainty surrounding patents and might delay innovation. See Valley Drug, 344 F.3d at 1308; Daniel A. Crane, Exit Payments in Settlement of Patent Infringement Lawsuits: Antitrust Rules and Economic Implications, 54 Fla. L.Rev. 747, 749 (2002). Although forcing patent litigation to continue might benefit consumers in some instances, “patent settlements can ... promote efficiencies, resolving disputes that might otherwise block or delay the market entry of valuable inventions.” Joseph F. Brodley & Maureen A. O’Rourke, Preliminary Views: Patent Settlement Agreements, Antitrust, Summer 2002, at 53.
We cannot judge this post-trial, pre-ap-peal settlement on the basis of the likelihood vel non of Zeneca’s success had it not settled but rather pursued its appeal. As the Supreme Court noted in another context, “[i]t is just not possible for a litigant to prove in advance that the judicial system will lead to any particular result in his case.” Whitmore v. Arkansas, 495 U.S. 149, 159-60, 110 S.Ct. 1717, 109 L.Ed.2d 135 (1990). Similarly, “[n]o one can be certain that he will prevail in a patent suit.” Asahi Glass, 289 F.Supp.2d at 993 (emphasis in original). We cannot guess with any degree of assurance what the Federal Circuit would have done on an appeal from the district court’s judgment in Tamoxifen I. Cf. In re Ciprofloxacin Hydrochloride Antitrust Litig., 261 F.Supp.2d 188, 200-01 (E.D.N.Y.2003) (“Cipro II ”) (noting that courts should not speculate about the outcome of litigation) (citing Boehm v. Comm’r, 146 F.2d 553 (2d Cir.), aff'd, 326 U.S. 287, 66 S.Ct. 120, 90 L.Ed. 78 (1945)); In re Ciprofloxacin Hydrochloride Antitrust Litig., 363 F.Supp.2d 514, 529 (E.D.N.Y.2005) (“Cipro III”) (“[M]aking the legality of a patent settlement agreement, on pain of treble
As the plaintiffs correctly point out, the Federal Circuit would have reviewed Judge Broderick’s factual findings underlying his conclusion of invalidity with considerable deference, rather than engaging in a presumption of validity. See Shelcore, Inc. v. Durham Indus., Inc., 745 F.2d 621, 624-25 (Fed.Cir.1984) (“The presumption of validity does not guide our analysis on appeal. Rather, we review the findings and conclusions of a district court under the appropriate standards of review.”). But it takes no citation to authority to conclude that appellants prevail with some frequency in federal courts of appeals even when a high degree of deference is accorded the district courts from which the appeals are taken.
The facts of this case provide an additional reason for us to embrace the general rule that we will ordinarily refrain from guessing what a court will hold or would have held. As noted earlier, federal district courts in later lawsuits seeking to enforce the tamoxifen patent concluded, contrary to the court in Tamoxifen I, that the patent was, in fact, valid. While we do not think that these results enable us to estimate the chances that the Federal Circuit would have reversed the judgment of the district court in Tamoxifen I, they at least suggest the extent to which the outcome of such proceedings may be unpredictable.
The fact that the settlement here occurred after the district court ruled against Zeneca seems to us to be of little moment. There is a risk of loss in all
We conclude, then, that without alleging something more than the fact that Zeneca settled after it lost to Barr in the district court that would tend to establish that the Settlement Agreement was unlawful, the assertion that there was a bar— antitrust or otherwise — to the defendants’ settling the litigation at the time that they did is unpersuasive.
2. Reverse Payments. Payments pursuant to the settlement of a patent suit such as those required under the Settlement Agreement are referred to as “reverse” payments because, by contrast, “Mypically, in patent infringement cases the payment flows from the alleged infringer to the patent holder.” David A. Balto, Pharmaceutical Patent Settlements: The Antitrust Risks, 55 Food & Drug L.J. 321, 335 (2000). Here, the patent holder, which, if its patent is valid, has the right to prevent the alleged infringer from making commercial use of it, nonetheless pays that party not to do so. Seeking to supply the “something more” than the fact of settlement that would render the Settlement Agreement unlawful, the plaintiffs allege that the value of the reverse payments from Zeneca to Barr thereunder “greatly exceeded the value of Barr’s ‘best case scenario’ in winning the appeal ... and entering the market with its own generic product.!’' Appellants’ Br. at 27.
It is the size, not the mere existence, of Zeneca’s reverse payment that the plaintiffs point to in asserting that they have successfully pleaded a Sherman Act cause of action. In explaining our analysis, though, it is worth exploring the notion advanced by others that the very existence of reverse payments establishes unlawfulness. See Balto, supra, at 335 ,(“A payment flowing from the innovator to the challenging generic firm may. suggest strqngly the anticompetitive intent of the parties in entering .the agreement and the rent-preserving effect of that agreement.”); Herbert Hovenkamp et al., Anticompetitive Settlement of Intellectual Property Disputes, 87 Minn. L.Rev. 1719, 1751 (2003) (“[T]he problem of exclusion payments can arise whenever the patentee has an incentive to postpone determination of the validity of its patent.”).
Heeding the advice of several courts and commentators, we decline to conclude (and repeat that the plaintiffs do not ask us to conclude) that reverse payment^ are per se violations of the Sherman Act such that an allegation of an agreement to make reverse payments suffices to assert an antitrust violation. We do not think that the fact that the patent holder is paying to protect its patent monopoly, without more, establishes a Sherman Act violation. See Valley Drug, 344 F.3d at 1309 (concluding
As other courts have noted, moreover, reverse payments are particularly to be expected in the drug-patent context because the Hatch-Waxman Act created an environment that encourages them. See Cipro II, 261 F.Supp.2d at 252 (noting that the Hatch-Waxman Act “has the unintended consequence of altering the litigation risks of patent lawsuits” and concluding that “reverse payments are a natural byproduct of the Hatch-Waxman process”); accord Schering-Plough, 402 F.3d at 1074.
In the typical patent infringement case, the alleged infringer enters the market with its drug after the investment of substantial sums of money for manufacturing, marketing, legal fees, and the like. The patent holder then brings suit against the alleged infringer seeking damages for, inter alia, its lost profits. If the patent holder wins, it receives protection for the patent and money damages for the infringement. And in that event, the in-fringer loses not only the opportunity to continue in the business of making and selling the infringing product, but also the investment it made to enter the market for that product in the first place. And it must pay damages to boot. It makes sense in such a circumstance for the alleged infringer to enter into a settlement in which it pays a significant amount to the patent holder to rid itself of the risk of losing the litigation.
By contrast, under the Hatch-Waxman Act, the patent holder ordinarily brings suit shortly after the paragraph IV ANDA has been filed- — before the filer has spent substantial -sums- on the manufacturing, marketing, or distribution of the potentially infringing generic drug. The prospective generic manufacturer therefore has relatively little to lose in litigation precipitated by a paragraph IV certification beyond litigation costs and the opportunity for future profits from selling the generic drug. Conversely, there are no infringement -damages for the patent holder to recover, and there is therefore little reason for it to pursue the litigation beyond the point at which it can assure itself that no infringement will occur in the first place.
The patent holder’s risk if it loses the resulting patent suit is correspondingly large: It will be stripped of its patent monopoly. At the same time, it stands to gain little from winning other than the continued protection of its lawful monopoly over the manufacture and sale of the drug in question.
“Hatch-Waxman essentially redistributes the relative risk assessments and explains the flow of settlement funds and their magnitude. Because of the Hatch-Waxman scheme, [the generic challengers] gain[ ] considerable leverage in patent litigation: the exposure to liability amount[s] to litigation costs, but pale[s] in comparison to the immense volume of generic sales and profits.” Schering-Plough, 402 F.3d at 1074 (citation omitted).
Under these circumstances, we see no sound basis for categorically condemning reverse payments employed to lift the uncertainty surrounding the validity and scope of the holder’s patent.
3. “Excessive” Reverse Payments. As we have noted, although there are those who contend that reverse payments are in and of themselves necessarily unlawful,, the plaintiffs are not .among them. They allege instead that “[t]he value of the consideration provided to keep Barr’s product off the market ... greatly exceeded the value
[o]nly if a patent settlement is a device for circumventing antitrust law is it vulnerable to an antitrust suit. Suppose a seller obtains a patent that it knows is' almost certainly invalid (that is, almost certain not to survive a judicial challenge), sues its competitors, and settles the suit by licensing them to use its patent in exchange for their agreeing not to sell the patented product for less than the price specified in' the license. In such a case, the patent, the suit, and the settlement would be - devices— masks — for fixing prices, in violation of antitrust law.
Asahi Glass, 289 F.Supp.2d at 991. “If, however, there is nothing suspicious about the circumstances of a patent settlement, then to prevent a cloud from being cast over the settlement process a third party should not be permitted to haul the parties to the settlement over the hot coals of antitrust litigation.” Id. at 992.
There is something on the face of it that does seem “suspicious” about a patent holder settling patent litigation against a potential generic manufacturer by paying that-manufacturer more than either party anticipates the manufacturer would earn by winning the lawsuit and entering the newly competitive market in competition with .the patent holder. Why, after all— viewing the settlement through an antitrust lens — should the potential competitor be permitted to receive such a windfall at the ultimate expense of drug purchasers? We think, however, that the suspicion abates upon reflection. In such a case, so long as the patent litigation is neither a sham nor otherwise baseless, the patent holder is seeking to arrive at a settlement in order to protect that to which it is presumably entitled: a lawful monopoly over the manufacture and distribution of the patented product.
Of course, the law could provide that the willingness of the patent holder to settle at a price above the generic manufacturer’s projected profit betrays a fatal disbelief in the validity of the patent or the likelihood of infringement, and that the patent holder therefore ought not to be allowed to maintain its monopoly position. Perhaps it is unwise to protect patent monopolies that rest on such dubious patents. But even if large reverse payments indicate a patent holder’s lack of confidence in its patent’s strength or breadth, we doubt the wisdom of deeming a patent effectively invalid on the basis of a patent holder’s fear of losing it.
[T]he private thoughts of a patentee, or of the alleged infringer who settles with him, about whether the patent is valid or whether it has been infringed is not the issue in an antitrust case. A firm that has received a patent from the patent office (and not by fraud ...), and thus enjoys the presumption of validity that attaches to an issued patent, 35 U.S.C. § 282, is entitled to defend the patent’s validity in court, to sue alleged infring-ers, and to settle with them, whatever its private doubts, unless a neutral observer would reasonably think either that the patent was almost certain to be declared invalid, or the defendants were almost certain to be found not to have infringed it, if the suit went to judgment. It is not “bad faith” to assert patent rights that one is not certain will be upheld in a suit for infringement pressed to judgment and to settle the suit to avoid risking the loss of the rights. No one can be certain that he will prevail in a patent suit.
Asahi Glass, 289 F.Supp.2d at 992-93 (citation omitted) (emphasis in original).
Such a rule would also fail to give sufficient consideration to the patent holder’s incentive to settle the lawsuit without reference to the amount the generic manufacturer might earn in á competitive market, even when it is relatively confident of the validity of its patent — to insure against the possibility that its confidence is misplaced, or, put another way, that a reviewing court might (in its view) render an erroneous decision. Cf. Schering-Plough, 402 F.3d at 1075-76. Whatever the degree of the patent holder’s certainty, there is always some risk of loss that the patent holder might wish to insure against by settling.
This case is illustrative. It is understandable that however sure Zeneca was at the outset that its patent was valid, settlement might have seemed attractive once it lost in the district court, especially in light of the deferential standard the Federal Circuit was expected to apply on review. But its desire to settle does not necessarily belie Zeneca’s confidence in the patent’s validity. Indeed, Zeneca’s pursuit of subsequent litigation seeking to establish the tamoxifen patent’s validity, and the success of that litigation, strongly suggest that such confidence persisted and was not misplaced. Neither do we think that the settlement’s entry after the district court rendered a judgment against Zeneca should counsel against the settlement’s propriety. It would be odd to handicap the ability of Zeneca to settle after it had displayed sufficient confidence in its patent to risk a finding of invalidity by taking the case to trial.
It strikes us, in other words, as pointless to permit parties to enter into an agreement settling the litigation between them, thereby protecting the patent holder’s monopoly even though it may be based on a relatively weak patent, but to limit the amount of the settlement to the amount of the generic manufacturer’s projected'profits had it won the litigation. ' - ■
We are not unaware of a troubling dynamic that is at work in these eases. The less sound the patent or the less clear the infringement, and therefore the less justified the monopoly enjoyed by the patent holder, the more a rule permitting settlement is likely to benefit the patent holder by allowing it to retain the patent. But the law allows the settlement even of suits involving weak patents with the presumption that the patent is valid and that settlement is merely an extension of the valid patent monopoly. So long as the law encourages settlement, weak patent 'cases will likely be settled even though such settlements will inevitably protect patent monopolies that are, perhaps, undeserved.
We also agree with the Cipro III court’s observation that:
If courts do not discount the exclusionary power of the patent by the probability of the patent’s being held invalid, then the patents most likely to be the subject of exclusion payments would be precisely those patents that have the most questionable validity. This concern, on its face, is quite powerful. But the answer to this concern lies in the fact that, while the strategy of paying off a generic company to drop its patent challenge would work to exclude that particular competitor from the market, it would have no effect on other challengers of the patent, whose incentive to mount a challenge would also grow commensurately with the chance that the patent would be held invalid.
Cipro III, 363 F.Supp.2d at 534. There is, of course, the possibility that the patent holder will continue to buy out potential competition such that a settlement with one generic manufacturer protecting the patent holder’s ill-gotten patent monopoly will be followed by other settlements with other generic manufacturers should a second, third, and fourth rise to challenge the patent. We doubt, however, that this scenario is realistic.
Every settlement payment to a generic manufacturer reduces the profitability of the patent monopoly. The point will come when there are simply no monopoly profits with which to pay the new generic challengers. “[I]t is unlikely that the holder of
An alternative rule is, of course, possible. As suggested above, the antitrust laws could be read to outlaw all, or nearly all, settlements of Hatch-Waxman infringement actions. Patent holders would be required to litigate each threatened patent to final, unappealable judgment. Only patents that the courts held were valid would be entitled to confer monopoly power on their proprietors. But such a requirement would be contrary to well-established principles of law. As we have rehearsed at some length above, settlement of patent litigation is not only suffered, it is encouraged for a variety of reasons even if it leads in some cases, to; the survival of monopolies created by what would otherwise be fatally weak patents. It is too late in the journey for us- to alter course.
We generally agree, then, with the Eleventh Circuit insofar as it held in Valley Drug that “ ‘simply because a brand-name pharmaceutical company holding a patent paid its generic competitor money cannot be the sole basis for a violation of antitrust law,’ unless the ‘exclusionary effects of the agreement’ exceed the ‘scope of the patent’s protection.’ ” Cipro III, 363 F.Supp.2d at 538 (quoting Schering-Plough, 402 F.3d at 1076 (alteration omitted)). Whatever damage is done to competition by settlement is done pursuant to the monopoly extended to the patent holder by patent law unless ,the terms of the settlement enlarge the scope of that monopoly. “Unless and until the patent is shown to. have been procured by fraud, or a suit for its enforcement is shown to be objectively baseless, there is no injury to the market cognizable under existing antitrust law, as long as competition is restrained only within the scope of the patent.” Cipro III, 363 F.Supp.2d at 535.
We further agree with the Cipro III court that absent an extension of the monopoly beyond the patent’s scope, an issue that we address in the next section of this
I. The Terms of the Settlement Agreement. Inasmuch as we conclude that neither the fact of settlement nor the amount of payments made pursuant thereto as alleged by the plaintiffs would render the Settlement Agreement unlawful, we must assess its other terms to determine whether they do. As we have explained in the previous section of this opinion, we think that the question is whether the “exclusionary effects of the agreement” exceed the “scope of the patent’s protection.” Schering-Plough, 402 F.3d at 1076. Looking to other courts that have addressed similar cases for guidance, and accepting the plaintiffs’ allegations as true,-we conclude that the Settlement Agreement did not unlawfully extend the reach of Zene-ca’s tamoxifen patent.
First, the Settlement Agreement did not extend the patent monopoly by restraining the introduction or marketing of unrelated or non-infringing products. It is thus unlike the agreement the Sixth Circuit held per se illegal in Cardizem, 332 F.3d at 908, which included not only a substantial reverse payment but also an agreement that the generic manufacturer would not market non-infringing products. See id. at 902, 908 & n. 13 (quoting the court in Cipro II, 261 F.Supp.2d at 242, which observed that the Cardizem district court, in condemning the settlement agreement in that case, “ ‘emphasized that the agreement [there] restrained Andrx from marketing other bioequivalent or generic versions of Cardizem that were not at issue in the pending litigation, .... Thus, the court found that the agreement’s restrictions extended to noninfringing and/or potentially noninfringing versions of generic Cardizem.’ ” (alterations in original)); see also
Like the patent for the compound cipro-floxacin hydrochloride, which was the subject of dispute in the Cipro cases, and unlike the patents at issue in Cardizem and Valley Drug, Zeneca’s tamoxifen patent is not a formulation patent, which covers only specific formulations or delivery methods of compounds; rather, it is a patent on a compound that, by its nature, excludes all generic versions of the drug. See Appellees’ Br. at 23; Cipro II, 261 F.Supp.2d at 249-50 (observing that the patent in that case covered all formulations and the generic manufacturer could not have avoided it). Because Zeneca’s patent therefore precludes all generic versions of tamoxifen, so that any such competing version would, as we understand it, necessarily infringe the patent, the Settlement Agreement did not, by precluding the manufacture of a generic version of tamoxifen, restrain the marketing of any non-infringing products.
Second, the Settlement Agreement ended all litigation between Zeneca and Barr and thereby opened the tamoxifen patent to immediate challenge by other potential generic manufacturers, which did indeed follow- — spurred by the additional incentive (at the time) of potentially securing the 180-day exclusivity period available upon a victory in a subsequent infringement lawsuit, since by vacating the district court judgment, Barr ensured (under procedures in effect at the time) that it was not eligible for the exclusivity period. See Cipro II, 261 F.Supp.2d at 242-43 (emphasizing that the settlement in that case extinguished the litigation between Barr and Bayer and that Barr thereby relinquished its claim to the 180-day exclusivity period, thus removing any “bottleneck” to future generic entrants). The Agreement thus avoided a “bottleneck” of the type created by the agreements in Valley Drug and Cardizem, which prevented other generic manufacturers from obtaining approval for their own generic versions from the FDA. Rather than resolve the litigation, the settlements in those cases prolonged it by providing incentives to the defendant generic manufacturers not to pursue the litigation avidly. In Cardizem, for example, the settlement included periodic payments to the generic manufacturer during the pendency of the lawsuit in exchange for its promise not to market a generic drug for
The disadvantage purportedly suffered by the plaintiffs is not that Barr somehow prevented others from challenging the patent and obtaining FDA approval; nor is it that no other generic manufacturer tried to do so. It is instead that each of the subsequent challenges failed. While it is true that, had the district court’s decision in Zeneca’s patent infringement lawsuit against Barr been affirmed, other generic manufacturers would have been allowed to market their drugs, there is no legal requirement that parties litigate an issue fully for the benefit of others. See, e.g., Nestle, 756 F.2d at 284.
Thus the stated terms of the Settlement Agreement include nothing that would place it beyond the legitimate exclusionary scope of Zeneca’s patent: The Settlement Agreement did not have an impact on the marketing of non-infringing or unrelated products, and the Agreement fully resolved the litigation between Zeneca and Barr, clearing the way for other generic manufacturers to seek to enter the market.
Finally, the Settlement Agreement did not entirely foreclose competition in the market for tamoxifen. It included a license from Zeneca to Barr that allowed Barr to begin marketing Zeneca’s version of tamoxifen eight months after the Settlement Agreement became effective. The license ensured that money also flowed from Barr to Zeneca, decreasing the value of the reverse payment. By licensing tamoxifen to Barr, Zeneca added a competitor to the market, however limited the competition may have been. Unlike reverse payment settlements that leave the competitive situation as it was prior to the litigation,
The Settlement Agreement almost certainly resulted in less price competition than if Barr had introduced its own generic version, of course. The plaintiffs allege that the Barr-distributed, Zeneca-manufactured tamoxifen sold at retail for just five percent less than the Zeneca-branded version, Compl. ¶ 75, compared with what the plaintiffs allege is a typical initial drop of sixteen percent or more, see Oral Argument Tr., July 12, 2004, at 5, and an eventual drop in a truly competitive market of thirty to eighty percent, Compl. ¶ 75. See also Congr. Budget Office, How Increased Competition from Generic Drugs Has Affected Prices and Returns in the Pharmaceutical Industry 32 (July
We conclude that the facts as alleged in the plaintiffs’ complaint, if proved, would not establish that the terms of the Settlement Agreement violated the antitrust laws. In the absence of any plausible allegation that the reverse payment provided benefits to Zeneca outside the scope of the tamoxifen patent, the plaintiffs have not stated a claim for relief with respect to the Settlement Agreement. See Twombly, 425 F.3d at 111.
5. Barr’s 180-Day Exclusivity Period. The plaintiffs also advance allegations regarding actions that Barr took with respect to the 180-day exclusivity period to which the first paragraph IV filer is entitled under the Hatch-Waxman - Act. We confess that it is not altogether clear to us what the import of those allegations is. The plaintiffs contend that Barr’s attempt to assert its exclusivity period in 1998, five years after the date of the Settlement Agreement, should be viewed as “circumstantial evidence demonstrating the anticompetitive consequences of [the] agreement ]” among the defendants. Appellants’ Reply Br. at 13. They allege that the Settlement Agreement was drafted “careful[ly] to preserve Barr’s” ability to “strategically deploy[]” its claim to the exclusivity period. Compl. ¶ 57. And they further allege the' existence of an understanding among the defendants as to when and under what circumstances “Barr would assert its claimed exclusivity period rights- to' prevent ... FDA approval” of other generic manufacturers’ ANDA applications, “even if Zeneca was unsuccessful in using patent litigation to keep another generic competitor off the market.”
The defendants contend in response that any consequences of the 180-day exclusivity period resulted from Barr’s petition to the FDA, and that Barr’s actions in claiming the 180-day exclusivity period’ were therefore immune from antitrust scrutiny under the Noerr-Pennington doctrine, which immunizes parties from antitrust liability for injuries resulting from government action prompted by the parties’ petitioning activities. See E.R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 136, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961) (stating that “the Sherman Act does not prohibit two or more persons from associating together in an attempt to persuade the legislature or the executive [or an agency or a court] to take particular
We are not so sure. Although Noerr-Pennington immunity may lend Barr’s actions some protection, it does not immunize all actions with respect to the 180-day exclusivity period from antitrust scrutiny. The doctrine does not extend protection to the defendants “where the alleged conspiracy ‘is a mere sham to cover what is actually nothing more than an attempt to interfere directly with the business relationships of a competitor.’ ” Cal. Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 511, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972) (quoting Noerr, 365 U.S. at 144, 81 S.Ct. 523). And it “does not authorize anticompetitive action in advance of [the] government’s adopting the industry’s anti-competitive proposal. The doctrine applies when such action is the consequence of legislation or other governmental action, not when it is the means for obtaining such action.” In re Brand Name Prescription Drugs Antitrust Litig., 186 F.3d 781, 789 (7th Cir.1999) (emphasis in original); see also Juster Assocs. v. City of Rutland, 901 F.2d 266, 271-72 (2d Cir.1990) (stating that when a claimed restraint is the consequence of government action, it falls within the purview of Noerr-Pennington immunity, but when the restraint is the means by which the defendants seek to obtain favorable government action, it does not). Because we think that an agreement to time the deployment of the exclusivity period to extend a patent’s monopoly power might well constitute anticompetitive action outside the scope of a valid patent, we decline to rest our conclusion on the ground of Noerr-Pennington immunity.
We nonetheless do not think that the facts as alleged with respect to Barr’s claim to the 180-day exclusivity period amount to an antitrust violation.
First, as we have explained, our review of the Settlement Agreement convinces us that, accepting the plaintiffs’ allegations as. true, the defendants did not violate the antitrust laws merely by entering into it. Therefore, even1 if we were to view Barr’s actions with regard to the 180-day exclusivity period as somehow constituting “evidence” — “circumstantial” or otherwise — of the “anticompetitive consequences” of the Settlement Agreement, it would not affect our conclusion. The Agreement is no doubt “anticompetitive” — the plaintiffs
Second, because we have concluded that the Settlement Agreement was not itself an unlawful conspiracy, Barr’s “block[ing of] generic entry” would not be unlawful as “in furtherance of’ an unlawful conspiracy. There would have to be an unlawful conspiracy before Barr’s actions could contribute to it.
Third, [t]he factual predicate that is pleaded does need to include [an unlawful] conspiracy among the realm of plausible possibilities. Twombly, 425 F.3d at 111 (footnote omitted). Assuming that the plaintiffs intended to allege a separate agreement among the defendants relating to Barr’s manipulation of its exclusivity period in order to protect the defendants from competition from other generic manufacturers, the pleaded conspiracy seems to us to be “implausible.”
At the time the Settlement Agreement was entered into, the established law was that a generic manufacturer must “successfully defend” a patent infringement lawsuit in order to obtain exclusivity.
Moreover, the fact that Barr acted as it did with respect to the deployment of the exclusionary period is easily explained by Barr’s own interest in protecting itself from competition through a petition to the FDA for a statutorily prescribed benefit. Nothing that we can draw from the facts alleged in the complaint indicates how Barr’s actions in this regard suggest that it was in league with Zeneca.
Fourth and last, we have grave doubt as to whether, even if the defendants agreed to deploy the exclusionary period to protect their shared monopoly power, the injury that the defendants allege they suf
To state a claim under the Sherman Act, a plaintiff, in addition to stating an antitrust violation, must allege facts sufficient to prove that it suffered “antitrust injury, which is to say injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants’ acts unlawful.” Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977) (emphasis omitted); see also George Haug Co., Inc. v. Rolls Royce Motor Cars Inc., 148 F.3d 136, 139 (2d Cir. 1998). “The injury should reflect the anti-competitive effect either of the violation or of anticompetitive acts made possible by the violation.” Brunswick, 429 U.S. at 489, 97 S.Ct. 690. “Harm to the antitrust plaintiff is sufficient to satisfy the constitutional standing requirement of injury in fact.” Associated Gen. Contractors, Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 535 n. 31, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983).
Accepting for the" sake of argument that the plaintiffs have stated an antitrust violation by alleging an agreement or understanding between Barr and Zeneca to manipulate the 180-day exclusivity period, we are inclined to agree with the district court’s conclusion that any injury that the plaintiffs suffered nonetheless resulted from Zeneca’s valid patent and from the inability of other generic manufacturers to establish that the patent was either invalid or not infringed- — and not from any agreement between Barr and Zeneca that Barr should employ its exclusivity powers to exclude competition. See Tamoxifen II, 277 F.Supp.2d at 136-38.
As we have noted, at the time that Zene-ca and Barr entered into the Settlement Agreement and caused the district court’s judgment of patent invalidity to be vacated, 5Barr was not entitled to the 180-day period of exclusivity. It was only after the FDA announced that it was abandoning the “successful defense” requirement that Barr asserted its claim to the exclusivity period. See Tamoxifen II, 277 F.Supp.2d at 135. As the district court noted:
Barr did not seek similar relief when Novopharm filed its ANDA and challenged the [tamoxifen] patent between 1994 and 1997. Only after the events in 1997 and 1998 ... did Barr attempt to assert its rights. If Barr intended to protect its exclusivity period on behalf of itself and Zeneca pursuant to the Settlement Agreement, Barr’s inactivity during the pendency of the Novopharm litigation is inexplicable.
Id. at 134 n. 9 (emphasis in original).
Therefore, the plaintiffs could not have suffered any antitrust injury with regard to an exclusivity period for Barr from the time the defendants signed the Settlement Agreement until the time the regulations were changed in 1997-1998. During that period, as far as all parties were concerned, the Settlement Agreement had indeed “cleared the field” so that other generic challengers could enter the market. Accordingly, any injury suffered by the plaintiffs during that time period was the result of Zeneca’s legitimate patent monopoly — which remained intact as a result of the lawful Settlement Agreement — and not the result of any steps that Barr took.
The plaintiffs also suffered no antitrust injury from the time the “successful defense” requirement was .eliminated until, in 2000, the FDA rejected Barr’s claim to the exclusivity period, because the other ANDA fliers with a paragraph IV certification ultimately lost their infringement suits against Zeneca. Even if Barr had not successfully petitioned the FDA, other generic manufacturers would not have been
Finally, there is clearly no antitrust injury with regard to Barr’s use of the exclusivity period after the FDA rejected Barr’s claim to the exclusivity period in 2000. From that time on, no one could have thought that Barr had a claim to an exclusivity period. Any injury suffered by the plaintiffs arose from Zeneca’s patent monopoly, which remained valid until its expiration in 2002, after which other generic manufacturers did, in fact, enter the market.
For the foregoing reasons, we conclude that the plaintiffs have not sufficiently stated an antitrust claim arising out of the defendants’ actions with regard to Barr’s 180-day exclusionary period.
IV. Leave To Amend
The plaintiffs contend that the district court erred in not addressing, and therefore in effectively denying, their request to amend their complaint to state a claim on which relief could be granted. The defendants reply that the district court acted within its discretion in effectively denying the plaintiffs’ request — which appeared in a footnote in the middle of their brief opposing the defendants’ motion to dismiss — because the request was buried and because it was, in any event, futile.
Federal' Rule of Civil Procedure 15(a) provides that “a party may amend the party’s pleading ... by leave of court ... and leave shall be freely given when justice so requires.” A district court has broad discretion to decide whether to grant leave to amend, a decision that we review for an abuse of discretion. Gurary v. Winehouse, 235 F.3d 792, 801 (2d Cir. 2000). It is within the court’s discretion to deny leave to amend implicitly by not addressing the request when leave is requested informally in a brief filed in opposition to a motion to dismiss. See id. Furthermore, where amendment would be futile, denial of leave to amend is proper. See Van Buskirk v. N.Y. Times Co., 325 F.3d 87, 91-92 (2d Cir.2003).
The plaintiffs’ assertion that, if granted leave to amend, they “would be able to redress perceived deficiencies” in their complaint, Appellants’ Br. at 56, does not persuade us. Even were plaintiffs- to allege — as they now assert they are able to — that the defendants were concerned about the possibility that the Settlement Agreement might run afoul of antitrust law, or that the reverse payments were in excess of Zeneca’s litigation costs but “less than the substantial losses Zeneca anticipated upon generic competition,” or that the defendants “believed the Federal Circuit would likely affirm” the invalidation of the tamoxifen patent, id., in the absence of any plausible allegation that Zeneca’s patent infringement lawsuit was baseless or that the Settlement Agreement otherwise restrained competition beyond the scope of the tamoxifen patent, their complaint would fail to state a claim on which relief can be granted.
“[I]t appears beyond doubt that the plaintiffs] can prove no set of facts in
CONCLUSION
For the foregoing reasons, the judgment of the district court is affirmed.
. A similar description of the relevant statutes and regulations is set forth in the Eleventh Circuit’s opinion in Valley Drug Co. v. Geneva Pharms., Inc., 344 F.3d 1294, 1296-98 (11th Cir.2003), cert. denied, 125 S.Ct. 308 (2004), and the District of Columbia Circuit’s opinion in Andrx Pharms., Inc. v. Biovail Corp. Int'l, 256 F.3d 799, 801-02 (D.C.Cir.2001), cert. denied, 535 U.S. 931, 122 S.Ct. 1305, 152 L.Ed.2d 216 (2002).
. The ANDA process was intended to be available to manufacturers of generic versions of approved drugs. "A generic version ... contains the same active ingredients, but not necessarily the same inactive ingredients, as the pioneer drug. A generic drug, as the name implies, is ordinarily sold without a brand name and at a lower price.” Andrx Pharms., 256 F.3d at 801 n. 1. Filing an ANDA allows a generic drug manufacturer to avoid the costly and time-consuming process of demonstrating safety and efficacy, allowing the manufacturer to rely on the FDA's earlier findings concerning the brand-name drug's NDA, and thereby facilitates quicker market entry by generic manufacturers. See id. at 801.
. The applicant shall file with the application the patent number and the expiration date of any patent which claims the drug for which the applicant submitted the application or which claims a method of using such drug and with respect to which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner engaged in the manufacture, use, or sale of the drug.
21 U.S.C. § 355(b)(1).
.At the time of the settlement in this case, the statute did not specify that a district court decision would end the 30-month stay, and the FDA interpreted the statute to require a court decision "from which no appeal can be or has been taken.” Ctr. for Drug Evaluation & Research (CDER), Food & Drug Admin., U.S. Dep’t of Health & Human Servs., Guidance for Industry: Court Decisions, ANDA Approvals, and 180-Day Exclusivity Under the Hatch-Waxman Amendments to the Federal Food, Drug, and Cosmetic Act 2 (Mar.2000) (quoting 21 C.F.R. § 314.107(e)(1) (1999)) (hereinafter CDER, Court Decisions), available at http://www.fda.gov/cder/guidance/3659fnl.pdf (last visited May 12, 2005). In 2000, the FDA changed its interpretation to include any district court decision. See id. at 3-5.
. Like its interpretation of the type of court decision sufficient to end the 30-month stay of final FDA approval described above, at the time of the settlement in this case and until 2000, the FDA interpreted a court decision required to trigger the 180-day period to mean only a court decision "from which no appeal can be or has been taken.” See CDER, Court Decisions, supra, at 2 (quoting 21 C.F.R. § 314.107(e)(1) (1999)). That interpretation was subsequently changed in 2000, when the FDA concluded that a patent invalidity decision by a district court would be sufficient to trigger the commencement of the 180-day period. See id. at 3-5.
. In 2001, Zeneca's domestic sales of tamoxifen amounted to $442 million.
. Soon thereafter, Heumann was dismissed as a defendant after it agreed to be bound by a determination in that case as to the validity of the tamoxifen patent. Compl. V 40.
. The rule in U.S. Bancorp does not apply retroactively. See U.S. Philips Corp. v. Sears Roebuck & Co., 55 F.3d 592, 598 (Fed.Cir.), cert. denied, 516 U.S. 1010, 116 S.Ct. 567, 133 L.Ed.2d 492 (1995).
. After the Settlement Agreement was entered into and the vacatur ordered, Barr began to market its licensed version of Zeneca's tamoxifen, selling its product to distributors and wholesalers at a 15 percent discount to the brand-name price, which translated into a price to consumers about five percent below Zeneca’s otherwise identical Nolvadex® brand-name version. Barr soon captured about 80 percent of the tamoxifen market.
. Pharmachemie initially filed a paragraph III certification in August 1994, but later amended it to include a paragraph IV certification. See Tamoxifen II, 277 F.Supp.2d at 126.
. Mylan had agreed to follow the Pharmachemie court decision. See Tamoxifen II, 277 F.Supp.2d at 127; AstraZemeca UK Ltd., No. 00-2239, slip op. at 2-3.
. The Christianson Court employed the "well-pleaded complaint” test that is routinely applied to determine whether a federal district court has federal-question jurisdiction. See Christianson, 486 U.S. at 808, 108 S.Ct. 2166 (quoting Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 27-28, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983)); see also, e.g., Aetna Health Inc. v. Davila, 542 U.S. 200, 124 S.Ct 2488, 2494, 159 L.Ed.2d 312 (2004); Empire Health-Choice Assurance, Inc. v. McVeigh, 396 F.3d 136, 140 (2d Cir.2005); Bracey v. Bd. of Educ., 368 F.3d 108, 113 (2d Cir.2004).
. "Although the Sherman Act, by its terms, prohibits eveiy agreement 'in restraint of trade,' th[e Supreme] Court has long recognized that Congress intended to outlaw only unreasonable restraints.” State Oil Co. v. Khan, 522 U.S. 3, 10, 118 S.Ct. 275, 139 L.Ed.2d 199 (1997). Conduct may be deemed an unreasonable restraint of trade in two ways. Conduct may be considered per se unreasonable because it has "such predictable and pernicious anticompetitive effect, and such limited potential for procompetitive benefit.” Id.
In most cases, however, conduct will be evaluated under a “rule of reason” analysis, "according to which the finder of fact must decide whether the questioned practice imposes an unreasonable restraint on competition, taking into account a variety of factors, including specific information about the relevant business, its condition before and after the restraint was imposed, and the restraint's history, nature, and effect.” Id. (citation omitted).
The rule-of-reason analysis has been divided into three steps. First, a plaintiff must demonstrate "that the challenged action has had an actual adverse effect on competition as a whole in the relevant market.” Capital Imaging Assocs., P.C. v. Mohawk Valley Med. Assocs., 996 F.2d 537, 543 (2d Cir.) (emphasis in original), cert. denied, 510 U.S. 947, 114 S.Ct. 388, 126 L.Ed.2d 337 (1993). If the plaintiff succeeds in doing so, "the burden shifts to the defendant to establish the 'pro-competitive "redeeming virtues” ' of the action.” K.M.B. Warehouse Distribs., Inc. v. Walker Mfg. Co., 61 F.3d 123, 127 (2d Cir. 1995) (quoting Capital Imaging Assocs., 996 F.2d at 543). If the defendant succeeds in meeting its burden, the plaintiff then has the burden of "show[ing] that the same pro-competitive effect could be achieved through an alternative means that is less restrictive of competition.” Id.
. "The offense of monopoly under § 2 of the Sherman Act has two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.” United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 16 L.Ed.2d 778 (1966).
. It is true that had the defendants not settled the underlying patent litigation and had the district court’s judgment been affirmed on appeal, Zeneca would have been estopped from asserting the validity of its patent against others seeking to enter the market. See Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313, 350, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971). However, it is clearly a permissible byproduct of settlement that future hypothetical plaintiffs might be forced to relitigate the same issues involved in the settled case. Furthermore, before 1994, when district court judgments were vacated as a matter of course upon settlement, see U.S. Bancorp, 513 U.S. at 29, 115 S.Ct. 386 (virtually ending this practice), there was similarly .and permissibly no collateral estoppel effect accorded these judgments for the benefit of future hypothetical plaintiffs. See Nestle, 756 F.2d at 284 (''Drumbeating about the need to protect other unknown users of the trademark [in question] will ring hollow indeed in the ears of the present defendants if the peril of a reversal is realized.... We see no justification to force these defendants, who wish only to settle the present litigation,' to act as unwilling private attorneys general and to bear the various costs and risks of litigation.”).
. It may be worth noting, although in and of itself it seems to us to prove little, that the Federal Circuit reversed district court determinations of patent invalidity at a relatively high rate during the relevant time period. See Donald R. Dunner et al., A Statistical Look at the Federal Circuit’s Patent Decisions: 1982-1994, 5 Fed. Cir. B.J. 151, 154-55 (1995).
. We thus think that it was appropriate for the district court to take these decisions into account for the limited purpose of rebutting the plaintiffs’ conclusory allegation that the Federal Circuit would have affirmed Judge Broderick's decision invalidating the tamoxifen patent. See Mason v. Am. Tobacco Co., 346 F.3d 36, 39 (2d Cir.2003) ("[L]egal conclusions, deductions or opinions couched as factual allegations are not given a presumption of truthfulness.” (internal quotation marks and citations omitted)), cert. denied, 541 U.S. 1057, 124 S.Ct. 2163, 158 L.Ed.2d 757 (2004); Smith v. Local 819 I.B.T. Pension Plan, 291 F.3d 236, 240 (2d Cir.2002) ("[Cjonclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss.” (internal quotation marks and citation omitted)).
. Indeed, our Circuit requires civil litigants to go through a pre-argument, Court-sponsored process called the Civil Appeals Management Plan ("CAMP”), see http://www.ca2.uscourts.gov/Docs/Forms/CAMP.pdf and http://www.ca2.uscourts.gov/Docs/Forms/Preargument.pdf designed in part to facilitate just such post-judgment, pre-appellate argument settlements — -which it accomplishes with significant success. See Gilbert J. Ginsburg, The Case for a Mediation Program in the Federal Circuit, 50 Am. U. L.Rev. 1379, 1383 (2001) (reporting estimate that forty-five to fifty percent of civil cases pending before the Second Circuit settle each year).
. In this case, Barr could not at the time of the Settlement Agreement count on obtaining the 180-day exclusive period from the FDA because, as a settler rather than a "successful defender,” it at least appeared that it was unlikely to be entitled to the period of exclusivity — in other words, it appeared that, by settling, Barr was trading away its exclusivity period. It is noteworthy, nonetheless, that the 180-day period is of substantial benefit to the generic drug manufacturer who obtains it because it gives that manufacturer a significant head start over other manufacturers. See, e.g., Geneva Pharms. Tech. Corp. v. Barr Labs. Inc., 386 F.3d 485; 494, 510 (2d Cir. 2004) (considering claim that defendant’s first-mover status converted a transitory advantage into a permanent one, where plaintiffs provided testimony that "even though its offer price to the Eckerd and CVS drugstore chains was as much as 25 percent below [the first mover's price], neither chain was willing to leave [the first mover] after having devoted substantial time to switching patients and getting their pharmacists comfortable with the new product”); Mova Pharm., 955 F.Supp. at 131 ("All parties recognize that the earliest generic drug manufacturer in a specific market has a distinct advantage over later entrants.”).
. It has been observed that even the typical settlement of the ordinary patent infringement suit appears to involve what may be characterized as a reverse payment. See Cipro II, 261 F.Supp.2d at 252 ("[E]ven in the traditional context, . implicit consideration flows from the patent holder to the alleged infringer.”); cf. Asahi Glass, 289 F.Supp.2d at 994 (“[A]ny settlement agreement can be characterized as involving 'compensation' to the defendant, who would not settle unless he had something to show for the settlement. If any settlement agreement is thus to be classified as involving a forbidden 'reverse payment,’ we shall have no more patent settlements.” (emphasis in original)); Daniel A. Crane, Ease Over Accuracy in Assessing Patent Settlements, 88 Minn. L.Rev. 698, 700 (2004) ("It makes no sense to single out exclusion payments for disfavor when the same potential for collusion arises in any settlement involving the defendant’s exit.”). A blanket rule that all settlements involving reverse payments are unlawful could thus conceivably endanger many ordinary settlements of patent litigation.
. The Federal Trade Cpmmission and some commentators have proposed similar or even more stringent rules. See In re Schering-Plough Corp., 2003 WL 22989651 (Dec. 8, 2003), 2003 FTC LEXIS 187 (applying a rale under which generic manufacturers would not be permitted to receive reverse payments that exceeded “the lesser of the [patent] [h]older’s expected future litigation costs to resolve the Patent Infringement Claim or $2 million”), vacated, 402 F.3d 1056 (11th Cir. 2005); Hovenkamp et al., supral at 1759 (proposing that "[i]n an antitrust challenge, a payment from a patentee to an infringement defendant for the latter’s exit from the market is presumptivély unlawful,” and that the "infringement plaintiff can defend by showing both (1) that the ex ante likelihood of prevailing in its infringement lawsuit is significant, and (2) that- the size of the payment is no more than the expected value of litigation and collateral costs attending the lawsuit”).
. The dissent questions what it sees as our reliance on the presumption of validity of the patent at the time of the settlement. Even after a district court holds a patent invalid, it is treated as presumptively valid under 35 U.S.C. § 282 on appeal. See Rosco, Inc. v. Mirror Lite Co., 304 F.3d 1373, 1377-78 (Fed. Cir.2002). But irrespective of whether there was a presumption or where any such presumption lay at the time of settlement, we think that Zeneca was then entitled to protect its tamoxifen patent monopoly through settlement. The question for this Court is whether
. There is authority for the proposition that when its patent monopoly is ended, the patent holder might actually raise the price on its branded product, rather than lower it in response to generic competition. See Congr. Budget Office, How Increased Competition from Generic Drugs Has Affected Prices and Returns in the Pharmaceutical Industry 29-31 (July 1998), available at http://www.cbo.gov/ftpdocs/6xx/doc655/pharm.pdf (last visited May 12, 2005).
. To illustrate using a vastly 'oversimplified hypothetical example (ignoring, for example, legal fees and costs): Suppose the patent holder is selling 1,000,000 pills per year at a $1 profit per pill (for a total profit of $1,000,000). The generic manufacturer files a paragraph IV ANDA, and the patent holder responds by bringing suit to protect its patent. If the patent holder projects that, should it lose the suit, it will thereafter sell only 250,-000 pills per year at a $.90 profit per pill (for a total profit of $225,000) in the competitive market, and the generic will .sell 750,000 pills per year at a profit of $.60 per pill (for a total profit of $450,000) — so that total market profits are now down from $1,000,000 to $675,-000 — it would make economic sense for the patent holder to pay the generic manufacturer something more than the $450,000 the generic manufacturer would make in a competitive market to settle the litigation. If it paid $500,000 a year to the generic manufacturer' — $50,000 more than the generic manufacturer could earn in the market in a "best case scenario'.' — for example, it would thereby retain the ability to make $500,000 per year selling its branded pills ($1,000,000 profit less $500,000 per year paid to the generic), $275,000 more per year than it would earn if it paid nothing to the generic but lost the patent litigation and with it the patent monopoly. It might well be sensible for the patent holder to enter into this sort of settlement, depending in part on its perceived prospects for winning the litigation, and it would seem difficult for the generic manufacturer to refuse. The $325,000 of yearly monopoly profits which accrued to the patent holder before the litigation began would thereafter be divided between the patent holder and the generic manufacturer.
. It seems to us odd for the dissent to urge, in the context of this case, that we have not given proper weight to "the public interest in having the validity of patents litigated.” The Settlement Agreement was a virtual invitation to other generic manufacturers to file paragraph IV certifications and thereby court litigation as to the validity of the tamoxifen patent. It was an invitation that was accepted three times leading to three lawsuits, two of them litigated to judgment, as to the validity of the tamoxifen patent. Accepting the value of litigating the validity of patents in these circumstances, it has hardly been undermined here.
. The dissent "see[s] no reason why the general standard for evaluating an anti-competitive agreement, i.e., its reasonableness, should not govern in this context.” We think, such a rule, making every settlement of patent litigation, at least in the Hatch-Waxman Act context, subject to the inevitable, lengthy and expensive hindsight of a jury as to whether the settlement constituted a "reasonable” restraint (and, in this case, whether the Federal Circuit would have affirmed or reversed in a patent appeal), would place a huge damper on such settlements contraiy to the law that we have discussed at some length that settlements are not only permitted, they are to be encouraged.
. The reasoning of the dissent, which quotes an excerpt from this statement, is, in our view, largely based on a repeated mis-charac-terization of our views in this regard. We do not, as the dissent states in one form or another many times, think that there is a "requirement” that antitrust plaintiffs "must show that the settled litigation was a sham, i.e., objectively baseless, before the settlement can be considered an antitrust violation .. There is no such requirement. The central criterion as to the legality of a patent settlement agreement is whether it "exceeds the 'scope of the patent's protection.' " As we pointed out at the outset of this discussion, we think that "[i]f the plaintiffs alleged facts that, if proved, would establish that the Settlement Agreement provided the defendants with benefits exceeding the scope of the tamoxifen patent, they would succeed in alleging an antitrust violation.” ("[T]he question is whether the ‘exclusionary effects of the agreement’ exceed the ‘scope of the patent's protection.' Schering-Plough, 402 F.3d at 1076.”). . A plaintiff need not allege or prove sham litigation in order to succeed in establishing that a settlement has provided defendants "with benefits exceeding the scope of the tamoxifen patent.” Whether there is fraud or baseless litigation may be relevant to the inquiry, but it is hardly, we think, "the ... standard,” as the dissent posits in order to take issue with it.
. See Asahi Glass, 289 F.Supp.2d at 994 (noting that in the typical reverse-payment case, "the settlement leaves the competitive situation unchanged from before the defendant tried to enter the market.”).
. Of course, as it turned out, Zeneca was successful in subsequently protecting its patent in the courts.
. “The competitive concern is that the 180-day exclusivity provision can be used strategically by a patent holder to prolong its market power in ways that go beyond the intent of the patent laws and the Hatch-Waxman Act by delaying generic entry for a substantial period.” Balto, supra, at 331. An agreement that a "generic manufacturer would not relinquish its 180-day exclusivity ... prevents] other generic manufacturers from entering as well.” Id. at 335; see also Hovenkamp et al., supra, at 1755 ("It is widely understood that the 180-day exclusivity period offers the potential for collusive settlement arrangements between pioneers and generics. A pioneer could initiate a patent infringement suit against a first generic ANDA filer and settle the litigation with a 'non-entry' payment to the generic, under which the generic would delay commercialization of the generic product, thus postponing the commencement of the 180-day exclusivity period and locking other generics out of the market indefinitely.”).
. In Andrx, the defendant attempted unsuccessfully to claim that it was unable to cause any delay in generic entry because the "successful defense" requirement would prevent it from doing so. Andrx Phanns., 256 F.3d at 810. The D.C. Circuit noted that the settlement agreement in that case was signed in September 1997 — after the district court in Mova issued, in January 1997, a preliminary injunction banning the enforcement of the successful defense requirement. Id. (citing Mova Pharm., 955 F.Supp. at 131-32). Thus, “[t]he timing of the Agreement and of the demise of the successful defense requirement defeats Andrx's argument on this point.” Id. In the instant case, however, the Settlement Agreement was executed long before Mova struck down the successful defense requirement.
. The dissent says that a reasonable fact-finder might conclude that sophisticated parties would not have included a provision that allowed Barr to re-file under paragraph IV absent an unlawfully anticompetitive purpose because it "had no potential benefit to either of them" apart from an anti-competitive one. We disagree. If another generic manufacturer had been successful in having the tamoxifen patent held invalid, it was strongly and legitimately in Barr’s interest to be able to refile so that it could market tamoxifen without risking a violation of the Settlement Agreement.