A February 17 news release announced that the California Supreme Court is considering whether a California state law may be used to challenge "reverse exclusionary payments" made in pharmaceutical patent litigation settlements. Sometimes referred to as "pay-for-delay" by detractors, this situation arises when a branded pharmaceutical manufacturer pays money to a generic manufacturer in the settlement of a patent infringement lawsuit. The question here is whether a suit under California's Cartwright Antitrust Act may be brought to challenge these settlements, which allegedly prolong the life of the patents at issue.
This case is particularly interesting because the dispute lies at the intersection between federal patent law (which gives patent owners the right to exclude others from making, using, or selling a patented good during the life of a patent) and California's antitrust law, which is intended promote competition. Preceding this petition, the California Court of Appeals held that these settlements do not violate the Cartwright Act if the settlement restrains competition only within the scope of the patent, unless the patent was procured by fraud or the enforcement suit was itself objectively baseless. In other words, such settlements are not violations of California's antitrust law, without more.
The petitioners, however, argue that these settlements are per se illegal under the Cartwright Act. In deciding otherwise, they allege that "the Court of Appeal accepted a misdirected line of recent federal authority that has no place in California jurisprudence" and "impose[d] a new standard on California, impairing the ability of the State and private citizens to vindicate their rights." This decision, they maintain, "offends the California public policy and public interest with respect to health care."