Patent settlements and competition law: where is the European Commission going?

Abstract

One of the clearer messages from the EU Pharmaceutical Sector Inquiry was that the European Commission believes some patent settlement agreements—in particular those involving payments from the patent holder to the challenger (so-called ‘reverse payments’)—may infringe EU competition law. Indeed, on the day it published the Final Report of the Inquiry, the Commission announced a formal investigation of Les Laboratoires Servier and various generic companies in relation to what are understood to be settlements concerning Servier’s perindopril patents. This is a new development in Europe where patent settlements have not previously been a significant focus of competition law enforcement. In the USA, however, they have been the subject of significant antitrust litigation and debate and, it seems, the Commission is influenced by the US situation. Based on a review of the Commission’s statements and US case law, this article sets out the relevant issues in relation to reverse payment patent settlements, seeking to identify the approach likely to be taken under EU competition law. It also outlines some practical guidance on how to approach patent settlements without engaging competition law concerns.