The Hatch-Waxman Act, Post-Grant Review, and the PTAB: A New Sort of Competition

Abstract

In FTC v. Actavis, the Supreme Court declined to adopt a rule making reverse payment settlements per se unlawful under the antitrust laws. Instead, the Court concluded that such settlements could be unlawful under the rule of reason. The Court’s decision further fueled an already-existing debate about the proper treatment of various elements of reverse payment settlements under the antitrust laws. This debate suggests that the Actavis decision has not fully resolved the “turducken” problem presented by these sorts of cases. Difficult questions of antitrust law remain contained within what ultimately began as a patent lawsuit. In addition, it suggests that settlements will not necessarily become any less likely, but instead may become more complex in order to obfuscate the purpose and value of the settlement. As a result, the public will continue to be deprived of the benefit of having a determination as to the validity of the underlying patent claims. And consumers will continue to be harmed by sustained and illegitimate monopoly prices.This Article finds hope in the new inter partes review (IPR) procedure before the Patent Trial and Appeal Board (PTAB) introduced as a part of the America Invents Act (AIA). The IPR procedure offers a few benefits: a faster determination; litigation proceeding in parallel to district court litigation, which can effect competition among tribunals as well as competition among generic drug manufacturers seeking FDA approval; and a more favorable standard for interpreting patent claims.But these features alone are not enough to deter settlement and effect earlier generic entry, so this Article proposes a few additional changes. First, I propose that the PTO issue a rule requiring that, whenever the patent claims at issue cover a drug already approved for marketing by the FDA, the PTAB be required to proceed to a final written decision, regardless of whether the parties settle. Second, I propose that the Hatch-Waxman Act be amended to make the 180-day exclusivity period contestable, such that it may be awarded to the applicant for FDA approval that first obtains a determination, whether before a federal district court or the PTAB. Third, and finally, I propose that the Hatch-Waxman Act be amended so that determinations by the PTAB invalidating patent claims effect the same consequences as a federal district court determination invalidating a patent.