The Seventh Circuit issued this week a long-awaited opinion in the HUMIRA antitrust litigation, UFCW Local 1500 Welfare Fund v. AbbVie Inc., Case No. 20-2402. The appeal is from the Northern District of Illinois’s dismissal of a proposed class action alleging that AbbVie, Inc. created a “patent thicket” around HUMIRA to block biosimilars from entering the market and entered into “reverse payment” settlement agreements with biosimilar applicants to further delay entry. The Seventh Circuit affirmed the dismissal in an opinion authored by Judge Easterbrook, agreeing that nothing alleged in the complaint stated an antitrust violation.
In affirming dismissal of the “patent thicket” claims, the Seventh Circuit rejected plaintiffs’ arguments that simply applying for and obtaining a large number of patents, without more, is anticompetitive conduct in violation of the Sherman Act. “The patent laws do not set a cap on the number of patents any one person can hold—in general, or pertaining to a single subject.” The panel acknowledged that “invalid patents cannot be used to create or maintain a monopoly” but stressed that plaintiffs did not even allege that the patents were invalid or that AbbVie had committed fraud before the PTO in connection with the patent applications. As a result, the Noerr-Pennington doctrine shields AbbVie from liability for filing applications with the PTO, even if any issued patents could be used to attempt to block competitors. Plaintiffs gained no ground arguing that AbbVie’s patents were “weak,” an argument, the panel said, that “leaves us cold. Weak patents are valid; to say they are weak is to say that their scope is limited, not that they are illegitimate.” On top of that, the panel noted, many of the patents at issue had survived inter partes review. Moreover, the fact that AbbVie ultimately asserted “some irrelevant patents” against competitors did not violate the Sherman Act, where plaintiffs did not allege that AbbVie listed “only irrelevant patents in those suits”—“the sifting of wheat from chaff is a job for the judges hearing those patent cases. The would-be entrants, such as Amgen, Samsung Bioepis, Sandoz, and Fresenius Kabi, were free to make arguments along these lines; a separate antitrust suit by strangers to the litigation does not justify an effort to adjudicate by proxy what might have happened in the patent litigation but didn’t.”
Turning to the allegations about the settlements, the Seventh Circuit panel rejected the idea that the deal structure—allowing earlier entry in Europe, purportedly in exchange for later entry in the US—is a reverse payment in violation of Section 1 of the Sherman Act. AbbVie’s settlement agreements with biosimilar manufacturers provided an October 2018 market entry date for Europe and a 2023 entry date in the United States. Plaintiffs argued that AbbVie “gifted the biosimilar makers with 4+ years of profits in Europe, in exchange for their agreement not to enter the U.S. market until 2023.” But the panel noted that, taking the U.S. and EU settlements on their own, each was perfectly legitimate, and that conclusion did not change by putting them together, agreeing with the district court that “0 + 0 = 0.” The panel noted that differences between AbbVie’s patent rights in Europe compared to the U.S. meant that the differing entry dates made sense.
In addition, the panel rejected plaintiffs’ theory that this deal structure involves any reverse payment at all within the meaning of Actavis. The panel noted that plaintiffs’ claim “boils down to a contention that, by leaving money on the table in Europe, AbbVie effectively paid the potential entrants for delay in the United States. This is a use of the economic concept of opportunity cost, which treats a foregone earning opportunity (fewer years of monopoly profit in Europe) as equivalent to a payment out of pocket.” The problem for plaintiffs, according to the panel, is that the Supreme Court “considered, and rejected, the argument that an opportunity cost is the same thing as a reverse-payment settlement.” Instead, all that happened here was “traditional resolutions of patent litigation. AbbVie did not pay the would-be entrants on either continent. Neither individually not collectively do these settlements state a claim under Section 1 of the Sherman Act.”
Stay tuned as we continue to monitor any further developments on this appeal, including any potential rehearing decisions.
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