Nathan A. Adams IV is a Partner in our Tallahasse office.
In In re: Lipitor Antitrust Litigation RP Healthcare, Inc., No. 14-4632, 2018 WL 266751 (3d Cir. Jan. 3, 2018), the court determined that the district court had diversity jurisdiction over the plaintiff's Cartwright Act (California's antitrust statute) claim, but affirmed dismissal of the claim because a reverse settlement is not a per se violation of the act. The district court initially declined to send the case back to state court from whence it was removed based on an erroneous finding of federal jurisdiction in potential patent defenses of the defendants. At the time, there were non-diverse defendants, but RP Healthcare voluntarily dismissed them so that by the time of final judgment there was a proper basis for federal jurisdiction. Turning to the merits, RP Healthcare alleged that Pfizer sued Ranbaxy for infringement of a Lipitor patent and that the parties entered into a reverse settlement agreement, which RP Healthcare claimed was a per se antitrust violation of the act. A reverse settlement occurs when a patent holder sues an alleged infringer and the suit is settled with a payment from the patent holder to the infringer in exchange for a promise from the infringer to exit the market for a period of time that falls within the term of the patent at issue. A reverse settlement is not a per se antitrust violation; instead, it implicates rule of reason analysis and antitrust concerns when payments are "large and unjustified." Therefore, the court affirmed dismissal of RP Healthcare's complaint.
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