Bryan Gant


Patent settlements are typically procompetitive, benefiting not only the settling parties but also the courts and the general public. But in rare cases patent settlements might instead harm competition, and thus raise antitrust concerns. How are courts to determine when antitrust scrutiny should — and, more importantly, should not — be applied to patent settlements? The answer ostensibly came in the Supreme Court’s 2013 decision in FTC v. Actavis, Inc. Under Actavis, antitrust scrutiny of patent settlements may “sometimes” be appropriate where there is a “large,” “unexplained” “reverse payment” from the patentee to the patent challenger. Unless, that is, the “reverse payment” is “fair value,” represents “saved litigation costs,” or is a “traditional” or “commonplace” way to settle. Unfortunately, the Supreme Court did not define any of these terms, and Chief Justice Roberts in his dissent thus could only wish “good luck to the district courts” asked to interpret the decision, many of whom have struggled to do so.