SUPREME COURT OF THE UNITED STATES
NO. ALB-13-01
__________________________________________________________________
__________________________________________________________________
GNB PHARMACEUTICALS, INC., Aldrin Generic Drug Co.
PETITIONERS
v.
ARCADIAN WHOLESALE CORP., Neighborhood Supermarket Co., et al.
RESPONDENTS
__________________________________________________________________
__________________________________________________________________
On Writ of Certiorari to the
United States Court of Appeals for the Fourteenth Circuit
__________________________________________________________________
BRIEF FOR PETITIONERS
__________________________________________________________________
ALB-13-01-P8
1
QUESTIONS PRESENTED
I.
Whether the Court of Appeals erred in affirming the
District Court’s class certification order, where the
District Court failed to apply Daubert v. Merrell Dow
Pharmaceuticals, Inc. and conduct a full inquiry into the
relevance and reliability of expert testimony introduced to
certify the class.
II.
Whether the Court of Appeals erred by declining to impose
scope of the patent review to Petitioners’ patent
infringement settlement agreement, where the agreement
reasonably implemented GNB’s rights under its presumptively
valid patent, and where any residual anticompetitive
effects of the agreement are ancillary to the settlement’s
pro-competitive justifications.
i
TABLE OF CONTENTS
Questions Presented............................................i
Table of Contents.............................................ii
Table of Authorities...........................................v
Proceedings Below..............................................1
Statement of the Facts.........................................3
Summary of the Argument........................................5
Argument.......................................................7
I.
THE COURT OF APPEALS ERRED WHEN IT AFFIRMED RESPONDENTS’
CLASS CERTIFICATION, BECAUSE THE DISTRICT COURT FAILED TO
APPLY DAUBERT V. MERRELL DOW PHARMACEUTICALS, INC. AND
CONDUCT A FULL INQUIRY INTO THE RELEVANCE AND RELIABILITY
OF EXPERT TESTIMONY INTRODUCED TO CERTIFY THE CLASS.......7
A.
B.
Courts must apply Daubert to expert testimony
introduced at the class certification stage...........8
1.
Daubert applies to class certifications, because
Rule 702 applies broadly and nothing in the
Federal Rules of Evidence limits Rule 702’s
scope............................................8
2.
District courts must conduct a rigorous Rule 23
analysis, and Daubert is necessary for such
rigorous analysis................................9
3.
Wal-Mart Stores, Inc. v. Dukes suggests that
Daubert applies to class certifications.........11
4.
Refusal to apply Daubert to class certification
proceedings increases the prospect of “blackmail
settlements,” undermining fairness in civil
proceedings.....................................13
Where a court must conduct a Daubert inquiry, the
analysis must be full rather than limited............14
ii
II.
1.
Rule 23 requires conclusive rulings on class
certifications, and only full Daubert inquiries
meet this requirement...........................15
2.
Full Daubert inquiries preserve judicial
efficiency by ensuring that cases do not
needlessly proceed to trial.....................16
3.
Full Daubert inquiries are consistent with the
Seventh Amendment...............................17
THE COURT OF APPEALS ERRED BY DECLINING TO IMPOSE SCOPE OF
THE PATENT REVIEW TO AN AGREEMENT WHICH REASONABLY
IMPLEMENTS GNB’S RIGHTS UNDER THE ‘022 PATENT AND BY
DECLINING, IN THE ALTERNATIVE, TO IMPOSE RULE OF REASON
REVIEW....................................................18
A.
Scope of the patent review sufficiently balances GNB’s
rights under the ‘022 Patent against the policies of
antitrust law and the pharmaceutical industry’s
regulatory backdrop.................................19
1.
2.
Scope of the patent review is sufficient since
the Agreement stays within the ‘022 Patent’s
boundaries and does not implicate antitrust
scrutiny.......................................19
a.
GNB may exclude competitors under the ‘022
patent without incurring antitrust
liability.................................19
b.
The Agreement stayed within the ‘022 Patent’s
exclusionary scope........................20
Scope of the patent review’s presumption that the
‘022 Patent is valid protects GNB’s intellectual
property rights while representing the best
balance of antitrust law, patent law, and the
Hatch-Waxman Act...............................22
a.
A presumption of the ‘022 Patent’s validity
is necessary to protect GNB’s intellectual
property rights...........................22
b.
The presumption of patent validity creates
an administrable standard for judicial
iii
review, which preserves bona fide
settlements like the Agreement............23
B.
c.
Petitioners’ reliance on reverse payments to
affect their settlement agreement is
consistent with a presumption that the ‘022
Patent is valid...........................25
d.
The goals of the Hatch-Waxman Act are
consistent with a presumption that the ‘022
Patent is valid...........................27
To the extent that the Agreement and other reverse
payment settlements implicate antitrust law, they
impose ancillary restraints and therefore warrant full
rule of reason review...............................28
1.
The Agreement’s covenants restraining Aldrin’s
ability to market MacLarian are ancillary
restraints because they were reasonably necessary
to conclude litigation.........................29
2.
Per se and quick look review are inappropriate in
light of the Agreement’s pro-competitive effects
and the regulatory uncertainty imposed by the
recent Hatch-Waxman Amendments.................30
Conclusion....................................................32
Appendix A...................................................A-1
Appendix B...................................................B-1
Appendix C...................................................C-1
iv
TABLE OF AUTHORITIES
United States Supreme Court Cases
Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997)............7
AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011)........8
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)...............12
Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985)...........10
Cal. Dental Ass'n v. F.T.C., 526 U.S. 756 (1999)..........18, 31
Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635 (2009)....10
Collegiate Athletic Ass'n v. Bd. of Regents of Univ. of Okla.,
468 U.S. 85 (1984)............................................19
Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752
(1984)........................................................30
Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579
(1993)....................................................passim
Deposit Guar. Nat’l Bank v. Roper, 445 U.S. 326 (1980)........13
Eisen v. Charlisle & Jacquelin, 417 U.S. 156 (1974)...........10
Gen. Tel. Co. v. Falcon, 457 U.S. 147 (1982)...................9
Koon v. United States, 518 U.S. 81 (1996)......................7
Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877
(2007)........................................................30
Microsoft Corp. v. i4i Ltd. P'ship, 131 S. Ct. 2238 (2011)....23
Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 130
S. Ct. 1431 (2010)............................................12
Simpson v. Union Oil Co. of Cal., 377 U.S. 13 (1964)..........20
Texaco Inc. v. Dagher, 547 U.S. 1 (2006)......................30
United States v. Line Material Co., 333 U.S. 287 (1948).......21
v
Univ. of Tex. v. Camenisch, 451 U.S. 390 (1981)...............17
Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011)....passim
Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382
U.S. 172 (1965)...............................................24
Other Federal Cases
Advanced Cardiovascular Sys., Inc. v. Scimed Life Sys., Inc.,
261 F.3d 1329 (Fed. Cir. 2001)................................23
Am. Honda Motor Co. v. Allen, 600 F.3d 813 (7th Cir. 2010) (per
curiam).......................................................14
Asahi Glass Co. v. Pentech Pharm., Inc., 289 F. Supp. 2d 986
(N.D. Ill. 2003)..............................................25
Bitler v. A.O. Smith Corp., 391 F.3d 1114 (3d Cir. 2004)......17
Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571 (9th Cir. 2010),
vacated, 131 S. Ct. 2541 (2011)...............................11
F.T.C. v. Watson Pharm., Inc., 677 F.3d 1298 (11th Cir. 2012),
cert. granted, 133 S. Ct. 787 (2012)......................24, 25
In re Ciprofloxacin Hydrochloride Antitrust Litig., 544 F.3d
1323 (Fed. Cir. 2008).............................21, 25, 26, 29
In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305 (3d Cir.
2008)..........................................................7
In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187 (2d Cir.
2006).........................................................25
In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293 (7th Cir.
1995).........................................................13
In re Zurn Pex Plumbing Prods. Liab. Litig., 644 F.3d 604 (8th
Cir. 2011)....................................................16
Messner v. Northshore Univ. Healthsystem, 669 F.3d 802 (7th Cir.
2012).........................................................15
Schering-Plough Corp. v. F.T.C., 402 F.3d 1056 (11th Cir.
2005).................................................21, 27, 29
vi
Teva Pharm. Indus. Ltd. v. Crawford, 410 F.3d 51 (D.C. Cir.
2005).....................................................27, 30
Unger v. Amedisys Inc., 401 F.3d 316 (5th Cir. 2005)..........11
Valley Drug Co. v. Geneva Pharm., Inc., 344 F.3d 1294 (11th Cir.
2003).............................................19, 20, 21, 24
West v. Prudential Sec., Inc., 282 F.3d 935 (7th Cir.
2002).........................................................14
Federal Statutory Provisions
21 U.S.C. § 355(j)(5)(B) (2006)...............................30
21 U.S.C. § 355(j)(5)(D) (2006)...............................31
35 U.S.C. § 282 (2006)........................................22
Federal Rules
Fed. R. Civ. P. 23(a)(2)......................................12
Fed. R. Civ. P. 23(b)(3)......................................12
Fed. R. Evid. 102.............................................13
Fed. R. Evid. 702(a)...........................................9
Fed. R. Evid. 1101(b)..........................................9
Fed. R. Evid. 1101(d)..........................................9
Other Authorities
Henry N. Butler & Jeffrey Paul Jarosch, Policy Reversal on
Reverse Payments: Why Courts Should Not Follow the New DOJ
Position on Reverse-Payment Settlements of Pharmaceutical Patent
Litigation, 96 Iowa L. Rev. 57 (2010).........................27
Fed. R. Civ. P. 23 advisory committee’s note..............passim
Manual for Complex Litigation (4th ed. 2004)..................17
Richard Marcus, Reviving Judicial Gatekeeping of Aggregation:
Scrutinizing the Merits on Class Certification, 79 Geo. Wash. L.
Rev. 324 (2011)...........................................17, 18
vii
Barbara J. Rothstein & Thomas E. Willging, Managing Class Action
Litigation: A Pocket Guide for Judges (2005)..................13
viii
PROCEEDINGS BELOW
Respondents, a class of retailers and wholesalers, filed a
lawsuit against Petitioners GNB Pharmaceuticals (“GNB”) and
Aldrin Generic Drug Company (“Aldrin”) in the United States
District Court for the District of Albers. [R. at 1, 6]
Respondents alleged that Petitioners’ reverse payment settlement
agreement illegally restrained trade in violation of § 1 of the
Sherman Antitrust Act (the “Sherman Act”). Id. at 6-7.
Respondents moved to certify as a class pursuant to Rule 23
of the Federal Rules of Civil Procedure. Id. at 7. To satisfy
Rule 23’s predominance requirement, Respondents presented an
expert who testified that Respondents could prove antitrust
impact at trial. Id. In response, Petitioners motioned to
exclude Respondents’ expert testimony under Daubert v. Merrell
Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), but the District
Court denied the motion. Id. at 1. The District Court instead
found that Respondents’ expert testimony was sufficiently
reliable for the purposes of class certification, rather than
sufficiently relevant and reliable to be admissible at trial.
Id. at 8. The District Court relied on the expert testimony to
certify Respondents as a class. Id. at 8-9.
In addition, the parties filed cross-motions in the
District Court for summary judgment on the merits. Id. The
District Court analyzed Petitioners’ settlement agreement under
1
a per se rule of illegality and granted summary judgment in
favor of Respondents. Id. at 9-10.
Petitioners filed an interlocutory appeal of the class
certification order to the United States Court of Appeals for
the Fourteenth Circuit, which accepted the petition. Id. at 10.
Petitioners also timely appealed the District Court’s ruling on
summary judgment. Id. Because of the importance of the expert
testimony to the class certification, Petitioners argued that
the District Court should have conducted a conclusive Daubert
analysis. Id. at 16-17. The Court of Appeals rejected that
argument, however, and affirmed the District Court’s class
certification order. Id. at 16-18, 28. In addition, Petitioners
argued that because their settlement agreement did not implicate
antitrust concerns, the scope of the patent test applied, and
even if the agreement did implicate antitrust concerns, the
District Court should have evaluated the agreement under the
full rule of reason. Id. at 25-26. The Court of Appeals reversed
the District Court’s grant of summary judgment but remanded the
case to the District Court for evaluation under quick look
review. Id. at 27-28.
Petitioners appealed to this Court. Id. at 29. On January
22, 2013, this Court granted Petitioners’ writ of certiorari to
review all issues raised in the Court of Appeals. Id.
2
STATEMENT OF THE FACTS
On August 1, 1995, the United States Patent and Trademark
Office awarded U.S. Patent No. 37,033,022 (the “‘022 patent”) to
Petitioner GNB. [R. 2] The ‘022 patent, which represented a
substantial investment of GNB’s resources, covered the design of
a time-release mechanism eventually used in capsules for GNB’s
brand-name drug Mosbium. Id. The ‘022 Patent expired on July 15,
2008. Id.
On July 3, 2002, Petitioner Aldrin filed an abbreviated new
drug application (“ANDA”) seeking approval from the US Food and
Drug Administration (“the FDA”) to market a generic version of
Mosbium called MacLarian. Id. at 3. The MacLarian ANDA contained
a paragraph IV certification, which specified that either
MacLarian would not infringe the ‘022 patent or the ‘022 patent
was invalid. Id. at 3-4.
On June 17, 2002, Aldrin notified GNB of the paragraph IV
certification. Id. at 4. GNB responded by filing a patent
infringement suit against Aldrin. Id. GNB’s patent infringement
suit automatically stayed FDA approval of the MacLarian ANDA for
thirty months while the parties resolved their litigation. Id.
GNB and Aldrin reached a settlement on March 1, 2004 (the
“Agreement”). Id. The Agreement specified that Aldrin would
recognize the ‘022 Patent’s validity; refrain from marketing
MacLarian or any other generic version of Mosbium until March
3
31, 2008; abstain from selling the rights of the MacLarian ANDA
to any other generic competitor; and refrain from assisting
other generic competitors in filing ANDAs targeting Mosbium or
challenging the ‘022 Patent. Id. In return, GNB agreed to pay
Aldrin $80 million when Aldrin received FDA approval for the
MacLarian ANDA, and pay $20 million per quarter from the time
Aldrin received FDA approval for the MacLarian ANDA until March
31, 2008. Id. at 4-5.
On August 15, 2005, the FDA approved the MacLarian ANDA,
and GNB began making its payments. Id. at 5. When the Agreement
terminated on March 31, 2008, these payments totaled $210
million and represented merely a quarter of GNB’s peak yearly
profits from Mosbium. Id. At this point, Aldrin began marketing
MacLarian. Id. Mosbium and MacLarian shared the market for only
six months before additional generic manufacturers entered the
market. Id. at 5-6. During this time, prices for Mosbium,
MacLarian, and other generic equivalents fell. Id. at 5-6. On
March 15, 2007, Respondents filed suit against Petitioners,
alleging that the Agreement illegally restrained trade in
violation of § 1 of the Sherman Act. Id. at 7.
4
SUMMARY OF ARGUMENT
This Court should reverse the Court of Appeals’ decision,
as that court improperly affirmed the District Court’s class
certification order and adopted the incorrect legal standard for
assessing the antitrust implications of Petitioners’ Agreement.
First, the District Court erroneously certified Respondents
as a class, because the court failed to conduct a full Daubert
analysis when relying on Respondents’ expert testimony to
certify the class. Daubert applied to the class certification
order, because Daubert extends to pre-trial proceedings and is a
prerequisite for rigorous Rule 23 analysis. This Court expressed
the need for Daubert in class certification proceedings;
specifically, Daubert promotes judicial fairness by reducing the
likelihood of “blackmail settlements.” The District Court failed
to apply Daubert, however, because it only assessed whether the
testimony was reliable, rather than both relevant and reliable.
Even assuming that the District Court applied Daubert, the
court erroneously held that it need only conduct a limited,
rather than a full, Daubert analysis. Courts must conduct a full
Daubert inquiry, because Rule 23 requires conclusive decisions
on class certifications. In addition, full Daubert analyses
promote judicial efficiency and safeguarded Seventh Amendment
rights. The District Court failed to conduct a full Daubert
analysis, however, because the court only assessed whether the
5
testimony was admissible for the purposes of class
certification, rather than trial. By applying the wrong legal
standard, the District Court abused its discretion.
This Court should also reverse the Court of Appeals’
application of quick look review and instruct the District Court
to evaluate the Agreement under the scope of the patent test
because the Agreement does not implicate antitrust scrutiny. The
‘022 patent granted GNB limited rights to exclude competitors,
and the scope of the patent test is sufficient to evaluate
whether GNB reasonably implemented those rights. Furthermore,
the test’s presumption that the ‘022 patent is valid represents
the best means of balancing interests at the intersection of
patent law, antitrust law, and the Hatch-Waxman Act.
Alternatively, to the extent that the Agreement generates
anticompetitive effects implicating antitrust scrutiny, this
Court should instruct the District Court to apply rule of reason
analysis. The Agreement’s covenants are reasonably necessary to
encourage pro-competitive patent litigation settlements, and the
District Court should evaluate these covenants as ancillary
restraints of trade under the rule of reason. Furthermore,
alternative means of antitrust scrutiny are insufficient because
they apply inappropriate presumptions, which fail to account for
the nuances of reverse payment settlements.
6
ARGUMENT
I.
THE COURT OF APPEALS ERRED WHEN IT AFFIRMED RESPONDENTS’
CLASS CERTIFICATION, BECAUSE THE DISTRICT COURT FAILED TO
APPLY DAUBERT V. MERRELL DOW PHARMACEUTICALS, INC. AND
CONDUCT A FULL INQUIRY INTO THE RELEVANCE AND RELIABILITY
OF EXPERT TESTIMONY INTRODUCED TO CERTIFY THE CLASS.
The Court of Appeals erroneously affirmed the District
Court’s class certification order, because the District Court
improperly relied on Respondents’ expert testimony to satisfy
Rule 23 of the Federal Rules of Civil Procedure. District courts
can only admit expert testimony if it is both relevant and
reliable. Daubert v. Merrell Dow Pharm., Inc., 509 U.S. at 589.
Courts must apply Daubert’s holding to class certification
proceedings and conduct a full inquiry under Daubert to ensure
that the testimony is ultimately admissible at trial. The
District Court neglected, however, to apply Daubert or conduct a
full analysis of Respondents’ expert testimony.
This Court reviews class certification orders under the
abuse of discretion standard. Amchem Prods., Inc. v. Windsor,
521 U.S. 591, 630 (1997) (Breyer, J., concurring in part and
dissenting in part). Abuse of discretion occurs if a district
court makes an erroneous conclusion of law or improperly applies
law to fact. Koon v. United States, 518 U.S. 81, 100 (1996); In
re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 312 (3d
Cir. 2008). Questions of law in class certification decisions
7
are reviewable de novo. AT&T Mobility LLC v. Concepcion, 131 S.
Ct. 1740, 1752 (2011).
A.
Courts must apply Daubert to expert testimony
introduced at the class certification stage.
Courts must apply Daubert to expert testimony introduced to
certify a class. Daubert applies broadly to civil proceedings
and is a prerequisite for rigorous Rule 23 analysis. Moreover,
this Court expressed the need for Daubert in class certification
proceedings. Daubert is necessary to protect against “blackmail
settlements” in class action suits. In this case, however, the
District Court failed to apply Daubert, because it only
considered the reliability, rather than both the relevance and
reliability, of expert testimony. Because the District Court
either misapplied the law or implicitly made an erroneous
conclusion of law, the District Court abused its discretion.
1.
Daubert applies to class certifications, because
Rule 702 applies broadly and nothing in the
Federal Rules of Evidence limits Rule 702’s scope.
Rule 702 of the Federal Rules of Evidence governs the
admissibility of expert testimony. Fed. R. Evid. 702. Daubert
applies in all cases where Rule 702 applies. See Daubert, 509
U.S. at 589-92 (discussing how the relevancy and reliability
requirements are “embodied in Rule 702”). Because Rule 702
encompasses pre-trial proceedings, district courts must conduct
Daubert analyses at the class certification stage.
8
Specifically, the Federal Rules of Evidence apply broadly
to “civil cases and proceedings,” rather than just trials. Fed.
R. Evid. 1101(b). The Federal Rules of Evidence do not apply in
certain enumerated cases, but class actions are not listed under
any of these exceptions. Fed. R. Evid. 1101(d). Furthermore,
Rule 702 applies where expert testimony will help “the trier of
fact to understand the evidence or to determine a fact in
issue.” Fed. R. Evid. 702(a). Since expert testimony helps
judges, as triers of fact, determine whether common questions of
law or fact predominate under Rule 23, Rule 702 must apply to
class certifications. Because Daubert applies where Rule 702
applies, the District Court should have applied Daubert to
Respondents’ expert testimony.
2.
District courts must conduct a rigorous Rule 23
analysis, and Daubert is necessary for such
rigorous analysis.
Daubert applies at the class certification stage, because
Daubert is a prerequisite for rigorous analysis under Rule 23.
To certify a class, courts must conduct a “rigorous analysis” to
ensure that Rule 23’s prerequisites are in fact satisfied. Gen.
Tel. Co. v. Falcon, 457 U.S. 147, 161 (1982). That is, district
courts must “probe behind the pleadings” to find “actual, not
presumed, conformance” with Rule 23. Id. at 160. Rigorous Rule
23 analysis is mandatory, because Rule 23 instructs courts to
“find” that common questions of law or fact predominate before
9
certifying a class. See Fed. R. Civ. P. 23(b)(3). The analysis
is also appropriate, as courts similarly assess facts when
ruling on challenges to subject matter or personal jurisdiction.
See, e.g., Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635,
640-41 (2009); Burger King Corp. v. Rudzewicz, 471 U.S. 462,
485-86 (1985).
Rigorous Rule 23 analysis is necessary even if the inquiry
will involve examination of the merits. Wal-Mart Stores, Inc. v.
Dukes, 131 S. Ct. 2541, 2551-52 (2011). Class certifications
frequently implicate considerations that are “enmeshed in the
factual and legal issues compromising the plaintiff’s cause of
action.” Id. at 2552. Courts cannot refuse to examine the merits
simply because an issue would have to be proven again at trial.
Id. at 2552 n.6.
In Eisen v. Charlisle & Jacquelin, 417 U.S. 156 (1974), this
Court cautioned against examining the merits during class
certification proceedings, but this Court later clarified that
Eisen should not be read expansively. See Dukes, 131 S. Ct. at
2552 n.6. That part of Eisen was dicta and contradicted by later
cases. Id. at 2551-52 & n.6 (citing Falcon). Eisen is also
distinguishable, because the judge had analyzed the merits not
to determine the propriety of class certification under Rule 23,
but rather to shift the cost of notice from the plaintiff to the
defendant. Id. at 2552 n.6. In addition, Eisen predated the 2003
10
amendments to Rule 23, which eliminated “conditional” class
certification and instead required definitive resolution of
class certification questions. See Fed. R. Civ. P. 23 advisory
committee’s note.
For “rigorous analysis” to carry meaning, however, courts
must base their findings on “adequate admissible evidence.” See
Unger v. Amedisys Inc., 401 F.3d 316, 319 (5th Cir. 2005). If a
court certifies a class based on inadmissible evidence, that
certification is not rigorous. Dukes v. Wal-Mart Stores, Inc.,
603 F.3d 571, 639 (9th Cir. 2010) (Ikuta, J., dissenting),
vacated, 131 S. Ct. 2541 (2011). Thus, to meet Rule 23’s
demanding requirements, the District Court should have applied
Daubert before certifying Respondents as a class.
3.
Wal-Mart Stores, Inc. v. Dukes suggests that
Daubert applies to class certifications.
This Court has explicitly acknowledged that lower courts
should apply Daubert at the class certification stage. In Dukes,
this Court observed that “[t]he District Court concluded that
Daubert did not apply to expert testimony at the certification
stage of class-action proceedings. We doubt that is so.” Dukes,
131 S. Ct. at 2554 (citation omitted). Thus, Dukes provides
guidance on the Daubert question.
The District Court, however, erred in distinguishing Dukes
and refusing to apply Daubert. Even though Dukes concerned an
11
employment discrimination claim, Dukes applies equally to
antitrust matters, because Dukes concerned a procedural, rather
than substantive, issue. See Bell Atl. Corp. v. Twombly, 550
U.S. 544, 593 n.13 (2007) (relying on Falcon, an employment
discrimination case, in discussing class certification
requirements in antitrust); see also Shady Grove Orthopedic
Assocs., P.A. v. Allstate Ins. Co., 130 S. Ct. 1431, 1437 (2010)
(describing Rule 23 as providing a “one-size-fits-all formula”
in class certifications). In addition, the fact that Dukes
focused on the commonality requirement of Rule 23(a)(2), rather
than the predominance requirement of Rule 23(b)(3), is
irrelevant. Rule 23(a) asks whether the plaintiffs share common
questions of law or fact, while Rule 23(b) requires that these
common questions of law or fact predominate over questions
affecting only individual members. Fed. R. Civ. P. 23(a)(2),
(b)(3). Thus, commonality cannot be fulfilled without
predominance, making the two requirements inextricably linked.
In addition, the Dukes Court did not recognize a meaningful
distinction between commonality and predominance. See Dukes, 131
S. Ct. at 2552 n.6 (noting that Eisen does not preclude an
inquiry into “the propriety of certification under Rules 23(a)
and (b)”). Because Dukes is relevant to antitrust class action
suits where defendants challenge predominance, the District
Court’s refusal to apply Daubert was in error.
12
4.
Refusal to apply Daubert to class certification
proceedings increases the prospect of “blackmail
settlements,” undermining fairness in civil
proceedings.
The Rules of Federal Evidence must be construed “so as to
administer every proceeding fairly.” Fed. R. Evid. 102. In
addition, “procedural fairness” is a key interest of Rule 23.
Fed. R. Civ. P. 23 advisory committee’s note. Courts must apply
Daubert during class certification proceedings, because lower
standards for certification undermine judicial fairness by
forcing defendants to settle, including in cases where
defendants have weak claims.
Class certification decisions are often the “most
significant decision[s] rendered in . . . class-action
proceedings.” Deposit Guar. Nat’l Bank v. Roper, 445 U.S. 326,
339 (1980). The aggregation of claims in class action suits can
result in immense judgments having the potential to bankrupt
defendants; therefore, class certification imposes tremendous
pressure on defendants to settle, even when plaintiffs’ claims
are weak. See, e.g., In re Rhone-Poulenc Rorer, Inc., 51 F.3d
1293, 1298-99 (7th Cir. 1995) (describing class action judgments
as “blackmail settlements”). For example, a Federal Judicial
Center report found that when courts approved certification,
ninety percent of cases settled as a result. Barbara J.
Rothstein & Thomas E. Willging, Managing Class Action
13
Litigation: A Pocket Guide for Judges 6 (2005). Courts must
apply Daubert to expert testimony at class certification
proceedings, as otherwise plaintiffs could attain class
certification “just by hiring a competent expert.” West v.
Prudential Sec., Inc., 282 F.3d 935, 938 (7th Cir. 2002).
Given the potential for “blackmail settlements,” the
District Court should have applied Daubert at the class
certification stage. By neglecting to apply the proper legal
standard, the District Court abused its discretion, and the
Court of Appeals improperly affirmed the class certification
order.
B.
Where a court must conduct a Daubert inquiry, the
analysis must be full rather than limited.
Even assuming that the District Court had conducted a
Daubert inquiry when certifying Respondents’ as a class, the
District Court erred in defining the scope of Daubert. Where
expert testimony is essential for class certification, courts
must conduct a “full” Daubert inquiry to ensure that expert
testimony is admissible at trial; courts may not conduct a
“limited” Daubert inquiry that only assesses whether the
testimony is admissible for the purposes of class certification.
Am. Honda Motor Co. v. Allen, 600 F.3d 813, 815-16 (7th Cir.
2010) (per curiam). Rule 23 requires conclusive decisions on
class certification, and full Daubert inquiries promote judicial
14
efficiency. Moreover, full Daubert examinations pose no threats
to the Seventh Amendment, because the right to trial by jury is
preserved.
In this case, Respondents’ expert testimony was essential,
because the District Court relied on it to certify Respondents
as a class. Messner v. Northshore Univ. Healthsystem, 669 F.3d
802, 813 (7th Cir. 2012) (finding that reliance on expert
testimony for class certification demonstrates that the
testimony is essential). The District Court, however, failed to
conduct a full Daubert inquiry, because the District Court only
evaluated the expert testimony for the purposes of class
certification. Thus, by failing to apply the correct legal
standard, the District Court abused its discretion.
1.
Rule 23 requires conclusive rulings on class
certifications, and only full Daubert inquiries
meet this requirement.
Courts must conduct full Daubert examinations, because Rule
23 instructs judges to apply “rigorous analysis” to ensure
actual compliance with Rule 23. The 2003 amendments to Rule 23
eliminated the option of “conditional” certification, reflecting
the drafters’ intention that judges only certify a class once
Rule 23’s requirements are met. Fed. R. Civ. P. 23 advisory
committee’s note. In addition, Rule 23 previously required class
certifications at a time “as soon as practicable,” but the 2003
amendments changed the wording to “at any early practicable
15
time.” Id. That change was made to ensure adequate discovery and
facilitate “informed certification determination[s].” Id.
The full Daubert approach is thus a “natural extension” of
the “rigorous analysis” requirement contained in Rule 23. In re
Zurn Pex Plumbing Prods. Liab. Litig., 644 F.3d 604, 628 (8th
Cir. 2011) (Gruender, J., dissenting). That is, by determining
whether expert testimony would be admissible at trial, courts
can achieve actual compliance with Rule 23. Under the limited
Daubert approach, however, courts can certify a class but
decertify at trial once that testimony is deemed inadmissible.
See id. at 613 (Murphy, J.). Thus, the limited approach is
inconsistent with rigorous Rule 23 analysis, and the District
Court applied the incorrect legal standard.
2.
Full Daubert inquiries preserve judicial
efficiency by ensuring that cases do not
needlessly proceed to trial.
The goal of class certification is to “achieve economies of
time, effort, and expense.” Fed. R. Civ. P. 23 advisory
committee’s note. To preserve judicial efficiency, courts must
conduct full Daubert analyses at the class certification stage.
The limited Daubert approach is “counterintuitive,” because it
allows courts to find expert testimony admissible for the
purpose of class certification but later find that testimony
inadmissible for the purpose of trial. In re Zurn, 644 F.3d at
628 (Gruender, J., dissenting). This shift on admissibility
16
wastes judicial time and resources, since courts would
ultimately find the testimony inadmissible. Furthermore,
application of Daubert at the class certification stage can be
judicially manageable, since Daubert hearings should not be not
mini-trials. Bitler v. A.O. Smith Corp., 391 F.3d 1114, 1122 (3d
Cir. 2004). For example, courts have tools to limit discovery.
See Manual for Complex Litigation (Fourth) § 23.353 (2004).
Because judicial efficiency is an important value, and because a
full Daubert inquiry better preserves judicial time and
resources, the District Court should have conducted a full
Daubert inquiry before certifying Respondents as a class.
3.
Full Daubert inquiries are consistent with the
Seventh Amendment.
While the Seventh Amendment preserves the “right of trial by
jury” in common law suits, the amendment does not preclude full
Daubert review simply because judges, rather than juries,
resolve class certification questions. Plaintiffs can proceed
individually, rather than as a class, if necessary. Richard
Marcus, Reviving Judicial Gatekeeping of Aggregation:
Scrutinizing the Merits on Class Certification, 79 Geo. Wash. L.
Rev. 324, 365 (2011). Furthermore, even though judges must
resolve certain merits issues at the class certification stage,
those merits findings do not bind juries. Cf. Univ. of Tex. v.
Camenisch, 451 U.S. 390, 395 (1981). Judges can withhold from
17
the jury their findings on those merits, allowing juries to make
their own determinations. Marcus, supra, at 365.
Because the District Court could have allowed Respondents
to proceed individually, and because a jury could have
determined the merits apart from the judge’s findings, a full
Daubert analysis would have preserved Respondents’ Seventh
Amendment rights. Thus, a full Daubert inquiry was appropriate,
and by applying the wrong legal standard, the District Court
abused its discretion. For these reasons, the Court of Appeals
erred in affirming the District Court’s classification order.
II.
THE COURT OF APPEALS ERRED BY DECLINING TO IMPOSE SCOPE OF
THE PATENT REVIEW TO AN AGREEMENT WHICH REASONABLY
IMPLEMENTS GNB’S RIGHTS UNDER THE ‘022 PATENT AND BY
DECLINING, IN THE ALTERNATIVE, TO IMPOSE RULE OF REASON
REVIEW.
The Court of Appeals erroneously held that quick look
antitrust review applied to Petitioner’s Agreement. The
Agreement represents GNB’s reasonable exercise of its rights
under the ‘022 Patent and therefore warrants review under the
scope of the patent test. Alternatively, to the extent that the
Agreement generates anticompetitive effects implicating
antitrust law, those effects are ancillary to the Agreement’s
pro-competitive goal of encouraging patent settlements.
Therefore, the Agreement warrants rule of reason scrutiny. This
Court review questions of law de novo. Cal. Dental Ass'n v.
F.T.C., 526 U.S. 756, 779 (1999).
18
A.
Scope of the patent review sufficiently balances GNB’s
rights under the ‘022 Patent against the policies of
antitrust law and the pharmaceutical industry’s
regulatory backdrop.
Scope of the patent review is sufficient because the
Agreement does not generate anticompetitive effects beyond those
of the ‘022 Patent; therefore, this Agreement does not implicate
antitrust scrutiny. Furthermore, scope of the patent review’s
presumption that the ‘022 Patent is valid represents the best
method for balancing competing interests at the intersection of
antitrust law, patent law, and the Hatch-Waxman Act.
1.
Scope of the patent review is sufficient since
the Agreement stays within the ‘022 Patent’s
boundaries and does not implicate antitrust
scrutiny.
a.
GNB may exclude competitors under the ‘022
patent without incurring antitrust liability.
The ‘022 Patent allows GNB to legally exclude competitors
through settlements such as the Agreement. Unreasonably
anticompetitive activity is illegal under § 1 of the Sherman
Act. See Collegiate Athletic Ass'n v. Bd. of Regents of Univ. of
Okla., 468 U.S. 85, 86 (1984) (finding that activity which tends
to significantly reduce a market’s output or increase prices is
the “hallmark” of a §1 violation). On the other hand, patents
reduce market output and increase prices because they grant
patentees a window in which to exclusively profit from their
inventions. See Valley Drug Co. v. Geneva Pharm., Inc., 344 F.3d
19
1294, 1304 (11th Cir. 2003)(stating that a patent’s
anticompetitive effects are balanced by stimulating procompetitive innovation).
When patent and antitrust law collide, patentees may
reasonably enforce their rights to exclude others without
incurring antitrust liability. See Simpson v. Union Oil Co. of
Cal., 377 U.S. 13, 24 (1964). Furthermore, patentees may enforce
these rights through private settlements rather than through
judicial enforcement, provided the settlement embraces the same
boundaries as the underlying patent. See Valley Drug Co., 344
F.3d at 1309.
As a patentee, GNB had the right to block competitors such
as Aldrin from profiting off of the ‘022 Patent’s content until
July 15, 2008. The Agreement implemented this right by
restricting Aldrin from entering the market with an infringing
drug. Thus, to the extent the Agreement stayed within the ‘022
Patent’s scope, any resultant anticompetitive activity was no
greater than what the patent already authorized. Therefore, as a
valid implementation of patent rights, the Agreement does not
warrant antitrust scrutiny unless it overstepped the ‘022
Patent’s boundaries.
b.
The Agreement stayed within the ‘022
Patent’s exclusionary scope.
20
The Agreement implements but does not exceed the ‘022
Patent’s privileges. The majority of appellate circuit courts
that have evaluated settlements like the Agreement examined (1)
the scope of the patent’s exclusionary potential, (2) the extent
to which the settlement agreement exceeded that scope, and (3)
the resulting anticompetitive effects. Schering-Plough Corp. v.
F.T.C., 402 F.3d 1056, 1066 (11th Cir. 2005). The patent’s
exclusionary boundaries are delineated by the precise terms of
the patent grant. United States v. Line Material Co., 333 U.S.
287, 300 (1948). Since patent rights are limited to a specific
window of time, patent infringement settlements must not impose
restraints that extend the patent’s duration. See In re
Ciprofloxacin Hydrochloride Antitrust Litig., 544 F.3d 1323,
1333 (Fed. Cir. 2008) (characterizing a settlement which
permitted an alleged infringer to enter the market before the
patent expired as within patent’s scope). Patent infringement
settlements may also exceed the patent’s scope by attempting to
block generic drug manufacturers from marketing drugs not
covered under the patent at issue. See Valley Drug Co., 344 F.3d
at 1311 (characterizing settlement as beyond the patent’s scope
where an infringer agreed not to market its existing, noninfringing drug formulations).
While the ‘022 Patent’s full exclusionary potential would
have barred Aldrin until July 15, 2008, Aldrin entered the
21
market more than three months earlier under the terms of the
Agreement. Furthermore, since Aldrin lacked any non-infringing
formulations of Mosbium, the Agreement did not obstruct any
drugs unrelated to the ‘022 Patent from entering the market.
Therefore, by enforcing narrower exclusions than the ‘022
Patent, the Agreement does not generate anticompetitive effects
beyond what the ‘022 patent produces.
2.
Scope of the patent review’s presumption that the
‘022 Patent is valid protects GNB’s intellectual
property rights while representing the best
balance of antitrust law, patent law, and the
Hatch-Waxman Act.
Scope of the patent review respects federal law’s
presumption that a patent is valid. By doing so, the scope of
the patent test protects patentees’ rights from attacks under
antitrust law. Furthermore, this presumption creates an
administrable standard for judicial review and preserves
settlement incentives. Finally, the presumption is consistent
with the existence of reverse payment settlements and the HatchWaxman Act’s incentives.
a.
A presumption of the ‘022 Patent’s validity
is necessary to protect GNB’s intellectual
property rights.
A presumption of patent validity is necessary to maintain
the protections patent law affords to GNB under the ‘022 Patent.
Under 35 U.S.C. § 282, “[a] patent shall be presumed valid”. 35
U.S.C. § 282 (2006). Furthermore, parties challenging a patent
22
bear the burden of proving the patent’s invalidity by clear and
convincing evidence. Microsoft Corp. v. i4i Ltd. P'ship, 131 S.
Ct. 2238, 2242 (2011). Patentees need only prove their
infringement claims by a preponderance of the evidence. Advanced
Cardiovascular Sys., Inc. v. Scimed Life Sys., Inc., 261 F.3d
1329, 1336 (Fed. Cir. 2001).
The scope of the patent test’s presumption of patent
validity enacts the explicit directive of 35 U.S.C. § 282.
Moreover, failure to respect this presumption unduly relieves
Respondents of their burden of proving that the ‘022 patent is
invalid. By allowing GNB to maintain its rights under a lower
standard of proof (preponderance of the evidence) and forcing
challengers to annual those rights under a higher standard
(clear and convincing evidence), patent law exhibits a
preference for maintaining the validity of the ‘022 Patent.
Therefore, this court must presume the ‘022 Patent is valid to
prevent unwarranted abrogation of GNB’s rights.
b.
The presumption of patent validity creates
an administrable standard for judicial
review, which preserves bona fide
settlements like the Agreement.
By presuming the ‘022 Patent is sound, scope of the patent
review efficiently allocates judicial resources and protects
settlement incentives. Evaluating the scope of underlying
patents in reverse payment settlements is unworkable, because it
23
requires retroactively evaluating a complex patent suit within
an antitrust suit. F.T.C. v. Watson Pharm., Inc., 677 F.3d 1298,
1315 (11th Cir. 2012) cert. granted, 133 S. Ct. 787 (2012)
(declining “to decide how some other court in some other case at
some other time was likely to have resolved some other claim if
it had been pursued to judgment”). Moreover, circuit courts
outside of the Federal Circuit lack Congress’ express grant of
authority and the necessary expertise by which to evaluate the
patent claim. Id.
Evaluating a patent’s merits is also problematic because it
threatens to subject parties settling in good faith to antitrust
liability and treble damages based on minor patent defects.
Valley Drug Co., 344 F.3d at 1308. This scheme undermines
finality and threatens to chill patent settlements. Id. at 1308.
Moreover, the result directly contradicts this Court’s
preference for encouraging innovation by protecting good faith
patentees from antitrust scrutiny. See Walker Process Equip.,
Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 178 (1965).
Exposing the ‘022 Patent to appellate review outside of the
Federal Circuit threatens to tie up judicial resources and
expose GNB to the danger of an erroneous judgment on the
patent’s merits. Furthermore, these risks will chill future
patent infringement settlements among parties such as GNB and
24
Aldrin. Therefore, this Court should respect the presumption of
patent validity and apply scope of the patent review.
c.
Petitioners’ reliance on reverse payments to
affect their settlement agreement is
consistent with a presumption that the ‘022
Patent is valid.
Reverse payments merely reflect how the Hatch-Waxman Act
redistributes pharmaceutical patent litigation risks. Under the
Hatch-Waxman Act, generic drug manufacturers seeking to
challenge a brand name patent incur relatively low costs and
risks. See F.T.C. v. Watson Pharm., Inc., 677 F.3d at 1302
(finding that generic manufacturers’ filing of ANDAs reduces
costs by “piggybacking” off the patentee’s safety and efficacy
studies); see also In re Tamoxifen Citrate Antitrust Litig., 466
F.3d 187, 207 (2d Cir. 2006)(noting that generic manufacturers
do not risk paying damages to patentees because Hatch-Waxman
infringement claims arise before damages accrue). On the other
hand, the uncertainty of patent litigation means that patentees
holding relatively strong patents still face enormous risks. In
re Ciprofloxacin, 261 F. Supp. at 208 (commenting that “no
matter how valid a patent is . . . it is still a gamble to place
a technology case in the hands of a lay judge or jury”).
Furthermore, any inferences about parties’ subjective
assessment of a patent’s validity are immaterial. See Asahi
Glass Co. v. Pentech Pharm., Inc., 289 F. Supp. 2d 986, 993
25
(N.D. Ill. 2003); see also In re Ciprofloxacin, 544 F.3d at 1338
(illustrating that reverse payment settlement did not reflect
the weakness of the underlying patent since the patent survived
three subsequent challenges).
Hatch-Waxman forces brand-name drug manufacturers such as
GNB to face significant risks from a growing lineup of generic
drug manufacturers. On the other hand, by using GNB’s safety and
efficacy studies, generic drug manufacturers like Aldrin need to
invest little to challenge patents. Furthermore, generic
manufacturers such as Aldrin risk little by challenging the
brand-name patents because generic manufacturers can defer
manufacturing and marketing costs until resolution of the
infringement litigation. Finally, like most generic
manufacturers challenging patents under Hatch-Waxman, Aldrin
faced no risk of paying infringement damages, since litigation
occurs before the generic manufacturers receive FDA approval.
Therefore, no damages accrue.
The existence of payments from GNB to Aldrin reflects the
risk, borne by GNB, that a bad day in court could wipe out all
of GNB’s rights under the ‘022 Patent. Moreover, the size of the
payments also reflects Aldrin’s leverage to demand compensation
in exchange for sacrificing some profit making opportunity by
deferring rights under the MacLarian ANDA. In light of this risk
and reward backdrop, the Agreement reflects a rational
26
settlement strategy and is consistent with a presumption that
the ‘022 Patent is valid.
d.
The goals of the Hatch-Waxman Act are
consistent with a presumption that the ‘022
Patent is valid.
Severely weakening GNB’s patent rights is inconsistent with
the policies undermining the Hatch-Waxman Act. Scrutiny of
patent infringement settlements must respect the patent holder’s
intellectual property rights. See Schering-Plough Corp., 402
F.3d at 1072 (holding that “[p]atent owners should not be in a
worse position, by virtue of the patent right, to negotiate and
settle surrounding lawsuits”). Although the Hatch-Waxman Act
encourages generic drug manufacturers to challenge patents, the
Hatch-Waxman Act also seeks to maintain patentees’ rights. See
Teva Pharm. Indus. Ltd. v. Crawford, 410 F.3d 51, 54 (D.C. Cir.
2005) (finding that the legislation’s full name, “The Drug Price
Competition and Patent Term Restoration Act,” reflects
Congressional intent to balance incentives for generating low
cost generics against incentives for innovation embodied in
patent rights). Furthermore, vigorous antitrust enforcement has
the potential to reduce the availability of generic drugs by
slowing the brand-name drug development antecedent to
availability of generic drugs. See Henry N. Butler & Jeffrey
Paul Jarosch, Policy Reversal on Reverse Payments: Why Courts
Should Not Follow the New DOJ Position on Reverse-Payment
27
Settlements of Pharmaceutical Patent Litigation, 96 Iowa L. Rev.
57, 120 (2010).
Despite its loosened standards for FDA approval and
incentives to challenge patents, the Hatch-Waxman Act does not
seek to undermine legitimate patent rights. Aggressively
attacking GNB’s patents will discourage brand-name investment in
research and development and reduce generic drug availability in
the long run. For these reasons, courts should evaluate
settlements such as the Agreement under scope of the patent
review and respect the presumption of patent validity.
B.
To the extent that the Agreement and other reverse
payment settlements implicate antitrust law, they
impose ancillary restraints and therefore warrant full
rule of reason review.
Reverse payment settlements like the Agreement include
ancillary restraints, which facilitate the resolution of patent
infringement litigation. Rule of reason analysis is the only
form of antitrust review that effectively evaluates these
restraints. Furthermore, quick look and per se analysis are
inappropriate absent empirical evidence that settlements
generate persistent anticompetitive effects. In light of the
variable covenants these settlements may embody and the changing
backdrop of pharmaceutical patent regulation, flexible and
holistic rule of reason analysis is warranted.
28
1.
The Agreement’s covenants restraining Aldrin’s
ability to market MacLarian are ancillary
restraints because they were reasonably necessary
to conclude litigation.
Certain anticompetitive activity may be subject to rule of
reason analysis if the activity is reasonably necessary to
effectuate pro-competitive goals. See Schering-Plough Corp., 402
F.3d at 1072 (enumerating patent litigation settlements as one
such goal in light of litigation’s high public and private
costs). For example, while patent settlements typically reduce
competition by preventing alleged infringers from challenging
patents or marketing competing drugs, these restrictions are
reasonable because they are necessary to efficiently end
litigation. See In re Ciprofloxacin, 544 F.3d at 1334.
Under this framework, settlement covenants that keep
generic manufacturers’ drugs such as MacLarian off the market
are necessary to induce GNB’s participation in the settlement.
Furthermore, stipulations that a generic manufacturer retain its
ANDA rights are also reasonable to the extent that transferring
such rights to a second generic manufacturer merely stimulates
another round of litigation.
While these restrictions are independently reasonable and
ancillary to pro-competitive settlements, when combined they
also delay the approval of subsequent ANDAs due to the mechanics
of the Hatch-Waxman Act’s grant of exclusivity to the initial
29
ANDA filer. See 21 U.S.C. § 355(j)(5)(B) (2006). Nevertheless,
the Agreement was still a narrow, reasonable restraint because
subsequent ANDA filers could challenge the ‘022 Patent through
declaratory judgment. Teva Pharm., USA, Inc., 182 F.3d at 1004.
Since settlement agreements may be structured with any number of
restrictive covenants, full rule of reason analysis is necessary
to reach a reasoned conclusion in each case.
2.
Per se and quick look review are inappropriate in
light of the Agreement’s pro-competitive effects
and the regulatory uncertainty imposed by the
recent Hatch-Waxman Amendments.
Neither quick look nor per se review is appropriate in
light of the strong pro-competitive tendencies of the Agreement.
Rule of reason analysis presumptively applies to antitrust
claims. Texaco Inc. v. Dagher, 547 U.S. 1, 5 (2006). The rule of
reason test fully evaluates a restraint’s anticompetitive
effects by considering the relevant industry’s structure and
market power distribution. See Copperweld Corp. v. Independence
Tube Corp., 467 U.S. 752, 768 (1984). Courts should only deviate
from applying the rule of reason to antitrust claims when strong
empirical justifications exist for doing so. See Leegin Creative
Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 886 (2007)
(finding that per se antitrust liability is unwarranted unless a
court has enough experience with a restraint to confidently
predict that it will be invalid under rule of reason analysis);
30
see also Cal. Dental Ass'n, 526 U.S. at 757 (finding that
evidence that an agreement merely had the potential to restrain
trade did not warrant quick look review’s rebuttable presumption
that agreement did in fact restrain trade).
Quick look and per se analyses of reverse payment
settlements stifle the ability of parties like GNB and Aldrin to
reach efficient settlements. Furthermore, since Respondents have
put forth no empirical evidence of the Agreement’s
anticompetitive effects, this Court has no reason to deviate
from the presumptive rule of reason analysis. Finally, since
2003, changes to the regulatory structure of the Hatch-Waxman
Act have left application of reverse payment settlements in a
state of flux, meaning application of per se rules or
presumptions are unsuited to address this regulatory
uncertainty. See 21 U.S.C. § 355(j)(5)(D).
The full rule of reason reflects a measured, thorough
analysis of a changing regulatory field. This approach gives due
weight to the potential for pro-competitive effects of
settlement agreements which occur in varied and nuanced
contexts. To the extent that the Agreement implicates antitrust
review, this Court should prescribe review under the full rule
of reason analysis. Therefore, Petitioners urge this Court to
reverse the Court of Appeals’ ruling.
31
CONCLUSION
For all of the foregoing reasons, Petitioners respectfully
request that this Court reverse the judgment of the United
States Court of Appeals for the Fourteenth Circuit and remand
for further proceedings.
Respectfully submitted,
GNB Pharmaceuticals
Aldrin Generic Drug Co.
By their attorneys,
________________________
Attorney 1
_______________________
Attorney 2
32
APPENDIX A
Sherman Antitrust Act, 15 U.S.C. § 1 (2006)
Every contract, combination in the form of trust or otherwise,
or conspiracy, in restraint of trade or commerce among the
several States, or with foreign nations, is declared to be
illegal. Every person who shall make any contract or engage in
any combination or conspiracy hereby declared to be illegal
shall be deemed guilty of a felony, and, on conviction thereof,
shall be punished by fine not exceeding $100,000,000 if a
corporation, or, if any other person, $1,000,000, or by
imprisonment not exceeding 10 years, or by both said punishments,
in the discretion of the court.
A-1
APPENDIX B
Rule 23 of the Federal Rules of Civil Procedure
(a)
(b)
Prerequisites. One or more members of a class may sue or be
sued as representative parties on behalf of all members
only if:
(1)
the class is so numerous that joinder of all members
is impracticable;
(2)
there are questions of law or fact common to the class;
(3)
the claims or defenses of the representative parties
are typical of the claims or defenses of the class;
and
(4)
the representative parties will fairly and adequately
protect the interests of the class.
Types of Class Actions. A class action may be maintained if
Rule 23(a) is satisfied and if:
(1)
[omitted]
(2)
the party opposing the class has acted or refused to
act on grounds that apply generally to the class, so
that final injunctive relief or corresponding
declaratory relief is appropriate respecting the class
as a whole; or
(3)
the court finds that the questions of law or fact
common to class members predominate over any questions
affecting only individual members, and that a class
action is superior to other available methods for
fairly and efficiently adjudicating the controversy.
The matters pertinent to these findings include:
[Subparts (A) through (D) omitted]
B-1
APPENDIX C
Rule 702 of the Federal Rules of Evidence
A witness who is qualified as an expert by knowledge, skill,
experience, training, or education may testify in the form of an
opinion or otherwise if:
(a)
the expert’s scientific, technical, or other specialized
knowledge will help the trier of fact to understand the
evidence or to determine a fact in issue;
(b)
the testimony is based on sufficient facts or data;
(c)
the testimony is the product of reliable principles and
methods; and
(d)
the expert has reliably applied the principles and
methods to the facts of the case.
C-1