In re Cipro

Case Updates

The California Supreme Supreme Court reversed the Court of Appeals' judgement and remanded the case for further proceedings. The Court held that parties illegally restrain trade when they privately agree to substitute consensual monopoly in place of potential competition that would have followed a finding of invalidity or noninfringement.

In its brief, the U.S. Chamber asked the California Supreme Court to follow the U.S. Supreme Court’s guidance regarding antitrust law and to apply the rule of reason to “reverse-payment” settlements, rather than applying a different standard. In 2013, the U.S. Supreme Court held in FTC v. Activis, Inc. that under federal antitrust laws, the rule of reason applies to so-called “reverse-payment” agreements to settle patent litigation between brand-name pharmaceutical companies and prospective generic competitors.

As the brief explains, if the court were to apply a different standard to such agreements under California law, the resulting disparity in the regulation of patent settlements would frustrate businesses’ ability to settle such disputes, increase costs and uncertainty to the disadvantage of both businesses and consumers, and disrupt the smooth flow of commerce. The Chamber points out that if the Court were to depart from the federal antitrust rule articulated in Actavis, future litigants might also use this case to advocate for further differences between California and federal antitrust law, creating difficulties for nationwide businesses in trying to conform their conduct to more than one inception of rules.

Jeffrey I. Weinberger, Adam R. Lawton, Guha Krishnamurthi, Rohit K. Singla, and Michelle T. Friedland of Munger, Tolles & Olson LLP represented the Chamber as co-counsel to the National Chamber Litigation Center.