In Re Wellbutrin XL Antitrust Litigation Indirect Purchaser Class

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

Nos. 15-2875/3559/3591/3681/3682

_____________

IN RE: WELLBUTRIN XL ANTITRUST LITIGATION

Indirect Purchaser Class,

Appellants in 15-2875

Aetna Health of California Inc.; IBEW-NECA Local 505

Health

and Welfare Plan; Bricklayers and Masons Union Local

Union

No. 5 Ohio Health and Welfare Fund; Mechanical

Contractors-United

Association Local 119 Health and Welfare Plan; Painters

District

Council No. 30 Health and Welfare Fund; Plumbers and

Pipefitters

Local 572 Health and Welfare Fund; Aetna, Inc.,

Appellants in 15-3559

Professional Drug Company, Inc., individually and on behalf

of the Direct Purchaser Class,

Appellant in 15-3591

SmithKline Beecham Corporation d/b/a

GlaxoSmithKline

and GlaxoSmithKline plc,

Appellants in 15-3681/3682

_______________

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

(D.C. Nos. 2-08-cv-2431 and 2-08-cv-2433)

District Judge: Hon. Mary A. McLaughlin

_______________

Argued

September 7, 2016

Before: JORDAN, VANASKIE, and NYGAARD, Circuit

Judges.

(Filed: August 9, 2017)

_______________

Kenneth A. Wexler

Justin N. Boley

Wexler Wallace LLP

55 W. Monroe St. – Ste. 3300

Chicago, IL 60603

2

Peter D. St. Phillip, Jr. [ARGUED]

Richard W. Cohen

Gerald Lawrence, Jr.

Uriel Rabinovitz

Melissa Cabrera

Lowey Dannenberg Cohen & Hart, P.C.

One North Broadway – Ste. 509

White Plains, NY 10601

Karen Iannance

Kissel Hirsch & Wilmer

370 Lexington Avenue – Ste. 1200

New York, NY 10017

James G. Stranch, III

Joe P. Leniski

Branstetter, Stranch & Jennings, PLLC

227 Second Ave. North – 4th Fl.

Nashville, TN 37201

Counsel for Appellant Indirect Purchaser Class/

End-Payor Class

David F. Sorensen [ARGUED]

Andrew C. Curley

Caitlin G. Coslett

Nicholas Urban

Berger & Montague, P.C.

1622 Locust Street

Philadelphia, PA 19103

3

Thomas M. Sobol [ARGUED]

Gregory T. Arnold

David S. Nalven

Kristen A. Johnson

Kristie A. LaSalle

Hagens Berman Sobol Shapiro LLP

55 Cambridge Parkway – Ste. 3-1

Cambridge, MA 021142

John W. Barrett

Barrett Law Group

400 Court Square North

P.O. Box 927

Lexington, MS 39095

Peter Kohn

Faruqi & Faruqi

101 Greenwood Avenue - #600

Jenkintown, PA 19046

Dianne M. Nast

NastLaw

1101 Market Street - #2801

Philadelphia, PA 19107

Counsel for Appellant Direct Purchaser Class

4

Leslie E. John [ARGUED]

Edward D. Rogers

Stephen J. Kastenberg [ARGUED]

Jason A. Leckerman

Jessica M. Anthony

Marcel S. Pratt

Ballard Spahr

1735 Market Street – 51st Fl.

Philadelphia, PA 19103

Taimarie N. Adams

640 N. Broad Street - #529

Philadelphia, PA 19130

Daniel J. Boland

217 Ryers Avenue

Philadelphia, PA 19102

Timothy K. Gilman

Kirkland & Ellis

601 Lexington Avenue

New York, NY 10022

Emily P. Hughes

Jason R. Parish

Kirkland & Ellis

655 15th Street, NW – Ste. 1200

Washington, DC 20005

Simeon G. Papacostas

Kirkland & Ellis

5

300 N. LaSalle Street - #2400

Chicago, IL 65054

Susanna R. Greenberg

University of Pennsylvania School of Law

3400 Chestnut Street

Philadelphia, PA 19104

Chong S. Park

Ropes & Gray

2009 Pennsylvania Avenue, NW

Washington, DC 20006

Counsel for Appellee SmithKline Beecham Corp,

dba GlaxoSmithKline; GlaxoSmithKline PLC

Linda E. Kelly

Quentin Riegel

Leland P. Frost

Manufacturers’ Center for Legal Action

733 10th Street, NW – Ste. 700

Washington, DC 20001

Brian H. Pandya

Wiley Rein

1776 K Street NW

Washington, DC 20006

Counsel for Amicus, National Association of

Manufacturers

6

Deborah L. Feinstein

Markus H. Meier

Bradley S. Alberg

Daniel W. Butrymowicz

Elizabeth R. Hilder

Jamis R. Towey

David C. Shonka

Joel Marcus

Mark S. Hegedus

Federal Trade Commission

MS-582

600 Pennsylvania Avenue, NW

Washington, DC 20580

Counsel for Non Party Amicus, Federal

Trade Commission

Barbara W. Mather

Robin P. Sumner

Lindsay D. Breedlove

Pepper Hamilton

3000 Two Logan Square

Eighteenth & Arch Streets

Philadelphia, PA 19103

Counsel for Amicus, Antitrust Economists

Sarah K. Frederick

Goodwin Procter LLP

Exchange Place

53 State Street

Boston, MA 02109

Counsel for Amicus, Generic Pharmaceutical

7

Association

David W. Ogden

Wilmer Cutler Pickering Hale and Dorr LLP

1875 Pennsylvania Avenue, NW

Washington, DC 20006

Mark A. Ford

Peter A. Spaeth

Daniel C. Wewers

Wilmer Cutler Pickering Hale and Dorr LLP

60 State Street

Boston, MA 02109

Counsel for Amicus, Pharmaceutical Research and

Manufacturers of America

Daniel G. Brown

Latham & Watkins

885 Third Avenue – Ste. 1000

New York, NY 10022

Counsel for Par Pharmaceutical Inc., and its

predecessor in interest Anchen

Pharmaceuticals

_______________

OPINION OF THE COURT

_______________

8

Table of Contents

I. Background ................................................................... 14

A. The Hatch-Waxman Act ..................................... 14

B. Factual and Procedural Background ................... 18

II. Discussion ..................................................................... 24

A. Sham Litigation .................................................. 24

1. Applicable Law ................................................... 25

2. The Anchen Lawsuit ........................................... 29

3. The Abrika Lawsuit ............................................ 36

4. The Impax and Watson Lawsuits and the

Appellants’ Conspiracy Theory .......................... 37

5. The FDA Citizen Petition ................................... 40

6. Serial Petitioning ................................................ 46

B. Reverse Payment Settlement Agreement ........... 49

1. Events Leading to the Settlement ....................... 49

2. The Settlement .................................................... 51

3. The Appellants Cannot Prevail on Their Antitrust

Claims Pertaining to the Alleged Reverse

Payment .............................................................. 54

a) The Agreements Are Not Immune from Antitrust

Scrutiny; the Rule of Reason Test Applies ......... 55

b) The Appellants Do Not Have Antitrust

Standing .............................................................. 61

(1) License-Based Scenario ............................. 68

9

(2) Litigation-Based Scenario .......................... 71

C. Class Certification, Daubert, and Intervention

Issues................................................................... 77

III. Conclusion .......................................................... 78

10

JORDAN, Circuit Judge.

This appeal lies at the confluence of intellectual

property and antitrust law. Following the Supreme Court’s

decision in FTC v. Actavis, Inc., 133 S. Ct. 2223 (2013), we

are tasked with balancing a patent owner’s right to exclude

and the public’s right to benefit from fair and open

competition.

The Appellants in this case are the direct and indirect

purchasers of Wellbutrin XL, a drug designed to treat

depression. (Consolidated Brief of Appellees/Cross-

Appellants (“Ans. Br.”) 6, 19.) The direct-purchaser

Appellants bring claims under federal antitrust law, alleging

that the Appellee, GlaxoSmithKline (“GSK”), 1 violated

Sections One and Two of the Sherman Antitrust Act by

entering into an unlawful conspiracy with a company called

Biovail, 2 GSK’s partner in the development of Wellbutrin

XL, to delay the launch of generic versions of the drug.

(Consolidated Brief of Direct Purchaser and End-Payor Class

1

“GlaxoSmithKline,” or “GSK,” refers collectively to

SmithKline Beecham Corporation and GlaxoSmithKline

PLC, the producers and distributors of Wellbutrin XL.

2

“Biovail” refers collectively to Biovail Corporation

(n/k/a Valeant Pharmaceuticals International, Inc.) and

Biovail Laboratories International SRL (n/k/a Valeant

International Bermuda). Biovail was originally a defendant in

the case but settled with the Appellants prior to the appeal.

11

Plaintiffs-Appellants (“Op. Br.”) 2; JA 11465-68.) The

indirect-purchaser Appellants assert similar theories, but

under state, rather than federal law. They also allege that

GSK’s actions violated common law principles and state

statutes mandating fair trade practices.

According to the Appellants, GSK is liable under two

theories. First, the Appellants claim that GSK delayed the

launch of generic versions of Wellbutrin XL by supporting

baseless patent infringement suits and a baseless FDA Citizen

Petition aimed at generic drug companies. Second, they

claim that GSK delayed the launch of those generic drugs by

entering into an unlawful reverse payment settlement

agreement with its potential competitors. 3 The District Court

granted summary judgment on the merits to GSK with respect

to both of those theories. It concluded that there was

insufficient evidence that GSK’s patent litigation was a sham

or that the settlement delayed the launch of generic versions

of Wellbutrin XL. At the same time, the Court granted

GSK’s Daubert motion to exclude the testimony of the

Appellants’ economic expert. The Court also granted a

motion to decertify the indirect-purchaser class for lack of

3

Ordinarily, when a plaintiff sues a defendant, one

expects that, if there is a settlement, it will involve a payment

from the defendant to the plaintiff. A so-called “reverse

payment” settlement takes place when the plaintiff settles the

case by paying the defendant. See FTC v. Actavis, Inc., 133

S. Ct. 2223, 2227 (2013) (“Because the settlement requires

the patentee to pay the alleged infringer, rather than the other

way around, this kind of settlement agreement is often called

a ‘reverse payment’ settlement agreement.”).

12

ascertainability and dismissed the indirect-purchaser claims

brought under the laws of any state that was not the home of a

named class representative. 4 Finally, the Court denied a

motion filed by Aetna, Inc. to intervene on the side of the

indirect purchasers. 5

4

The District Court had certified both the direct-

purchaser and indirect-purchaser classes in August 2011. The

indirect purchasers allege antitrust claims under the laws of

Arizona, California, the District of Columbia, Florida,

Hawaii, Iowa, Kansas, Louisiana, Maine, Michigan,

Minnesota, Mississippi, Nebraska, Nevada, New Mexico,

North Carolina, North Dakota, South Dakota, Tennessee,

Utah, Vermont, West Virginia and Wisconsin. They assert

violations of consumer protection laws in Alaska, Arizona,

Arkansas, California, Colorado, Connecticut, Delaware,

Florida, Georgia, Hawaii, Idaho, Illinois, Kansas, Louisiana,

Maine, Maryland, Massachusetts, Michigan, Minnesota,

Missouri, Montana, Nebraska, Nevada, New Hampshire, New

Mexico, New York, North Carolina, North Dakota, Ohio,

Oklahoma, Oregon, Pennsylvania, Rhode Island, South

Carolina, South Dakota, Texas, Utah, Vermont, Washington

and West Virginia, as well as the District of Columbia. The

District Court concluded that the indirect-purchaser

Appellants only have standing to bring their claims under the

laws of states where their members reside – that is,

California, Florida, Illinois, Nevada, New York, Ohio,

Pennsylvania, Tennessee, Texas, and Wisconsin.

5

Aetna, an insurance provider, had purchased brand

and generic versions of Wellbutrin XL in all 50 states. It

sought to intervene in order to save the indirect purchasers’

claims from dismissal.

13

This appeal followed. Both the direct-purchaser and

indirect-purchaser Appellants seek review of the District

Court’s summary judgment and Daubert rulings. The

indirect-purchaser Appellants also contest the order

decertifying their class and the denial of Aetna’s motion to

intervene. GSK filed a conditional cross-appeal challenging

on numerosity grounds the certification of the direct-

purchaser class. GSK filed a second conditional cross-appeal

with respect to the indirect-purchaser class, asking that, if we

were to disagree with the District Court’s decertification on

ascertainability grounds, we nevertheless affirm on

numerosity grounds. The direct-purchaser and indirect-

purchaser Appellants filed a joint brief addressing the

summary judgment orders and the order denying Aetna’s

intervention; the indirect-purchaser Appellants also filed a

separate brief addressing the decertification order.

We agree with the District Court’s conclusions that the

Appellants have failed to establish a genuine dispute of fact

either as to whether GSK engaged in sham litigation or

whether GSK’s actions delayed the launch of any generic

version of Wellbutrin XL. Consequently, we will affirm the

District Court’s grant of summary judgment and do not reach

the remaining issues on appeal.

I. Background

A. The Hatch-Waxman Act

14

To better explain the antitrust issues in this case, we

first describe the regulatory scheme that governs the testing

and approval of new drugs in the United States. That

framework was established by the Drug Price Competition

and Patent Term Restoration Act of 1984, 98 Stat. 1585, as

amended, which is commonly known as the Hatch-Waxman

Act (“the Act”), or simply Hatch-Waxman. Actavis, 133 S.

Ct. at 2227-28.

A drug manufacturer seeking to market a new drug

“must submit a New Drug Application [(NDA)] to the federal

Food and Drug Administration (FDA) ... and undergo a long,

comprehensive, and costly testing process, after which, if

successful, the manufacturer will receive marketing approval

from the FDA.” Id. at 2228 (citing 21 U.S.C. § 355(b)(1)).

One of the goals of Hatch-Waxman is to increase competition

between generic and brand-name drugs. To that end, the Act

allows the manufacturers of generic drugs to obtain FDA

approval without having to endure the gauntlet of procedures

associated with NDAs.

[O]nce the FDA has approved a brand-name

drug ... a manufacturer of a generic drug can

obtain similar marketing approval through the

use of abbreviated procedures. The [Act]

permits a generic manufacturer to file an

Abbreviated New Drug Application [(ANDA)]

specifying that the generic has the “same active

ingredients as,” and is “biologically equivalent”

to, the already-approved brand-name drug. ...

[B]y allowing the generic to piggy-back on the

pioneer’s approval efforts, [the Act] “speed[s]

15

the introduction of low-cost generic drugs to

market,” thereby furthering drug competition.

Id. (last alteration in original) (internal citations omitted)

(quoting Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, 566

U.S. 399, 405 (2012)).

In addition to streamlining the drug approval process,

the Hatch-Waxman Act provides specialized procedures for

brand-name and generic drug manufacturers to resolve

intellectual property disputes. The Act “requires the ... brand-

name manufacturer to list in its [NDA] the number and the

expiration date of any relevant patent. And it requires the

generic manufacturer in its [ANDA] to assure the FDA that

the generic will not infringe the brand-name’s patents.” Id.

(internal quotation marks and citations omitted). One way for

generic manufacturers to make that assurance is to “certify

that any listed, relevant patent ‘is invalid or will not be

infringed by the manufacture, use, or sale’ of the drug

described in the [ANDA].” Id. (quoting 21 U.S.C.

§ 355(j)(2)(A)(vii)). That assurance is referred to as a

paragraph IV certification. Id. To facilitate the filing of

infringement suits, a paragraph IV certification

“automatically counts as patent infringement.” 6 Id. (citation

6

The “infringement” in those circumstances is a legal

construct that permits a patent holder to initiate suit without

having to wait for the generic manufacturer to actually make,

use, or sell a generic version of the patented drug. Eli Lilly &

Co. v. Medtronic, Inc., 496 U.S. 661, 678 (1990) (explaining

that “the defined act of infringement [is] artificial” and exists

to “enable the judicial adjudication upon which the ANDA ...

scheme[] depend[s]”). Because a paragraph IV certification

16

omitted). Hatch-Waxman further states that “[i]t shall be an

act of infringement to submit an [ANDA] for a drug claimed

in a patent[.]” 35 U.S.C. § 271(e)(2)(A).

The Act also encourages brand-name manufacturers to

file patent infringement suits quickly. If a patentee files an

infringement suit against a generic manufacturer within 45

days of receiving notice of the filing of a paragraph IV

certification, the patentee is rewarded with some breathing

space before competition can begin: the FDA is required to

withhold approval of the generic drug for 30 months or until

the infringement case is resolved, whichever comes first. 21

U.S.C. § 355(j)(5)(B)(iii).

Finally, the Act “provides a special incentive for a

generic to be the first to file an [ANDA] taking the paragraph

IV route.” Actavis, 133 S. Ct. at 2228-29. The first applicant

is entitled to an exclusivity period during which no generic

drug other than the first-filer’s can compete with the brand-

name drug. More specifically, the Act prohibits the FDA

from approving any ANDA other than the one first filed until

180 days after the first-filer starts marketing its drug.

21 U.S.C. § 355(j)(5)(B)(iv). In effect, that allows the first-

filing generic to exclude other generics from the market for

is defined as a technical act of infringement, it allows a patent

owner to sue, but it does not speak to whether the disclosed

generic drug does, in fact, infringe the cited patent. Glaxo,

Inc. v. Novopharm, Ltd., 110 F.3d 1562, 1569 (Fed. Cir.

1997) (“The occurrence of the defined ‘act of infringement’

does not determine the ultimate question whether what will be

sold will infringe any relevant patent.”).

17

longer than 180 days because it may delay or decline to

launch its drug. 7

B. Factual and Procedural Background

In 1985, GSK obtained FDA approval for bupropion

hydrochloride, a drug for the treatment of major depressive

disorders. The drug became branded as “Wellbutrin.” Over

the years, several companies, including GSK, sought to

develop an extended release formulation of bupropion

hydrochloride. While GSK was unsuccessful, at least two

companies – Biovail and Andrx Pharmaceuticals, LLC –

found success and obtained patents covering extended release

7

While the exclusivity period can be forfeited if the

first-filer fails to market its drug, it can take time to trigger

the forfeiture. “Forfeiture applies only upon the satisfaction

of two statutory conditions. The first condition [(i.e., the

failure to market the drug either within 75 days of the date the

ANDA was approved or within 30 months of the date the

ANDA was submitted, whichever comes earlier)] is relatively

easy to satisfy. The second is triggered only if an appeals

court rules that the relevant patents are invalid or not

infringed, or if a settlement reaches a similar result.” C. Scott

Hemphill, An Aggregate Approach to Antitrust: Using New

Data and Rulemaking to Preserve Drug Competition, 109

Colum. L. Rev. 629, 660-61 (2009) (footnotes omitted). That

rule “allows first-filers to retain their exclusivity by settling.”

Chika Seidel, Comment, Settlement Should be the End of

Story: A Proposed Procedure to Settle Hatch-Waxman

Paragraph IV Litigations Modeled After Rule 23 Class Action

Settlement Procedure, 46 Seton Hall L. Rev. 697, 706-07

(2016) (footnote omitted).

18

formulations of the drug. 8 To gain access to an extended

release formulation, GSK obtained an exclusive license to

certain of Biovail’s patents. Then, in August 2002, GSK filed

an NDA for that new formulation, which was approved the

following year. The extended release Wellbutrin was named

“Wellbutrin XL.”

Between September 2004 and May 2005, four generic

manufacturers filed ANDAs seeking approval to market

generic versions of Wellbutrin XL. Each of the four

companies – Anchen, Abrika, Impax, and Watson – filed a

paragraph IV certification. 9 Of those companies, Anchen was

the first to file its ANDA, and, as a result, was entitled to the

180-day period of exclusivity.

Biovail filed patent infringement suits against all four

generic companies. With one exception, it filed its several

suits within 45 days of receiving each of the would-be

8

Biovail obtained U.S. Patents 6,096,341 and

6,143,327 (the ’341 and ’327 patents), while Andrx obtained

U.S. Patent 6,905,708 (the ’708 patent). At the time that

Biovail and Andrx were conducting their research, it appears

that most or all of the information relating to bupropion

hydrochloride and its delivery mechanisms was in the public

domain. Neither Biovail nor Andrx needed to obtain a license

from GSK in order to conduct its research.

9

The companies’ full names are Anchen

Pharmaceuticals, Inc., Abrika Pharmaceuticals, LLP, Impax

Laboratories, Inc., and Watson Pharmaceuticals, Inc.,

respectively.

19

competitors’ paragraph IV certifications. As explained

above, that triggered a stay that generally prevented the FDA

from approving the ANDAs for 30 months, or until the

resolution of the respective patent suits, whichever came first.

Biovail did not file suit within the required 45-day period

against Impax’s 300 mg dosage of extended release

bupropion hydrochloride. Impax was therefore not subject to

the 30-month stay with respect to that product. GSK joined

Biovail’s suits against Anchen and Abrika but not the suits

against Impax and Watson. 10

In addition to its lawsuits, Biovail filed a “Citizen

Petition” with the FDA on December 20, 2005. 11 Biovail

asked the FDA to impose certain requirements for approval of

any generic version of Wellbutrin XL. The FDA issued a

final response to the Petition in December 2006, granting it in

part and denying it in part.

On December 21, 2005, Andrx filed suit against GSK,

alleging that Wellbutrin XL, in 150 mg dosages, violated

Andrx’s ’708 patent, see supra n.8. Andrx also filed suit

10

GSK’s CEO, Jean-Pierre Garner, explained that

GSK elected not to join the suits against Impax or Watson

because it did not believe it would have sufficient control

over the litigation.

11

Interested citizens may “petition the Commissioner

[of the FDA] to issue, amend, or revoke a regulation or order,

or to take or refrain from taking any other form of

administrative action.” 21 C.F.R. § 10.25. GSK elected not

to join Biovail’s FDA petition.

20

against Anchen for infringing the same patent with a generic

version of Wellbutrin XL. In both cases, Andrx sought

damages and an injunction against the sale of infringing

products. In February 2007, all of the parties involved in the

Wellbutrin-related patent litigation, except for Abrika,

entered into a settlement. 12

The next year, in May 2008, this litigation began. Two

putative classes – a class of direct purchasers (e.g., entities

like pharmacies that purchased Wellbutrin XL directly from

GSK) and a class of indirect purchasers (e.g., consumers) –

filed suits against Biovail and GSK. 13 As noted at the outset

12

Abrika settled with Biovail a few months later, after

GSK had withdrawn from the suit.

13

The direct-purchaser class includes “[a]ll persons or

entities in the United States ... who purchased Wellbutrin XL

directly from any of the Defendants at any time during the

period November 14, 2005 through August 31, 2009... .” (JA

3.) In total, the class contains over 30 members. When

certified, the indirect-purchaser class included “[a]ll persons

or entities who purchased an [appropriately FDA- rated]

generic bioequivalent of Wellbutrin XL ... at any time

[between November 14, 2005 and April 29, 2011] in

California, Florida, Nevada, New York, Tennessee and

Wisconsin; and ... [a]ll entities that purchased 150 mg or

300 mg Wellbutrin XL before an [appropriately FDA-rated]

generic bioequivalent was available for such dosages AND

purchased generic XL in the same state after generic XL

became available in California, Florida, Nevada, New York,

Tennessee and Wisconsin.” (Appendix for 15-2875 at 6.)

21

of this opinion, both sets of plaintiffs alleged that Biovail and

GSK conspired to prevent generic versions of Wellbutrin XL

from entering the market. The instrumentalities of the alleged

conspiracy were, according to the Plaintiffs, sham lawsuits, a

sham FDA petition, and an unlawful reverse payment

settlement. The direct purchasers brought their claims under

federal law, while the indirect purchasers brought their claims

under various state laws. Biovail settled with both classes in

November 2012, so only GSK has remained as a defendant. 14

The District Court had earlier granted summary

judgment for GSK on the merits on all of the claims. First,

the Court granted summary judgment on the sham petition

claims. Shortly after that, it stayed both the direct-purchaser

and indirect-purchaser cases while the Supreme Court

considered potentially relevant petitions for writs of

certiorari. The District Court continued the stay in

anticipation of the Supreme Court’s decision in FTC v.

Actavis, Inc., 133 S. Ct. 2223 (2013). After the Actavis

opinion issued, the District Court granted summary judgment

for GSK on the reverse payment claims.

The District Court also rendered decisions regarding

class certification. It at first certified both putative classes.

Later, however, it concluded that the indirect-purchaser class

only had standing “under the laws of those states where the

plaintiffs are located or their members reside.” (JA 243.)

The Court thus dismissed the claims arising under the laws of

states that were not represented by one of the named

plaintiffs. In response, Aetna moved to intervene in the

14

The two cases proceeded independently in the

District Court, but were consolidated on appeal.

22

indirect-purchaser suit. It alleged that it had purchased brand

and generic Wellbutrin XL in all fifty states, and that,

consequently, its intervention would alleviate the standing

issues. The Court denied Aetna’s motion. In June 2015, the

Court granted a motion to decertify the indirect-purchaser

class on ascertainability grounds.

Before us on appeal are the following rulings: the grant

of summary judgment to GSK on all claims, the exclusion of

the testimony of the Appellants’ economic expert, the

decertification of the indirect-purchaser class, the dismissal of

certain of the indirect-purchaser Appellants’ claims for lack

of standing, and the denial of Aetna’s motion to intervene.

GSK also conditionally challenges the certification of the

direct-purchaser class. And, should the indirect purchasers

succeed in overcoming the ascertainability objection to

certification of their class, GSK also conditionally appeals

any certification of that class, citing problems with

numerosity.

23

II. Discussion 15

A. Sham Litigation

The first broad issue on appeal is whether the District

Court erred in granting summary judgment on the sham

litigation claims. The Appellants argue that GSK violated

antitrust laws by conspiring with Biovail to prosecute sham

lawsuits against Anchen, Abrika, Impax, and Watson, and to

file a sham petition with the FDA. According to the

Appellants, GSK and Biovail worked together to press the

infringement lawsuits in order to exploit the mandatory 30-

month stay created by the Hatch-Waxman Act. The

Appellants also allege that, but for the lawsuits and the FDA

petition, the FDA would have approved Anchen’s ANDA

immediately and likewise would have approved the other

three ANDAs at the end of Anchen’s 180-day exclusivity

15

The District Court had subject matter jurisdiction

over the direct purchasers’ claims under 15 U.S.C. § 15(a)

and 28 U.S.C. §§ 1331, 1332, and 1337. The District Court

had subject matter jurisdiction over the indirect purchasers’

claims under 28 U.S.C § 1332(d)(2). We have jurisdiction

over the appeal pursuant to 28 U.S.C. § 1291.

“We exercise plenary review over a district court’s

order granting summary judgment, applying the same

standard as the district court. We will affirm only if drawing

all reasonable inferences in favor of the nonmoving party,

there is no genuine issue as to any material fact and the

moving party is entitled to judgment as a matter of law.”

Young v. Martin, 801 F.3d 172, 177 (3d Cir. 2015) (internal

quotation marks, citations, and modifications omitted).

24

period. The assertion is that, without the delay in ANDA

approvals, Anchen and the other generics would have

launched their products sooner, resulting in increased

competition and lower drug prices for pharmacies and

consumers.

1. Applicable Law

A plaintiff claiming that a lawsuit is, by its very

existence, anticompetitive and unlawful faces an uphill battle.

It is well-established that the First Amendment protects the

right to petition the government and to have access to the

courts. Prof’l Real Estate Inv’rs, Inc. v. Columbia Pictures

Indus., Inc., 508 U.S. 49, 56-57 (1993); 16 Cal. Motor Transp.

Co. v. Trucking Unlimited, 404 U.S. 508, 515 (1972); see also

U.S. Const. amend. I (“Congress shall make no law ...

abridging ... the right of the people ... to petition the

Government for a redress of grievances.”). That protection is

the basis of the Noerr-Pennington doctrine, which holds that

“[t]hose who petition [the] government for redress are

generally immune from antitrust liability.” 17 PRE, 508 U.S.

16

We will refer to Professional Real Estate Investors

v. Columbia Pictures Industries, 508 U.S. 49 (1993),

throughout this opinion as “PRE.”

17

The Noerr-Pennington doctrine “takes its name from

Eastern R.R. Presidents Conference v. Noerr Motor Freight,

Inc., 365 U.S. 127 (1961) (holding that railroads’ publicity

campaign to promote support for laws harmful to trucking

interest was immune from antitrust liability), and United Mine

Workers of America v. Pennington, 381 U.S. 657 (1965)

(joint efforts by miners’ union and large coal companies to

25

at 56. Noerr-Pennington immunity, however, is not absolute.

“[A]ctivity ‘ostensibly directed toward influencing

governmental action’ does not qualify for [first amendment]

immunity if it ‘is a mere sham to cover ... an attempt to

interfere directly with the business relationships of a

competitor.’” Id. at 51 (third alteration in original) (quoting

E. R.R. Presidents Conference v. Noerr Motor Freight, Inc.,

365 U.S. 127, 144 (1961)).

To determine whether a lawsuit qualifies as a “sham,”

courts apply a two-part test:

First, the lawsuit must be objectively baseless in

the sense that no reasonable litigant could

realistically expect success on the merits. If an

objective litigant could conclude that the suit is

reasonably calculated to elicit a favorable

outcome, the suit is immunized under Noerr,

and an antitrust claim premised on the sham

exception must fail. Only if challenged

litigation is objectively meritless may a court

examine the litigant’s subjective motivation.

Under this second part ..., the court should

focus on whether the baseless lawsuit conceals

an attempt to interfere directly with the business

relationships of a competitor through the use of

the governmental process—as opposed to the

outcome of that process—as an anticompetitive

have federal agency impose higher minimum wage for coal

suppliers to TVA were immune from antitrust liability).”

Mercatus Grp., LLC v. Lake Forest Hosp., 641 F.3d 834, 841

(7th Cir. 2011).

26

weapon. This two-tiered process requires the

plaintiff to disprove the challenged lawsuit’s

legal viability before the court will entertain

evidence of the suit’s economic viability.

PRE, 508 U.S. at 60-61 (internal quotation marks, citations,

alteration, and footnote omitted). 18

The Supreme Court has explained that “[t]he existence

of probable cause to institute legal proceedings precludes a

finding that an antitrust defendant has engaged in sham

litigation.” Id. at 62. In selecting “probable cause” as the

standard by which to judge objective baselessness, the Court

said that it was drawing from “[t]he notion of probable cause,

as understood and applied in the common law tort of

wrongful civil proceedings[.]” Id. A litigant has probable

cause to initiate a suit if the litigant has “a reasonable belief

that there is a chance that a claim may be held valid upon

adjudication.” Id. at 62-63 (internal citations, quotation, and

alterations omitted); see also Restatement (Second) of Torts

§ 675. In other words, the essential question is not whether

18

The Supreme Court in PRE indicated that the

plaintiff in an antitrust suit has the burden of proving that the

defendant is not entitled to immunity under the Noerr-

Pennington doctrine. See PRE, 508 U.S. at 61 (explaining

that a plaintiff must “demonstrat[e] both the objective and the

subjective components of a sham”). The Court was silent,

however, as to the standard of proof (i.e., clear and

convincing evidence, or preponderance of the evidence)

needed to show objective baselessness. Because our decision

in this case does not hinge on the standard of proof, we leave

that question for another day.

27

the suit succeeds, but whether the suit was a sham at the time

it was filed. See PRE, 508 U.S. at 60 n.5 (cautioning that

“when the antitrust defendant has lost the underlying

litigation, a court must resist the ... temptation to engage in

post hoc reasoning by concluding that an ultimately

unsuccessful action must have been unreasonable or without

foundation” (internal quotations omitted)).

In addition, it is not enough for a plaintiff to show that

a defendant engaged in sham litigation. “[A] plaintiff who

defeats the defendant’s claim to Noerr immunity ... must still

prove a substantive antitrust violation.” Id. at 61. That

includes proving the challenged lawsuit is “causally linked”

to an antitrust injury. Brunswick Corp. v. Pueblo Bowl-O-

Mat, Inc., 429 U.S. 477, 489 (1977) (describing antitrust

injury as “injury of the type the antitrust laws were intended

to prevent and that flows from that which makes defendants’

acts unlawful”).

As noted earlier, the Appellants argue that each of the

patent infringement suits relating to generic versions of

Wellbutrin XL (that is, each of the suits against Anchen,

Abrika, Watson, and Impax), as well as the Citizen Petition,

was an instance of anticompetitive sham litigation or sham

petitioning that caused antitrust injury by delaying the entry

of generic versions of Wellbutrin XL into the market. The

District Court granted summary judgment to GSK with

respect to each of the five challenged actions. We agree that

the sham litigation claims fail, for reasons we now endeavor

to explain.

28

2. The Anchen Lawsuit

The sham litigation claim relating to the Anchen suit

fails for the simple reason that an act of infringement plainly

occurred. The already high hurdle for stating an antitrust

claim for anticompetitive litigation, PRE, 508 U.S. at 56, is

higher still in the context of an ANDA case because, as

described above, the Hatch-Waxman Act states that “[i]t shall

be an act of infringement to submit” an ANDA for a drug

claimed in a patent, 35 U.S.C. § 271(e)(2). Since the

submission of an ANDA is, by statutory definition, an

infringing act, an infringement suit filed in response to an

ANDA with a paragraph IV certification could only be

objectively baseless if no reasonable person could disagree

with the assertions of noninfringement or invalidity in the

certification. See AstraZeneca AB v. Mylan Labs., Inc., No.

00-cv-6749, 2010 WL 2079722, at *4 (S.D.N.Y. May 19,

2010) (“[A]t the outset of Astra’s case, Mylan gave Astra an

objectively reasonable basis to sue: Mylan provided Astra

notice of its Paragraph IV certification.”), aff’d sub nom. In re

Omeprazole Patent Litig., 412 Fed. App’x 297 (Fed Cir.

2011). It suffices here to say that this case does not present

such a circumstance. Anchen filed an ANDA for a drug that

was claimed in Biovail’s ’341 patent. There is nothing in the

record indicating that Biovail, the patentee, and GSK, the

exclusive licensee, 19 were less than objectively reasonable in

19

“Because the legally protected interests in a patent

are exclusionary rights created by the Patent Act, a party

holding one or more of those exclusionary rights—such as an

exclusive licensee—suffers a legally cognizable injury when

an unauthorized party encroaches upon those rights and

29

acting on that technical act of infringement, and that alone

provides a sufficient basis for us to affirm the District Court’s

grant of summary judgment.

The content of the ANDA bolsters that conclusion. As

explained above, Wellbutrin XL used a formulation of

bupropion hydrochloride described in Biovail’s ’341 patent.

That patent discloses, among other things, “a core comprising

bupropion hydrochloride and conventional excipients, free of

stabilizer” (JA 3117, ’341 patent at 9:50-51 (emphasis

added).) Anchen’s paragraph IV certification asserted that

“Anchen’s proposed product cannot be deemed literally to

infringe [the patent] because it includes a stabilizing amount

of hydrochloric acid in the core[,]” and thus does not satisfy

the “free of stabilizer” limitation. (JA 35714); see also

Pfizer, Inc. v. Teva Pharm., USA, Inc., 429 F.3d 1364, 1376

(Fed. Cir. 2005) (explaining that a product must satisfy each

of a claim’s limitations in order to infringe). But Anchen’s

ANDA suggested otherwise. It included several tables listing

the ingredients that would be present in Anchen’s drug, along

with the relative percentages of each. While the tables listed

hydrochloric acid, which can serve as a stabilizer, 20 they

indicated that the acid would compose 0% of the final

product. To the same effect, the percentages associated with

the other listed ingredients summed to 100%. As if to

emphasize that point, the tables explicitly stated that the

therefore has standing to sue.” WiAV Solutions LLC v.

Motorola, Inc., 631 F.3d 1257, 1264-65 (Fed. Cir. 2010).

20

Hydrochloric acid is a stabilizing agent. (See

Anchen’s paragraph IV certification, JA 35714 (referring to

hydrochloric acid as a stabilizing agent).)

30

hydrochloric acid had been “removed” or “evaporated” from

the drug. (JA 11748-52.) That language provided GSK and

Biovail with sufficient probable cause to file its infringement

suit, and no reasonable jury – i.e., no jury considering the

sham litigation claim – could conclude otherwise. See Abbott

Labs. v. TorPharm, Inc., 300 F.3d 1367, 1373 (Fed. Cir.

2002) (holding that the ANDA specification governs the

infringement inquiry).

The parties and the District Court invested

considerable effort in addressing two subsidiary questions –

whether FDA regulations required Anchen to quantify the

amount of stabilizer present in its drug, and whether Biovail

asserted a frivolous claim construction position. Those

disputes are ultimately irrelevant. The question here is

whether GSK and Biovail could have perceived “some

likelihood of success” in their case at the time of filing. PRE,

508 U.S. at 65; Rohm & Haas Co. v. Brotech Corp., 127 F.3d

1089, 1093 (Fed. Cir. 1997) (concluding that courts should

evaluate the question of objective baselessness “in light of ...

information [available] at the time of filing”). At that time,

the only information they had access to was an excerpt of

Anchen’s ANDA – an excerpt that, under a plain reading,

suggested the non-infringement theory offered in Anchen’s

paragraph IV certification was, or at least could be, infirm.

Viewed in that light, the FDA’s rules regarding quantification

are insufficient to override the probable cause provided in the

ANDA. Again, the fact that one might conclude, after a

thorough investigation, that Anchen’s ANDA did not

definitively exclude the presence of hydrochloric acid does

not mean it was unreasonable for GSK and Biovail to file

their suit, as it was not unreasonable for them to take the

31

ANDA at face value. 21 Similarly, the fact that a court (in the

underlying patent litigation) rejected Biovail’s later proposed

claim construction does not bear on whether the patent

infringement suit was objectively baseless from the outset. 22

21

As explained above, Anchen’s ANDA quantified the

amount of hydrochloric acid in its drug as “--” and indicated

that the other ingredients summed to 100%. The Appellants

argue that, under standard industry convention, “--” denotes a

residual quantity greater than zero. However, they do not

point to any evidence showing that GSK and Biovail’s

interpretation of either “--” or “100%” was unreasonable.

More to the point, they have not demonstrated that it was

unreasonable to view the claim language “free of stabilizer”

as covering a residual amount so small as to not register in the

tables they provided.

22

It is worth noting that GSK withdrew from the case

well before claim construction began. While it is no doubt

important to think about possible constructions for patent

claims before filing a case, it would be unfair to require

parties to divine the outcome of claim construction before

filing. That is especially true in the Hatch-Waxman context,

where many details about the potentially infringing drug

(details that could shape a plaintiff’s claim construction

position) cannot be known at the time a suit is filed and where

there are congressionally designed pressures to file suit

quickly. See 21 U.S.C. § 355(b)(3)(D) (stating that an ANDA

applicant is required to provide notice to patentees

“includ[ing] a detailed statement of the factual and legal basis

of the opinion of the applicant that the patent[s] [are] invalid

or will not be infringed,” but refraining from requiring

ANDA applicants to submit any additional information). The

32

See Rohm & Haas Co., 127 F.3d at 1092 (explaining that

“[p]atent litigation is complex, long, and difficult” and that

parties and courts rely on “discovery procedures, partial or

complete summary judgment, and evidentiary rules to narrow

the issues”).

The Appellants also argue that the District Court

“usurp[ed] the role of the jury” by “find[ing] facts.” (Op. Br.

53-54.) We disagree. In PRE, the Supreme Court held that

courts can grant summary judgment on the issue of objective

baselessness if “there is no dispute over the predicate facts of

the underlying legal proceeding.” 508 U.S. at 63. Here, the

predicate facts include the content of Anchen’s ANDA. The

existence of that content – as opposed to its accuracy – is not

in dispute. Instead, the parties disagree about whether that

content was sufficient to establish probable cause for the

time limits imposed by the Hatch-Waxman Act embody a

“file-now, discover-details-later” policy, and while the merit

of that policy may make for an interesting debate, Aaron S.

Kesselheim & Jonathan J. Darrow, Hatch-Waxman Turns 30:

Do We Need a Redesigned Approach for the Modern Era?, 15

Yale J. Health Pol’y, L. & Ethics 293 (2015) (describing the

debate over whether the Act is good policy), it is not our

place – nor was it GSK’s – to take that debate on. We decline

to apply the antitrust laws in a way that would undermine the

operation of Hatch-Waxman.

It is likewise a painful stretch to say that Biovail’s

claim construction arguments show GSK was wrong to join in

the initial decision to file against Anchen. At the time the suit

was filed, GSK was not obligated to know the details of claim

construction arguments that Biovail would later present.

33

objective baselessness inquiry. PRE, 508 U.S. at 62. That,

however, is a legal question, not a factual one. Highmark,

Inc. v. Allcare Health Mgmt. Sys., Inc., 701 F.3d 1351, 1353

(Fed. Cir. 2012) (“Under PRE, the reasonableness of a legal

position … is itself a question of law[.]”); Stewart v.

Sonneborn, 98 U.S. 187, 194 (1878) (“[P]robable cause is a

question of law in a very important sense. ... Whether the

circumstances alleged to show it probable are true, and

existed, is a matter of fact; but whether, supposing them to be

true, they amount to a probable cause, is a question of law.”).

In granting summary judgment, the District Court decided

that GSK’s suit “[did] not fit the profile of objectively

baseless sham litigation.” (JA 72, 95.) It was entitled to

reach that legal conclusion. 23

There is an additional problem with the Appellants’

argument that warrants discussion. As we noted earlier, to

establish an antitrust claim for anticompetitive litigation, the

Appellants had to show not only that GSK’s litigation was a

sham, but also that it caused an antitrust injury by delaying

generic competition. Based on the current record, they would

have difficulty making such a showing, for at least two

reasons. First, generic entry would have been blocked by

Biovail’s continuing litigation against Anchen, in which GSK

did not participate. Under Hatch-Waxman, the rule requiring

the FDA to delay approving an ANDA is based not simply on

the filing of a lawsuit but on the ongoing presence of a

lawsuit. See 21 U.S.C. § 355(j)(5)(B)(iii) (stating that the

FDA may approve an ANDA as soon as “the district court

23

That the Court elected at times to use the verb “find”

instead of “conclude” does not change our decision.

34

decides that the patent is invalid or not infringed”). GSK

withdrew from the underlying litigation just a few months

after the case was filed. Biovail, however, continued to

pursue the suit. That is significant, as it means that the delay

in competition based on the lawsuit should likely be attributed

to Biovail rather than to GSK. 24

Second, and perhaps more formidably, generic entry

would have been blocked by the ’708 patent owned by Andrx.

We address the Andrx patent in more detail in the context of

the reverse payment settlement. The implications for

causation, however, apply just as much to the Appellants’

sham litigation claims as they do to their reverse payment

claims.

24

GSK and Biovail filed their suit against Anchen on

December 21, 2004. GSK withdrew from the case exactly

four months later, on April 21, 2005, long before the 30-

month stay expired. In order to prevail against GSK, the

Appellants must show that at least some delay can be

attributed to GSK’s actions in the case – that is, they must

show that at least some delay can be attributed to the first four

months of the litigation. There is no evidence in the record

indicating that any delay can be linked to that period of time.

In a heading in their statement of undisputed facts, the

Appellants state that “GSK Withdrew From the Anchen and

Abrika Cases But Not the Conspiracy[.]” It takes some

chutzpah to use that language, as GSK plainly disputes that it

was ever in a conspiracy with Biovail. We consider the

conspiracy argument in more detail below.

35

3. The Abrika Lawsuit

The Appellants contend that GSK and Biovail’s suit

against Abrika was another instance of anticompetitive

litigation. As before, they argue that GSK and Biovail are not

entitled to Noerr-Pennington immunity because the lawsuit

was a sham. The District Court granted summary judgment

to GSK based on its conclusion that there was insufficient

evidence to show that the litigation delayed Abrika’s entry

into the market. Again, we agree.

As an initial matter, we note that two of the arguments

that defeated the Appellants’ claim relating to the Anchen

litigation also justify affirming the District Court on this

point. First, Abrika’s ANDA, including the paragraph IV

certification, provided GSK with an objectively reasonable

basis to file its suit. 25 Additionally, as in the Anchen case,

GSK initially joined with Biovail in the infringement suit, but

then withdrew, and Biovail continued to litigate. That means

that any delay attributable to the litigation would have existed

even without GSK’s involvement.

Moreover, there is an independent problem with the

causation theory as it relates to the Abrika litigation. The

Appellants argue that the infringement suit against Abrika

delayed Abrika’s entry into the market because the suit

25

Without parsing the Abrika ANDA in the same

detail as we did Anchen’s, it suffices to say that the

Appellants have not provided evidence to demonstrate that it

was objectively unreasonable for Biovail and GSK to act on

the technical act of infringement that the ANDA and

paragraph IV certification provided.

36

imposed a 30-month stay on the FDA’s approval of Abrika’s

ANDA. There is, however, no evidence that Abrika could

have launched even in the absence of the 30-month stay. To

the contrary, it is undisputed that the FDA could not have

approved Abrika’s ANDA until the end of Anchen’s 180-day

first-filer exclusivity period, a period that would not even

start until Anchen launched its drug. Thus, it should surprise

no one to learn that, while the 30-month stay imposed by

GSK’s suit expired on June 21, 2007, Abrika’s ANDA was

not approved until over a year later, after Anchen’s

exclusivity period came to an end. In responding to those

facts, the Appellants in their Reply Brief appear to abandon

their argument that it was the Abrika lawsuit that caused

delay. Instead, they argue that the delay was caused by the

suit against Anchen. That argument, however, is unavailing

for the reasons already stated. Because there is no evidence

showing that GSK’s lawsuit against Abrika actually delayed

Abrika’s entry into the market, the District Court rightly

rejected it as a basis of liability.

4. The Impax and Watson Lawsuits and the

Appellants’ Conspiracy Theory

In contrast with the Anchen and Abrika lawsuits, GSK

never joined the infringement litigation against Impax and

Watson. Biovail pursued those suits on its own.

Nevertheless, the Appellants argue that all of Biovail’s

Wellbutrin-related litigation was brought in furtherance of a

conspiracy with GSK. Once again, their arguments are

wanting.

To avoid an adverse summary judgment on an antitrust

conspiracy claim, a plaintiff must “present evidence ‘that

37

tends to exclude the possibility’ that the alleged conspirators

acted independently.” Matsushita Elec. Indus. Co., Ltd. v.

Zenith Radio Corp., 475 U.S. 574, 588 (1986) (quoting

Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764

(1984)). “[A] plaintiff must offer enough evidence that the

inference of conspiracy is reasonable in light of the

competing inferences of independent action ... .” Cosmetic

Gallery, Inc. v. Schoeneman Corp., 495 F.3d 46, 51 (3d Cir.

2007) (internal quotation marks and citation omitted). Mere

communication between alleged co-conspirators, without

more, is not sufficient to defeat the presumption of

independent action. See In re Baby Food Antitrust Litig., 166

F.3d 112, 133 (3d Cir. 1999) (concluding that courts reject

conspiracy claims that “seek to infer agreement from …

communications despite a lack of independent evidence

tending to show an agreement” (citation omitted) (alteration

in original)); Alvord-Polk, Inc. v. F. Schumacher & Co., 37

F.3d 996, 1014 (3d Cir. 1994) (“Plaintiffs … seek to infer an

agreement from those communications despite a lack of

independent evidence tending to show an agreement and in

the face of uncontradicted testimony that only informational

exchanges took place. Without more, they cannot do so.”).

The Appellants have markedly failed to offer

meaningful evidence that excludes the possibility that Biovail

acted independently. With respect to the suits against Impax

and Watson, the evidence that the Appellants do point to is a

“common interest agreement” between Biovail and GSK, 26 a

26

GSK and Biovail did not produce the common

interest agreement. Instead, the parties stipulated that “[u]pon

receiving [Anchen’s] Paragraph [IV] certification ... GSK and

Biovail reached a common interest agreement with respect to

38

communication between Biovail and GSK in which GSK

forwarded Impax’s paragraph IV certification, and an email

from Biovail to GSK’s outside counsel stating that Biovail

had not heard from GSK with respect to the Impax litigation

and that Biovail “[did] not want to let the 45-day clock expire

without consciously dealing with the issue.” 27 (JA 2347.)

That evidence is insufficient. Biovail was the patentee and

GSK the exclusive licensee on directly relevant technology,

so communication between them acknowledging a common

interest is hardly surprising and does not come close to

supporting an inference that there was an unlawful conspiracy

to stifle competition. Likewise, it is not surprising to see that

the companies exchanged e-mails relating to their shared

interest. The e-mails containing Impax’s paragraph IV

certification and acknowledging Hatch-Waxman’s 45-day

litigation window are the sort one would expect from two

companies that share an interest in a pharmaceutical patent.

That communication does not amount to a conspiracy to

engage in sham litigation. See In re Nexium (Esomeprazole)

Antitrust Litig., 842 F.3d 34, 56 (1st Cir. 2016) (explaining

that pharmaceutical companies have valid reasons for

their common legal interest in potential infringement of [the

’341 and ’327 patents] by Anchen or the filers of any

additional ANDAs and related Paragraph [IV] notices ... .”

(JA 11513.) GSK and Biovail further stipulated that the

common interest agreement “related to the Paragraph [IV]

certifications of [Anchen, Abrika, and Impax]” as well as the

Anchen and Abrika actions. (Id.)

27

The Appellants do not have any evidence regarding

communication between Biovail and GSK with respect to the

Watson suit.

39

communicating with each other, and concluding that evidence

of such communication, without more, is not enough to

establish an unlawful conspiracy).

The Appellants do not fare any better with respect to

their claim that the Impax and Watson suits were brought as

part of a larger conspiracy involving all four infringement

actions, the Citizen Petition filed with the FDA, and the

overall settlement agreement. Bare allegations cannot defeat

summary judgment, and the Appellants have not pointed to

any evidence to support their theory that there was a larger,

overarching conspiracy.

5. The FDA Citizen Petition

Biovail (but not GSK) filed a Citizen Petition with the

FDA, expressing concern regarding the sufficiency of the

FDA’s bioequivalence criteria for generic versions of

Wellbutrin XL. 28 Biovail requested the FDA to require all

generic manufacturers of the drug to do the following four

things:

28

As already discussed, for a generic manufacturer to

obtain FDA approval of an ANDA, the manufacturer must

demonstrate that its drug is bioequivalent to a drug that went

through the rigorous NDA approval process. Actavis, 133 S.

Ct. at 2228. “Bioequivalence is the absence of a significant

difference in the rate and extent to which the active ingredient

or active moiety in pharmaceutical equivalents or

pharmaceutical alternatives becomes available at the site of

drug action when administered at the same molar dose under

similar conditions in an appropriately designed study.” 21

C.F.R. § 314.3 (2016).

40

(1) demonstrate that the generic formulation of

[the drug] is bioequivalent to Wellbutrin ...

Wellbutrin SR ... and Wellbutrin XL;

(2) calculate and evaluate parameters in all of

its bioequivalence trials based on concentrations

of the patent drug and active metabolites; ...

(3) conduct its bioequivalence trials at steady-

state... [; and]

[(4)] ... provide in vitro data demonstrating the absence

of dose dumping if generic bupropion HCl extended-

release tablets are consumed with alcohol.

(JA 37509.) Six months after receiving the Petition, the FDA

issued an interim response stating that the FDA “has been

unable to reach a decision on [the] petition because it raises

complex issues requiring extensive review and analysis by

Agency officials.” (JA 37507.)

Another six months passed and, on December 14,

2006, the FDA issued its final response to the Petition,

granting it in part, and denying it in part. The final response

came on the same day that the FDA approved Anchen’s

ANDA. The Appellants allege that Biovail’s Citizen Petition

was anticompetitive and unlawful because, again, it was filed

in furtherance of a conspiracy with GSK to delay generic

entry. The District Court rejected that contention, concluding

that the Appellants failed to “raise[] a genuine issue of

material fact as to whether the unsuccessful and allegedly

sham requests[(among the four requests Biovail made to the

FDA)] caused any delay beyond the non-sham requests[.]”

41

(JA 127.) The Court also concluded that the Appellants failed

to show that Biovail filed the Petition as part of a conspiracy

with GSK.

On appeal, the Appellants argue that each of the four

requests in the Petition was a sham, that there is no

requirement to show the extent to which the delay was caused

by sham requests (as opposed to meritorious requests), and

that there was evidence to show that the Petition was filed as

part of a conspiracy between Biovail and GSK. Those

arguments, though, are no more persuasive now than they

were before the District Court.

The most straightforward basis for affirmance is, once

more, that the Appellants have failed to identify evidence

showing that there was a conspiracy between Biovail and

GSK, in this instance relating to the FDA petition. Just as

with the sham litigation conspiracy claims, the Appellants

must “present evidence ‘that tends to exclude the possibility’

that the alleged conspirators acted independently[,]”

Matsushita, 475 U.S. at 588 (quoting Monsanto Co., 465 U.S.

at 764), and must “offer enough evidence that the inference of

conspiracy is reasonable in light of the competing inferences

of independent action … .” Cosmetic Gallery, 495 F.3d at 51

(internal quotation marks omitted). They have not met that

burden. There is no evidence in the record showing that

Biovail and GSK collaborated, let alone illegally conspired,

on Biovail’s Citizen Petition, and there is no evidence

showing that Biovail filed the Petition at the direction of GSK

or in furtherance of a plan involving GSK. On the contrary,

the record indicates that GSK was not aware of Biovail’s

42

specific plans to file a petition, 29 that neither GSK nor Biovail

wanted to collaborate on a petition, 30 that GSK refused to

share its data with Biovail for use in a petition, 31 and that

GSK disagreed with the general premise of Biovail’s

Petition. 32

29

Eight days before Biovail filed its Petition, GSK

employees sent an internal email expressing uncertainty as to

whether Biovail had filed a petition.

30

GSK sent a fax to Biovail indicating that it “[did]

not wish to participate in or be associated with ... Biovail

explorations, deliberations, strategizing, decision-making, or

ultimate advocacy with the FDA.” (JA 12356.) Biovail

responded and confirmed that it “[did] not seek the

participation of GSK[.]” (JA 12358.)

31

In e-mail correspondence, GSK employees

acknowledged that “Biovail is curious if we have any

information on metabolites that might form the basis of a

challenge to the standard bioequivalence testing/standards.”

(JA 13281.) In response, Stan Hull, a GSK employee,

explained that “[the] information is available internally, but

has not been shared with Biovail, and it is our

recommendation not to share metabolite data with Biovail.”

(JA 13282.)

32

Indeed, in a heading in their statement of undisputed

facts, the Appellants state that “GSK concluded that the

bioequivalence ... argument was wrong.”

43

In arguing otherwise, the Appellants point to an e-mail

between two Biovail employees noting that “David [S]tout

[who, at the time, was the President of U.S. Pharmaceutical

Operations for GSK ... said that a generic to Wellbutrin XL

would have to prove bioequivalence to [Wellbutrin IR] not to

[Wellbutrin XL] to get approved.” (JA 12621.) Assuming

the relevance of that statement, however, simple

communication does not establish a conspiracy. The

Appellants claim that the e-mail shows that “GSK developed

the [bioequivalence argument] and gave it to Biovail to put in

the petition.” (JA 2383.) But the e-mail does not support that

claim. Nothing in the e-mail indicates that GSK wanted

Biovail to include the bioequivalence argument in a Citizen

Petition – the e-mail does not mention a petition and, in fact,

there was no petition to which GSK could refer – the e-mail

was written over a year and a half before any FDA petition

was filed.

The Appellants also point to an e-mail from David

Stout to several GSK employees that asked the employees to

“coordinate with Biovail on ... [d]eveloping an agreement for

[the concerns relating to bioequivalence, steady-state testing,

and dose-dumping] and formulat[ing] a plan for the filing of

the petition.” (JA 13261.) At the same time, though, the

Appellants ignore a follow-up e-mail indicating that GSK did

not want to move forward with the Petition. A week after

Stout sent his e-mail, he received a response concluding that

“a Citizen’s Petition requesting that all generic versions of

Wellbutrin extended-release products be required to

demonstrate a lack of food effect appears unnecessary as

these are current confirmed requirements.” (JA 13279.) The

evidence is thus inadequate to support the Appellants’ claim

that GSK and Biovail collaborated on Biovail’s Petition,

44

much less that they conspired to use the Petition to suppress

competition. 33 Because we can affirm the District Court on

that basis, we do not need to consider whether GSK is entitled

to Noerr-Pennington immunity with respect to the Petition. 34

33

As was the case with each of the four sham lawsuit

claims, there is another causation problem. As we will

explain in more detail below, Anchen’s launch would have

been delayed by a blocking patent owned by Andrx. That

means that any delay caused by Biovail’s FDA Petition is

irrelevant – the blocking patent would have prevented a

lawful launch even in the absence of Biovail’s Petition.

34

In evaluating Biovail’s Petition, the District Court

considered the Petition as a series of four requests. The Court

concluded that two of the four requests were successful, and

thus not baseless, and that two of the four requests were

potentially baseless. The Court then concluded that GSK was

entitled to summary judgment because the Appellants had

failed to show that their injury was attributable to the

unsuccessful (and potentially sham) requests, rather than to

the successful requests.

We have doubts about that reasoning. The flaw is in

viewing the Petition as four independent requests, rather than

as a single petition. When considering whether a petition is

entitled to immunity, courts should consider whether the

petition as a whole is objectively baseless. See Tyco

Healthcare Grp. LP v. Mut. Pharm. Co., 762 F.3d 1338, 1347

(Fed. Cir. 2014); Cheminor Drugs, Ltd. v. Ethyl Corp., 168

F.3d 119, 123 (3d Cir. 1999) (“[W]e will determine whether

Ethyl’s petition was objectively baseless ... .” (emphasis

added)). While the District Court considered the merit of

each of the Petition’s constituent requests, it did not reach any

45

6. Serial Petitioning

In addition to arguing that GSK engaged in sham

litigation with respect to each of the four suits against generic

manufacturers and the Citizen Petition, the Appellants

contend that GSK engaged in serial petitioning, and thus in an

abuse of the opportunity to litigate. They say that we should

vacate and remand to allow the District Court to evaluate

GSK’s actions in light of Hanover 3201 Realty, LLC v.

Village Supermarkets, Inc., 806 F.3d 162 (3d Cir. 2015), an

opinion we issued after the District Court’s final judgment.

GSK responds that the serial petitioning argument was

waived and that, even if we consider it, Hanover is readily

distinguishable. We decline to vacate and remand because

the Appellants have not demonstrated that GSK engaged in

serial petitioning. 35

conclusions regarding whether the Petition, in toto, was

objectively baseless. As a result, the Court’s consideration of

causation and delay was premature.

35

GSK argues that the Appellants did not properly

preserve the serial petitioning claim below, despite the fact

that the Supreme Court precedent on which Hanover 3201

Realty, LLC v. Village Supermarkets, Inc., 806 F.3d 162 (3d

Cir. 2015), relied was decided “more than 40 years ago,” and

that the Appellants’ trial counsel was familiar with it from a

prior case. (Ans. Br. 64.) The Appellants respond that

asserting a general theory of sham litigation was sufficient

because in doing so, they “recounted a series of meritless

petitions filed to frustrate competition and prolong the

defendants’ monopoly.” (Consolidated Reply Brief of Direct

Purchaser and End-Payor Class Plaintiffs-Appellants 74.) In

46

In Hanover, we held that a plaintiff could more easily

overcome Noerr-Pennington immunity when the defendant

had engaged in multiple legal actions against the plaintiff.

806 F.3d at 180. We explained that, “[w]here there is only

one alleged sham petition, [PRE]’s exacting two-step test

properly places a heavy thumb on the scale in favor of the

defendant.” Id. at 180. “In contrast, a more flexible standard

is appropriate when dealing with a pattern of petitioning.” Id.

In the latter context, we ask “whether a series of petitions

were filed with or without regard to merit and for the purpose

of using the governmental process (as opposed to the outcome

of that process) to harm a market rival and restrain trade.” Id.

To determine whether a practice of petitioning the

government without regard to merit was used, “a court should

perform a holistic review that may include looking at the

defendant’s filing success—i.e., win-loss percentage—as

circumstantial evidence of the defendant’s subjective

motivations.” Id.

At the outset, we reject the contention that GSK

engaged in serial petitioning through “four lawsuits and a

petition[.]” (Op. Br. 116.) GSK was only involved in two of

Hanover, we rejected an argument that the plaintiffs had

waived a serial litigation claim where the plaintiffs

“consistently” argued “that the sham exception applie[d]” and

“alleg[ed] an ‘illegal scheme’ through a ‘series of sham

litigations,’ [that] put Defendants on notice of the relevant

facts[.]” 806 F.3d at 179 n.13. Although the Appellants did

not independently articulate the “series” claim in the District

Court, we conclude that, as in Hanover, the recitation of

sequential litigious activity was sufficient to preserve the

claim.

47

the suits, and then only briefly. GSK did not file suit against

Impax or Watson, nor did it join the Citizen Petition that was

filed with the FDA. Biovail took those steps alone. And we

have already rejected the Appellants’ arguments that GSK

was engaged in a conspiracy with Biovail. When the

Appellants’ serial petitioning claim is reduced to only the

lawsuits against Anchen and Abrika, both of which GSK

withdrew from, it must fail. The test for serial petitioning

announced in Hanover explicitly applies to “a series of legal

proceedings” or “a pattern of petitioning[,]” 806 F.3d at 180,

and two proceedings – each against an independent defendant

– does not constitute a pattern.

The serial petitioning charge is particularly inapt

because GSK’s actions were consistent with the design and

intent of Hatch-Waxman. The Act incentivizes brand-name

drug manufacturers to promptly file patent infringement suits

by rewarding them with a stay of up to 30 months if they do

so. 21 U.S.C. § 355(j)(5)(B)(iii). We are not inclined to

penalize a brand-name manufacturer whose “litigiousness

was a product of Hatch-Waxman.” Kaiser Found. Health

Plan, Inc. v. Abbott Labs., Inc., 552 F.3d 1033, 1047 (9th Cir.

2009). Doing so would punish behavior that Congress sought

to encourage. See id. (recognizing that the “volume of ...

suits” filed by a brand-name manufacturer is “dependent on

the number of generic companies attempting to enter the …

marketplace, a matter over which the [brand-name

manufacturer] ha[s] no control”). For that reason too, we

agree with the District Court’s rejection of the Appellants’

serial petitioning argument.

48

B. Reverse Payment Settlement Agreement

The second major point of contention on appeal relates

to a set of agreements that resolved Biovail’s infringement

suits against Anchen, Impax, and Watson, and Andrx’s

infringement suits against GSK and Anchen. Each of the

agreements was entered into on February 9, 2007, and

together they settled many of the patent disputes related to

Wellbutrin XL. The Appellants argue that the overall

settlement was unlawful and anticompetitive. Before delving

into the details of the agreements, we give some background

on the events leading to the settlement.

1. Events Leading to the Settlement

In January 2006, in anticipation of the FDA’s approval

of Impax’s ANDA, Anchen, Impax, and Teva

Pharmaceuticals U.S.A entered into an agreement under

which Anchen would waive its first-filer exclusivity to allow

Teva to market Impax’s 300 mg version of Wellbutrin XL. 36

Pursuant to that agreement, Impax and Teva launched a

generic version of 300 mg Wellbutrin XL in December 2006.

36

This is Teva’s first appearance in this case. It is

another producer and distributor of generic drugs.

As explained above, because Biovail filed its suit

against Anchen promptly, it was able to delay the approval of

Anchen’s ANDA for 30 months. However, Biovail did not

file against Impax within 45 days of receiving Impax’s

paragraph IV certification. As a result, the only barrier to the

approval of Impax’s ANDA was Anchen’s first-filer

exclusivity period.

49

That same month, Anchen’s ANDA was approved, and

Anchen and Teva entered into a “Distribution and Supply

Agreement,” under which Teva would launch Anchen’s

150 mg version of Wellbutrin XL. At that point, GSK,

Biovail, and Teva (as the distributor for Anchen and Impax)

entered into a “‘standstill’ agreement under which Teva,

Anchen, and Impax agreed not to launch any more 300 mg

generic product or any 150 mg generic product, and Biovail

... agreed not to launch any authorized generic version of

either dosage strength.” 37 (JA 2435.)

In the midst of that standstill, in February 2007, the

parties entered into the series of agreements constituting the

settlement. By that time, Biovail had lost its infringement

suit against Anchen in district court and had an appeal

pending in the United States Court of Appeals for the Federal

Circuit. 38 Each of the other infringement cases was pending

in district court. Also pending was a federal case filed by

Biovail against the FDA challenging the FDA’s treatment of

Biovail’s Citizen Petition.

37

An “authorized generic” is a non-branded version of

a brand-name drug that is produced by the brand-name

company itself.

38

The appeals process was at an early stage – Biovail

filed its notice of appeal on September 13, 2006, and its

opening brief on December 14, 2006.

50

2. The Settlement

Five agreements constituting the overall settlement are

relevant here. The first was between GSK and Andrx and

provided that GSK would settle with Andrx, “paying $35

million to cover past use of the technology described in

Andrx’s patent, plus an ongoing royalty rate in exchange for a

license to the patent.” 39 (Ans Br. 14; see also JA 34043.)

GSK also obtained the right to sublicense the Andrx patent.

The second agreement was a license between Teva and

Biovail. It contained three relevant provisions. First, it

granted Teva a 180-day exclusive license to certain Biovail

patents, 40 so that Teva could sell a 150 mg version of generic

Wellbutrin XL beginning on May 30, 2008, or earlier if

Biovail lost its appeal in the Anchen case. 41 Second, the

agreement granted Teva an exclusive license to Biovail

patents so that it could sell a 300 mg version of generic

39

In November 2006, Andrx was acquired by Watson.

For simplicity, we will continue to refer to Andrx by that

name.

40

To ensure that the license would, in fact, be

exclusive, Biovail amended its development agreement with

GSK. To facilitate the settlement, GSK agreed to refrain

from launching an authorized generic version of 150 mg

Wellbutrin XL for the duration of Teva’s exclusive license.

41

The agreement contained five other “trigger”

provisions that would allow Teva to market generic versions

of Wellbutrin. None of the other provisions is relevant here.

51

Wellbutrin XL. 42 The license ran from December 13, 2006

through June 12, 2007. 43 Finally, the agreement required

Biovail to provide Teva with a supply of 150 mg and 300 mg

generic Wellbutrin XL. 44 Specifically, Biovail agreed to

supply Teva with 75 million tablets of the 150 mg dosage.

The agreement also contained two unlimited supply

provisions (one for the 150 mg dosage and one for the 300

mg dosage), obligating Biovail to provide Teva with an

unlimited supply of Wellbutrin XL in the event that Biovail’s

Citizen Petition ended up interfering with Teva’s launch.

The third agreement was between Anchen and Biovail.

In that agreement, Biovail granted Anchen a sublicense to

Andrx’s ’708 patent – the patent that had been the subject of

litigation involving Anchen’s 150 mg generic version of

Wellbutrin XL. 45 The parties also acknowledged that the

42

Biovail and GSK similarly amended their

development agreement to preclude GSK from launching an

authorized generic version of 300 mg Wellbutrin XL.

43

The license was written to retroactively authorize the

sales that Teva had made prior to entering the license

agreement. The Appellants contend that the license was

meaningless and that “Teva did not need a license to make

and sell the product because Teva was already doing so.” (JA

2635.)

44

The agreement specified that the tablets must be

“Generic NDA Equivalent.” (JA 34081.)

45

The agreement explains that Biovail was an assignee

of the license agreement between Andrx and GSK, and thus

52

agreement did not “settle or otherwise end the Biovail

Anchen lawsuit.” (JA 3697.)

The fourth agreement was between Biovail and Impax,

in which Biovail agreed to dismiss its infringement suit

against Impax and agreed not to sue Impax for selling or

manufacturing generic versions of Wellbutrin XL outside of

Anchen’s 180-day exclusivity period.

The fifth agreement was an “omnibus” one in which

the several parties acknowledged that the second through fifth

agreements were related to each other and agreed to submit

those agreements to the FTC for approval. The parties further

agreed to modify the agreements in response to any FTC

concerns. 46

that Biovail had the ability to grant a sublicense to Andrx’s

patent.

46

By statute, the parties were required to submit their

several settlement agreements to the FTC within 10 days.

Medicare Prescription Drug, Improvement, and

Modernization Act of 2003, Pub. L. No. 108-173, § 1112(a),

117 Stat 2066, 2461-62 (2003). The omnibus agreement

required the parties to submit the agreements to the FTC

within two days and to either revise or terminate the

agreement in response to any FTC concerns. In addition to

the five agreements described above, Andrx sent a letter to

Anchen explaining that, in light of the license agreement

between GSK and Andrx, Andrx would dismiss its

infringement suit against Anchen. That same day, Biovail

and GSK amended their development agreement (the

agreement that granted GSK an exclusive license to Biovail’s

53

Pursuant to the terms of the agreements, Anchen

waited until May 2008 to launch its 150 mg generic version

of Wellbutrin XL, and GSK waited 180 days to launch

authorized generic versions of both 150 mg and 300 mg

Wellbutrin XL.

3. The Appellants Cannot Prevail on Their

Antitrust Claims Pertaining to the

Alleged Reverse Payment

In order to prevail on an antitrust claim, a private

plaintiff must establish antitrust standing, Ethypharm S.A.

France v. Abbott Laboratories, 707 F.3d 223, 232-33 (3d Cir.

2013), and must show that the defendant’s actions violated

antitrust law. Phillip E. Areeda & Herbert Hovenkamp,

Fundamentals of Antitrust Law 3-16 (4th ed. 2015). In this

case, there is an additional threshold question – whether the

challenged agreements are immune from antitrust scrutiny as

the valid exercise of patent rights. See Dawson Chem. Co. v.

Rohm & Haas Co., 448 U.S. 176, 215 (1980) (explaining that

“the essence of a patent grant is the right to exclude others

from profiting by the patented invention”); Actavis, 133 S. Ct.

at 2238 (Roberts, C.J., dissenting) (“A patent grants the right

to exclude others from profiting by the patented invention. In

doing so it provides an exception to antitrust law, and the

scope of the patent ... forms the zone within which the patent

patents) to bring it into compliance with the substance of the

Teva-Biovail agreement. Finally, Biovail agreed to dismiss

its suit against Watson. There was no payment (reverse or

otherwise) associated with the Biovail-Watson settlement.

54

holder may operate without facing antitrust liability.”

(internal quotation marks and citation omitted)).

a) The Agreements Are Not Immune

from Antitrust Scrutiny; the Rule

of Reason Test Applies

The Supreme Court considered the legality of reverse

payment settlements in FTC v. Actavis, 133 S. Ct. 2223. In

that case, a brand-name drug manufacturer sued an ANDA

applicant. Id. at 2229. After litigating the case for several

years, the parties entered into a settlement agreement whereby

the brand manufacturer paid the generic manufacturer tens of

millions of dollars in exchange for the generic’s agreement to

delay its entry into the market for nine years. Id. at 2229-30.

The FTC filed suit challenging the settlement agreement. Id.

at 2227. Although the United States Court of Appeals for the

Eleventh Circuit held that reverse payment settlements should

be immune from antitrust liability, as long as they fall within

the scope of the relevant patents, FTC v. Watson Pharm., Inc.,

677 F.3d 1298, 1312 (11th Cir. 2012), the Supreme Court saw

it differently. It said that “reverse payment settlements ... can

sometimes violate the antitrust laws” and that “courts

reviewing such agreements should ... apply[] [the] ‘rule of

reason’ [test].” Actavis, 133 S. Ct. at 2227, 2237. 47 In

reaching that conclusion, the Court observed that “it would be

incongruous to determine antitrust legality by measuring the

47

The Supreme Court explicitly rejected the claim that

reverse payment settlement agreements are “presumptively

unlawful” and concluded that it would also be improper to

evaluate reverse payment agreements via a “quick-look”

approach. Id. at 2237.

55

settlement’s anticompetitive effects solely against patent law

policy, rather than by measuring them against procompetitive

antitrust policies as well.” Id. at 2231. The Court then

explained that reverse payments can generate “genuine

adverse effects on competition” by allowing brand

manufacturers to “avoid the risk of patent invalidation or a

finding of noninfringement.” Id. at 2235-36. Ultimately, the

Court concluded that “a reverse payment, where large and

unjustified, can bring with it the risk of significant

anticompetitive effects[.]” Id. at 2237.

In King Drug Co. of Florence, Inc. v. Smithkline

Beecham Corp., 791 F.3d 388 (3d Cir. 2015), we considered

whether antitrust scrutiny under Actavis was limited to

reverse payments of cash, or whether other “transfers of

value” would also be subject to scrutiny. Like the agreement

at issue in this case, King involved a settlement in which a

brand manufacturer agreed not to produce an “authorized

generic” version of its drug – a so-called “no-AG agreement.”

Id. at 394. The antitrust plaintiffs in that case alleged that the

no-AG agreement qualified as a reverse payment under

Actavis. See id. We agreed and held that “Actavis’s holding

[could not] be limited to reverse payments of cash.” Id. at

403. We explained:

[A] brand’s commitment not to produce an

authorized generic means that it must give up

the valuable right to capture profits ... . The no-

AG agreement transfers the profits the patentee

would have made from its authorized generic to

the settling generic—plus potentially more ...

because there will now be a generic monopoly

instead of a generic duopoly.

56

Id. at 405. As a result, we concluded that “no-AG agreements

are likely to present the same types of problems as reverse

payments of cash” and that “[t]he anticompetitive

consequences of [a no-AG agreement] may be as harmful as

those resulting from reverse payments of cash.” Id. at 404-

05.

When evaluating the challenged settlements in this

case, the District Court suggested, but did not hold, that they

might be beyond the reach of antitrust law. According to the

Court, “the Wellbutrin Settlement does not present the same

antitrust concerns that motivated the court in Actavis to

subject the settlement to antitrust scrutiny” because “the

Wellbutrin Settlement required the underlying patent

litigation to continue, maintaining the risk of a finding of

patent invalidity or non-infringement[.]” (JA 182-83.)

Despite that intimation, the Court declined to hold that “any

reverse payment that allows the underlying patent litigation to

continue is automatically exempt from the antitrust laws.”

(JA 184.) Instead, the Court analyzed the settlement using

the rule of reason. On appeal, GSK echoes the initial

intimation of the District Court and maintains that “[t]he

settlement did not pose the anticompetitive harm the Supreme

Court identified in Actavis[.]” (Ans. Br. 67.) We disagree.

In light of Actavis and our decision in King, the

agreements at issue in this case, as they relate to Anchen’s

generic version of 150 mg Wellbutrin XL, must be evaluated

under the rule of reason test. As explained above, the

agreements include an alleged reverse payment and pay-for-

delay scheme: in exchange for a 180-day no-AG agreement

from Biovail and GSK (the reverse payment), Anchen agreed

not to launch a generic version of 150 mg Wellbutrin XL until

57

the occurrence of a triggering event. Moreover, there is some

support in the record for the assertion that the reverse

payment is large and unjustified, see Actavis, 133 S. Ct. at

2237 (suggesting that reverse payments are especially

problematic if they are “large and unjustified”). First, the

payment can be said to be large. According to the

Appellants’ economic expert, 48 the no-AG agreement was

worth $233 million to Anchen, Teva, and Impax – an amount

that would qualify as large in most any context. See Actavis,

133 S. Ct. at 2237 (explaining that “the likelihood of a reverse

payment bringing about anticompetitive effects depends upon

its size [and] scale in relation to the payor’s anticipated future

litigation costs”). The “payment,” i.e., the no-AG agreement,

could also be said to be unjustified in the sense of being

unexplained. 49 In particular, it was not tied to the merits of

the litigation between Biovail and Anchen. We know that the

48

The District Court granted a Daubert motion to

exclude that expert’s opinion relating to the rule of reason

analysis. However, the Daubert motion did not appear to

challenge the expert’s opinions with respect to the value

associated with the no-AG agreement. And, in Actavis, the

Supreme Court recognized the immense value associated with

market exclusivity. See Actavis, 133 S. Ct. at 2229 (citing C.

Scott Hemphill, Paying for Delay: Pharmaceutical Patent

Settlement as a Regulatory Design Problem, 81 N.Y.U. L.

Rev. 1553, 1579 (2006)).

49

We intend no comment on whether a no-AG

promise could be justified in the sense of being a sound

exercise of business judgment and consonant with good

public policy.

58

no-AG agreement was not linked to the merits of the

litigation because its value did not depend on the outcome of

the appeal before the Federal Circuit. The duration of the no-

AG promise was fixed at 180 days, regardless of who

prevailed in the case, and that duration provided value to

Anchen, as well as to Teva and Impax. 50 Because the

50

It is worth noting that this case differs from Actavis

and King in at least one important respect: in both Actavis and

King, the challenged agreements ended litigation between the

brand-name manufacturer and the generic manufacturer. In

this case, however, the agreements allowed Biovail’s appeal

to continue. (See JA 3697 (explicitly noting that the

agreement did not “settle or otherwise end the Biovail

Anchen lawsuit”).) In acknowledging that difference, the

District Court concluded that the agreements in this case

“do[] not present the same antitrust concerns that motivated

the court in Actavis to subject the settlement to antitrust

scrutiny.” (JA 183.) We question that conclusion. While

there is language in Actavis that describes the premature

termination of litigation as an anticompetitive harm, see 133

S. Ct. at 2236 (explaining that a patentee should not be

allowed to “us[e] its monopoly profits to avoid the risk of

patent invalidation or a finding of noninfringement”), the

Supreme Court’s holding was not so narrow. Instead, Actavis

stands for the broader proposition that both “patent and

antitrust policies are ... relevant in determining the ‘scope of

the patent monopoly’—and consequently antitrust law

immunity—that is conferred by a patent.” Id. at 2231. In

other words, the Court took issue with reverse payments not

simply because they could lead to the premature termination

of litigation, but rather because they eliminate the risk of

competition. Id. at 2236; King, 791 F.3d at 405.

59

agreements at issue here are such as to implicate the concerns

identified in Actavis, they are not immune from antitrust

scrutiny and must, to a degree, be evaluated under the rule of

reason test.

That “to a degree” qualifier is added because our

conclusion is limited to the agreements as they relate to

Anchen’s generic version of 150 mg Wellbutrin XL. We

reach a different conclusion with respect to the agreements as

they relate to Anchen’s 300 mg Wellbutrin XL. 51 As

While the agreements at issue here did not end the

litigation between Biovail and Anchen, they nevertheless

implicate the kinds of concerns articulated in Actavis by

delaying the entry of 150 mg generic Wellbutrin XL and by

delaying the entry of an authorized generic version of both

150 and 300 mg Wellbutrin XL. That conclusion follows

directly from Actavis and King and is also supported by the

FTC, which filed an amicus brief in this case. (See FTC Br.

15 (“An agreement that forecloses the possibility of at-risk

entry into the market (in exchange for shared monopoly

profits) can also be anticompetitive under that analysis.”).)

The view of the law espoused by the FTC, adopted by the

majority in Actavis, and followed by our Court in King, has

been subject to cogent criticism, see, e.g., Actavis, 133 S. Ct.

at 2240-47 (Roberts, C.J., dissenting), but the controlling

precedent is what it is.

51

It does not appear that the Appellants have presented

any arguments relating exclusively to Anchen’s generic

version of 300 mg Wellbutrin XL. As a result, any arguments

the Appellants might have regarding the 300 mg product

could be viewed as waived. Nagle v. Alspach, 8 F.3d 141,

60

explained above, Anchen, in partnership with Impax and

Teva, launched a 300 mg version of Wellbutrin XL in

December 2006 – as soon as its ANDA was approved. The

agreements reached in February 2007 allowed Teva to

continue marketing that product. As a result, there was no

delay associated with the 300 mg product and the analysis in

Actavis does not apply. As a result, any pay-for-delay claim

unique to Anchen’s 300 mg product must fail. 52

b) The Appellants Do Not Have

Antitrust Standing

In order to maintain an antitrust suit, a plaintiff must

establish antitrust standing, which is distinct from Article III

standing. While Article III standing is rooted in the

Constitution, antitrust standing is a judge-made doctrine. 53

143 (3d Cir. 1993). However, for the reasons stated above,

the Appellants would not prevail on that issue even if it were

not waived.

52

One could argue that the no-AG agreement relating

to the 300 mg product was part of the payment used to

persuade Anchen to delay its launch of the 150 mg product.

If one adopts that view, then the 300 mg no-AG agreement

would be subject to the same analysis as the 150 mg no-AG

agreement and there would not be any claim unique to the

generic 300 mg product.

53

Though judge-made, federal antitrust standing is

rooted in federal statutory law, and antitrust standing under

state law is likewise rooted in the respective statutes of the

several states represented within the ranks of the indirect-

61

Associated Gen. Contractors of Cal., Inc. v. Cal. State

Council of Carpenters, 459 U.S. 519, 534-35 & n.31 (1983);

Ethypharm S.A. France v. Abbott Labs., 707 F.3d 223, 232

n.17 (2013) (“[A]ntitrust standing is based on prudential

principles.”). It is not a jurisdictional requirement. In re

Modafinil Antitrust Litig., 837 F.3d 238, 263 n.30 (3d Cir.

2016). And while “[h]arm to the antitrust plaintiff is

sufficient to satisfy the constitutional standing requirement of

injury in fact,” courts must also consider “whether the

plaintiff is a proper party to bring [the] private antitrust

action.” Associated Gen. Contractors, 459 U.S. at 535 n.31.

In that sense, antitrust standing is more properly viewed as an

element of an antitrust claim that can be resolved at summary

judgment. Ethypharm S.A. France, 707 F.3d at 232 n.15

purchaser Appellants. The state requirements for antitrust

standing are functionally identical to the federal requirements

in this respect – each of the state antitrust laws asserted in this

case requires antitrust plaintiffs to prove that they have

suffered an antitrust injury. Moreover, the standards for

proving antitrust injury under the state laws appear to be

identical to the standards under federal law. See Breakdown

Servs., Ltd. v. Now Casting, Inc., 550 F. Supp. 2d 1123, 1141

(C.D. Cal. 2007); Boulware v. State of Nev., Dept. of Human

Res., 960 F.2d 793, 800-01 (9th Cir. 1992) (Nevada);

Benjamin of Forest Hills Realty, Inc. v. Austin Sheppard

Realty, Inc., 823 N.Y.S.2d 79, 94 (App. Div. 2006); Lerma v.

Univision Commc’ns, Inc., 52 F. Supp. 2d 1011, 1016 (E.D.

Wis. 1999); Rockholt Furniture, Inc. v. Kincaid Furniture

Co., 1998 WL 1661384, at *7 (E.D. Tenn. July 6, 1998). As

a result, our standing and causation analysis on this issue

applies equally to the direct purchasers’ claims and the

indirect purchasers’ claims.

62

(indicating that antitrust standing is a “merits issue”); see also

Barton & Pittinos, Inc. v. SmithKline Beecham Corp., 118

F.3d 178, 182 (3d Cir. 1997) (considering the question of

antitrust standing at summary judgment, and determining

whether the plaintiff “adduced sufficient evidence to permit a

reasonable factfinder to conclude that it competed in the

market in which trade was allegedly restrained, such that its

alleged injury would constitute ‘antitrust injury’”); McCarthy

v. Recordex Serv., Inc., 80 F.3d 842, 852-54 (3d Cir. 1996)

(resolving the question of antitrust standing at summary

judgment).

To establish antitrust standing, a plaintiff must show

that it has suffered an antitrust injury 54 – that is, an “injury of

54

“The Supreme Court ... [has] articulated several

factors to be considered when deciding whether a

complainant has antitrust standing.” Ethypharm S.A. France,

707 F.3d at 232 (3d Cir. 2013) (internal quotation marks and

citations omitted). Those factors include:

(1) the causal connection between the antitrust

violation and the harm to the plaintiff and the

intent by the defendant to cause that harm, with

neither factor alone conferring standing; (2)

whether the plaintiff’s alleged injury is of the

type for which the antitrust laws were intended

to provide redress; (3) the directness of the

injury, which addresses the concerns that liberal

application of standing principles might

produce speculative claims; (4) the existence of

more direct victims of the alleged antitrust

violations; and (5) the potential for duplicative

63

the type the antitrust laws were intended to prevent and that

flows from that which makes [the] defendants’ acts

unlawful.” 55 Ethypharm S.A. France, 707 F.3d at 233 (3d

recovery or complex apportionment of

damages.

Id. at 232-33 (internal citations omitted). Because “[t]he

second factor, antitrust injury, is a necessary but insufficient

condition of antitrust standing[,] ... if it is lacking, we need

not address the remaining ... factors.” Id. at 233 (internal

quotation marks and citation omitted); see also City of

Pittsburgh v. W. Penn Power Co., 147 F.3d 256, 265

(“[B]ecause there is no causal connection and no antitrust

injury, we need not examine the other ... standing factors.”).

55

In Illinois Brick Co. v. Illinois, the Supreme Court

held that indirect purchasers do not have standing to bring

antitrust suits under federal law. 431 U.S. 720, 730-31

(1977); see also In re Lower Lake Erie Iron Ore Antitrust

Litig., 998 F.2d 1144, 1163 n.10 (3d Cir. 1993) (“[In Illinois

Brick Co.,] [t]he Court held that § 4 [of the Clayton Act] did

not permit ... indirect purchasers ... to recover for the

overcharge passed through the chain of distribution.”).

However, indirect purchasers do have standing to assert

antitrust claims in each of the state causes of action asserted

here. Nev. Rev. Stat. § 598A.210 (Nevada statute granting

standing to indirect purchasers to recover for antitrust

violations); In re Dynamic Random Access Memory (Dram)

Antitrust Litig., 516 F. Supp. 2d 1072, 1094-95 (N.D. Cal.

2007) (recognizing that indirect purchaser suits are permitted

in Arizona, Kansas, Maine, Michigan, Minnesota,

Mississippi, Nebraska, Nevada, New Mexico, North Carolina,

64

Cir. 2013) (alteration in original) (quoting Brunswick Corp.,

429 U.S. at 489).

In order to establish antitrust injury here, the

Appellants must show that the harm they say they

experienced – increased drug prices for Wellbutrin XL (and

its generic equivalents) – was caused by the settlement they

are complaining about. See Zenith Radio Corp. v. Hazeltine

Res., Inc., 395 U.S. 100, 114 n.9 (1969) (explaining that,

under the Clayton Act, a plaintiff must prove that it has

suffered at least “some damage flowing from the unlawful

conspiracy”). The Appellants attempt to meet their burden by

pointing to evidence showing that, in the absence of the

agreements, Anchen (partnering with Teva) would have

launched its 150 mg generic no later than the middle of 2007.

At first glance, that argument seems appealing.

Indeed, the District Court found that there was at least a

question of fact as to whether Anchen would have launched

the drug in June 2007. The problem with the argument,

however, is that it does not take into account Andrx’s

blocking patent, the ’708 patent. It is not enough for the

Appellants to show that Anchen wanted to launch its drug;

they must also show that the launch would have been legal.

After all, if the launch were stopped because it was illegal,

then the Appellants’ injury (if it could still be called that)

North Dakota, South Dakota, and Wisconsin); Indirect

Purchaser Lawsuits: A State-by-State Survey 27, 215, 287,

337 (Eric McCarthy et al., eds., 2010) (explaining that

California, New York, Tennessee, and Wisconsin each allow

indirect purchasers to assert antitrust claims).

65

would be caused not by the settlement but by the patent laws

prohibiting the launch. See In re Nexium (Esomeprazole)

Antitrust Litig., 842 F.3d 34, 62-63 (1st Cir. 2016) (“[T]he

argument that [the generic manufacturer] would have incurred

the risk of launching at risk or that [it] would have won its ...

suit against [the patent holder] depends on the theory that ...

[the] patents were invalid or not infringed by a generic

version.”); Phillip E. Areeda & Herbert Hovenkamp,

Fundamentals of Antitrust Law § 3.04[B] (rev. 4th ed. Supp.

2015) (“[A] plaintiff cannot be injured in fact by private

conduct excluding it from the market when a statute prevents

the plaintiff from entering that market in any event.”). 56

That a regulatory or legislative bar can break the chain

of causation in an antitrust case is beyond fair dispute. For

example, in RSA Media, Inc. v. AK Media Grp., Inc., 260

F.3d 10, 15 (1st Cir. 2001), the First Circuit decided that the

plaintiff was excluded from the outdoor billboard market not

because of the defendant’s actions but rather “because the

Massachusetts regulatory scheme ... [prevented] new

billboards from being built.” Similarly, in In re Canadian

Import Antitrust Litigation, 470 F.3d 785, 790-91 (8th Cir.

2006), the Eighth Circuit held that the plaintiffs faced higher

drug prices not because drug companies excluded cheaper

56

GSK also argues that Anchen’s launch would have

been blocked by FDA regulations relating to Anchen’s

production facilities. We do not consider that argument

because, even if it were given full weight, it would only show

that Anchen would have had to wait until June 12, 2007 to

launch – a date that was almost a year prior to its actual

launch. In other words, the argument relates to the length of

delay, rather than the existence of a delay.

66

Canadian drugs from the market but because federal law

excluded the cheaper Canadian drugs. See City of Pittsburgh

v. W. Penn Power Co., 147 F.3d 256, 265 (3d Cir. 1998)

(applying the same principle and concluding that any injury

suffered by the plaintiff resulted from “the realities of the

regulated environment” rather than from the defendants’

actions). In this case, the launch of Anchen’s 150 mg version

of Wellbutrin XL was effectively blocked by federal patent

law, which, through Andrx’s ’708 patent, would have

prevented market entry.

The Appellants offer two arguments to fend off that

conclusion – one legal and one factual. Their legal argument

is that the reasoning just given was repudiated by our decision

in Consolidated Express, Inc., v. New York Shipping

Association. 602 F.2d 494 (3d Cir. 1979), vacated 448 U.S.

902 (1980), remanded and affirmed, 641 F.2d 90 (3d Cir.

1981). They misread that case. In Consolidated Express, we

held that an antitrust plaintiff’s improper conduct did not

preclude that plaintiff from asserting an antitrust claim

unrelated to the improper conduct. Id. at 508. By contrast,

our holding in this case is that the antitrust claim fails because

the actions of GSK, the defendant, did not actually cause the

Appellants’ claimed injury. But even if the Appellants had a

correct reading of Consolidated Express, their argument

would still fail because that case predates significant

developments in antitrust standing jurisprudence.

Consolidated Express was decided in 1979, before the

Supreme Court established its antitrust standing “factors” in

Associated General Contractors four years later. See

Merican, Inc. v. Caterpillar Tractor Co., 713 F.2d 958, 965

(3d Cir. 1983) (applying the Supreme Court’s decision in

Associated General Contractors). We later adopted the very

67

argument that the Appellants now claim is not good law. In

City of Pittsburgh we said that no antitrust standing exists

when a plaintiff’s grievance is caused by a regulatory scheme

rather than by the defendant’s actions. 147 F.3d at 266. We

decline to deviate from the well-reasoned path marked in City

of Pittsburgh.

The Appellants’ factual response is that, but for the

challenged agreements, Anchen would have been able to

launch its 150 mg version of Wellbutrin XL without running

afoul of Andrx’s patent. They offer two scenarios. First, they

argue that, in the absence of the challenged agreements,

Anchen would have obtained a license to Andrx’s patent. We

will refer to that as the license-based scenario. Alternatively,

they argue that, in the absence of the challenged agreements,

Anchen would have prevailed against Andrx in litigation. We

will refer to that as the litigation-based scenario. The record

supports neither.

(1) License-Based Scenario

The Appellants contend that, for at least three reasons,

Anchen would have obtained a license from Andrx. First,

they say that GSK failed to produce evidence “showing [that]

… GSK’s no-AG payment or the generic delay … were

necessary in order [for Anchen] to secure a ... license [to

Andrx’s patent].” (Op. Br. 74.) That argument, however,

flips the burden of proof. As the plaintiffs, the Appellants

have the burden of proving that they have been injured. In

order to withstand summary judgment, they must point to

evidence affirmatively showing that Anchen could have

launched. See W. Penn Allegheny Health Sys., Inc. v. UPMC,

627 F.3d 85, 101 (3d Cir. 2010) (“[T]he plaintiff must

68

establish that it suffered an antitrust injury.”). It is no good

saying that the defendants have failed to disprove causation.

See id.

Second, the Appellants say that Andrx had “an

independent economic interest” in providing a license to

Anchen. (Op. Br. 74.) Their reasoning is that Andrx was a

non-practicing entity and thus “could only profit from its ‘708

patent through licenses.” (Id. at 74.) That argument is both

incorrect and insufficient. The argument is incorrect because,

as noted above, supra n.39, Watson acquired Andrx in

November 2006. That means that Andrx was, by that time,

not a non-practicing entity and in fact had a reason to deny

Anchen a license. If Anchen were precluded from launching

its product, then Anchen would waive its exclusivity period,

allowing Watson (a/k/a Andrx) to enter the market earlier.

See 21 U.S.C. § 355(j)(5)(D)(i) (outlining the conditions in

which a first-filer waives its exclusivity). But, even if the

Appellants’ argument were better rooted in reality, it would

be insufficient. In order to withstand summary judgment, the

Appellants must produce evidence from which a reasonable

jury could conclude that it is more likely than not that Anchen

would have obtained a license. Evidence showing that

Anchen may have been able to obtain a license does not meet

that standard. A plaintiff cannot satisfy the summary

judgment burden based on speculation alone. See Halsey v.

Pfeiffer, 750 F.3d 273, 287 (3d Cir. 2014) (“[A]n inference

based upon a speculation or conjecture does not create a

material factual dispute sufficient to defeat [entry of]

summary judgment.” (quoting Robertson v. Allied Signal,

Inc., 914 F.2d 360, 382 n.12 (3d Cir. 1990))); Fedorczyk v.

Caribbean Cruise Lines, Ltd., 82 F.3d 69, 76 (3d Cir. 1996)

(affirming a grant of summary judgment because “[b]ased on

69

the evidence presented, a jury could only speculate” as to

whether the defendant’s actions actually caused the claimed

injury). 57

Third, the Appellants argue that Anchen was

negotiating a license agreement with Andrx in the days

preceding the agreements and had agreed on all but one term.

Based on those negotiations, the Appellants argue, a

57

The Appellants point to our recent decision in In re

Fosamax (Alendronate Sodium) Products Liability Litigation,

852 F.3d 268 (3d Cir. 2017), to support their claim that juries

are “‘routinely’ given questions that permissibly require them

to ‘predict the outcome of a hypothetical scenario’ or to

‘speculate’ or ‘guess what could have happened in a

counterfactual setting’ by assessing corporate motives and

thought processes or by ‘evaluat[ing] inference[s] about

human behavior.’” (March 27, 2017 28(j) letter at 2

(alterations in original) (quoting Fosamax, 852 F.3d at 289,

297, 299).) Their argument is correct, but irrelevant. The

fact that juries may predict the outcome of hypothetical

scenarios says nothing about the type or amount of evidence

that is needed for a plaintiff to withstand summary judgment

on a claim involving a counterfactual scenario. As explained

above, the Appellants have not presented sufficient evidence

upon which a reasonable jury could rely to conclude that it is

more likely than not that Anchen and Andrx would have

entered into a license agreement in the counterfactual world.

While it may be better than speculative that Anchen and

Andrx would have had an incentive to talk, it is, on this

record, pure speculation that they would have reached an

agreement.

70

reasonable jury could infer that the two companies would

have reached an agreement. But this argument too is

completely speculative. It is certainly possible that Anchen

and Andrx would have reached an agreement, but it is also

certainly possible that the negotiations would have stalled and

failed. Many a contract has foundered on a single deal-

breaker point. Without more specific or concrete evidence,

the jury in this case would be left with nothing on which it

could rely to reach a conclusion one way or the other.

Summary judgment was thus appropriate.

(2) Litigation-Based Scenario

The Appellants’ litigation-based scenario is premised

on the idea that Anchen would have prevailed in Andrx’s

infringement suit. If Andrx’s ’708 patent were invalid, or if

it did not cover Anchen’s product, then patent law would not

have prevented Anchen’s launch. In order to evaluate the

merit of the litigation-based scenario, we must consider the

substance of that underlying litigation. 58

58

In the Actavis decision, there was a debate between

the majority and the Chief Justice on whether lower courts

would be required to resolve substantive patent questions in

order to adequately assess the merits of reverse payment

antitrust claims. Writing for the majority, Justice Breyer

asserted that “it is normally not necessary to litigate patent

validity to answer the antitrust question ... .” Actavis, 133 S.

Ct. at 2236. The Chief Justice disagreed:

[S]ettling a patent claim cannot possibly impose

unlawful anticompetitive harm if the patent

holder is acting within the scope of a valid

71

The Appellants make two arguments relative to the

merits of the patent litigation. First, they say that we should

view the size of the reverse payment as “a surrogate for [the]

patent’s weakness” and conclude that GSK “knew [that

Andrx’s patent] could not prevent generic competition.” (Op.

Br. 86.) While the size of a reverse payment may have some

relevance in determining how confident a litigant is in the

strength of its case, Actavis, 133 S. Ct. at 2236-37 (“In a

word, the size of the unexplained reverse payment can

provide a workable surrogate for a patent’s weakness ... .”), it

is far from dispositive. That is especially so when, as in this

case, the settlement is complex and multi-faceted. For

patent and therefore permitted to do precisely

what the antitrust suit claims is unlawful. This

means that in any such antitrust suit, the

defendant (patent holder) will want to use the

validity of his patent as a defense—in other

words, he’ll want to say “I can do this because I

have a valid patent that lets me do this.” I

therefore don’t see how the majority can

conclude that it won’t normally be “necessary

to litigate patent validity to answer the antitrust

question[.]”

Id. at 2244 (Roberts, C.J., dissenting). The present case

appears to vindicate the Chief Justice’s analysis. As he

predicted, GSK argues that the Andrx patent (which was a

central component of the agreements) defeats the Appellants’

suit, and, as he predicted, we cannot resolve this aspect of the

case without considering the merits of the underlying patent

dispute.

72

example, GSK and Biovail may have offered the reverse

payment not because they thought Andrx had a weak patent

but rather because they thought Anchen would improperly

evaluate the patent and launch at-risk. 59 In that scenario,

GSK would lose substantial revenue from having a generic

competitor and would not be entitled to damages if the patent

were vindicated because the patent belonged to Andrx, not to

GSK. That there are multiple plausible ways to interpret the

reverse payment in this case means that the payment alone

tells us less about the merits of the underlying case than the

Appellants wish.

We are also persuaded by an argument raised in the

amicus brief filed by a group of antitrust economists (“the

Economists”). That group explains why risk aversion makes

it difficult to use the size of a settlement as a proxy for the

brand-name’s likelihood of success in litigation:

To explore why risk aversion could lead to the

exchange of consideration having nothing to do

with delayed entry, consider a lottery ticket with

a 50% chance of a $0 payoff and a 50% chance

of a $100 million payoff—i.e., the lottery ticket

has an expected payoff of $50 million. Most

people holding such a ticket would be willing to

accept less than the expected payoff amount to

59

In the context of patent litigation, a launch is said to

be “at-risk” if it takes place before the questions of

infringement and validity are resolved, either through

litigation or a license. See In re Modafinil Antitrust Litig.,

837 F.3d at 244.

73

achieve certainty. If a person would trade the

aforementioned lottery ticket for a certain

outcome of $20 million, he or she would

essentially be willing to pay $30 million dollars

to eliminate the risk of holding the lottery ticket

that might result in the $0 payoff. Accepting

the certain outcome of $20 million dollars,

however, does not reflect a belief that a $0

payoff is anything more than [a] 50% [risk].

(Antitrust Economists Br. 11 (internal citation omitted).) We

think that reasoning serves as an effective rebuttal to the

Appellants’ claim that the size of the reverse payment is a

“surrogate” for the weakness of the ’708 patent.

The Appellants’ second argument relating to the

litigation-based scenario relies on testimony provided by

Martin Adelman, GSK’s expert. Adelman estimated that

Andrx had an 80% chance of prevailing with respect to

infringement, a 50% chance of prevailing with respect to

validity, and a 90% chance of prevailing with respect to

inequitable conduct. 60 Because Andrx would have to prevail

with respect to all three issues in order to win the case,

Adelman concluded that “Andrx had approximately a one out

of three chance of winning the cases.” 61 (JA 38717.)

60

Adelman’s estimates and analysis are uncontested.

61

The probability that Andrx would prevail on all

three issues was calculated by multiplying the probability of

success on each issue. 0.8*0.9*0.5=0.36, which is

approximately 1/3.

74

However, in a bit of historical irony, it was Anchen’s founder

and CEO who made the invention disclosed in the ’708

patent, and he assigned his rights in it to Andrx. Accordingly,

it is highly likely that assignor estoppel would have prevented

Anchen from arguing that the ’708 patent was invalid or that

the patent was unenforceable because of inequitable

conduct. 62 Mentor Graphics Corp. v. Quickturn Design Sys.,

Inc., 150 F.3d 1374, 1378-79 (Fed. Cir. 1998) (describing the

doctrine of assignor estoppel and explaining that the doctrine

“also prevents parties in privity with an estopped assignor

from challenging the validity of the patent”); Shamrock

Techs., Inc. v. Med. Sterilization, Inc., 903 F.2d 789, 793

(Fed. Cir. 1990) (same). As a result, the only topic left for

litigation would be whether Anchen infringed. On that point,

Adelman’s unrebutted analysis was that Andrx would have an

62

“Assignor estoppel prevents a party who assigns a

patent to another from later challenging the validity of the

assigned patent. This doctrine prevents the unfairness and

injustice of permitting a party to sell something and later to

assert that what was sold is worthless. ... [A]n assignment

contains an implicit representation by the assignor that the

patent rights that he is assigning ... are not worthless.”

Mentor Graphics Corp., v. Quickturn Design Sys., Inc., 150

F.3d 1374, 1378 (Fed. Cir. 1998) (internal quotation marks

and citations omitted); see Shamrock Techs., Inc. v. Med.

Sterilization, Inc., 903 F.2d 789, 793 (Fed. Cir. 1990)

(explaining assignor estoppel also applies to those who are in

privity with the assignor). Because the estoppel applies not

only to the individual inventor but also to those in privity,

Anchen itself, and not just its founder and CEO, would likely

have been estopped.

75

80% chance of proving infringement – or, in other words, that

Anchen would only have a 20% chance of winning the suit. 63

Neither the Appellants nor GSK identify any other evidence

in the record that speaks to the possible outcomes of the

Anchen-Andrx litigation. On this record, then, no reasonable

jury could conclude that Anchen would have been more likely

than not to prevail.

Because both of the scenarios advanced by the

Appellants fail to show that Anchen would have been able to

launch its 150 mg version of Wellbutrin XL without running

afoul of the Andrx patent, we conclude that the Appellants

have also failed to show that their injuries were caused by the

overall settlement. Because the Appellants thus do not have

antitrust standing, we will affirm the District Court’s grant of

summary judgment. 64

63

The Appellants’ only response to that analysis is that

GSK never moved for summary judgment on inventor

estoppel and that Anchen had not raised the issue of assignor

estoppel before it settled the case. Even if those assertions

are true, they do not show that Andrx would not have asserted

the estoppel argument as the case progressed.

64

Having concluded that the Appellants lack antitrust

standing, we do not need to consider the District Court’s

application of the rule of reason. We note, however, that the

rule of reason inquiry is fact intensive and is not easy to

resolve at the summary judgment stage. See Poller v.

Columbia Broad. Sys., Inc., 368 U.S. 464, 473 (1962)

(“[S]ummary procedures should be used sparingly in complex

antitrust litigation where motive and intent play leading roles,

the proof is largely in the hands of the alleged conspirators,

76

C. Class Certification, Daubert, and

Intervention Issues

Because we affirm the District Court’s grant of

summary judgment on the merits, we need not address those

other issues on appeal. 65 Cf. Bowen v. Owens, 476 U.S. 340,

344 n.4 (1986) (“Because we reject the equal protection

claim, we do not reach the class certification issue.”); Wilson

v. Quadramed Corp., 225 F.3d 350, 353 n.3 (3d Cir. 2000)

(“We do not reach the class certification issue raised by

Wilson since we [will] affirm the District Court’s dismissal of

the complaint ... .”).

and hostile witnesses thicken the plot.”); W. Penn Allegheny

Health Sys., 627 F.3d at 99 (describing the rule-of-reason as

“fact intensive”); cf. King, 791 F.3d at 411 n.36 (describing

the significance of fact finding in the rule of reason analysis).

65

To recap, those issues are the decisions excluding

the testimony of their economic expert and denying Aetna’s

motion to intervene. Additionally, the indirect-purchaser

Appellants challenge the District Court orders decertifying

the indirect-purchaser class and dismissing certain of the

indirect purchasers’ claims for lack of standing. Finally, GSK

conditionally cross-appeals the Court’s certification of the

direct-purchaser class as well as the Court’s conclusion that

the indirect purchasers satisfy the predominance requirement

of Rule 23.

77

III. Conclusion

For the foregoing reasons, we will affirm the District

Court’s grant of summary judgment.

78