Fed. Trade Comm'n v. Shire Viropharma, Inc.

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 18-1807

_____________

FEDERAL TRADE COMMISSION,

Appellant

v.

SHIRE VIROPHARMA, INC.

_____________

On Appeal from the United States District Court

for the District of Delaware

District Court No. 1-17-cv-00131

District Judge: The Honorable Richard G. Andrews

Argued December 11, 2018

Before: SMITH, Chief Judge, McKEE, and FISHER,

Circuit Judges

(Filed: February 25, 2019)

Bradley S. Albert

Meredyth Andrus

Thomas J. Dillickrath

Matthew M. Hoffman [ARGUED]

June Im

Nicholas Leefer

Joel R. Marcus

Joseph Mathias

James H. Weingarten

Federal Trade Commission

600 Pennsylvania Avenue, N.W.

Washington, DC 20580

Counsel for Appellant

J. Clayton Everett, Jr.

Scott A. Stempel

Morgan Lewis & Bockius

1111 Pennsylvania Avenue, N.W.

Suite 800 North

Washington, DC 20004

Noah J. Kaufman

Morgan Lewis & Bockius

One Federal Street

Boston, MA 02110

Steven A. Reed [ARGUED]

Jessica J. Taticchi

Morgan Lewis & Bockius

2

1701 Market Street

Philadelphia, PA 19103

Counsel for Appellee

George P. Slover

Consumers Union

1101 17th Street, N.W.

Suite 500

Washington, DC 20036

Counsel for Amicus Appellant

Richard A. Samp

Washington Legal Foundation

2009 Massachusetts Avenue, N.W.

Washington, DC 20036

Counsel for Amicus Appellee

________________

OPINION OF THE COURT

________________

SMITH, Chief Judge.

3

Shire ViroPharma, Inc. (“Shire”),1 manufactured

and marketed the lucrative drug Vancocin, which is

indicated to treat a life-threatening gastrointestinal

infection. After Shire got wind that manufacturers were

considering making generic equivalents to Vancocin, it

inundated the United States Food and Drug

Administration (“FDA”) with allegedly meritless filings to

delay approval of those generics. The FDA eventually

rejected Shire’s filings and approved generic equivalents

to Vancocin, but the filings nonetheless resulted in a high

cost to consumers—Shire had delayed generic entry for

years and reaped hundreds of millions of dollars in profits.

Nearly five years later—and after Shire had

divested itself of Vancocin—the Federal Trade

Commission (“FTC”) filed suit against Shire in the United

States District Court for the District of Delaware under

Section 13(b) of the Federal Trade Commission Act, 15

U.S.C. § 53(b). The FTC sought a permanent injunction

and restitution, alleging that Shire’s petitioning was an

unfair method of competition prohibited by the Act. Shire

moved to dismiss, arguing that the FTC’s allegations of

long-past petitioning activity failed to satisfy Section

13(b)’s requirement that Shire “is violating” or “is about

1

Shire ViroPharma, Inc. is the corporate successor

to ViroPharma, which it acquired in 2014—after the

petitioning activity at issue in this case ceased.

4

to violate” the law. The District Court agreed and

dismissed the case.

On appeal, the FTC urges us to adopt a more

expansive view of Section 13(b). According to the FTC,

the phrase “is violating, or is about to violate” in Section

13(b) is satisfied by showing a past violation and a

reasonable likelihood of recurrent future conduct. We

reject the FTC’s invitation to stretch Section 13(b) beyond

its clear text. The FTC admits that Shire is not currently

violating the law. And the complaint fails to allege that

Shire is about to violate the law. We will therefore affirm

the District Court’s judgment.

I.2

A.

A company that wishes to manufacture and market

a new drug in the United States must submit to the FDA a

New Drug Application (“NDA”) demonstrating the safety

2

We derive the facts of this case from the FTC’s

complaint. In our review of the grant of the motion to

dismiss, we take the allegations to be true and construe

them in the light most favorable to the FTC. In re: Tower

Air, Inc., 416 F.3d 229, 232 n.1 (3d Cir. 2005).

5

and efficacy of the product.3 Usually, the NDA filer

demonstrates safety and efficacy by using expensive in

vivo clinical endpoint studies, where researchers provide

sick patients with either the proposed drug or a placebo to

compare the safety and efficacy of the drug with the

placebo. See Fed. Trade Comm’n v. Actavis, Inc., 570

U.S. 136, 142 (2013) (describing the “long,

comprehensive, and costly testing process” underlying an

NDA). After FDA approval, the manufacturer must seek

approval through a supplemental NDA if it wishes to

change the drug or its label.

A generic drug manufacturer need not file an NDA

because it is essentially copying the approved branded

drug. The generic manufacturer must instead file an

Abbreviated New Drug Application (“ANDA”), which

relies on the approved drug’s profile for safety and

efficacy. See id. (“The Hatch-Waxman process, by

allowing the generic to piggy-back on the pioneer’s

3

The regulatory scheme employed by the FDA is

governed by the Food, Drug, and Cosmetic Act, 21 U.S.C.

§ 301, as amended by the Drug Price Competition and

Patent Term Restoration Act of 1984 (“Hatch-Waxman”),

Pub. L. No. 98-417, 98 Stat. 1585 (1984) (codified as

amended at 21 U.S.C. § 355 and 35 U.S.C. § 271(e)

(1994)), and the Medicare Prescription Drug,

Improvement, and Modernization Act of 2003, Pub. L. No.

108-173, 117 Stat. 2066 (2003).

6

approval efforts, speeds the introduction of low-cost

generic drugs to market, thereby furthering drug

competition.” (internal alteration, quotation marks, and

citation omitted)). The generic manufacturer must

demonstrate, inter alia, that the proposed generic drug is

bioequivalent to the referenced branded drug.4 See 21

C.F.R. § 314.3(b) (defining bioequivalence as “the

absence of a significant difference in the rate and extent to

which the active ingredient or active moiety in

pharmaceutical equivalences or pharmaceutical

alternatives becomes available at the site of drug

action . . . .”).

B.

Shire develops, manufactures, and markets branded

drugs. Until Shire divested itself of the product in 2014,

4

The FDA has flexibility in determining how a

manufacturer must establish bioequivalence. See, e.g., 21

C.F.R. § 320.24(a) (providing that the FDA may require

either in vivo or in vitro studies to demonstrate

bioequivalence).

7

this included Vancocin capsules.5 Vancocin capsules are

an oral antibiotic used to treat Clostridium-difficile

associated diarrhea, which is a serious, potentially life-

threatening gastrointestinal infection. When Vancocin

capsules were developed, the NDA did not include in vivo

clinical endpoint studies because the capsules were an

alternative delivery system to Vancocin oral solution,

which the FDA already knew to be safe and effective.

Instead, the NDA included in vitro dissolution data (which

measures how quickly the capsules dissolve) and in vivo

pharmacokinetic data (which compares the absorption of

the drug in capsule form versus oral solution form).

In April 1986, the FDA approved Vancocin

capsules. Shire acquired Vancocin capsules in November

2004. From then until 2011, Vancocin capsules were

Shire’s largest revenue-generating product. Vancocin

capsules accounted for all of Shire’s net revenue until

2009 and up to 53% of its net revenue in 2011. United

5

We take judicial notice of this fact—which is not

in the complaint—from Shire’s Form 8-K filings with the

Securities Exchange Commission. Shire plc, Form 8-K, 5

(Oct. 24, 2014), https://bit.ly/2SxTOm8; see Oran v.

Stafford, 226 F.3d 275, 289 (3d Cir. 2000) (taking judicial

notice of SEC filings).

8

States sales for Vancocin capsules grew from $40 million

in 2003 to almost $300 million in 2011.

Generic manufacturers, attracted by Vancocin’s

financial success, wanted to enter the market. Vancocin

was vulnerable to generic competition because it lacked

both patent protection and regulatory exclusivity. One

primary barrier to generic entry remained—the FDA’s

recommendation that generic manufacturers seeking to

demonstrate bioequivalence conduct in vivo clinical

endpoint studies. Ironically, these tests were more

expensive and onerous than the in vitro dissolution testing

and in vivo pharmacokinetic studies that had been used to

gain approval of Vancocin capsules in the first place. The

FDA apparently realized this inconsistency; in October

2004 it convened a public meeting of the Advisory

Committee for Pharmaceutical Science (the “Advisory

Committee”)6 to reassess bioequivalence testing for

locally-acting gastrointestinal drugs like Vancocin.

Shire became increasingly concerned that the FDA

might allow generic manufacturers to demonstrate

bioequivalence using in vitro data. Shire thus hired a

6

The Advisory Committee is a body of sixteen

independent experts from academia, non-profits, and

hospitals. These experts are “knowledgeable in the fields

of pharmaceutical sciences, clinical pharmacology, and

gastrointestinal diseases.” Compl. ¶ 85.

9

bioequivalence consultant to advise it on the FDA’s likely

course of action. In November 2005, the consultant

confirmed Shire’s suspicions, advising Shire that the FDA

would likely allow generic manufacturers to submit in

vitro dissolution data to establish bioequivalence to

Vancocin capsules. The consultant counseled Shire to

submit a citizen petition “sooner than later” but warned

that without supporting clinical data, Shire “could not

convince the FDA of its position against use of in vitro

dissolution testing.” Compl. ¶ 45.

Shire’s fear came to pass: the FDA indeed changed

its position on bioequivalence testing for Vancocin

capsules. In February 2006, the FDA advised a generic

manufacturer that bioequivalence for Vancocin capsules

could be demonstrated by in vitro dissolution testing. The

FDA also shared this guidance with other generic

manufacturers that inquired. In March 2007, the first

generic manufacturer submitted its ANDA for Vancocin

capsules. Two other generic manufacturers followed suit

later that year.

C.

Not surprisingly, Shire wanted to protect its

monopoly on the Vancocin market. Among its options

was a citizen petition. The First Amendment guarantees

individuals the right to petition the government. U.S.

Const. amend. I. Consistent with that right, the

Administrative Procedure Act permits any “interested

10

person” to petition a federal agency “for the issuance,

amendment, or repeal of a rule.” 5 U.S.C. § 553(e); see

also 21 C.F.R. § 10.30 (FDA regulation governing citizen

petitions).

The filing of a citizen petition can substantially

delay approval of a generic drug. During the time period

at issue here, the FDA automatically suspended ANDA

approval if a branded manufacturer filed a citizen

petition.7 The FDA is obligated to respond to every citizen

petition within 180 days.8 Id. § 10.30(e)(5); see also 21

7

Although inapplicable to Shire’s citizen petition,

Congress passed the Food and Drug Administration

Amendments Act of 2007 to assuage the FDA’s fear that

many brand manufacturers’ citizen petitions were

meritless attempts to delay generic competition. See 21

U.S.C. § 355(q). Post-2007, the FDA cannot delay ANDA

approval due to a citizen petition unless “a delay is

necessary to protect the public health.” Id.

§ 355(q)(1)(A)(ii). Under the amendment, the FDA may

also deny a citizen petition filed “with the primary purpose

of delaying” ANDA approval that “does not on its face

raise valid scientific or regulatory issues.” Id.

§ 355(q)(1)(E).

8

This time period has since been shortened to 150

days. 21 C.F.R. § 10.30(e)(5).

11

U.S.C. § 355(q)(1)(F). But the FDA’s response need not

dispose of the entire petition within that time. The FDA

may deny the petition, approve it in whole or in part,

provide a tentative response, or delay a decision by

modifying or postponing any suggested action. See 21

C.F.R. § 10.30(e)(2)(i)–(iv).

From March 2006 to April 2012, Shire submitted a

total of forty-three filings to the FDA and instituted three

federal court proceedings—all allegedly to delay the

approval of generic Vancocin capsules by convincing the

FDA to require ANDA applicants to conduct in vivo

clinical endpoint studies. Shire’s filings ranged from a

citizen petition and amendments thereto to public

comments on other manufacturers’ ANDAs. Many of

these filings were around the same time Shire suspected

the FDA was nearing approval of generic equivalents to

Vancocin.

On April 9, 2012, the FDA rejected Shire’s citizen

petition.9 The FDA concluded that Shire’s scientific

challenges to the bioequivalence recommendation

“lack[ed] merit” and “were unsupported.” Compl. ¶ 104

(internal quotation marks omitted); App. 77–95. On that

same day the FDA approved three ANDAs for generic

9

Shire did not prevail in any of its lawsuits, which

were either dismissed or withdrawn.

12

Vancocin capsules. Shire lost almost 70% of its unit sales

for Vancocin capsules within three months.

D.

Nearly five years later, on February 7, 2017, the

FTC sued Shire, seeking a permanent injunction and

equitable monetary relief under Section 13(b) of the FTC

Act. The FTC claimed that Shire’s conduct—submitting

serial, meritless filings—had harmed consumers and

competition because it enabled Shire to maintain and

extend its monopoly by delaying the FDA’s approval of

generic alternatives to Vancocin capsules. See 15 U.S.C.

§ 45(a).

The FTC alleged that, absent an injunction, “there

is a cognizable danger” that Shire will “engage in similar

conduct causing future harm to competition and

consumers.” Compl. ¶ 150. It based this assertion on

Shire’s (1) knowledge that its petitioning campaign would

enrich it at the expense of consumers; (2) incentive to

engage in similar conduct in the future; and (3)

opportunity to engage in similar conduct in the future. As

to the third point, the FTC specifically alleged that Shire

“marketed and developed drug products,” namely

Cinryze, “for commercial sale in the United States, and it

could do so in the future.” Id. ¶¶ 8, 151.

Shire moved to dismiss the complaint, arguing that

the FTC had failed to plead sufficient facts to invoke its

13

authority under Section 13(b). Shire also contended that

its petitioning activity was immune from antitrust

challenge pursuant to the Noerr-Pennington doctrine. See

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

Inc., 365 U.S. 127, 136 (1961); United Mine Workers of

Am. v. Pennington, 381 U.S. 657, 670 (1965). The FTC

responded that Section 13(b) authorized its lawsuit and

that Shire had engaged in sham petitioning, which is not

protected by Noerr-Pennington.

The District Court granted Shire’s motion to

dismiss, ruling that the FTC had failed to plead sufficient

facts to show that Shire “is violating, or is about to violate”

the law.10 The Court flatly rejected the FTC’s contention

that Shire was about to violate the law merely because it

had the incentive and opportunity to engage in similar

conduct in the future.

10

Despite the District Court’s grant of Shire’s

motion to dismiss—which was couched in jurisdictional

terms—the Court also reached Shire’s Noerr-Pennington

defense. The Court declined to dismiss the case on these

grounds, explaining that the allegations in the complaint

were sufficient to invoke the sham petitioning exception—

at least at the pleading stage. Because we affirm the

District Court’s dismissal, Shire’s Noerr-Pennington

defense is not before us on appeal.

14

The FTC filed this timely appeal.

II.

We begin by addressing whether Section 13(b)’s

requirements are jurisdictional. The FTC contends that

Section 13(b) is not jurisdictional while Shire argues the

opposite. The District Court appears to have assumed—

without expressly analyzing the issue—that Section 13(b)

does not impose a jurisdictional requirement.11

The Supreme Court of the United States has

instructed us to assume that statutory limitations are

nonjurisdictional unless Congress provides otherwise. In

Arbaugh v. Y&H Corp., the Court addressed whether Title

VII’s definition of “employer” (which only includes those

having fifteen or more employees) “affects federal-court

subject-matter jurisdiction or, instead, delineates a

substantive ingredient of a Title VII claim for relief.” 546

U.S. 500, 503 (2006). The Court held that it was the latter,

cautioning courts against “drive-by jurisdictional rulings”

11

The District Court’s opinion was murky on this

point, citing both Rule 12(b)(1) and 12(b)(6) of the Federal

Rules of Civil Procedure. At several points the District

Court couched its inquiry as jurisdictional, yet still

addressed the merits of Shire’s Noerr-Pennington defense.

Regardless of the District Court’s conclusion, our review

is plenary.

15

that fail to actually assess “whether the federal court had

authority to adjudicate the claim in suit.” Id. at 511

(citation omitted).

The Supreme Court reiterated that a plaintiff obtains

the “basic statutory grant[]” of subject matter jurisdiction

in 28 U.S.C. § 1331 by pleading a colorable claim that

arises under the Constitution or the laws of the United

States. Id. at 513. The plaintiff in Arbaugh had invoked

federal question jurisdiction by pleading a claim under

Title VII. Id. The Court held that the fifteen-employee

threshold went to the merits of the Title VII claim,

explaining that Congress had not clearly delineated it as a

jurisdictional requirement. Id. at 514–16. The Supreme

Court created a “readily administrable bright line”—

“when Congress does not rank a statutory limitation on

coverage as jurisdictional, courts should treat the

restriction as nonjurisdictional in character.” Id. at 516.

Under the standard announced in Arbaugh, Section

13(b)’s “is” or “is about to violate” requirement is

nonjurisdictional. Section 13(b) provides, in relevant part:

Whenever the [FTC] has reason to believe—

16

(1) that any person, partnership, or

corporation is violating, or is about to

violate, any provision of law enforced

by the [FTC,] and

(2) that the enjoining thereof pending the

issuance of a complaint by the [FTC]

and until such complaint is dismissed

by the [FTC] or set aside by the court

on review, or until the order of the

[FTC] made thereon has become final,

would be in the interest of the public—

the [FTC] . . . may bring suit in a district court

of the United States to enjoin any such act or

practice.

15 U.S.C. § 53(b) (emphasis added).

The FTC’s claim arises under a law of the United

States—15 U.S.C. § 53(b). It thus falls within the general

grant of jurisdiction in § 1331. The District Court also had

jurisdiction under 28 U.S.C. §§ 1337(a) and 1345.

Section 13(b) includes no indicia that Congress

intended to “rank a statutory limitation . . . as

jurisdictional”; as such, we must follow the Supreme

Court’s “readily administrable bright line” rule and treat

the statutory language as nonjurisdictional. Arbaugh, 546

U.S. at 516. Whether a person “is violating, or is about to

17

violate” the law relates to the merits of a Section 13(b)

claim, and does not indicate that Congress intended to strip

district courts of their authority to resolve the FTC’s claim.

Because “nothing in [Section 13(b)] displays any intent to

withdraw federal jurisdiction . . . we will not presume that

the statute means what it neither says nor fairly implies.”

Verizon Md. Inc. v. Pub. Serv. Comm’n of Md., 535 U.S.

635, 644 (2002).

We conclude that the District Court had jurisdiction

pursuant to 28 U.S.C. §§ 1331, 1337(a), and 1345.

18

III.12

A.

The FTC Act declares “[u]nfair methods of

competition in or affecting commerce” to be unlawful, 15

U.S.C. § 45(a)(1), and directs the FTC to prevent

violations of the Act, id. § 45(a)(2). The FTC has multiple

instruments in its toolbox to combat unfair methods of

competition; among these are administrative proceedings

and lawsuits in federal court. See id. §§ 45(b), 53(b).

Section 5(b), the FTC’s administrative remedy, is

its traditional enforcement tool. See id. § 45(b). Since its

inception, the FTC Act has provided for administrative

12

We exercise jurisdiction under 28 U.S.C. § 1291.

Because Section 13(b)’s requirements are

nonjurisdictional, we consider the dismissal to be under

Rule 12(b)(6) of the Federal Rules of Civil Procedure. We

exercise plenary review over the District Court’s order

granting a motion to dismiss for failure to state a claim.

Mariotti v. Mariotti Bldg. Prods., Inc., 714 F.3d 761, 765

(3d Cir. 2013). We accept “all well-pleaded allegations in

the complaint as true and view[] them in the light most

favorable to the plaintiff.” Id. The movant can obtain

relief only if the complaint’s allegations, “however true,

could not raise a claim of entitlement to relief.” Id.

(alteration and internal quotation marks omitted).

19

proceedings to remedy unfair methods of competition.

Federal Trade Commission Act § 5, 38 Stat. 719 (1914)

(current version at 15 U.S.C. § 45(b) (2018)). If the FTC

has “reason to believe” that a person, partnership, or

corporation “has been or is using” unfair methods of

competition, the FTC can issue an administrative

complaint “stating its charges in that respect.” 15 U.S.C.

§ 45(b). If after receiving the FTC’s complaint the

respondent contests the charges, the parties adjudicate in a

trial-type proceeding in front of an administrative law

judge (“ALJ”). Either party may appeal the ALJ’s

decision. If the FTC believes the respondent is violating

the law, it issues a written report and serves a cease and

desist order upon the respondent. Id. The respondent has

sixty days to seek review “in the appropriate court of

appeals.”13 Id.

In addition to cease and desist orders, Section 5

provides for limited monetary remedies. If a respondent

violates a cease and desist order, the FTC may seek a civil

penalty of no more than $10,000 per violation. Id. § 45(l).

The civil penalty is recoverable in a “civil action brought

by the Attorney General.” Id. The FTC may also file a

civil action to recover a penalty for knowing violations of

13

The appropriate court of appeals is “any circuit

where the method of competition . . . was used or where

[the respondent] resides or carries on business.” 15 U.S.C.

§ 45(c).

20

rules “respecting unfair or deceptive acts or practices.” Id.

§ 45(m)(1)(A). In these actions the District Court is

permitted “to grant mandatory injunctions and such other

and further equitable relief” as appropriate to enforce the

FTC’s final order. Id. § 45(l).

Section 13 authorizes the FTC—in certain

circumstances—to file suit in federal district court. Unlike

Section 5, Section 13 was not part of the original FTC Act.

Rather, Section 13(b) was added later in an effort to solve

one of the main problems of the FTC’s relatively slow-

moving administrative regime—the need to quickly enjoin

ongoing or imminent illegal conduct. In Section 5

proceedings, the FTC must prevail to obtain a cease and

desist order. See id. § 45(b). Even if the FTC issues a

cease and desist order, it must seek a court’s aid in

enforcing the order. Id. § 45(l) To remedy this

shortcoming and allow a quicker response, Congress

amended the FTC Act in 1973 to allow the FTC to obtain

a temporary restraining order or preliminary injunction in

federal court whenever it “has reason to believe” that

violations of the FTC Act are occurring or are about to

occur. Id. § 53(b). Section 13(b) thus empowers the FTC

to speedily address ongoing or impending illegal conduct,

rather than wait for an administrative proceeding to

conclude. See id.

21

B.

The crux of the FTC’s claim is that it is entitled to

pursue immediate relief in the District Court under Section

13(b), rather than via the administrative remedy set forth

in Section 5. We begin with the text of the FTC Act. See

Murphy v. Millennium Radio Grp. LLC, 650 F.3d 295, 302

(3d Cir. 2011) (“When the statute’s language is plain, the

sole function of the courts—at least where the disposition

required by the [text] is not absurd—is to enforce it

according to its terms.” (internal quotation marks

omitted)). Section 13(b) provides, in relevant part,

Whenever the [FTC] has reason to believe—

(1) that any person, partnership, or

corporation is violating, or is about to

violate, any provision of law enforced

by [the FTC,] and

(2) that the enjoining thereof

pending the issuance of a complaint by

the [FTC] and until such complaint is

dismissed by the [FTC] or set aside by

the court on review, or until the order

of the [FTC] made thereon has become

final, would be in the interest of the

public—

22

the [FTC] by any of its attorneys designated

by it for such purpose may bring suit in a

district court of the United States to enjoin

any such act or practice. Upon a proper

showing that, weighing the equities and

considering the [FTC]’s likelihood of

ultimate success, such action would be in the

public interest, and after notice to the

defendant, a temporary restraining order or a

preliminary injunction may be granted

without bond: Provided, however, That if a

complaint is not filed within such period (not

exceeding 20 days) as may be specified by

the court after issuance of the temporary

restraining order or preliminary injunction,

the order or injunction shall be dissolved by

the court and be of no further force and effect:

Provided further, That in proper cases the

[FTC] may seek, and after proper proof, the

court may issue, a permanent injunction.

15 U.S.C. § 53(b)(1)–(2) (first emphasis added).

Section 13(b) requires that the FTC have reason to

believe a wrongdoer “is violating” or “is about to violate”

the law. Id. § 53(b)(1). We conclude that this language is

unambiguous; it prohibits existing or impending conduct.

Simply put, Section 13(b) does not permit the FTC to bring

a claim based on long-past conduct without some evidence

23

that the defendant “is” committing or “is about to” commit

another violation.

The plain language of Section 13(b) is reinforced by

its history. “Generally, where the text of a statute is

unambiguous, the statute should be enforced as written

and only the most extraordinary showing of contrary

intentions in the legislative history will justify a departure

from that language.” Millennium Radio Grp. LLC, 650

F.3d at 302 (internal quotation marks omitted). When

Congress added Section 13(b), the provision was expected

to be used for obtaining injunctions against illegal conduct

pending completion of FTC administrative hearings. See

S. Rep. No. 93-151, at 30 (1973) (“The purpose of

[Section 13(b)] is to permit the [FTC] to bring an

immediate halt to unfair or deceptive acts or practices

when . . . [a]t the present time such practices might

continue for several years until agency action is

completed.”). The provision was not designed to address

hypothetical conduct or the mere suspicion that such

conduct may yet occur. Cf. id. (explaining that Section

13(b) is meant to “bring an immediate halt to unfair or

deceptive acts or practices. . . .”). Nor was it meant to

duplicate Section 5, which already prohibits past conduct.

C.

The FTC’s arguments to the contrary are

unconvincing. The FTC contends that relief under Section

13(b) is appropriate when it shows a reasonable likelihood

24

that past violations will recur. In other words, “when a

defendant has already violated the law but the illegal

conduct has ceased, injunctive relief should be granted if

‘there exists some cognizable danger of recurrent

violation.’” Br. of Appellant 21 (quoting United States v.

W.T. Grant Co., 345 U.S. 629, 633 (1953)).

The FTC borrows its “likelihood of recurrence”

standard from the common law standard for an award of

injunctive relief. A party can generally obtain injunctive

relief for past conduct that is likely to recur; the wrongdoer

cannot avoid an injunction by voluntarily ceasing its

illegal conduct. W.T. Grant Co., 345 U.S. at 632.

Although injunctive relief can survive discontinuance of

the illegal conduct, “the moving party must satisfy the

court that relief is needed. The necessary determination is

that there exists some cognizable danger of recurrent

violation, something more than the mere possibility which

serves to keep the case alive.” Id. at 633.

The FTC insists that other courts have

“consistently” applied the likelihood of recurrence

standard in Section 13(b) cases. Br. of Appellant 21–22.

This is true, and unsurprising, given that Section 13(b)

explicitly authorizes the FTC to obtain injunctions. But

none of the cases cited by the FTC considers the issue

presented here—the meaning of Section 13(b)’s threshold

requirement that a party “is” violating or “is about to”

violate the law.

25

The FTC relies heavily on Federal Trade

Commission v. Evans Products Co., 775 F.2d 1084, 1087

(9th Cir. 1985). There, the United States Court of Appeals

for the Ninth Circuit upheld the denial of an injunction

under Section 13(b), ruling that “an injunction will issue

only if the wrongs are ongoing or likely to recur.” Id. The

FTC sued a home seller at least two years after it had

stopped making allegedly illegal misrepresentations. Id.

at 1085–88. The district court denied the FTC’s motion

for an injunction; the Ninth Circuit affirmed, ruling that

26

the seller’s conduct had completely ceased and was not

likely to recur.14 Id.

In another case cited by the FTC, Federal Trade

Commission v. Accusearch Inc., the United States Court of

Appeals for the Tenth Circuit upheld a Section 13(b)

injunction prohibiting the operator of a website that sold

illegally-acquired personal data from engaging in future

misconduct. 570 F.3d 1187, 1191 (10th Cir. 2009). The

Tenth Circuit did not even quote—let alone analyze—

Section 13(b)’s “about to violate” language because it was

14

Although the result in Evans Products Co. cuts

against the FTC, the Commission tries to rely on portions

of the Ninth Circuit’s reasoning. The Ninth Circuit,

however, did not interpret “about to violate.” See Fed.

Trade Comm’n v. Evans Prods. Co., 775 F.2d 1084, 1086

(9th Cir. 1985). Instead, it gave Chevron deference to the

FTC’s interpretation of a different part of Section 13(b)—

the so-called permanent injunction proviso. See id. The

FTC claimed that the permanent injunction proviso was a

standalone cause of action that authorized it to obtain a

permanent injunction against violations of any provision

of law it enforced. See id. Here, however, the FTC has

expressly disclaimed reliance on the permanent injunction

proviso, see Br. of Appellant 23 n.8, making the FTC’s

arguments relying on Evans Products Co. at best

inapposite and at worst misleading.

27

clear that the website operator had the capacity and

motivation to engage in similar conduct in the future. See

id. at 1202. The Tenth Circuit did not address whether the

FTC had properly filed suit under Section 13(b).

The FTC next protests that our interpretation of “is

about to violate” would make it harder to get in the

courthouse door than to win injunctive relief.15 The FTC

contends that the likelihood of recurrence standard—

which applies when a court is considering whether to grant

or deny injunctive relief—must be the sole standard to

plead a Section 13(b) claim. But the FTC cannot

overcome Congress’s plain language in Section 13(b),

which requires the FTC to plead, at the time it files suit,

that a violation “is” occurring or “is about to” occur. 15

U.S.C. § 53(b). Furthermore, the FTC ignores that the

“about to violate” and “likelihood of recurrence” standards

coexist. The “about to violate” pleading requirement—

15

The FTC argues that the District Court erred by

imposing a “higher” pleading threshold of “imminent

recurrence.” Br. of Appellant 22. The FTC is wrong. The

District Court never imposed an imminence requirement.

In fact, it didn’t even use the word “imminent” in its

opinion. The Court held that the factual allegations in the

FTC’s complaint failed to “plausibly suggest [Shire] is

‘about to violate’ any law enforced by the FTC,

particularly when the alleged misconduct ceased almost

five years before filing of the complaint.” Op. 12.

28

which is applied right out of the gate—is not inconsistent

with the likelihood of recurrence standard, which a court

uses to determine the FTC’s entitlement to an injunction.

The FTC also places much weight on cases

interpreting the Securities Act of 1933 and the Securities

Exchange Act of 1934. These Acts permit the Securities

Exchange Commission to seek injunctive relief in federal

court when a defendant “is engaged” or is “about to

engage” in a violation of securities laws. 15 U.S.C.

§§ 77t(b) and 78u(d)(1). We reject the FTC’s invitation to

import the interpretation of “is” or “is about to” contained

in cases interpreting the securities laws. We “look to other

statutes pertaining to the same subject matter which

contain similar terms” only if “the ordinary meaning of a

statute and the statute’s legislative history fail to provide

sufficient guidance to a term’s meaning.” Liberty Lincoln-

Mercury, Inc. v. Ford Motor Co., 171 F.3d 818, 823 (3d

Cir. 1999). Here, the plain language of Section 13(b)

answers the question for us—“is about to violate” means

something more than a past violation and a likelihood of

recurrence. If we were in doubt, the structure and history

of the FTC Act support our interpretation. Moreover, the

statutory scheme—the addition of Section 13(b) to cure a

shortcoming of Section 5(b)—is not similar to the

securities laws, which have always permitted suits for

injunctions. See also Amicus Br. of Washington Legal

Foundation 9 (“While several other statutes include

language similar to the FTC’s ‘about to violate’ language,

29

none of those statutes include agency-litigating authority

that even remotely resembles the overall structure and

history of the FTC Act.”).

Finally, the FTC trots out the old adage that a

remedial statute like the FTC Act should be construed

broadly. Because Section 13(b)’s “is” or “is about to”

requirement allegedly conflicts with the remedial purpose

of the FTC Act, the FTC says we should disregard the

plain meaning of that language. Of course, none of the

authority the FTC cites stands for the broad proposition

that we can ignore clear statutory language if it does not

promote a remedial interpretation. See Touche Ross & Co.

v. Redington, 442 U.S. 560, 578 (1979) (explaining that

“generalized references” to “remedial purposes” of a

statute will “not justify reading a provision more broadly

than its language and the statutory scheme reasonably

permit” (internal quotation marks omitted)).

The FTC points to a parade of horribles that it

predicts will result if we uphold the District Court’s

decision.16 See, e.g., Br. of Appellant 35 (“Limiting the

FTC’s Section 13(b) authority to cases of ongoing or

imminent violation would make it easy for wrongdoers to

16

The FTC also claims that the District Court’s

interpretation could interfere with other statutes that

contain similar language. Given the unique history and

structure of the FTC Act, we consider this fear unfounded.

30

evade Congress’ purposes in creating the regime. As soon

as a potential defendant got wind that the FTC was

investigating its activities, it could simply stop those

activities and render itself immune from suit in federal

court unless the FTC could allege and prove an imminent

re-violation.”). But there is no reason to believe that our

decision today unnecessarily restricts the FTC’s ability to

address wrongdoing. Section 5 authorizes administrative

proceedings based on past violations. And, of course, if

the FTC believes that a wrongdoer is “about to violate” the

law during the pendency of an administrative proceeding,

it could then come to court and obtain an injunction under

Section 13(b).

The FTC’s understandable preference for litigating

under Section 13(b), rather than in an administrative

proceeding, does not justify its expansion of the statutory

language. If the FTC wants to recover for a past

violation—where an entity “has been” violating the law—

it must use Section 5(b). 15 U.S.C. § 45(b). If the FTC

instead chooses to use Section 13(b), it must plead that a

violation of the law “is” occurring or “is about to” occur.

Id. § 53(b). Here, the FTC wants to use the most

advantageous aspects of each statutory provision—to

punish Shire for a past violation using the less onerous

enforcement mechanism. But the FTC’s attempt to

squeeze Shire’s conduct into the “about to violate”

category distorts Section 13(b) beyond its intended

purpose. Section 13(b) cannot accommodate the FTC’s

31

interpretation—that “about to violate” means only that a

violation could recur at some future point.

In short, we reject the FTC’s contention that Section

13(b)’s “is violating” or “is about to violate” language can

be satisfied by showing a violation in the distant past and

a vague and generalized likelihood of recurrent conduct.17

Instead, “is” or “is about to violate” means what it says—

the FTC must make a showing that a defendant is violating

or is about to violate the law.

17

The FTC also asserts that Section 13(b)’s “reason

to believe” language confers upon it unreviewable

discretion to file suit. See 15 U.S.C. § 53(b) (“Whenever

the Commission has reason to believe—(1) that any

person, partnership, or corporation is violating, or is about

to violate, any provision of law. . .[the FTC] may bring

suit in a district court of the United States to enjoin any

such act or practice.” (emphasis added)). We decline to

consider this argument because the FTC failed to raise it

in the District Court. Garza v. Citigroup Inc., 881 F.3d

277, 284 (3d Cir. 2018) (“It is well established that

arguments not raised before the District Court are waived

on appeal.” (internal citation omitted)). Even if this

argument were not waived, we would find it unpersuasive.

Here, there is no evidence to support the FTC’s “reason to

believe” Shire is violating or is about to violate the law.

32

D.

Here, the FTC never initiated Section 5 proceedings

against Shire.18 Instead, the FTC waited until five years

after Shire had stopped its allegedly illegal conduct before

seeking an injunction under Section 13(b). Viewed under

the correct standard, the FTC’s complaint fails to allege

that Shire “is violating” or “is about to violate” the law.

The FTC does not contest that Shire is not currently

violating the law. Indeed, Shire divested itself of

Vancocin in 2014, two years after generic competition

entered the market.

Instead, the FTC relies on Section 13(b)’s “is about

to violate” language. The few factual allegations in the

FTC’s forty-five page complaint that suggest Shire “is

about to violate” the law are woefully inadequate to state

a claim under Section 13(b). The FTC alleges generally

that Shire “is engaged in the business of, among other

things, developing, manufacturing, and marketing branded

drug products, including inter alia, Cinryze.” Compl. ¶ 8.

As to the likelihood that Shire will engage in illegal

18

At oral argument in the District Court, the FTC

explained that it “generally” pursues administrative

proceedings and a preliminary injunction simultaneously.

App. 381. It is unclear why the FTC did not use that

strategy here, particularly when Shire’s allegedly illegal

conduct ceased long before the FTC filed suit.

33

behavior, the FTC alleges, “[a]bsent an injunction, there is

a cognizable danger that [Shire] will engage in similar

conduct causing future harm to competition and

consumers. [Shire] knowingly carried out its

anticompetitive and meritless petitioning campaign to

preserve its monopoly profits. It did so conscious of the

fact that this conduct would greatly enrich it at the expense

of consumers.” Id. ¶ 150. Without mentioning Cinryze by

name, the FTC alleges that Shire “has the incentive and

opportunity to continue to engage in similar conduct in the

future. At all relevant times, [Shire] marketed and

developed drug products for commercial sale in the United

States, and it could do so in the future. Consequently,

[Shire] has the incentive to obstruct or delay competition

to these or other products.” Id. ¶ 151.

The District Court concluded that these vague

allegations failed to “plausibly suggest [Shire] is ‘about to

violate’ any law enforced by the FTC, particularly when

the alleged misconduct ceased almost five years before

filing of the complaint.” Op. 12. We agree. Taking the

factual allegations in the complaint as true, Shire stopped

its sham petitioning campaign in 2012 when the FDA

approved generic equivalents to Vancocin. The complaint

contains no allegations that Shire engaged in sham

petitioning in the five-year gap between the 2012 cessation

in petitioning and the 2017 lawsuit. The complaint also

lacks specific allegations that Shire is “about to violate”

34

the law by petitioning as to Cinryze, the only other drug

mentioned.

At oral argument in the District Court, the FTC

provided more support for its argument that Shire “is about

to violate” the law. The FTC explained that Shire is

“perfectly positioned” to commit violations in the future

because it is already marketing a “blockbuster drug” that

is in the pipeline. Id. at 11. That drug, Cinryze, is not ripe

for generic entry but has “the same type of significance as

Vancocin . . . .” Id. We need not consider whether these

allegations might satisfy the pleading standard. None of

these facts—other than that Shire markets Cinryze—are

pleaded in the complaint, which the FTC chose not to

amend. Based upon the pleading before us, we conclude

that the FTC has failed to plead that Shire is “about to

violate” any law.

In this case, given the paucity of allegations in the

complaint, the FTC fails to state a claim under any

reasonable definition of “about to violate.” Whatever the

outer reach of “about to violate” may be, the facts in this

case do not approach it.19 We therefore leave for another

19

We also reject the FTC’s standalone claim for

equitable monetary relief. Assuming that such relief is

available under Section 13(b), the FTC must still meet the

“is” or “is about to” requirement.

35

day the exact confines of Section 13(b)’s “about to

violate” language.

IV.

Under Section 13(b) of the FTC Act, the FTC must

plead that Shire “is” violating or “is about to” violate the

law. But Shire indisputably is not currently violating the

law, nor is it alleged to be poised to do so anytime in the

foreseeable future. The FTC thus fails to state a claim

upon which relief can be granted. We will affirm the

District Court’s judgment.

The FTC’s improper use of Section 13(b) to pursue

long-past petitioning has the potential to discourage lawful

petitioning activity by interested citizens—activity that is

protected by the First Amendment. Because we affirm the

District Court’s judgment dismissing the complaint, we

need not address the issue further but suggest that the FTC

be mindful of such First Amendment concerns.

36