Petition for Writ of Certiorari — AbbVie Inc., et al., Petitioners v. Federal Trade Commission
Supreme Court briefMar 18, 2021
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No. 20IN THE
Supreme Court of the United States
ABBVIE INC., ABBOTT LABORATORIES, UNIMED
PHARMACEUTICALS LLC, AND BESINS HEALTHCARE, INC.,
Petitioners,
v.
FEDERAL TRADE COMMISSION,
Respondent.
ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED
STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
WILLIAM F. LEE
WILMER CUTLER PICKERING
HALE AND DORR LLP
60 State Street
Boston, MA 02109
SETH P. WAXMAN
Counsel of Record
LEON B. GREENFIELD
CATHERINE M.A. CARROLL
BRITTANY BLUEITT AMADI
CLAIRE H. CHUNG
JEFFREY I. WEINBERGER
MEDHA GARGEYA
STUART N. SENATOR
WILMER CUTLER PICKERING
ADAM R. LAWTON
HALE AND DORR LLP
MUNGER, TOLLES & OLSON LLP 1875 Pennsylvania Ave., NW
350 South Grand Avenue
Washington, DC 20006
Los Angeles, CA 90071
(202) 663-6000
seth.waxman@wilmerhale.com
ELAINE J. GOLDENBERG
MUNGER, TOLLES & OLSON LLP
601 Massachusetts Ave., NW
Suite 500 East
Washington, DC 20001
Counsel for AbbVie Inc., Abbott Laboratories, and Unimed
Pharmaceuticals LLC
MELINDA F. LEVITT
GREGORY E. NEPPL
FOLEY & LARDNER, LLP
3000 K Street, NW
Washington, DC 20007
Counsel for Besins Healthcare, Inc.
QUESTION PRESENTED
Whether the subjective element of the “sham litigation” exception to Noerr-Pennington immunity may
be met by an inference from a finding that a challenged
lawsuit was objectively baseless, even without evidence
that the antitrust defendant actually believed the suit
lacked merit or was indifferent to the outcome.
(i)
PARTIES TO THE PROCEEDING
Petitioners are AbbVie Inc., Abbott Laboratories,
Unimed Pharmaceuticals LLC, and Besins Healthcare,
Inc., which were defendants in the district court and
appellees and cross-appellants in the court of appeals.
Teva Pharmaceuticals USA, Inc. was a defendant
in the district court but was dismissed as a party by the
court of appeals.
Respondent is the Federal Trade Commission,
which was the plaintiff in the district court and appellant and cross-appellee in the court of appeals.
(ii)
CORPORATE DISCLOSURE STATEMENT
AbbVie Inc. has no parent corporation, and no publicly held company owns 10% or more of its stock.
Abbott Laboratories has no parent corporation,
and no publicly held company owns 10% or more of its
stock.
Unimed Pharmaceuticals LLC is an indirect, wholly owned subsidiary of AbbVie Inc., a publicly traded
company.
Besins Healthcare, Inc., is a wholly owned U.S.
corporate subsidiary of Belgian company Besins
Healthcare, S.A. Neither Besins Healthcare, S.A. nor
its parent entity Besins Healthcare Holding LTD are
publicly traded companies.
(iii)
RELATED PROCEEDINGS
Federal Trade Commission v. AbbVie Inc., et al.,
Nos. 18-2621, -2748, -2758 (3d Cir.) (opinion and judgment issued September 30, 2020; opinion amended December 4, 2020; rehearing denied December 4, 2020).
Federal Trade Commission v. AbbVie Inc., et al.,
No. 2:14-cv-05151-HB (E.D. Pa.) (judgment issued July
18, 2018).
(iv)
TABLE OF CONTENTS
Page
QUESTION PRESENTED ............................................... i
PARTIES TO THE PROCEEDING .............................. ii
CORPORATE DISCLOSURE STATEMENT ............iii
RELATED PROCEEDINGS..........................................iv
TABLE OF AUTHORITIES .........................................vii
INTRODUCTION .............................................................. 1
OPINIONS BELOW .......................................................... 6
JURISDICTION ................................................................. 6
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED ...................................... 6
STATEMENT ..................................................................... 7
A. Noerr-Pennington Immunity And The
Sham-Litigation Exception ................................. 7
B. AbbVie’s Hatch-Waxman Act Lawsuit ............. 9
C. The FTC’s Antitrust Claim And
Proceedings Below .............................................. 13
REASONS FOR GRANTING THE PETITION .......... 16
I.
THE DECISION BELOW CONFLICTS WITH
THIS COURT’S PRECEDENT ....................................... 17
II. OTHER COURTS OF APPEALS HAVE
APPLIED A MORE RIGOROUS SUBJECTIVE
MOTIVATION STANDARD ............................................ 25
III. THE DECISION BELOW WILL HAVE
SIGNIFICANT NEGATIVE CONSEQUENCES ............ 27
IV. THIS CASE IS AN APPROPRIATE VEHICLE ............. 32
(v)
vi
TABLE OF CONTENTS—Continued
Page
CONCLUSION ................................................................. 34
APPENDIX A: Opinion of the United States
Court of Appeals for the Third Circuit,
dated September 30, 2020 ......................................... 1a
APPENDIX B:
Findings of Fact and
Conclusions of Law of the United States
District Court for the Eastern District of
Pennsylvania, dated June 29, 2018......................... 93a
APPENDIX C: Memorandum of the United
States District Court for the Eastern
District of Pennsylvania, dated September
15, 2017 ..................................................................... 177a
APPENDIX D: Sur Petition for Rehearing
denial of the United States Court of
Appeals
for
the
Third
Circuit,
dated December 4, 2020......................................... 205a
APPENDIX E:
Judgment of the United
States Court of Appeals for the Third
Circuit, dated January 15, 2020 ............................ 207a
APPENDIX F: Relevant Constitutional and
Statutory Provisions:
U.S. Const. amend. I .............................................. 211a
21 U.S.C. § 355 ........................................................ 211a
vii
TABLE OF AUTHORITIES
CASES
Page(s)
Athena Diagnostics, Inc. v. Mayo
Collaborative Services, LLC, 927 F.3d 1333
(Fed. Cir. 2019) ........................................................... 31
BE&K Construction Co. v. NLRB, 536 U.S.
516 (2002) ............................................................ passim
C.R. Bard, Inc. v. M3 Systems, Inc., 157 F.3d
1340 (Fed. Cir. 1998) ...................................... 25, 26, 29
California Motor Transportation Co. v.
Trucking Unlimited, 404 U.S. 508 (1972) .. 7, 20, 28, 32
Caraco Pharmaceutical Laboratories, Ltd. v.
Novo Nordisk A/S, 566 U.S. 399 (2012) ....... 10, 11, 29
City of Columbia v. Omni Outdoor
Advertising, Inc., 499 U.S. 365 (1991) ............ passim
CSMN Investments, LLC v. Cordillera
Metropolitan District, 956 F.3d 1276 (10th
Cir. 2020) ...................................................................... 28
Dawson Chemical Co. v. Rohm & Haas Co.,
448 U.S. 176 (1980) ..................................................... 21
Eastern Railroad Presidents Conference v.
Noerr Motor Freight, Inc., 365 U.S. 127
(1961) .............................................................................. 7
Eli Lilly & Co. v. Hospira, Inc., 933 F.3d 1320
(Fed. Cir. 2019) ........................................................... 14
Festo Corp. v. Shoketsu Kinzoku Kogyo
Kabushiki Co., 535 U.S. 722 (2002) .............. 11, 12, 31
FTC v. Actavis, Inc., 570 U.S. 136 (2013) ...................... 13
viii
TABLE OF AUTHORITIES—Continued
Page(s)
Handgards, Inc. v. Ethicon, Inc., 743 F.2d 1282
(9th Cir. 1984).............................................................. 26
In re DDAVP Direct Purchaser Antitrust
Litigation, 585 F.3d 677 (2d Cir. 2009) .................... 26
Kottle v. Northwest Kidney Centers, 146 F.3d
1056 (9th Cir. 1998)..................................................... 28
KSR International Co. v. Teleflex Inc.,
550 U.S. 398 (2007) ..................................................... 30
Mohawk Industries, Inc. v. Carpenter,
558 U.S. 100 (2009) ..................................................... 32
Octane Fitness, LLC v. ICON Health &
Fitness, Inc., 572 U.S. 545 (2014) ....... 9, 18, 23, 24, 27
Professional Real Estate Investors, Inc. v.
Columbia Pictures Industries, Inc.,
508 U.S. 49 (1993) .............................................. passim
Teva Pharmaceuticals USA, Inc. v. Sandoz,
Inc., 574 U.S. 318 (2015) ............................................ 30
Theme Promotions, Inc. v. News America
Marketing FSI, 546 F.3d 991 (9th Cir.
2008) ............................................................................. 13
Tyco Healthcare Group LP v. Mutual
Pharmaceutical Co., 762 F.3d 1338
(Fed. Cir. 2014) ..................................................... 25, 28
United Mine Workers v. Pennington, 381 U.S.
657 (1965) ....................................................................... 7
Virtue v. Creamery Package Manufacturing
Co., 227 U.S. 8 (1913) ................................................. 29
ix
TABLE OF AUTHORITIES—Continued
Page(s)
Warner-Jenkinson Co. v. Hilton Davis
Chemical Co., 520 U.S. 17 (1997) ............................. 11
DOCKETED CASES
AMG Capital Management, LLC v. FTC,
No. 19-508 (U.S.) ......................................................... 16
King Drug Company of Florence, Inc. v.
Abbott Laboratories, No. 2:19-cv-03565-HB
(E.D. Pa.) ..................................................................... 33
Perrigo Co. v. AbbVie, Inc., No. 3:20-cv-17560BRM-DEA (D.N.J.) ................................................... 33
CONSTITUTIONAL AND STATUTORY PROVISIONS
U.S. Const. amend. I ........................................................... 7
15 U.S.C.
§ 15 ................................................................................ 24
§ 45 ................................................................................ 13
§ 53 ................................................................................ 13
21 U.S.C. § 355 ......................................................... 6, 10, 11
28 U.S.C. § 1254 ................................................................... 6
35 U.S.C.
§ 271 .............................................................................. 11
§ 285 .............................................................................. 23
REGULATIONS AND LEGISLATIVE MATERIALS
21 C.F.R. § 314.54 .............................................................. 10
H.R. Rep. No. 98-857, pt. 1 (1984) ................................... 28
x
TABLE OF AUTHORITIES—Continued
Page(s)
OTHER AUTHORITIES
Brachmann, Steve, Hatch-Waxman Litigation:
60 Percent Increase in ANDA Lawsuits
from 2016 to 2017, IPWatchdog (May 16,
2018), https://www.ipwatchdog.com/2018/05/
16/hatch-waxman-litigation-60-percent-incr
ease-anda-lawsuits/id=96985/ ................................... 30
IN THE
Supreme Court of the United States
No. 20ABBVIE INC., ABBOTT LABORATORIES, UNIMED
PHARMACEUTICALS LLC, AND BESINS HEALTHCARE, INC.,
Petitioners,
v.
FEDERAL TRADE COMMISSION,
Respondent.
ON PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
AbbVie Inc., Abbott Laboratories, Unimed Pharmaceuticals LLC, and Besins Healthcare, Inc. (collectively, “AbbVie”) respectfully petition for a writ of certiorari to review the judgment of the United States
Court of Appeals for the Third Circuit in this case.1
INTRODUCTION
This petition concerns a crucial and recurring issue
at the intersection of patent law, antitrust law, and the
First Amendment: When may a patent owner be held
1
“AbbVie” refers here to all petitioners, except where Besins
Healthcare, Inc. (“Besins”) is separately mentioned.
2
liable under the antitrust laws for suing a competitor to
enforce a valid patent? The Noerr-Pennington doctrine
allows litigants to exercise their First Amendment
right to petition the government for redress of grievances, including by litigating against a competitor,
without fear of antitrust liability and attendant treble
damages. Although this Court has recognized an exception to that immunity for “sham” litigation, the
Court has insisted on a stringent test for identifying
sham suits, to ensure adequate “‘breathing space’” for
First Amendment rights. BE&K Constr. Co. v. NLRB,
536 U.S. 516, 531 (2002). Thus, a plaintiff who claims
that a lawsuit violated the antitrust laws must prove
both (1) that the challenged suit was objectively baseless, and (2) that the antitrust defendant was subjectively motivated by an improper purpose in bringing
the challenged suit. Professional Real Estate Inv’rs,
Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 6061 (1993) (“PRE”).
Under the subjective prong, the plaintiff must establish that the defendant’s “subjective motivation” for
suing was “to interfere directly with the business relationships of a competitor” by using “the [litigation] process—as opposed to the outcome of that process—as an
anticompetitive weapon.” PRE, 508 U.S. at 60-61 (quotation marks omitted). A “classic example” is litigation
undertaken “with no expectation of achieving” success,
“but simply in order to impose expense and delay.”
City of Columbia v. Omni Outdoor Advert., Inc., 499
U.S. 365, 380 (1991). In contrast, a litigant’s mere intent to undermine a competitor—i.e., “an intent to restrain trade as a result of the government action
sought”—“does not foreclose protection” under the
First Amendment. Id. at 380-381.
3
The decision below vitiates the subjective element
of the sham exception. In this antitrust action brought
by the Federal Trade Commission, the court of appeals
held that a patent-infringement suit AbbVie brought
against Perrigo Company under the Hatch-Waxman
Act was a sham and that AbbVie violated the antitrust
laws by seeking to enforce its valid patent. The court
first concluded that the infringement suit was objectively baseless. But then, rather than requiring the
FTC independently to prove subjective bad faith, the
court held that the subjective element could be inferred
from the finding of objective baselessness. App. 68a69a. In the court’s view, a mere “intent to thwart competition” suffices to establish improper subjective motivation, App. 67a (quotation marks omitted); see App.
49a, and such an intent can be inferred through a logical
“syllogism” whenever a litigant brings an objectively
baseless lawsuit, App. 68a. Although the FTC had offered no probative evidence that AbbVie actually was
indifferent to the outcome of the infringement suit or
believed that the suit lacked any prospect of success,
the court held that “evidence of [the] defendant’s belief
about the merits of its claims … is not required.” Id.
Instead, the court treated circumstances that are present in virtually all Hatch-Waxman Act litigation—that
AbbVie’s patent-infringement suit was directed by experienced lawyers who understood the law and the financial stakes of the cases and who knew that a lawsuit
under the Hatch-Waxman Act would automatically
stay FDA approval of Perrigo’s product—as supporting
the inference of bad faith. App. 69a-70a.
That analysis conflicts with this Court’s precedent
and stands in significant tension with decisions of other
courts. Whereas this Court has held that a lawsuit can
violate the antitrust laws only if a plaintiff proves the
4
suit is a sham “both objectively and subjectively,”
BE&K, 536 U.S. at 526; see PRE, 508 U.S. at 61, the
court of appeals relieved the FTC of its burden to
prove the latter component, allowing subjective motivation to be inferred from the finding of objective baselessness (at least where AbbVie had not waived attorney-client privilege to introduce its own direct evidence
overcoming the inference), App. 68a-70a. Whereas this
Court has emphatically held that an intent to thwart
competition alone “does not render [petitioning] activity a ‘sham,’” Omni, 499 U.S. at 381, the court of appeals
agreed with the FTC that “what matters is the intent
to thwart competition,” App. 67a (quotation marks
omitted); see App. 49a. And whereas this Court has
held that a litigant’s “indifferen[ce] to the outcome on
the merits” is the hallmark of sham litigation, PRE, 508
U.S. at 65; see Omni, 499 U.S. at 380—and other courts
have treated such evidence as dispositive—the court of
appeals here held that evidence of AbbVie’s belief
about the merits was “not required,” App. 68a.
The decision below thus eviscerates the Court’s
two-pronged sham-litigation exception, to the detriment of First Amendment rights and the innovation
that patents protect. The court of appeals’ analysis imputes a subjective intent to sue in bad faith to any lawsuit that seeks a competitive advantage if the suit is
later found objectively baseless, without distinguishing
between litigants who hoped to achieve their objectives
through a successful outcome and those who sought only to abuse the litigation process itself. As a result, litigants who seek to enforce their rights against a rival
must face the substantial chilling effects of antitrust
liability and treble damages whenever the objective
merit of a suit is in question.
5
Those consequences will be especially pernicious in
a large and important category of cases: those in which
patent owners rely on the mechanisms Congress provided in the Hatch-Waxman Act to enforce their intellectual-property rights, which account for some ten
percent of all patent-infringement suits in the United
States. To balance the rights of patent owners against
the benefits of competition, the Hatch-Waxman Act encourages patent owners to file infringement suits
promptly against potential generic competitors—and
rewards them for doing so with a stay of FDA approval
of the generic—so that intellectual-property disputes
can be resolved expeditiously before a generic drug
goes to market. But the court of appeals treated the
fact that AbbVie followed that statutory scheme (and
thus benefited from the automatic stay) as
“[e]specially” indicative of bad faith. App. 70a; see App.
50a. And the court held that the circumstances of the
suit—that it was overseen by experienced lawyers familiar with the Hatch-Waxman framework and that
AbbVie stood to gain financially—supported the inference of subjective bad faith. App. 70a. On that reasoning, any Hatch-Waxman suit later found to be objectively baseless will automatically be deemed a sham,
unless the antitrust defendant can overcome the inference and affirmatively establish its good faith by waiving attorney-client privilege. That rule improperly
shifts the burden of proof to the antitrust defendant
and imperils the attorney-client privilege.
It provides little solace to patent owners and innovators that these consequences will follow only where
an infringement suit is deemed objectively baseless.
Patent law is notoriously complicated, hard to predict,
and constantly changing. Thus, the “breathing space”
that this Court has emphasized for suits that are adju-
6
dicated to be objectively baseless is particularly necessary, lest a defendant be subjected to antitrust liability
and treble damages for incorrectly assessing the merits
of enforcing a patent under inherently complex and
evolving law. That is precisely why the Court established the subjective prong as an independent element
of the test and why the decision below will be so damaging to First Amendment rights and innovation alike.
OPINIONS BELOW
The court of appeals’ amended opinion (App. 1a92a) is reported at 976 F.3d 327. The order denying rehearing (App. 205a-206a) is unreported. The district
court’s findings of fact and conclusions of law after a
bench trial (App. 93a-175a) are reported at 329 F. Supp.
3d 98. The district court’s decision granting partial
summary judgment to the FTC (App. 177a-204a) is unpublished but is available at 2017 WL 4098688.
JURISDICTION
The court of appeals entered judgment on September 30, 2020, and denied a timely rehearing petition on
December 4, 2020. On March 19, 2020, this Court extended the deadline to file petitions for writs of certiorari to 150 days from the date of the lower court judgment or order denying rehearing. This Court has jurisdiction under 28 U.S.C. § 1254(1).
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED
The First Amendment to the U.S. Constitution and
relevant provisions of the Hatch-Waxman Act, 21
U.S.C. § 355(a), (b), (c), (j)(1)-(2), (j)(5)(A)-(B), are reproduced in the Appendix.
7
STATEMENT
A. Noerr-Pennington Immunity And The ShamLitigation Exception
The First Amendment protects “the right of the
people … to petition the Government for a redress of
grievances.” U.S. Const. amend. I. The right to petition is “one of ‘the most precious of the liberties safeguarded by the Bill of Rights,’” implied in “‘[t]he very
idea of a government, republican in form.’” BE&K
Const. Co. v. NLRB, 536 U.S. 516, 524-525 (2002).
To safeguard that right, this Court has long held
that people may seek “anticompetitive action from the
government” without fear of antitrust liability. City of
Columbia v. Omni Outdoor Advert., Inc., 499 U.S. 365,
379-380 (1991). The antitrust laws, the Court has explained, do not prohibit attempts to “persuade the legislature or the executive to take particular action with
respect to a law that would produce a restraint or a
monopoly.” Eastern R.R. Presidents Conference v.
Noerr Motor Freight, Inc., 365 U.S. 127, 136 (1961); accord United Mine Workers v. Pennington, 381 U.S. 657,
669 (1965).
That principle—known as the Noerr-Pennington
doctrine—applies equally to litigation in courts. When
parties “use … courts to advocate their causes and
points of view respecting resolution of their business
and economic interests vis-a-vis their competitors,”
they are exercising their right to petition the government, and the litigation generally cannot be the basis of
antitrust liability. California Motor Transp. Co. v.
Trucking Unlimited, 404 U.S. 508, 510-511 (1972).
This Court has recognized a limited exception to
Noerr-Pennington immunity for when petitioning is “‘a
8
mere sham to cover … an attempt to interfere directly
with the business relationships of a competitor,’” rather
than a “genuine” effort to influence governmental action. Omni, 499 U.S. at 380, 382. To show that litigation was a sham, an antitrust plaintiff bears the burden
of satisfying the “two-part definition” set forth in Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49, 60 (1993) (“PRE”).
“First, the lawsuit must be objectively baseless in the
sense that no reasonable litigant could realistically expect success on the merits.” Id. Second, the litigant
must have been subjectively motivated by an improper
purpose in bringing the suit. Id. The subjective element “focus[es] 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 weapon.” Id. at 6061 (quotation marks and internal citations omitted).
The subjective element serves a distinct role in the
sham inquiry. Whereas the objective element requires
the antitrust plaintiff to “disprove the challenged lawsuit’s legal viability,” the subjective element requires
the plaintiff to disprove the suit’s “economic viability.”
PRE, 508 U.S. at 61. Litigation may be motivated by
an improper purpose (and economically irrational)
when the litigant is “indifferent to the outcome on the
merits of the … suit,” when “any damages” to be recovered from the suit are “too low to justify [the litigant’s] investment in the suit,” or when the litigant
sues “primarily for the benefit of collateral injuries inflicted through the use of legal process.” Id. at 65. A
“classic example” of sham litigation, this Court has noted, is where a party files suit “with no expectation of”
9
prevailing, “simply in order to impose expense and delay.” Omni, 499 U.S. at 380.
By contrast, a litigant’s mere “purpose of delaying
a competitor’s entry into the market does not render
[the lawsuit] a sham,” absent proof that “the delay is
sought to be achieved only by the [litigation] process
itself, and not by the governmental action that the [litigation] seeks.” Omni, 499 U.S. at 381 (emphasis added). As the Court has explained, a litigant’s “ill will”
toward a competitor “does not mean” the dispute is
“not genuine.” BE&K, 536 U.S. at 534.
This Court has cautioned that the sham exception
to Noerr-Pennington immunity is and must be “narrow,” “to avoid chilling the exercise of the First
Amendment right to petition.” Octane Fitness, LLC v.
ICON Health & Fitness, Inc., 572 U.S. 545, 556 (2014);
see BE&K, 536 U.S. at 528-529. Particularly in the antitrust context, the threat of liability and “attendant
treble damages” “significantly chills” the right to bring
suit against a competitor. Octane Fitness, 572 U.S. at
556. Thus, the Court has “never held that the entire
class of objectively baseless litigation may be enjoined
or declared unlawful even though such suits may advance no First Amendment interests of their own.”
BE&K, 536 U.S. at 531. Instead, recognizing that
“‘breathing space’” is necessary for robust First
Amendment protection, the Court has made clear that
only those suits that are “both objectively baseless and
subjectively motivated by an unlawful purpose” can
give rise to antitrust liability. Id.
B. AbbVie’s Hatch-Waxman Act Lawsuit
AbbVie and Besins co-own the patent that covered
AndroGel, a revolutionary drug for treating low testos-
10
terone levels.2 As the first topical testosterone replacement therapy offered in a convenient gel form,
AndroGel offers patients numerous benefits and became a commercial success after it launched in 2000.
App. 8a-10a.
In 2011, nine years before the AndroGel patent was
set to expire, Teva Pharmaceuticals USA and Perrigo
Company each sought FDA approval under the HatchWaxman Act to market generic versions of AndroGel.
App. 14a-15a. Ordinarily, a manufacturer seeking to
market a new drug must submit a New Drug Application (NDA) and undergo a lengthy testing process for
safety and efficacy. The Hatch-Waxman Act, however,
facilitates competition by permitting generic manufacturers to pursue abbreviated approval pathways by
“piggy-backing on the brand’s NDA” and supporting
data. Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S,
566 U.S. 399, 405 (2012); see 21 U.S.C. § 355(b)(2),
(j)(2)(A); 21 C.F.R. § 314.54. To protect patent rights in
such cases, the Hatch-Waxman Act requires a generic
manufacturer seeking abbreviated approval to certify
either that the branded drug is not covered by an existing patent or—in what is commonly known as a paragraph IV certification—that any applicable patent “is
invalid or will not be infringed” by the manufacture,
use, or sale of the generic drug.
21 U.S.C.
§ 355(b)(2)(A)(iv), (j)(2)(A)(vii)(IV).
Filing a paragraph IV certification “means provoking litigation.” Caraco, 566 U.S. at 407. To facilitate
the prompt resolution of any patent disputes between
generic and brand manufacturers, the patent statute
deems the submission of a paragraph IV certification
2
The AndroGel patent expired in August 2020. App. 12a.
11
“an act of infringement” that “gives the brand an immediate right to sue” without waiting for the generic
drug’s manufacture or sale. Id. (citing 35 U.S.C.
§ 271(e)(2)(A)). And the Hatch-Waxman Act incentivizes brand manufacturers to file such suits quickly, by
providing that if the patent owner sues for infringement within 45 days after receiving the paragraph IV
certification then the FDA must withhold approval of
the generic drug for 30 months or until the infringement suit ends, whichever occurs first. 21 U.S.C.
§ 355(c)(3)(C), (j)(5)(B)(iii).
Teva and Perrigo each submitted paragraph IV
certifications asserting that their testosterone gels
would not infringe the AndroGel patent because they
contained an ingredient—the “penetration enhancer,”
which accelerates drug delivery through the skin—that
differed chemically from the penetration enhancer
claimed in the AndroGel patent. AbbVie promptly
sued Teva and Perrigo for infringement, triggering the
statutory stay of FDA approval of Teva’s and Perrigo’s
products. App. 14a-15a.
AbbVie alleged in the infringement suits that although Teva’s and Perrigo’s products did not literally
infringe the AndroGel patent, they infringed the patent
under the “doctrine of equivalents,” because the differences between the penetration enhancer claimed in the
patent and the penetration enhancers used in those
products were insubstantial. App. 184a, 187a-188a; see
Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co.,
535 U.S. 722, 732 (2002); Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 21 (1997). Teva and
Perrigo did not dispute the validity of the AndroGel patent or that their products were substantially equivalent. Instead, relying on the doctrine of “prosecution
history estoppel,” they each contended that AbbVie
12
had surrendered patent protection for equivalent penetration enhancers by narrowing the scope of the AndroGel patent during prosecution. App. 107a, 110a,
189a-193a; C.A.J.A. 429-440; see Festo, 535 U.S. at 739740. AbbVie responded that no estoppel applied because the narrowing amendments it made to the patent
application during prosecution were not made for purposes of patentability and were only tangentially related to the Teva and Perrigo penetration enhancers. See
Festo, 535 U.S. at 735-741 (discussing tangentiality and
other exceptions to prosecution-history estoppel).
Throughout the relevant period, while acknowledging some risk to AndroGel from potential market entry
by Teva or Perrigo, AbbVie’s internal business planning documents reflected overall confidence that AndroGel would continue to maintain market exclusivity
and experience growing sales. C.A.J.A. 1827-1865,
2016-2070, 2538-2596, 2599-2662, 3378-3391, 3393-3401,
3403-3470, 3966, 3971, 3977-3982. For example, even
after AbbVie received Teva’s paragraph IV certification, AbbVie’s Long Range Plan as of April 2011 reflected the “key assumption for the business” that AndroGel would have exclusivity through August 2015
(the date two other generics were licensed to enter the
market). C.A.J.A. 3966; see C.A.J.A. 4119 (dates used
in planning documents “universally c[a]me from … our
legal teams”). And even after both lawsuits began,
AbbVie’s annual plan for 2012 continued to reflect that
confidence. C.A.J.A. 3977-3982.
Both infringement suits settled on terms favorable
to AbbVie. App. 16a-17a. Although Teva and Perrigo
each initially pushed for agreements that would have
allowed an earlier launch of their respective products,
AbbVie held firm and successfully insisted on later
launch dates—dates far later than the maximum 30-
13
month stay that would have applied under the HatchWaxman Act had the lawsuits continued. Id. As Perrigo’s in-house lawyer later explained, Perrigo accepted
a later date based in part on its assessment of AbbVie’s
chances of winning the infringement litigation. App.
16a. Cf. Theme Promotions, Inc. v. News Am. Mktg.
FSI, 546 F.3d 991, 1008 (9th Cir. 2008) (that “ongoing
litigation settled suggests that the original suit was not
objectively baseless”).
C. The FTC’s Antitrust Claim And Proceedings
Below
Nearly three years after the patent-infringement
suits settled, the FTC brought this antitrust action
against AbbVie under the FTC Act, 15 U.S.C. §§ 45(a),
53(b). As relevant here, the FTC alleged that AbbVie
engaged in monopolization by filing sham litigation
against Teva and Perrigo to delay entry of their generic
products. App. 19a.3
The district court held that both lawsuits were
sham litigation that violated the antitrust laws and
awarded the FTC nearly $500 million in disgorgement.
App. 175a; C.A.J.A. 171-172. Addressing the subjective
prong of the sham exception, the district court
acknowledged that “the FTC must prove that defendants had actual knowledge that the patent infringement
suits here were baseless in order both to meet its bur3
In a separate count against AbbVie and Teva, the FTC alleged that AbbVie’s settlement with Teva was an illegal restraint
of trade under FTC v. Actavis, Inc., 570 U.S. 136 (2013). The district court dismissed that count. App. 19a. On the FTC’s appeal,
Teva was dismissed as a defendant, and the court of appeals reinstated the claim against AbbVie. App. 29a-47a. That claim is not
at issue in this petition.
14
den under” this Court’s precedent “and to avoid interference with [AbbVie’s] First Amendment rights.”
App. 123a. The court further acknowledged that there
was “no direct evidence of … subjective intent.” App.
133a. The court nevertheless found the subjective element satisfied based on its view that AbbVie’s lawyers
were “very experienced patent attorneys” who knew
the law and the prosecution history of the AndroGel
patent and “knew the extensive financial benefits” that
would follow if generic competition was delayed. App.
135a. Because the court had deemed the patentinfringement suits objectively baseless, the court found
it “reasonable to conclude” in those circumstances that
the lawyers’ “subjective intent” must have been “to file
sham lawsuits.” Id.
The court of appeals affirmed in part, reversed in
part, and vacated in part. App. 3a-4a, 208a. It held that
AbbVie’s infringement suit against Teva was not objectively baseless and therefore not a sham. App. 51a-60a.
As to the suit against Perrigo, however, the court affirmed the finding of sham litigation. App. 60a-71a.
The court of appeals first stated that the district
court did not err in holding that the suit was objectively baseless. App. 60a-64a.4 Regarding the subjective
4
Although this petition does not seek review of the court of
appeals’ determination on objective baselessness, that holding was
wrong for several reasons. The patent-law doctrine of prosecution-history estoppel and the “tangentiality” exception to that doctrine are highly technical, fact-specific standards, and an objectively reasonable litigant considering the prosecution history of the
AndroGel patent could have easily perceived a chance that
AbbVie’s patent-infringement claims would prevail—indeed, the
Federal Circuit has found several infringement suits similar to
AbbVie’s to be not only reasonable but meritorious. See, e.g., Eli
Lilly & Co. v. Hospira, Inc., 933 F.3d 1320 (Fed. Cir. 2019). That
Perrigo (like Teva) made significant concessions during settlement
15
prong, the court of appeals “agree[d] with the FTC”
that “what matters is the intent to thwart competition.”
App. 67a (quotation marks omitted); see App. 49a. The
district court had therefore “applied an improper legal
standard” by requiring evidence that AbbVie believed
the suit lacked merit. App. 65a, 67a-68a. To the contrary, the court of appeals held that “evidence of [the]
defendant’s belief about the merits of its claims … is
not required” to establish the necessary intent to
thwart competition. App. 68a.
Instead, the court held that the objective and subjective elements of the sham exception are not “distinct,” but rather are “interrelated,” and that a subjective intent to thwart competition could therefore be inferred from a suit’s objective baselessness. App. 68a.
In particular, the court of appeals endorsed the district
court’s “syllogism,” reasoning that because “‘no reasonable litigant could realistically [have] expect[ed] success’” in an objectively baseless suit, AbbVie’s subjective motivation for pursuing such a suit “must [have]
be[en] something besides success on the merits.” Id.
In the court’s view, that inference of subjective bad
faith was supported because, as the district court had
emphasized, the lawyers at AbbVie who decided to sue
Perrigo were “all very experienced patent attorneys”
who knew that AbbVie would benefit financially if Perrigo was delayed from entering the market. App. 68a,
70a. Given those circumstances, and “the collateral injury the Hatch-Waxman Act’s 30-month stay invariably
inflicts,” the court of appeals upheld the district court’s
determination that AbbVie must have been subjective-
discussions indicates that it too perceived a meaningful chance that
AbbVie would win.
16
ly motivated “not to assert a patent in good faith, but to
impose expense and delay on Perrigo.” App. 70a.
The court of appeals allowed that an antitrust defendant could overcome an inference of bad faith by introducing evidence that it “subjectively (though unreasonably) expected the lawsuit to succeed.” App. 69a.
But the court recognized that such evidence was not
available here because AbbVie had not waived attorney-client privilege. Id. Although AbbVie had cited
business planning documents and settlement negotiation conduct showing that AbbVie believed the suits
would succeed, the court rejected that evidence as not
“probative” of the decisionmakers’—i.e., the attorneys’—subjective motivations. App. 66a n.4; see App.
127a. The court thus deemed the Perrigo suit a sham in
violation of the antitrust laws. App. 92a.
The court of appeals affirmed the denial of injunctive relief and reversed the disgorgement award as unauthorized by § 13(b) of the FTC Act. App. 77a-90a.5
REASONS FOR GRANTING THE PETITION
The decision below effectively nullifies the subjective element of the sham exception to NoerrPennington immunity in conflict with this Court’s
precedent. Under the court of appeals’ decision, a court
may infer that a litigant who brings a suit that is later
adjudicated to be objectively baseless must have acted
for an improper purpose, without requiring the antitrust plaintiff to prove independently that the litigant
was subjectively indifferent to the outcome of the suit
5
The question of whether equitable monetary relief is available under § 13(b) of the FTC Act is currently pending before this
Court in AMG Capital Management, LLC v. FTC, No. 19-508 (argued Jan. 13, 2021).
17
and was suing only to use the litigation process to undermine competition—at least where (as is almost always the case) the litigation was directed by experienced attorneys.
That decision is irreconcilable with this Court’s
precedent and will have a substantial chilling effect on
parties seeking to petition the government for redress
of grievances. And that consequence will be particularly pronounced in the Hatch-Waxman context. Under
that Act, patent owners have a short window of time in
which to decide whether to assert their patent rights;
given the heightened risk of antitrust liability under
the decision below, a patent owner will be deterred
from asserting its patent against a potentially infringing product if there is any risk that the infringement
claim might later be adjudicated to be objectively baseless (unless the patent owner is willing to waive attorney-client privilege to defend itself against the sham
inference). That deterrent effect will be especially
strong where, as is frequently the case (including here),
the patent-law doctrines in question are unsettled or
are the subject of confusing or conflicting decisions by
the Federal Circuit. The decision below thus undermines Congress’s purpose to encourage filing such suits
promptly and chills the very First Amendment rights
that Noerr-Pennington was intended to protect. This
Court’s review is warranted.
I.
THE DECISION BELOW CONFLICTS WITH THIS COURT’S
PRECEDENT
A. Noerr-Pennington immunity is “broad” so as to
“balance[] the risk of anticompetitive lawsuits against
the chilling effect on First Amendment petitioning that
might be caused by the treble-damages remedy and
other distinct features of antitrust litigation.” BE&K
18
Constr. Co. v. NLRB, 536 U.S. 516, 528-529 (2002) (quotation marks omitted). For the same reason, this Court
has held that the sham exception is and must be narrow
and difficult to satisfy. Id. at 530-531; see Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S.
556-557 (2014). The court of appeals’ decision upends
that balance, and in doing so it conflicts with this
Court’s precedent.
First, the decision below deprives the subjective
element of its independent role in the sham inquiry and
relieves the antitrust plaintiff of its burden to prove
both elements of the two-part test. This Court has
made clear that for a suit to be a sham, it must satisfy
“a two-part definition”: the suit must be objectively
baseless, and the litigant must have been subjectively
motivated by an improper purpose. PRE, 508 U.S. 49,
60 (1993); see BE&K, 536 U.S. at 526 (“For a suit to violate the antitrust laws, … it must be a sham both objectively and subjectively.”). The Court also has made
clear that it is the antitrust plaintiff’s burden to “defeat[] the defendant’s claim to Noerr immunity by
demonstrating both the objective and the subjective
components of a sham.” PRE, 508 U.S. at 61 (emphasis
added). In other words, the plaintiff is “require[d] … to
disprove” both the challenged lawsuit’s “legal viability”
under the objective prong and “the suit’s economic viability” under the subjective prong. Id.
Under the decision below, however, an antitrust
plaintiff need prove only the objective element in most
circumstances. The court of appeals held that the objective and subjective elements are “interrelated,” not
“distinct,” and thus that subjective bad faith may be
inferred from the suit’s objective baselessness through
a “syllogism,” at least where experienced lawyers decided to sue. App. 68a. As the court of appeals put it,
19
AbbVie “must have been motivated by something other
than success on the merits” because its lawyers were
“very experienced patent attorneys” yet they filed a
suit that was later adjudicated to be objectively meritless. App. 68a-69a.
That analysis improperly merges the objective and
subjective elements, collapsing the “two-part” test into
a single inquiry. But this Court’s precedent requires
both elements to be satisfied independently. The subjective component of Noerr-Pennington immunity protects litigation that is not motivated by an improper
purpose, even when the lawsuit is not “reasonably
based.” BE&K, 536 U.S. at 528. Yet the decision below
instructs courts to find subjective bad faith because the
litigant brought an objectively baseless suit, rather
than requiring an independent showing of improper
purpose.
Second, the court of appeals held that “what matters” under the subjective element is a commonplace
“intent to thwart competition.” App. 67a (quotation
marks omitted); see App. 49a. But this Court has made
clear that a mere “purpose of delaying a competitor’s
entry into the market does not render [petitioning] activity a ‘sham,’ unless … the delay is sought to be
achieved only by the [petitioning] process itself, and not
by the governmental action that the [petitioning]
seeks.” City of Columbia v. Omni Outdoor Advert.,
Inc., 499 U.S. 365, 381 (1991) (emphasis added). The
Court thus held in Omni that the defendant’s lobbying
conduct was not a sham, even though the defendant
“indisputably set out to disrupt [the plaintiff’s] business
relationships,” because the defendant “sought to do so
not through the very process of lobbying … but rather
through the ultimate product of that lobbying.” Id. “‘If
Noerr teaches anything it is that an intent to restrain
20
trade as a result of the government action sought …
does not foreclose protection.’” Id.
This Court’s decisions instead focus on the litigant’s
abuse of process, not on the commonplace intent to undermine a competitor. A “classic example” of sham litigation, the Court has explained, is where a party files
suit “with no expectation of” prevailing, “simply in order to impose expense and delay.” Omni, 499 U.S. at
380. Similarly, in PRE, the Court noted that a “baseless lawsuit” is subjectively motivated by an improper
purpose where it seeks 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.” 508 U.S. at 60-61 (quotation
marks and citations omitted). Accordingly, a suit may
be motivated by bad faith where the damages to be recovered are “too low to justify” the litigant’s investment in the suit, which shows the suit was “economic[ally]” not viable. Id. at 61, 65 (emphasis omitted).
And in California Motor Transport, the Court noted
that a suit may be a sham where the litigant has
brought “a pattern of baseless, repetitive claims” that
“leads the factfinder to conclude that the administrative and judicial processes have been abused.” 404 U.S.
at 513.
The court of appeals’ holding that a mere “intent to
thwart competition” satisfies the subjective element
directly conflicts with that precedent. In particular,
the court of appeals’ standard fails to follow this Court’s
instruction to distinguish between suits that seek to
impede competition through a potentially successful
outcome and suits that seek the same effect through
the litigation process. Rather, the decision below indiscriminately imputes bad faith to all litigants that seek
to stymie competition, including those that seek to do
21
so through a “genuine” (albeit mistaken) expectation
that the prospect of a successful outcome justified the
costs of suing. Omni, 499 U.S. at 382; see PRE, 508
U.S. at 61 (“genuine,” in the subjective sense, means
“‘sincerely and honestly felt or experienced’”).
An intent to thwart competition is a particularly
inappropriate proxy for bad faith in patentinfringement suits, because “the essence of a patent
grant is the right to exclude others from profiting by
the patented invention,” Dawson Chemical Co. v.
Rohm & Haas Co., 448 U.S. 176, 215 (1980)—i.e., to impede competition by asserting patent rights. In that
sense, an intent to impede competition is present in virtually every intellectual-property dispute. This Court
has recognized as much, noting that a suit is not a sham
merely because the litigant bears “ill will” toward the
competitor, BE&K, 536 U.S. at 534, or, as Justice Stevens’s concurring opinion in PRE explained, because
the litigant intends to harm an adversary, 508 U.S. at
69 (Stevens, J., concurring) (“We may presume that
every litigant intends harm to his adversary.”).
Third, the court of appeals held that an antitrust
plaintiff is “not required” to show that the defendant
actually knew or believed the challenged lawsuit was
meritless. But this Court has held that suing with “no
expectation” of success is the hallmark of subjective
bad faith. Omni, 499 U.S. at 380. Where a litigant believed the suit was meritless or was simply indifferent
to the merits but sued anyway, see id., that indicates
that the litigant “decided to sue primarily for the benefit of collateral injuries inflicted through the use of legal
process,” PRE, 508 U.S. at 65. By dispensing with any
requirement that the antitrust plaintiff adduce such evidence, the decision below allows a litigant to be subject
to antitrust liability and treble damages based on a lat-
22
er determination of objective baselessness even if the
litigant subjectively (if mistakenly) believed its suit
could prevail—or at least believed the chances of success were sufficiently plausible to warrant investment
in the suit in light of the potential relief.
The court of appeals did hold that an antitrust defendant could rebut an inference of bad faith by adducing its own evidence that it “subjectively (though unreasonably) expected the lawsuit to succeed.” App.
69a. But that improperly shifts the burden of proof on
subjective intent to the antitrust defendant, see PRE,
508 U.S. at 61, and, in any event, the court of appeals
made even that defense inaccessible unless the defendant is willing to waive attorney-client privilege. Here,
AbbVie introduced business-planning documents and
evidence of its settlement negotiation conduct to show
that AbbVie subjectively believed the infringement
suit against Perrigo could succeed, but the court of appeals rejected that evidence as not “probative” because
the evidence did not reveal the views of the lawyers
who made the decision to sue. App. 66a n.4; see App.
127a. Because AbbVie did not waive privilege and present direct evidence of its counsel’s advice and mental
impressions, the court allowed the FTC to prove subjective bad faith merely by establishing that the suit
was objectively baseless.
Fourth, the Third Circuit attached the wrong significance to the AbbVie attorneys’ knowledge of the
financial stakes. In the court’s view, their knowledge
that AbbVie could benefit financially from the infringement suits supported a finding of sham because it
suggested an improper purpose to delay Perrigo’s market entry. But this Court has held the opposite: the
subjective element turns on a suit’s “economic viability.” PRE, 508 U.S. at 61. Where a suit is economically
23
irrational—because any damages remedy “would be too
low to justify [the antitrust defendant’s] investment in
the suit,” id. at 65—that irrationality is evidence that
the litigant’s purpose was to interfere with a competitor through the process of the litigation, rather than by
achieving a favorable outcome. Id. But where a litigant (like AbbVie here) stood to gain financially by
prevailing in a suit to protect its patent that, if successful, would have kept a rival off the market, that shows
the litigant had ample reason to sue in pursuit of that
outcome—unless the antitrust plaintiff offers evidence
showing that the litigant believed it had no chance to
win, such that the costs of suit could not be justified.
Id. at 65-66.
This Court’s precedent thus treats a rational economic motive as evidence of a good-faith reason to
bring even a long-shot claim. But the court of appeals
treated it as evidence of bad faith. And by omitting any
requirement of proof that the litigant subjectively believed the suit had no potential to prevail, the court excluded from the analysis the only evidence capable of
distinguishing efforts to use “the government process—
as opposed to the outcome of that process—as an anticompetitive weapon.” PRE, 508 U.S. at 60-61.
B. No decision of this Court supports the court of
appeals’ approach. The court of appeals relied principally on Octane Fitness, 572 U.S. 545. App. 49a, 67a.
But Octane Fitness was not a sham-litigation case at
all, and the language the court of appeals cited was dicta. Octane Fitness addressed the standard for awarding attorney’s fees in patent litigation for “exceptional
cases” under 35 U.S.C. § 285. See 572 U.S. at 548, 556557. To identify “exceptional cases,” the Federal Circuit had adopted PRE’s test, but this Court rejected
that test as too restrictive for the attorney-fee context.
24
Id. at 548, 554-557. In one sentence, cited by the court
of appeals, the Court described PRE as requiring that
“the plaintiff must have brought baseless claims in an
attempt to thwart competition (i.e., in bad faith).” Id.
at 556; see App. 49a, 67a. But, as the context demonstrates, Octane Fitness had no occasion to explicate the
sham-litigation standard or thoroughly define its contours—to the contrary, the Court held that PRE was
irrelevant to the issue before it. Octane Fitness’s
short-hand description of PRE thus did not silently
overrule Omni’s holding that a mere intent to thwart
competition “does not render [petitioning] activity a
sham.” 499 U.S. at 381 (emphasis added).
Indeed, to the extent Octane Fitness is relevant, it
confirms the error in the court of appeals’ decision. As
one reason for rejecting the application of PRE to the
attorney-fee context, this Court explained that “[t]he
threat of antitrust liability (and the attendant treble
damages, 15 U.S.C. § 15) far more significantly chills
the exercise of the right to petition than does the mere
shifting of attorney’s fees.” Octane Fitness, 572 U.S. at
556. And the Court emphasized that it had “crafted the
Noerr-Pennington doctrine—and carved out only a
narrow exception for ‘sham’ litigation—to avoid chilling
the exercise of the First Amendment right to petition
the government for the redress of grievances.” Id.
Thus, far from supporting the court of appeals’ decision,
Octane Fitness confirms that the sham-litigation exception to Noerr-Pennington immunity is narrow and that
PRE’s two-part inquiry must be maintained stringently to protect First Amendment rights. The court of appeals failed to heed that warning.
25
II. OTHER COURTS OF APPEALS HAVE APPLIED A MORE
RIGOROUS SUBJECTIVE MOTIVATION STANDARD
Unlike the court below, other courts of appeals
have understood the subjective element of the sham
exception to require affirmative evidence of bad faith,
independent of a suit’s objective baselessness. In C.R.
Bard, Inc. v. M3 Systems, Inc., 157 F.3d 1340 (Fed. Cir.
1998), the Federal Circuit held that “[n]either the
bringing of an unsuccessful suit to enforce patent
rights, nor the effort to enforce a patent that falls to
invalidity, subjects the suitor to antitrust liability.” Id.
at 1369. “Since a principal purpose of the patent system is to provide innovators with a property right upon
which investment and other commercial commitments
can be made,” the court explained, “the patentee must
have the right of enforcement of a duly granted patent,
unencumbered by punitive consequences should the patent’s validity or infringement not survive litigation.”
Id. The Federal Circuit therefore concluded that to establish that a suit was a sham, an antitrust plaintiff
must offer “affirmative evidence of bad faith” sufficient
to overcome the presumption that “the assertion of a
duly granted patent is made in good faith.” Id.
When the Federal Circuit has found the sham exception to apply, the court has predicated that finding
on evidence that the antitrust defendant knew the suit
lacked merit. In Tyco Healthcare Group LP v. Mutual
Pharmaceutical Co., 762 F.3d 1338 (Fed. Cir. 2014), for
example, the Federal Circuit vacated the district
court’s grant of summary judgment in favor of an antitrust defendant accused of filing a sham citizen petition
with the FDA. With respect to the subjective element,
the court cited evidence that was sufficient to “support
a finding that [the antitrust defendant] knew the theory in its citizen petition lacked merit.” Id. at 1348. In
26
contrast, in C.R. Bard, the Federal Circuit rejected a
sham-litigation claim where the evidence that the antitrust defendant “knew its patents were not infringed
when it brought the suit” was too thin to overcome the
“presumption that the assertion of a duly granted patent is made in good faith.” 157 F.3d at 1369; see id. at
1368 (“Conduct prohibited under antitrust law includes
bringing suit to enforce a patent with knowledge that
the patent is invalid or not infringed, and the litigation
is conducted for anti-competitive purposes.” (emphasis
added)).
Other courts of appeals have taken an approach
similar to the Federal Circuit’s. In In re DDAVP Direct Purchaser Antitrust Litigation, 585 F.3d 677, 694
(2d Cir. 2009), the Second Circuit reinstated a shamlitigation complaint where the allegations that the defendants “‘knew their misconduct before the PTO had
rendered the patent invalid’” were “sufficient to make
out a sham litigation claim.” And the Ninth Circuit has
held, even before PRE, that evidence that the antitrust
defendant “actually knew” that the patent it asserted in
litigation was invalid supports a finding of bad faith.
Handgards, Inc. v. Ethicon, Inc., 743 F.2d 1282, 1288
(9th Cir. 1984).
In Handgards, the defendant’s
“knowledge that its patent was invalid” was dispositive
because “[a]ll that is required for a finding of bad faith
in the context of an infringement suit is that the patent
holder … knew that its patent was invalid,” id. at 1289,
and the same showing sufficed to overcome NoerrPennington immunity, id. at 1294-1295.
Those decisions are in sharp tension with the decision below. They confirm that the appropriate focus of
the subjective inquiry is not the mere intent to thwart
competition or a bare inference from objective baselessness, but whether an antitrust plaintiff adequately
27
alleged or proved that the defendant actually believed
its suit lacked merit or was otherwise subjectively indifferent to the outcome of the litigation, as this Court’s
precedent requires. By treating such evidence as unnecessary, the decision below cannot be reconciled with
those other courts’ decisions.
III. THE DECISION BELOW WILL HAVE SIGNIFICANT NEGATIVE CONSEQUENCES
The court of appeals’ decision sets a dangerous
precedent that threatens to curtail the First Amendment right to petition, erode patent rights and the
Hatch-Waxman Act, and undermine the attorney-client
privilege.
A. This Court has “carved out only a narrow exception for ‘sham’ litigation” to “avoid chilling the exercise of the First Amendment right to petition.” Octane
Fitness, 572 U.S. at 556; see BE&K, 536 U.S. at 528. A
rigorous subjective element is critical to cabining that
narrow exception and to protecting the First Amendment rights embodied in the Noerr-Pennington doctrine. Indeed, this Court has “never held that the entire class of objectively baseless litigation may be enjoined or declared unlawful even though such suits may
advance no First Amendment interests of their own,”
but instead has required an independent showing of
bad faith to ensure the necessary “‘breathing space,’”
consistent with broader First Amendment principles.
BE&K, 536 U.S. at 531.
The decision below, however, deprives the subjective element of an independent role in the sham inquiry, allowing it to be satisfied by a commonplace intent to thwart competition inferred from a finding of
objective baselessness. As a result, litigants exercising
28
their First Amendment right to assert claims with uncertain prospects of success will do so at their peril.
That chilling effect will reach beyond litigation. As
this Court has explained, the same sham exception
“governs the approach of citizens or groups of them to
administrative agencies” as to courts. California Motor Transp., 404 U.S. at 510. Thus, courts have applied
PRE’s sham exception to citizen petitions submitted to
the FDA to oppose entry of generic products, see Tyco,
762 F.3d at 1347 (citing cases), and to petitioning conduct before state or local agencies, see Kottle v. Northwest Kidney Centers, 146 F.3d 1056, 1059, 1062 (9th Cir.
1998); CSMN Investments, LLC v. Cordillera Metropolitan District, 956 F.3d 1276, 1282 n.8, 1286 n.13 (10th
Cir. 2020); see also PRE, 508 U.S. at 59 (discussing
sham exception “[w]hether applying Noerr as an antitrust doctrine or invoking it in other contexts”). The
decision below thus jeopardizes a broad range of First
Amendment petitioning activity.
B. The chilling effect will be especially pernicious
in patent cases—and, in particular, in the important
context of Hatch-Waxman litigation, thwarting Congress’s purposes in enacting that statute.
Congress designed the Hatch-Waxman Act to balance patent rights against the benefits of increased
competition in the market for medicines. At the same
time that it allowed generic manufacturers to take advantage of brand manufacturers’ research and development through streamlined approval pathways, Congress also incentivized “increased expenditures for research and development” by lengthening patent protection to compensate for time lost on patent life to the
FDA approval process. H.R. Rep. No. 98-857, pt. 1, at
15 (1984). In addition, Congress sought to ensure that
29
patent disputes could be resolved early—before the generic product goes to market—by providing for the
statutory stay of FDA approval to reward patent owners that file infringement suits promptly. See Caraco
Pharm. Labs., Ltd. v. Novo Nordisk A/S, 566 U.S. 399,
407-408 (2012). Yet the court of appeals treated the
fact that AbbVie followed and benefited from that congressional design as “[e]specially” supportive of an inference of bad faith. App. 70a. Indeed, the court went
so far as to disparage the congressional design as giving
rise to “a collateral injury” that a patent owner’s “mere
use of legal process invariably inflicts” as “an anticompetitive weapon.” App. 50a; see App. 70a.
That is a perverse outcome—one that will affect
nearly every litigant filing an infringement suit under
the Hatch-Waxman Act. All litigants that promptly file
infringement suits under the Hatch-Waxman Act benefit from the automatic stay, as Congress intended, and
they invariably do so on the advice of experienced lawyers with the aim of securing a financial benefit by preventing or delaying competition from a potentially infringing product. Imputing bad faith to litigants’ mere
participation in that statutory scheme is particularly
unfair and destructive to incentives to innovate because
a patentee is presumed to assert a “duly granted patent
… in good faith.” C.R. Bard, 157 F.3d at 1369 (citing
Virtue v. Creamery Package Mfg. Co., 227 U.S. 8, 37-38
(1913)). The court of appeals’ decision penalizes a patentee that enforces its patent against a potentially infringing competitor despite that presumption, even
though such a suit may be entirely compatible with a
“genuine[]” invocation of the Hatch-Waxman Act’s protections. Omni, 499 U.S. at 382.
That expansion of the sham exception would have
significant practical impact. Ten percent of all patent-
30
infringement suits filed in the United States are triggered by paragraph IV certifications under the HatchWaxman Act, and the number of such suits has been
increasing. Brachmann, Hatch-Waxman Litigation: 60
Percent Increase in ANDA Lawsuits from 2016 to
2017, IPWatchdog (May 16, 2018). The court of appeals’
decision will deter patentees from availing themselves
of their Hatch-Waxman remedy—and enforcing their
patent rights more generally—for fear that they might
be subject to antitrust liability and treble damages if
the suit is subsequently adjudicated to be objectively
baseless notwithstanding their subjective expectation
of success. And, of course, where patent-holders face
uncertainty about their ability to enforce their patent
rights in court, their incentive to innovate in the first
place is correspondingly diminished.
It is no answer to suggest that the requirement of
objective baselessness adequately protects against an
undue chilling effect. As explained above, objective
baselessness is only one half of the sham-litigation
test—and that is so for important reasons. Supra pp. 79, 18-19. In addition, reasonable jurists can, and do,
make errors in assessing objective baselessness or disagree about what constitutes such baselessness. That
problem is highlighted by this very case: the district
court ruled that AbbVie’s patent-infringement suit
against Teva was objectively baseless, but the court of
appeals reached the opposite conclusion (even while
agreeing that the similar suit against Perrigo was objectively baseless).
That is not surprising, given that patent law is notoriously technical and subject to change. See Teva
Pharm. USA, Inc. v. Sandoz, Inc., 574 U.S. 318, 327
(2015); see also, e.g., KSR Int’l Co. v. Teleflex Inc., 550
U.S. 398, 419 (2007) (invalidating Federal Circuit’s test
31
for obviousness); Festo, 535 U.S. at 737-738 (rejecting
Federal Circuit’s “per se rule” for prosecution-history
estoppel); cf. Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC, 927 F.3d 1333, 1335-1373 (Fed. Cir.
2019) (per curiam) (eight opinions concurring in or dissenting from denial of rehearing, articulating different
standards for subject-matter eligibility). Especially
where, as here, the objective baselessness inquiry turns
on issues of patent law, rather than disputed issues of
underlying fact, it is dangerous to subject a patent litigant to antitrust liability based only on a decisionmaker’s later determination that the litigant got the law
wrong—without any consideration of that litigant’s actual expectations in bringing suit.
C. The decision below also threatens to intrude on
the attorney-client privilege. Under the court of appeals’ approach, an antitrust defendant can overcome
the inference of bad faith only by adducing its own evidence that it subjectively (if erroneously) expected the
challenged lawsuit to succeed. App. 69a-70a. But the
court also held that evidence would not be “probative”
of that defense unless it bears directly on the opinions
and mental impressions of the attorneys who directed
the litigation. App. 66a n.4; see App. 127a (rejecting
business planning documents as “not probative of the
state of mind of the … attorneys”). As an initial matter, an antitrust defendant should not have to prove
anything because, as explained above, it is the plaintiff’s burden to establish the objective and subjective
elements of the sham exception. PRE, 508 U.S. at 61.
But the court’s approach is all the more problematic because its burden-shifting framework makes the antitrust defendant’s defense contingent on its willingness
to waive privilege, at least where the decision to sue is
made by lawyers. That requirement not only impinges
32
on an “important[]” privilege that facilitates lawyers’
“candid advice and effective representation,” Mohawk
Industries, Inc. v. Carpenter, 558 U.S. 100, 108 (2009),
but also adds to the chilling effect on First Amendment
rights that Noerr-Pennington immunity was intended
to prevent.
IV. THIS CASE IS AN APPROPRIATE VEHICLE
This case squarely frames the important question
presented. The decisions below make clear that had
the court of appeals applied the subjective element consistent with this Court’s precedent, it could not have
concluded that AbbVie sued Perrigo in bad faith, because the FTC offered no probative evidence that
AbbVie actually believed the suit was meritless, was
indifferent to the outcome, or misused the litigation
process in any other way. App. 64a-71a, 132a-136a.
The FTC did not allege, for example, that the potential
economic return of a successful outcome did not justify
AbbVie’s investment in the suit or that AbbVie had
brought a pattern of baseless suits before. See PRE,
508 U.S. at 65; California Motor Transp., 404 U.S. at
513. The issue is thus cleanly presented, and resolving
it in AbbVie’s favor would dispositively require reversal of the conclusion that AbbVie violated the antitrust
laws.
It makes no difference that the disgorgement
award was vacated and the injunction denied. As an
initial matter, the availability of a disgorgement remedy under § 13(b) of the FTC Act is currently pending
before this Court, see supra n.5, and if the Court holds
that such a remedy is authorized, that decision would
likely support any effort by the FTC to reinstate the
nearly-half-billion-dollar disgorgement award. And
even if this Court agrees that no monetary award was
33
permissible, the decision below will still have significant collateral consequences giving AbbVie an ongoing
stake in reversal.
The court of appeals stated that it was “affirm[ing]
the [district court’s] order adjudging AbbVie and Besins liable for monopolization … based upon its holding
that the suit against Perrigo was a sham.” App. 92a. A
number of plaintiffs in follow-on antitrust suits challenging AbbVie’s enforcement of the AndroGel patent,
including Perrigo, have already indicated their intent to
argue that the sham-litigation finding in this case
should be preclusive of AbbVie’s liability in those other
cases. See Plaintiffs’ Br. in Opp. to Defendants’ Mot.
for Judgment on the Pleadings 1, Perrigo Co. v.
AbbVie, Inc., No. 3:20-cv-17560-BRM-DEA, Doc. 76
(D.N.J. Feb. 16, 2021) (“Perrigo anticipates presenting
the liability phase of its case on the basis of issue preclusion resulting from the FTC litigation”); Compl. 2-3,
King Drug Company of Florence, Inc. v. Abbott Labs.,
No. 2:19-cv-03565-HB, Doc. 1 (E.D. Pa. Aug. 7, 2019)
(alleging antitrust claims based on findings in this FTC
action). Moreover, if the decision below were to stand,
the FTC and other plaintiffs might cite it as a basis for
seeking a restrictive injunction against AbbVie in future cases. Cf. FTC C.A. Opening Br. 49-51.
Finally, AbbVie will face the chilling effects of the
decision below on its own efforts to enforce its valid patents and exercise its First Amendment rights. Whenever it receives a paragraph IV certification under the
Hatch-Waxman Act, AbbVie must now act at its peril
in pursuing infringement claims that are uncertain to
prevail, lest it face not only the potential for antitrust
liability and treble damages but also the prospect of being adjudicated liable for serial sham petitioning. The
legal standard that the court of appeals announced to
34
restrict Noerr-Pennington immunity will thus infringe
on AbbVie’s own First Amendment rights, just as it
threatens to do for all litigants seeking to enforce their
patent rights against a competitor or to invoke their
remedies under the Hatch-Waxman Act.
CONCLUSION
The petition for a writ of certiorari should be
granted.
Respectfully submitted.
WILLIAM F. LEE
WILMER CUTLER PICKERING
HALE AND DORR LLP
60 State Street
Boston, MA 02109
SETH P. WAXMAN
Counsel of Record
LEON B. GREENFIELD
CATHERINE M.A. CARROLL
BRITTANY BLUEITT AMADI
CLAIRE H. CHUNG
JEFFREY I. WEINBERGER
MEDHA GARGEYA
STUART N. SENATOR
WILMER CUTLER PICKERING
ADAM R. LAWTON
HALE AND DORR LLP
MUNGER, TOLLES & OLSON LLP 1875 Pennsylvania Ave., NW
350 South Grand Avenue
Washington, DC 20006
Los Angeles, CA 90071
(202) 663-6000
seth.waxman@wilmerhale.com
ELAINE J. GOLDENBERG
MUNGER, TOLLES & OLSON LLP
601 Massachusetts Ave., NW
Suite 500 East
Washington, DC 20001
Counsel for AbbVie Inc., Abbott Laboratories, and Unimed
Pharmaceuticals LLC
MELINDA F. LEVITT
GREGORY E. NEPPL
FOLEY & LARDNER, LLP
3000 K Street, NW
Washington, DC 20007
Counsel for Besins Healthcare, Inc.
MARCH 2021
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.