Previous business/academic article Next business/academic article
Academic Articles Awards > Economics

Should Reverse Payment Patent Settlements Be Prohibited Per Se

Jorge Padilla and Valerie Meunier, Ian S. Forrester LL.D.: A Scot without Borders Liber Amicorum - Volume II, Concurrences, 2015

See Atilano Jorge Padilla's resume See Valérie Meunier's resume

Vote for this articleHelp

* Average
** Interesting
*** Good
**** Excellent
***** Must receive an Award!

Please note that the star(s) appearing on the article page before you have voted reflect the status of all votes registered to date.

Readers’ vote will close on February 15, 2016. Readers’ vote will allow you to nominate 1 article for each of the Awards, i.e., 10 Academic articles, 10 Business articles, and the best Soft Laws. The readers’ short-list of Academic and Business Articles will be communicated to the Board together with the 20 articles nominated by the Steering Committees. The Board will decide on the award-winning articles. Results will be announced at the Awards ceremony to take place in Washington DC on the eve of the ABA Antitrust Spring Meeting on April 5, 2016.

Using the same competition test and counterfactual that has been used in the economic literature that is often cited to justify intervention against virtually all reverse payment patent settlements (RPPSs), we conclude that (1) RPPSs can benefit consumers and, therefore, it is wrong to presume that RPPSs are necessarily anticompetitive; (2) it is also incorrect to presume that RPPSs are by their very nature injurious to competition; (3) such a presumption is unjustified even for those involving reverse payments in excess of the originator’s expected litigation costs; (4) there is therefore no justification for treating RPPSs as per se illegal; (5) a case-by-case assessment of the effects on competition and consumer welfare of an RPPS that uses the expected date of entry as the standard of comparison in the counterfactual world, would necessarily require informed judgments as to (at a minimum) the strength of the patent at issue and the likelihood of patent infringement; (6) as a result, assessing RPPSs on a case by case basis using the expected date of entry standard for comparison is bound to lead to errors and reduce consumer welfare and, hence, cannot constitute an appropriate legal standard; and (7) RPPSs, even those involving reverse payments greater than the originator’s litigation costs, should be assessed under a rebuttable presumption of legality rule — i.e. they should be presumed legal unless there is direct evidence of a conspiracy to delay entry.

Download our brochure