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Journal of Technology Law & Policy

Document Type

Article

Abstract

This Article will argue that a new standard is needed for the examination of settlements between name brand manufacturers and their generic rivals. These arrangements are neither horizontal restraints between competitors at the same level of the supply-chain, nor vertical restraints between suppliers and distributors, but a new diagonal restraint between generic competitors who are dependent upon their name brand rivals for important research and development. Legal interpretation of these diagonal restraint agreements should give greater flexibility to name brand manufacturers in protecting their intellectual property, while simultaneously assuring generic rivals incentives to innovate and to produce cheap substitutes, spurring competition in the market place. To meet both of these goals, courts will need to return to a modified rule of reason analysis. The Federal Circuit must take the lead in creating manageable standards that allow parties to forecast the strength of their litigation positions with reasonable certainty, thus leading to increased private resolution of costly patent infringement cases.

Part II of this Article will discuss the legislative and regulatory framework of the Hatch-Waxman Act as it has developed, and will give a background on patent infringement lawsuit settlements. Part III will explain the antitrust laws which give rise to the split of authority regarding which standard of review is applicable to patent settlement agreements. Part IV will focus on the two cases giving rise to the split between the Sixth Circuit Court of Appeals and the Eleventh Circuit Court of Appeals over the proper standard of review to apply to these agreements. Part V will explain the complex diagonal nature of restraints which cross the rift between the patent and antitrust regimes, and will conclude by suggesting that the rule of reason is the proper bridge over that divide.

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