Hatch-Waxman Patent Case Settlements – The Supreme Court Churns the Swamp

The Supreme Court in FTC v. Actavis, Inc. rejected both (a) the settling parties’ view that any settlement within the scope of the patent at issue and not the result of sham litigation was legal; and (b) the FTC’s view that any settlement which involved a transfer of any money or asset from the patent owner to the challenger was presumptively illegal. The Court chose to open up door (c), and require that there be a full “rule of reason” inquiry into the settlement.This article explores what that means in terms of settlements going forward, and suggests reforms that might make the whole system work better.