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May 12, 2016
Brattle Economist Contributes to Amicus Brief in Wellbutrin XL Antitrust Litigation

Brattle Principal Steven Herscovici recently contributed to an amicus brief in support of defendant-appellees including SmithKline Beecham Corporation in Re: Wellbutrin XL Antitrust Litigation, an antitrust case currently before the U.S. Court of Appeals for the Third Circuit. In his work on this brief, Dr. Herscovici, along with internationally renowned academic economists including Brattle Academic Advisor Henry Grabowski, supported Pepper Hamilton’s Barbara W. Mather, Robin P. Sumner, and Lindsay D. Breedlove.

In FTC v. Actavis, the U.S. Supreme Court established that patent infringement settlements with “large” and “unexplained” payments from the patent holder to the infringer can be subjected to antitrust claims under the rule of reason, and rejected a truncated rule of reason approach levied by Actavis. This ruling is central to the amici’s argument, in which they urge the U.S. Court of Appeals for the Third Circuit to reject the Appellant’s recommended use of the truncated rule of reason in the current case.

Dr. Herscovici and his co-authors offer three economic arguments against a truncated approach. First, they highlight that a payment from the patent holder to the challenger as part of a patent infringement settlement under the Hatch-Waxman Act is not an accurate proxy for the anticompetitive effects of that settlement. Second, they argue that courts should not overlook procompetitive settlement terms simply because those terms are not “payments” in the eyes of the plaintiffs. Third, the amici show that a truncated inquiry would have substantial long-term welfare costs, and undercut the value of patent rights.

The full brief may be viewed using the link below.