Hypothesis About D.C. Circuit Vacancies

I have a hypothesis (not tested by research yet) that one of the reasons the D.C. Circuit vacancies have ballooned to four, and three of them have dragged on for years, is that D.C. does not have voting Senators.

Other circuits have Senators for the states within them. Voters and others can question those Senators about what they are doing to move the process along. The Federal Circuit is also Senator-less. But its nominees face less opposition, since it is a specialized court and not typically viewed as a farm team for the Supreme Court, as the D.C. Circuit is.

Circuit Split Watch: Can Drug Companies Pay for Delay?

This article first appeared in the August 1, 2012, issue of the National Law Journal’s Supreme Court Insider.

When a drug company pays a manufacturer to delay launching a generic, is it the act of an illegal monopoly or merely a settlement benefiting both parties?

The U.S. Court of Appeals for the 3rd Circuit recently ruled on these so-called “pay-for-delay” deals, splitting from three other circuits. If not revised en banc, the decision will likely warrant Supreme Court review.

Schering-Plough (now Merck) manufactures K-Dur, a patented high blood pressure medication. More than a decade before Schering’s patent was set to expire, two manufacturers attempted to enter the market early via generic versions of K-Dur. Schering sued for patent infringement.

The parties settled the patent cases. The manufacturers agreed not to bring the generics to market for several years, while Schering agreed to pay them millions. Supporters argue that such agreements are simply dispute settlements, which courts generally favor.

The Federal Trade Commission disagrees. According to the FTC website, pay-for-delay deals are a top priority for the agency, since they are “anticompetitive” and “cost consumers and taxpayers $3.5 billion in higher drug costs every year.” The FTC filed an amicus brief in the 3rd Circuit, in support of plaintiffs challenging the K-Dur agreements.

Those plaintiffs include CVS, Rite Aid, wholesale drug companies, and others. They argue that pay-for-delay deals violate antitrust law and prevent competitive pricing.

On July 16, a unanimous three-judge 3rd Circuit panel deciding In Re: K-Dur Antitrust Litigation found that pay-for-delay deals are “prima facie evidence of an unreasonable restraint of trade.” Showing that the payment has a purpose other than delaying generic entry or has some pro-competitive benefit can rebut this evidence.

The 3rd Circuit rejected the “scope of the patent test” adopted by the Federal, 2nd, and 11th Circuits. (The Federal Circuit, with its specialized docket, is not frequently involved in circuit splits, but this case is an exception.)

The court also pointed to other circuit cases, but acknowledged that they did not address settlement of patent litigation, the backdrop of the K-Dur fight.

The patent-scope test accepted in other circuits focuses on the patent holder’s exclusive rights to the patent before it expires. If a patent holder company can exclude everyone else during that period, why can’t it fend off litigation to protect its exclusivity?

Citing an NYU Law Review article, the 3rd Circuit said that “this approach nominally protects intellectual property, not on the strength of a patent holder’s legal rights, but on the strength of its wallet.”

“Many patents,” the 3rd Circuit explained, “are later found to be invalid or not infringed.” A pay-for-delay deal preserves a monopoly “without any assurance that the underlying patent is valid.” It is in the public interest to judicially test and eliminate weak patents, the court wrote.

Because of the circuit split, the tremendous financial stakes, and the FTC’s pay-for-delay priority, the 3rd Circuit decision could very well catch the Supreme Court’s attention, unless it is reversed en banc.

The Supreme Court has declined to review cases that accepted the patent-scope test, which may indicate that the Court does not object to the test and perhaps sees it as the companies do—as allowing settlement. The Court could, of course, reach a different result after briefing and argument.

*Update: On August 3, after this article was originally published in the National Law Journal, Merck gave notice to the 3rd Circuit that it intends to proceed directly to the Supreme Court with a petition for certiorari.

Judges Series: Chief Judge Randall Rader

Chief Judge Randall Rader of the U.S. Court of Appeals for the Federal Circuit enjoys teaching.  In fact, Rader's court biography states that his "most prized title may well be 'Professor Rader.'"  He has taught intellectual property at George Washington, University of Virginia, and Georgetown law schools, as well as internationally in Munich, Tokyo, Taipei, New Delhi, and Beijing.  A short video clip of the judge discussing intellectual property is linked here.

Chief Judge Rader also frequently speaks at conferences and similar events.  Last week alone, Rader spoke at three events, per the Federal Circuit website.  Earlier this year, Rader granted an in-depth interview to Gene Quinn of IPWatchdog, linked here, discussing everything from opinion assignments and dissents, to the anticipated turnover on the Federal Circuit, to how presiding over trials benefits an appellate judge, as well as some lighter fare, including Rader's fifth grade report on space travel and answer to Kirk or Picard?  (Kirk.)  For more information, see Rader biographies here (Federal Judicial Center) and here (Federal Circuit).  

Other items of note:

Worked from 1975-1988 on Capitol Hill, on both the House and Senate sides, including seven years with the Senate Judiciary Committee and Senator Orrin Hatch.

Served on the U.S. Claims Court (now the U.S. Court of Federal Claims) from 1988-1990.

Nominated to the Federal Circuit by George H.W. Bush and confirmed in 1990; became chief judge in 2010.

Has written about the history and unique aspects of the Federal Circuit, as well as development of law within it.  Randall R. Rader, Introduction—Specialized Courts: The Legislative Response, 40 Am. U. L. Rev. 1003 (1991); The United States Court of Appeals for the Federal Circuit: The Promise and Perils of a Court of Limited Jurisdiction, 5 Marq. Intell. Prop. L. Rev. 1 (2001) (linked here); Foreword—Always at the Margin: Inequitable Conduct in Flux, 59 Am. U. L. Rev. 777 (2010) (linked here).

Graduated from Brigham Young University (B.A., 1974) and George Washington University Law School (J.D., 1978).

Born 1949 in Hastings, NE.

To learn about other judges, please click on "Judges Series" in the right sidebar or here.

Federal Circuit Tokyo Conference and Other Court Announcements

Recent announcements from the federal appellate court websites:

The Federal Circuit announced that its judges will travel to Japan for a joint conference with the judges of the Tokyo Intellectual Property High Court (May 12-13, 2011).  Also, the court announced a portrait presentation for Chief Judge Rader (Nov. 19, 2010), an award presentation to Judge Lourie by the Philadelphia Intellectual Property Law Association (Nov. 18, 2010), and a speech by Judge Plager at George Washington University Law School (Oct. 20, 2010).

The Second Circuit posted notice of a report by the Advisory Group to the New York State-Federal Judicial Council about electronic information: Harmonizing the Pre-Litigation Obligation to Preserve Electronically Stored Information in the New York State and Federal Courts.

The Tenth Circuit invited comments (due Nov. 17, 2010) on the reappointment of Terrence L. Michael, U.S. Bankruptcy Judge (N.D. Okla.).

Federal Circuit: New Advisory Council Members

According to an announcement on the Federal Circuit website, Chief Judge Rader has appointed four new members to the court's Advisory Council, effective October 1, 2010: Tina M. Chappell, Richard J. "Chip" Lutton, John M. Whealan, and Katherine E. White.  He has also appointed current members Edward R. Reines, as the new Council chair, and Lisa A. Dolak, to a new three-year term.

Federal Circuit Chief Judge Interview and News

A forthcoming Judges Series entry will be about Chief Judge Randall Rader of the Federal Circuit.  One of the items collected for this entry warrants individual highlighting, though.  Earlier this year, IPWatchdog posted an in-depth interview with Chief Judge Rader, linked here.

This week, Rader was in the news, due to a pending recusal request in a human gene patenting case.  The request, which cites Rader's comments at a biotechnology industry event, was unusual, as the panel has not yet been announced.

Quote: Why the Federal Circuit Gets Reversed

[The U.S. Court of Appeals for the Federal Circuit has] national jurisdiction over patent and customs appeals, appeals from the Merit Systems Protection Board, and claims against the government.  Inasmuch as cases decided by the [Federal Circuit] will not ordinarily present a conflict with another circuit's holdings, [the Supreme] Court has fewer occasions to grant certiorari simply to resolve a circuit conflict.  Our acceptance of a case for plenary review from the [Federal Circuit] is more likely to be based on a serious concern about the correctness of the appellate court's ruling, rather than merely a concern about conflicting circuit rulings.  No doubt, this helps explain why a much higher percentage of the cases we do review from the [Federal Circuit] result in reversals than would otherwise be the case.

Sandra Day O'Connor, The Majesty of the Law 130 (Craig Joyce ed., 2003).

Federal Circuit Denies Claim Linking Autism and Vaccination

Yesterday, the Federal Circuit denied a couple's claim that an infant measles, mumps, and rubella ("MMR") vaccination had caused autism in their son, affirming earlier decisions of the Court of Federal Claims and a special master.  The couple, Rolf and Angela Hazlehurst, argued on appeal that the special master had "improperly relied on certain evidence . . . and disregarded other evidence that should have been considered."