THE PROXIMATE CAUSE REQUIREMENT IN PRIVATE REVERSE PAYMENT ANTITRUST LITIGATION
By Sarah H. Trela and Kenneth R. O’Rourke1
An unlitigated patent is a bit like Schrodinger’s cat:2 until challenged and adjudicated, the patent arguably appears as though it is both valid and invalid.3 This ambiguity has led certain courts and legal scholars to observe that, at the time a reverse payment settlement is executed, the brand pharmaceutical company really owns a "probabilistic patent" that may or may not give it the right to exclude competition.4 In the context of private antitrust litigation involving reverse payment settlements, patent ambiguity has tempted some to substitute proxies or presumptions for actual proof of proximate cause. That will not do. Proximate causation is an element a private plaintiffs must prove in all cases; reverse payment settlements do not create an exception.
Following the Supreme Court’s 2013 opinion in FTC v. Actavis, Inc.,5 a government enforcement case, courts have split in how they approach the proximate cause requirement in private reverse payment cases. Several recent appellate and district courts have properly required proof that the patent supposedly blocking a generic’s entry is, in fact, invalid before finding that a reverse payment proximately caused any antitrust injury.6 Other courts have relied on a few select phrases in Actavis to eschew the causation element entirely, using the size of the reverse payment as a proxy for patent invalidity.7 But, Actavis was a Federal Trade Commission (FTC) enforcement action that did not require proof of actual causation.8 Thus, this latter approach is inapplicable in private antitrust cases because it imports the different and lighter standard from government enforcement actions into Clayton Act claims.