AbbVie says bar for ‘sham litigation’ is too low

AbbVie has again urged the US Supreme Court to save it from claims of filing sham litigation to block competition for testosterone treatment AndroGel.

The drugmaker claims that, if upheld, a US Court of Appeals for the Third Circuit ruling could bar patent owners from pursuing a “long-shot outcome” in the courts.

The Federal Trade Commission (FTC) sued AbbVie and Besins Healthcare for using anti-competitive tactics to keep generic AndroGel products off the market.

Last September, the Third Circuit issued a mixed ruling which frustrated both sides. While the appeals court overturned a $448 million judgment against AbbVie, it did find that it had filed sham litigation against Dublin-based Perrigo with the aim of delaying generic competition.

AbbVie petitioned the Supreme Court in March looking for a review of the Third Circuit’s findings on the sham litigation issue, claiming the FTC’s arguments didn’t meet the legal standard for such a finding.

In its latest brief before the country’s highest court, AbbVie claimed the Third Circuit has abandoned legal doctrine which “protects even objectively baseless litigation unless the antitrust plaintiff proves the defendant was subjectively motivated to use the litigation process itself as an anticompetitive weapon”.

AbbVie claims its suit against Perrigo, which the Third Circuit found to be “objectively baseless”, was justified given the potential financial award if it had been successful.

“The court’s holding treats a patent owner that sues a competitor for infringement believing there is some chance of success despite long odds, and that the potential financial reward of a successful outcome justifies the effort, exactly the same as a patent owner that sues knowing its claim will be dead on arrival but calculating that the litigation burdens will harm its competitor,” AbbVie argued.

The FTC has doubled down on its position, arguing that AbbVie’s in-house lawyers had enough experience and legal knowledge to know their lawsuit against Perrigo was baseless.

“The attorneys must instead have been motivated by a desire to impose expense and delay on Perrigo so as to block [its] entry into the market,” the FTC told the court.

AbbVie’s $448m reprieve

In 2018, a Pennsylvania district court ordered AbbVie and Besins to pay $448 million in damages, after finding they used sham litigation to block competition for AndroGel.

AbbVie’s appeal against that decision gave rise to the Third Circuit opinion which is now the subject of a potential Supreme Court review.

But while the Third Circuit upheld the finding of a sham litigation filed against Perrigo, it cancelled the $448 million bill because, it ruled, the FTC wasn’t entitled to seek monetary restitution under its statutory rules.

The Supreme Court settled this issue earlier this year, when it found the FTC had misused its powers in seeking $1.27 billion from AMG Capital Management. In its brief to the court in the AbbVie case, the FTC admitted the Third Circuit’s decision to overturn the $448 million award against the drugmaker was correct in light of the Supreme Court’s findings.

But the FTC’s acting chairperson Rebecca Slaughter sharply criticised the AMG ruling at the time, commenting in April that the Supreme Court had “ruled in favor of scam artists and dishonest corporations, leaving average Americans to pay for illegal behaviour.”

"We urge Congress to act swiftly to restore and strengthen the powers of the agency so we can make wronged consumers whole,” Slaughter added.

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