### FILED U.S. COURT OF APPEALS ELEVENTH CIRCUIT September 15, 2003 THOMAS K. KAHN CLERK [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH

CIRCUIT

________________________ No. 02-12091

________________________ D. C. Docket No. 99-01317-M D-PAS VALLEY DRUG COMPANY, LOUISIANA WHOLESALE DRUG COMPANY, INC., et al., Plaintiffs-Appe llees,

versus GENEVA PHARMACEUTICALS, INC., ABBOTT LABORATORIES Defendants-Appe llants.

________________________ Appeal from the United States District Court for the Southern District of Florida

_________________________ (September

15, 2003) Before TJOFLAT and ANDERSON , Circuit Judges, and STAFFORD*, District Judge. ANDERSON, Circuit Judge:

_____________________ *Honorable William H. Stafford, United States District Judge for the Norther District of Florida, sitting by designation.1 Zenith came to a tentative settlement following the district court's order granting

partial summary

judgment and is no

t a party to th

is appeal. 2 This case comes to us on interlocutory appeal from the district court's order granting plainti ffs' motion for partial su mmary judgment. The issue with which we are presented is w

hether the district

court properly

determined tha

t two agreeme

nts among the defendants were per se violations of § 1 of the Sherman Act, 15 U.S.C. § 1. Because we c

onclude that the distr

ict court incorrec

tly applied the la

w, the order below will b e reversed and the case remande d for further proc eedings consistent with this op

inion.

I. BACKGROUND This is a private an

titrust lawsuit, or

rather numer

ous private antitrust lawsuits, brought against three pharmaceuticals manufacturers. The various cases asserting antitrust injury from the actions of the defendants have been consolidated by the Judicial Panel on Multidistrict Liti gation in the Sout hern District of Flori da. Plaintiffs basica

lly assert that two agreeme nts, one between de

fendant-appellant Abbott Laboratori

es ("Abbott") and de

fendant-appellant Geneva Pharm aceuticals ("Geneva") and a

nother between Ab

bott and defendant Zenith Goldline Pharmaceuticals ("Zenith"), 1 entered into in 1998, violated the Sherman Act's3

prohibition against con

tracts in restrai

nt of trade. Abbot

t, a manufac

turer of the pioneer drug Hytrin, entered separate agreements with generic m anufacturers Zenith and Geneva

while those com

panies were pursui

ng FDA approval of

generic versions of Hytrin and wh ile embroiled in patent litigation with th ose companies. Because the fact

s of this case took place against a com plex regulatory

background, we will first describe the relevant regulatory context, then the facts of the case as they appear in the current procedural posture, and then the relevant procedural histo ry. A. Regulatory Framework No new drug can be marketed or sold in the United States without approval from the Food and Drug Administ ration ("FDA"). 21 U.S.C. § 355( a). Applications for FD

A approval can be f

iled in one of two wa

ys: as a new dr

ug application ("ND

A") under § 355(b),

or as an abbreviate

d new drug applicati

on ("ANDA") unde

r § 355(j). A ne

w drug application m

ust include exhaustive information about the drug, including rep orts of safety and efficacy stud ies. See 21 U.S.C. § 355(b)(1). Prior to 1984, the NDA was the only method of obtaining FDA approval of a new drug. Every applicant had to submit safety and efficacy studies, even if such studies had already been performed for identical drugs or drugs with identical2 "Except as otherw ise provided in this

title, whoever wi

thout authority

makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented in vention during the term of the patent therefor, in fringes the patent." 35 U.S.C. § 271(a). 4 active ingredients.Adding to this ineffi ciency was the

fact that the conduc

t of safety and eff

icacy studies w

ould, if the new dr

ug was the subject

of a patent, constitute infringement of that patent under 35 U.S.C. § 271(a). 2 In an effort to eliminate thes e twin impedim ents to the introductio

n of generic drugs to t

he market, Congr

ess enacted the Dr

ug Price Compe

tition and Patent Te

rm Restoratio

n Act, Pub. L. No. 98-417, 98 Sta t. 1585 (1984), com

monly known a

s the Hatch-Waxman Act. The prim ary accomplishments of the Hatch-W axman Act were the creat

ion of the ANDA,

allowing a new dru

g applicant to piggy

back on the safety and efficacy studies con ducted for the pion eer drug, see generally 21 U.S.C. § 355(j); modif

ication of the defini

tion of infringem

ent, so that the condu

ct of safety and efficacy studies for FDA approval is no lon ger infringing acti vity, see generally 35 U.S.C. § 271(

e); and allowing the

extension of patent te

rms to compensate for

the period when a pa

tented drug could not be

marketed bec ause it was undergoing the FDA approval process, see generally 35 U.S.C. § 156. Several of Hatch-Waxman's addit ions to 21 U.S.C. § 355 g overn FDA approval of ANDAs in the fa ce of patent claims by pioneer d rug makers. NDA3 Specifically , any paten

t claiming the dru

g or method of usin

g the drug that

"could reasonably be asserted if a person not licensed by the owner engaged in the manufacture, use, or sale of the drug." 21 U.S.C. § 355(b)(1). 5 applicants are re

quired to submit th

e patent number

and expiration date o f any patent that a generic manufacturer might infringe. 3 If such a patent issues after approval of the ND

A, the holder of th

e application is requ

ired to file the pate

nt number and expir

ation date with the F

DA no later than 30

days after the

patent issues. See 21 U.S.C. § 355( c)(2). The FD

A publishes this patent

information, along with other info

rmation about the

drug, in what is popul

arly known as the Orange Book. See 21 U.S.C. § 355(j)(7)(A). An ANDA applicant relying on the safety and eff

icacy studies f

iled with the application of a drug

listed in the Orange

Book must ma

ke a certificati

on with respect to each pa

tent claiming th

e listed drug or a m

ethod of using the liste

d drug of which the applican t is aware. See 21 U.S.C. § 355( j)(2)(A)(vii

). The applicant must certify either that (1) the patent information has not been filed with t he FDA; (2) the patent is expired; (3) the patent will expire, identifying the expiration date; or (4) the patent is i

nvalid or will not be i

nfringed by the m

anufacture, use,

or sale of the new drug. I

f the applicant cer

tifies (1) or (2),

FDA approval proceeds in regular fashion, see 21 U.S.C. § 355( j)(5)(B)(i);

if the applicant ce

rtifies (3), the application will n ot be approved unt il the date the relevan t patent expires, see 214

It shall be an act of infringement to submit an application under section 505(j) of the Federal Food, Drug, and Cosmetic Act [21 U.S.C. § 355(j)] . . . for a drug claimed in a patent or the use of which is claimed in a patent . . . if the purpose of such submission is to obtain approval under such Act to engage in the commercial manufacture, us

e, or sale of a dr

ug . . . claimed in

a patent or the use

of which is claimed in a pate

nt before the expir

ation of such pate

nt. 35 U.S.C. § 271(e)(2)(A). This definition of infringement was added by Ha tch-Waxman to allow the invocation of the procedures described in the following paragraph of this opinion.

5 The patent holder is, of course, free to sue the applicant for infringement under 35 U.S.C. § 271(e)(2)

(A) after the 45

day window e

xpires. The 30-month

stay of FDA

approval, however, will not be triggered. 6 U.S.C. § 355(j)(5)(B)(ii). If the ANDA a

pplicant certifie s that the relevant p atents are invalid or will not be infringed, co

mmonly called a "paragr

aph IV certifica

tion," several thin

gs happen. First, the app licant must notify the paten t holder. 21 U.S.C. § 355(j)(2)(B).If the patent holder brings suit for patent

infringement

4 within 45 days of receiving this n otice, the FDA automatically delays ap proval of the ANDA for thirty months. See 21 U.S.C. § 355(j)(5)(B)(iii). 5 If the court hear ing the infringement a

ction declares the patent invalid or not in fringed, this autom

atic delay in FDA approval terminates, 21 U.S.C. § 355(j)(5)(B)(iii)(I), or, if the court finds the patent valid

and infringed, the a

pproval date will be

set for a date on or after the patent's exp iration, 21 U.S.C. § 355(j)(5 )(B)(iii)(II); 35 U.S.C. § 271(e)(4)(A).If the court grant s the patent holder a preliminary injunction prior to6 When the agreements at issue were entered into, the FDA regulations defined the

relevant court decision triggering the end of the 30-month stay or the start of the first filer's 180- day exclusivity period as the decision of the appellate c ourt hearing the infringement action agai nst the fir st f

ile r. T his rul e was chal len ged i n co urt and hel d in val id b y TorPharm Inc., v. Shalala , No. 97-1925, 1997 U.S. Dist. LEXIS 21983 (D.D.C. Sep. 15, 1997), appeal withdrawn and remanded , 1998 U.S. App. LEXIS 4681 (D.C. Cir. Feb. 5, 1998), vacated on other grounds (D.D.C. April 9, 1998) (30-month stay expires upon judgment of the district court holding the pat ent not inf

rin ged) , an d by Mylan Pharms ., Inc., v. Sha lala , 81 F. Supp. 2d 30 (D.D.C. 2000) (180-day exclusivity period trigge red by judgment of the district court holding the patent invalid). Though

the FDA was initia

lly committed

to continued adhe

rence to the app

ellate judgment rule , see 62 Fed. Reg. 63,268 (Nov. 28, 1997), it dropped the rule following the Mylan decision, see 65 Fed. Reg. 43,233, 43,234 (July 13, 2000) (interim rule). The FDA now considers the 180-day exclusivity period to be trigg ered by any district court judg ment holding the patent invalid, not infringed, or unenforceable, whether or not the judgment comes from the district court hearing the infringement suit against the first filer. See Granutec, I nc., v. Shalala

, 7 the expiration of the

30-month stay

, the application w

ill be approved on the d

ate on which the court later h olds the patent in valid or not infrin ged. See 21 U.S.C. § 355(j)(5)(B)(iii)(III). The timing of F

DA approval is af

fected by anothe

r provision of Hatch-Waxm

an in the event that a

listed drug is subjec

t to more than one

paragraph IV certificati

on. Approval of an A

NDA that contains

a paragraph IV certification is aut omatic ally d elayed if ano ther A NDA was previ ousl y filed based on th e same listed drug and th e previous ANDA contains a paragraph IV certificati on. Approval of the subse

quent ANDA is de

layed until 180 day

s after the earli

er of (1) the first comm

ercial marke

ting of the drug under t

he previous applicati

on or (2) the date a court heari

ng an infringeme

nt action brought again

st the previous filer

holds the patent invalid or n

ot infringed. 6 See21 U.S.C. § 355( j)(5)(B)(iv) . ThisNos. 97-1873 & 97- 1874, 1998 WL 153 410, *8-9 (4th Cir. A pril 3, 1998) (unpu

blished, table decision reporte

d at 139 F.3d 889) (

endorsing the F

DA's position that

, if the successf

ul defense requirement is invalid, the court decision triggering the 180-day exclusivity period is the decision of any district court). See also Teva Pharms., USA, Inc. v. FDA , 182 F.3d 1003 (D.C. Cir. 1999) (reversing district court's denial of an injunction to require the FDA to recog nize the dismissal with prejudice of an infringement suit against a subsequent filer as triggering the first filer's 180- day exclusivity period). See post at n.12 for a discu

ssion of the succe

ssful defense re

quirement.

7 The facts are la

rgely unc ontested by t

he parties.

8 Terazosin hy

drochloride is a c

rystal. Dihy

drate terazosin h

ydrochlori

de is a particular cry

stalline poly

morph of terazosin

hydrochlor

ide. The opinion wil

l refer to terazosin hydrochlor

ide and its poly

morphs simply a

s terazosin hy

drochloride unle

ss greater spe

cificity is appropriate. 8 delaying mechanism gives the first generic ma nufacturer to file a paragraph IV certification and successfully ch allenge the scope or

validity of a pat

ent on a pioneer drug a 180-da

y period during w

hich it is the exclusive

competitor of t

he pioneer manufa

cturer. This exc

lusivity period is a significant incent ive for generic manufacturer

s to challenge weak

or narrow drug pat

ents. B. Factual History 7 1. Zenith's and Geneva's ANDAs Abbott manufac

tures Hytrin,

a brand-name

drug with the active

ingredient dihydrate terazosin hydrochloride. 8 Hytrin is used t o treat hyperte

nsion and enlarged prostate,

and has been a very

successful product f

or Abbott. Abbott obtained FDA appr

oval of its NDA f

or Hytrin in 1987 and has held a num ber of patents related to t

erazosin hydroc

hloride over the y

ears. Its first patent, issued in9 The active ingredient in these two drugs is anhydrous tera zosin hydrochloride.

10 The '207 patent, issued on April 2, 1996, claims a method of preparing anhy drous terazosin hydrochloride. The patent is due to expire in October of 2014. 9 1977, covered the ba sic terazosin hydrochl oride compound. See Abbott Labs. v. Novopharm Ltd

. , Nos. 96-C-611 & 95-C-6657, 1996 WL

131498, *1 (N.D.Ill. March 15, 1996). That patent has since expired, though Abbott has been issued other patents for va

rious crystalli

ne forms of the

compound and vari

ous methods of using and preparing the

compound. Geneva filed four ANDAs based on Hytrin between 1993 and 1996, each time making paragraph IV certifica tions with respect t o Abbott's listed p atents. Abbott brought infring

ement suits under

35 U.S.C. § 271(

e), invoking the 30-month stay

of FDA approval o f Geneva's AN DAs. On April

29, 1996, Geneva filed two additional

ANDAs based on H

ytrin, one for

a capsule form

of terazosin hydrochloride and one for a tablet form 9 , making para

graph IV certifi

cations with respect to the relevant patents. Within 45 days of receiving notice of Geneva's paragraph IV ce

rtifications, Ab

bott filed an infringe

ment suit based on

the submission of the t

ablet ANDA, a

sserting that the Ge

neva's tablet tera

zosin hydrochloride pr

oduct infringed Abbot

t's patent numbe

r 5,504,207 ("the '

207 patent"). 10 In the suit, Geneva admitted infringement but contested the patent's validity. Appa

rently through ove

rsight, Abbott fail

ed to file an infring

ement suit11 The active ingredient of this drug is anhydrous terazosin hy drochloride.

12 Prior to 1998, the FDA applied the "successful defense" requirement to ANDA filers hoping to take advantage of the 180-day e xclusivity period. A subsequently-filed ANDA would only have its approval date delaye d by 180 days if the first-filer had succ essfully defended against an infringement suit. See 59 Fed. Reg. 50,338, 50,367 (Oct. 3, 1994) (adopting successful defense regulation as a final rule, codified at 21 C.F.R. § 314.107). I f Zenith's ANDA were ready for approval before G eneva successfully defended Abbott's infring ement suit, then the ANDA would be approved without the 180-day delay . If Zenith were forced to make a parag raph IV certification with respect to Abbott's '095 and '207 patents, howe ver, Abbott could invoke the 30-month stay of approval, giving Geneva more time to defe nd Abbot's infringement action 10 based on the submissi on of the capsule ANDA. FDA cons ideration of that ANDA, therefore, proceeded unhindered, a nd Geneva's capsul

e ANDA was a

pproved in March of 1998. W

hen Abbott was notif

ied of this approval,

it began efforts to amend its com

plaint to allege that

Geneva's teraz

osin hydrochloride

capsule infringed the '207 pa

tent. Zenith, mea

nwhile, filed an A

NDA for a tera

zosin hydrochlori

de drug 11 in June of 1994, ma

king a paragraph IV

certification wi

th respect to Abbott' s Hytrin patents. Abbott wa

s issued a patent cla

iming form

s of terazosin hy

drochloride on May 2, 1995, pa

tent no. 5,412,095 ( "the '095 patent"), and another on April

2, 1996, the '207 paten t. Abbott timely filed this pa tent information with th e FDA, which then required Zenith to amend its ANDA to make a certif ication with regard to these newly l

isted patents. Ze

nith resisted, hoping t

o avoid the 30-mont

h stay of approval and the 180-day delay of approval based on Geneva's earlier-filed ANDAs. 12 Instead of certif ying, Zenith br

ought suit against Abbot

t in an attempt t

oagainst it.

The successful d

efense require

ment was eventua

lly held to be

an unreasonable interpretation of the Hatch-Waxman Act by two courts of appeals. See Mova Pharm. Corp. v. Shalala , 140 F.3d 1060, 106 9-70 (D.C. Cir. 1998

); Granutec , 1998 WL 153410, at *6-7. The Mova court enjoined the FDA from enforcing the regulation, and the FDA droppe d the requirement effective November 10, 1998. See 63 Fed. Reg. 59,710, 59,711 (Nov. 5, 1998) (interim rule). 11 force Abbott to deli st its '095 and '207 pat ents, relieving Zenith of the obligation to certify with respect to those pate nts, and seeking a de

claration that its te

razosin hydrochloride dr

ug did not infringe those

patents. Zenith' s suit alleged that A bbott listed the '095 and '207 patents knowing that the patents did not claim Hytrin or a method of using H

ytrin. Abbott c

ounterclaimed

for infringem

ent. Zenith's at

tempt to obtain a preliminary injunction against the listing of the patents was unsuccessful. See Zenith Labs. v. Abbott Labs. , No. 96-1661, 1997 U.S. Dist. LEXIS 23954 (D.N.J. Oct. 1, 1997). Zenith appealed the denial to the Federal Circuit. 2. The Agreem ents The agreements challenged by the plaintiffs arose ag ainst this backdr op. On March 31, 1998, Abbott and Zenith entered an agreement dismissing Zenith's delisting claims and Abbott's infringement counterclaims ("Zenith Agreem ent"). In the Zenith Agreement, Zenith acknowledged the validity of each of Abbott's patents claimi

ng terazosin hydr

ochloride and adm

itted that any te

razosin13 The '532 patent claims dihyd

rate terazosin hy

drochloride, the

active ingredi

ent in Hytrin. That patent expired on February 17, 2000. 12 hydrochloride pr

oduct Zenith mig

ht market woul

d infringe these pate

nts. Zenith agreed not to sell or

distribute any pha

rmaceutical

product containing any

form of terazosin hydrochloride until som eone else introduce

d a generic teraz

osin hydrochloride pr

oduct first or until A

bbott's patent no. 4, 215,532 (the '532 pate nt) expired. 13 Zenith agreed not to s ell or transfer its rig hts under any ANDA application relatin

g to a terazosin hy

drochloride drug, no

t to aid any other

person in gaining FDA approval of a terazosin hydrochloride drug, and not to aid any other person in opposing or invalidating any of Abbott's patents claiming terazosin. In return, Abbott agreed to a payment schedule according to which Abbott would pay Zenith $3 million up front, $3 million after three months, and $6 million every three months the

reafter until Mar

ch 1, 2000, or until th

e Agreement

terminated by its own terms.If another generi c manufactur

er introduced a ter

azosin hydrochloride dr

ug and obtained a 180-da y exclusivity

period, Abbott's p ayments would be halved until t

he period expired. Abbott agreed not to sue Zenith for infringement i

f it entered the m

arket consistent wi

th the Agreem

ent. Abbott entered an a

greement wit

h Geneva on April 1,

1998 ("Geneva Agreement") . According to the Geneva Agreem

ent, Geneva agre

ed not to sell or13

distribute any pha

rmaceutical

product containing any

form of tera

zosin hydrochloride unt

il either Abbott's '532 patent expired, someone else int

roduced a generic terazosin

hydrochloride dr

ug, or Geneva obta

ined a court judgm

ent that its terazosin tablets and capsules did not infringe the '207 patent or that the patent was invalid. This latter condition required a final judgment from which no further appeal could be tak en, including peti tion for certiorari to the Supreme Court. Geneva agreed not

to transfer or sel

l its rights under its A

NDAs, including i

ts right to the 180-day exc

lusivity period. Geneva also agreed to oppose any subs equent ANDA applicant's attempt to seek approval of its application based on Geneva's failure to satisfy

the then-existing successful defense r equirement and

to join and support any attempt by Abbott t o seek an extension of the 30-month stay of FDA approval on Geneva's tablet ANDA. In return, Abbott agreed to pay Geneva $4.5 million each m

onth until either som

eone else brought a ge

neric terazosin hydrochloride product to market or Abbott won a favorable decision in the district court on its infrin gement claim. If Geneva won in distr ict court, Abbott's $ 4.5 million mont

hly paym ents would go into escr

ow pending resolution o f the appeal, with the escrowed funds going to the party prevailing on appeal. Abbott reserved the right to term

inate its paym

ents after Februa

ry 8, 2000, if n

o other generic terazosin hydrochloride product had been marketed as of that date. I f Abbott14

exercised this right

, it would execute a release in Gene va's favor of any

claims of infringement ba

sed on the '207 patent. 3. Terminat

ion of the Agreem

ents The district court hearing Abbott's infringement suit against Geneva handed down its decision on September 1, 1998. Abbott Labs. v. Geneva Pharms., Inc. , Nos. 96-C-3331, 96 -C-5868, & 97-C-7 587, 1998 WL 566884 ( N.D. Ill. Se

pt. 1, 1998). The court he

ld the '207 patent inva

lid because the cry

stalline form o f terazosin hydrochloride claimed in the patent was on sale in the United States more than one year before Abbot t applied for the pat ent, see 35 U.S.C. § 102( b). 1998 WL 566884 at *7. A

bbott appealed to the F ederal Circuit, which affirm

ed on July 1, 1999. 182 F.3d 1315 (Fed. Cir. 1999). Abbott's petition for certiorari was denied on January 10, 2000. 528 U.S. 1078, 120 S.Ct. 796 (2000). The Agreements did not terminate on their own terms, however. The parties terminated the Agreements on Aug ust 13, 1999, appare ntly in response to an FTC investigation of those A

greements. T

he FTC action res

ulted in a consent settlement. See Matter of Abbott L abs. , No. C-3945, 2000 WL 681848 (F.T.C. May 22, 2000), also available at http ://ww w.ftc .gov/ os/2 000/ 05/c 3945 .do.h tm. C. Procedural History All class action an

d individual antitrust pl

aintiffs filed a j oint motion for15

summary judgm

ent that the Agreements were per se illegal under § 1 of th e Sherman Act

on February 18,

2000. The district

court issued an order

granting the motion on Decem

ber 13, 2000. Perm

ission to take an inter

locutory appeal

from the order under 28 U.S .C. § 1292(b) was granted on April 19,

2002. D. The Order Gra

nting Summa

ry Judgment The December 13, 2000, Order granting plaintiffs' motion for partial summary judgm

ent concluded that the Agreements were per se violations of § 1 of the Sherman Act. The Order characterized the A greements as geographic market allocation Agreem

ents between horiz

ontal competitor

s, essentially

allocating the entire United Sta

tes market for

terazosin drugs to A

bbott, who shared it

s monopoly profits with the othe

r cartel mem

bers during the life of the Agreem ents. The court found that on the eve of the Agreements , both Geneva and Ze

nith were poised to m

arket generic ver

sions of Hytrin in the U

nited States. Ge

neva received fina

l FDA approval fo

r its generic capsule

in March subject t

o "validation," and t

he 30-month stay on its gener

ic tablet proposal w

as set to expire in O ctober. Zenith declared that it was ready to market a generic tablet upon receipt of a favorable decision from the Fede ral Circuit and fin

al FDA approval. In re Terazosin H

ydrochloride A

ntitrust Litig. , 164 F. Supp. 2d 1340 , 1345-46 (S.D. Fla. 2 000). Despite bein g poised to enter the m

arket, however,

"Geneva and Zenith forswore

competing with Abbott in the United S tates market f

or terazosin16

hydrochloride drugs . . . ." Id. at 1348-49. The court identified four elements of the Agreement with Geneva that wer e anticompetitive : (1) Geneva's pr omise not to m

arket its terazosi

n capsule until the Agreement te

rminated; (2)

Geneva's prom

ise not to marke

t its terazosin table

t until the Agreeme

nt terminated;

(3) Geneva's pr

omise not to sell i

ts rights in its capsule and tablet ANDA

s until the Agreem

ent terminate

d; and (4) Geneva' s promise to aid Abbott in opposing any attempt by other ANDA applicants to enter the mar ket before the Agree

ment term

inated. The cour

t identified three a

nticompetitive elements of the

Agreement w

ith Zenith: (1) Ze

nith's agreem

ent to dismiss its delisting suit; (2) Zenith's promise not to aid any othe

r entity's cha

llenge to the validity of Abbot

t's terazosin pate

nts; and (3) Zenith' s promise not to m arket a generic terazosin

product until the Agr

eement term

inated. The esse

nce of the Agreements,

the court concluded,

was to "dissuade[] Geneva and Zenith from marketing the first generic terazosin hydrochloride drugs in the United States for an indefinite period [a

nd] eliminat[e] the risk that e ither drug make

r would sell or purchase the right to introduce such drugs in the interim . . . ." Id. at 1349. Despite holding the A

greements per se unlawful, the cour t nonetheless entertained, and rejected, the defendants' arguments that the Agreem ents were14 Defendants also argued that the

Agreements we

re immune from ant

itrust liability under the Noerr

- Pennington doctrine, see United Mine Workers v. Pennington , 381 U.S. 657, 85 S.Ct. 1585 (1965); Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc. , 365 U.S. 127, 81 S.Ct. 523 (1961); that the Agreements were not subject to per se treatment because of their novelty

; and that the Agr

eements could not h

ave anti-compet

itive effects be

cause independent reg

ulatory pro

hibitions prevente

d market entry

by Geneva

and Zenith until a

t least August of 1999. Th

e court rejecte

d these argume

nts, as well. The de

fendants do not ra

ise their Noerr

- Pennington

or ineffective

restraints arg

uments on appeal. 17 either pro-com

petitive or benign. 14 Defendants argue d that the Agreem

ents eliminated the "substantial legal and financial risks" that accompany market entry while patent disputes remain unresolved. This justification was rejected for three reasons. First,

the Agreeme

nt with Geneva wa

s unnecessary to

avoid these risks, because Geneva's unil ateral decision to fo rego entry would achieve t he same result. Second, the Agre

ement with Ge

neva did not resolve the

patent litigation; "in

fact, it tended to prolong that dispute to Abbott's advantage." Id. at 1350. The litiga tion was prolonged by the provisions extending the Agreeme

nt until the patent dispu

te was finally r

esolved, including Su

preme Court r

eview, and by Geneva's prom ise to aid Abbott in any motion seeking to e xtend the 30-month

stay of FDA a

pproval of Geneva's tablet A

NDA. Finally

, the court reje

cted the argum

ent that the provision of the Agreem

ent permitting G

eneva to enter the m

arket if Abbott ele

cted to suspend its payments was pro-competitive. Although the court may have been willing to "infer tha

t this clause was a catalyst for competition if G eneva paid Abbott for it, [] the suggestion that Ab bott handsomely

paid Geneva to spur18

competition in its

own lucrative dom

estic market f

or terazosin hy

drochloride products is patently unreasonable." Id. at 1351. The court did not analyze a

ny potentially eff

iciency-enhan

cing effects of the

Agreement w

ith Zenith, conclud

ing that the Agreement "would indefinitely postpone Zenith's entry into the United States marke

t and would perm

it competition onl

y once Abbott lost

its exclusive market." Id. Defendants argue

d that because the A

greement wit

h Geneva was anal

ogous to an interim pa

tent settlemen

t and the Agreem

ent with Zenith ter

minated the litigation between Zenith and Abbott, the court should treat the Agreements as patent litigation sett

lements. The

court rejected

this argument a

s well, concluding that the Agreement with Geneva did not resolve Abbott's infringement suit and that the termination of litigation between Zenith and Abbott "was part of a larger scheme to restrain the domestic sale of generic terazosin hydrochloride products." Id. at 1353. Even if the Agreements were patent litigation settlements, the court held , such settl ements were n ot immun e from per se analysis. Id. E. Issues Appealed On appeal, Abbott

and Geneva argue t

hat the district cour

t erred in concluding that the Agreements were per se violations of § 1 of the Sherman Act and that genuine issues of material facts remain in dispute.15 Indeed, all of appellants' arguments rely primarily on the circumstance that the Agreements arose in the context of patent litigation. 19 Appellants argue th

at courts lack suff

icient experience

with agreeme

nts of the kind at issue to draw the conclusion that "history and analysis have shown that in sufficiently

similar circ

umstances the r

ule of reason unequivo cally results in a finding of liability." Seagood Trading Corp. v. Jerrico, Inc. , 924 F.2d 1555, 1567 (11th Cir. 1991) (quotation and citation omitted). Appellants also argue that there are pro-competitive justifications for the Agreements that warrant analy sis under the rule of reason.Appellants argue t hat genuine issues of m

aterial fact ar

e in dispute with regard

to these potential pr

o-competitive e

ffects. Finally

, Appellants argue that the Agreements are patent litigation settlements that must be analy zed under the rule of reaso n unless it is sho wn that the settlements were "sham." 15

II. STANDARD OF REVIEW We review a di strict court's gra nt of summa

ry judgme

nt de novo, applyi

ng the same legal standards applied by the distric t court. Bailey v. Allgas, Inc. , 284 F.3d 1237, 1242 (11th C

ir. 2002). Sum

mary jud gment is appropr

iate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material20

fact and that the moving party is entitled to a judgment as a ma tter of law." Fed. R. Civ. P. 56(c). We view the evi dence in the light m

ost favorable to the non-movant, resolving all reasonable doubts and drawing all reasonable inferences in that party's favor. Bailey , 284 F.3d at 1243.

III. DISCUSSION Section 1 of the She

rman Act proh

ibits "[e]very

contract, com

bination in the form of trust or

otherwise, or co

nspiracy, in r

estraint of trade o

r commer ce among the several State s, or with foreign nations . . . ." 15 U.S.C. § 1. It is understood that the ban on "contra

ct[s] in restra

int of trade" m

eans only unreas onable restraints, State Oil Co. v. Khan , 522 U.S. 3, 10 , 118 S.Ct. 275, 279 (1997), that is, restraints that impair co mpetition, Chicago Board of Trade v. United States , 246 U.S. 231, 238, 3 8 S.Ct. 242, 244 (1 918). Some ty pes of agreem

ents are so obviously anticompetitive, or so unlikely to be pro-competitive, that such agreements can be deemed to violate the Sherman A ct without much more than an examination of t

he agreement itself and the rela tionships of the partie s to the agreement. State Oil , 522 U.S. at 10, 118 S.Ct. at 279; Arizona v. Mari copa County Medical Soc. , 457 U.S. 332, 344, 102 S.Ct. 2466, 2473 (1982). These agreements a

re labeled " per se " violations. Regar dless of termin

ology, the ultim

ate21

purpose of the antitr

ust inquiry is to fo

rm a judgm

ent with respect to

the competitive significa nce of the restraint at issue. National Collegiat e Athletic Ass'n v. Bd. Reg

ents Okla. Univ. , 468 U.S. 85, 103, 104 S.Ct. 2 948, 2962 (1984). The analytic focus should be on what conclusions regarding the competitive impact of a challenged re straint can confide ntly be drawn f

rom the facts demonstrated by the parties. See California Dental Ass'n v. FTC , 526 U.S. 756, 779-81, 119 S.Ct. 1604, 1617-18 (19 99), NCAA , 468 U.S. at 103 -04, 104 S.Ct. a t 2961-62. The district court

focused on the agree

ments by Ge

neva and Zenith not to enter the mar

ket with FDA-ap

proved (or approval pending) generic te razosin drugs, holding that this exclusionary effect of the Agreements constituted an allocation of the m

arket between hor

izontal competi

tors and that the Agr

eements were therefore per seillegal. We be gin our discussion by

addressing this exclusionary ef

fect of the Agree

ments. A. An agreement between competitors to allocate ma rkets is, as the district court noted, clearly anticompetitive. Such an agreement has the obvious tendency to diminish output a

nd raise prices. W

hen a firm pay

s its only potential

competitor not to compete in return for a share of the profits that f

irm can obtain b

y being a monopolist, competition is reduced. See , e.g. , Palmer v. BRG of Georgia, Inc. , 49822

U.S. 46, 49-50,

111 S.Ct. 401, 403 ( 1990) (per curiam ) (agreemen

ts not to compete within certain ter

ritorial limit

s are obviously an

ticompetitive) ; United States v. Topco Assocs. , 405 U.S. 596, 608, 92 S.Ct. 1126, 1133-34 (1972) (observing that an agreement between competitors to allocate territories is a "classic exam ple" of a per seviolation of the Sher man Act, wi

th no purpose other than

reducing competition). If this case merely involved one firm m aking monthly payments to potential competitors in return fo r their exiting or refr aining from entering th e market, we would readily affirm the district court's order. This is not such a case, however, because one of the pa

rties owned a pate

nt. For reasons ex

plained below, and in light of the fact tha

t all parties seem

to agree that the A

NDAs that were

the subjects of the infringement suits infringed Abbott's ‘207 patent, we reject the district court's characte

rization of the insta

nt Agreement

s as illegal per se . We believe a ny such characteriz

ation is premat

ure without further

analysis of the k

ind suggested in this opinion. Because

the market al

location characte

rization was cent

ral to the district court's conclusion that the Agreements in their entireties are per se violations of § 1 of the Sherman Act, we will reverse the grant of summ ary judgment. A patent grants its o wner the lawful right to exclude others. See 35 U.S.C.23

§§ 271(a) (defining i

nfringement) & 283 (providing injunc tive relief for infringement) ; Dawson Chem. Co. v. Rohm &

Haas Co. , 448 U.S. 176, 215, 100 S.Ct. 2601, 2623 ( 1980) ("[T]he e ssence of a patent gr ant is the right to exc

lude others from pr

ofiting by the pate

nted invention."). This exclusionary right is granted to allow the

patentee to exploit w

hatever degree of

market power

it might gain thereby as an incentive to induce investment in inno

vation and the public disclosure of inv entions. Bonito Boats, Inc., v. Thunder Craft Boats, Inc. , 489 U.S. 141, 150-51, 109 S.C

t. 971, 977-78 (1989) ; United States v. Studiengesellschaft Kohle, m.b.H. , 670 F.2d 1122, 1127 ( D.C. Cir. 1981) . The exclusionar y right cannot be exploited in e

very way -- patentees canno t pool their patents a

nd fix the prices at which licens ees will sell the paten ted article, for example, see United States v. New Wrinkle, Inc. , 342 U.S. 371, 72 S.Ct. 350 (1952) -- but a patentee can choose to exclude

everyone from

producing the patente

d article or can c

hoose to be the sole supp lier itself, see , e.g. , In re Indep. Ser v. Orgs. Antitr

ust Litig. , 203 F.3d 1322, 1328 (Fed. Cir. 2000); SCM Corp. v. Xe rox Corp. , 645 F.2d 1195, 1209 (2d Cir. 1981); or grant exclusive territorial licenses carving up the United States among its licensees, see 35 U.S.C. § 261.Within reason, p atentees can also subdivide markets in ways ot her than territorial , such as by customer class. Gen. Talking Pictures Corp. v. Wester n Elec. Co. , 304 U.S. 175, 58 S.Ct. 849, aff'd on16 The ‘207 patent was, of course, declared invalid on September 1, 1998, a

judgment affirmed on January 10, 2000. The antitrust consequences of this subsequent invalidation will be addressed below. 24 reh'g , 305 U.S. 124, 59 S.Ct. 116 (1938) (approving a license

restricting the licensee's sales t

o non-comme

rcial custome

rs). Such arra

ngements undoubted

ly tend to result in lowe

r production and higher

prices of the paten

ted article than if competition were unrestrained, but these anticompetitive tendencies do not render them in violation o f the Sherman Act. The above discussion i

llustrates the point t

hat a patentee's a

llocation of territories is not always the kind of territorial market allocation that triggers antitrust liability

, and this is so becaus e the patent gives its owner a lawful exclusionary right. In characterizing the Agreements as territorial m arket allocations agreem

ents, the district c

ourt did not consider tha

t the '207 patent gave Abbott the right to exc

lude others from

making, using,

or selling anhydr

ous terazosin hydrochloride until October of 2014, when it is due to expire. 16 To the extent that Zenith a

nd Geneva agreed n

ot to market adm

ittedly infringi

ng products before the '207 pat

ent expired or was held invalid, the m arket allocation characterization is inappropriate. Zenith's agreem

ent not to marke

t an infringing gener

ic terazosin hydrochloride dr

ug terminated,

by its own term

s, when either an

other generic17 We say “may ” because we do

not hold that the ‘20

7 patent would

have allowed Abbott to o

btain a pr eliminary injunctio n or a stay

of an adve

rse judg ment pend

ing appe al. We mean only that these are among the considerations that the district court should addre ss on remand. We do note that appellees have not at this stage argued that Abbott would have been unable to obtain such relief. 25 manufacturer

marketed a te

razosin product and a

ny exclusivity

period expired or Abbott's ‘532 pate

nt expired in Februa

ry of 2000. The

effect of the Ze

nith Agreement on the production of Ze nith's infringing ter

azosin product appea

rs to be no broader than the potential exclusionary effect of the ‘207 patent, and was actually narr

ower to the extent i

t permitted Zenith to market its drug before the '

207 patent expired. Geneva's agreement not to market an infringing terazosin product terminated at

the earliest of (1 ) a final, unappea lable judgmen

t holding the '207 patent invalid; (2) t

he marketing of

a terazosin product

by another gener

ic manufacturer

; or (3) the expirat

ion of the '532 patent.

The effect of t

he Geneva Agreement on the production of Geneva's infringing generic terazosin product may have been no broader

than the potential exc

lusionary effe

ct of the ‘207 pate

nt. The '207 patent may have allowed Abbott to obtain preliminary injunctive relief or a stay of an adverse judgment pending appeal, which also would have prevented Geneva from

marketing its te

razosin hydroch

loride products during

this period. 17 With respect to the foregoing aspects of the two Agreements' exclusionary effects, which

were the foundati

on of the district cour

t's characteriz

ation of the18 Appellees argue that the Agreements have broader exclusionary tendencies in that they also prohibited the marketing of non-infringing tera zosin products, prohibited Geneva from marketing infringing products beyond the date a district court held the '207 patent invalid, and prohibited Genev

a from waiving it

s 180-day e

xclusivity per

iod. As we explain be

low, these prohibitions may

be beyond th

e scope of Abbott'

s lawful right to e

xclude and, if so, wo

uld expose appellants t

o antitrust liability

for any ac

tual exclusionary

effects resulti

ng from these provisions that appellees can prove at the causation and damages stages of litigation. Our point thus far is that appellees have failed to prove that appellants should face per se antitrust liability for treble dama

ges for the fai

lure of Zenith a

nd Geneva to mark

et admittedly

infringing pro

ducts when no court had declared Abbott's patent invalid or unenforceable at the time of the Agreements. 26 Agreements a

s market allocation agreeme nts, these are at the heart of the pat ent right and cannot trigger the per se label. 18 Unlike some kinds of agreements that

are per se illegal whether e ngaged in by patent

ees or anyone e

lse, such as tyi

ng or price-fixing, the

exclusion of infringi

ng competition is t

he essence of the pa

tent grant. As one cour

t has concluded, "w

hen patents are invol

ved . . . the exclusionary ef

fect of the patent m

ust be considered bef

ore making any determination a

s to whether the all

eged restraint is per se illegal." In re Ciprofloxacin Hy

drochloride Antitr

ust Litig. , 261 F. Supp. 2d 188, 24 9 (E.D.N.Y. 2003). Because the

district court fail

ed to consider the exc

lusionary power

of Abbott's patent in it

s antitrust analy

sis, its rationale w

as flawed and its conclusion that these Agreements constitute per se violations of the antit rust laws must b e reversed. While our holding at this early stage of the li tigation is appro priately narrow,27

the decision below and the arguments of the parties invite our discussion of several matters that pr

omise to be rele

vant on remand.We first discuss appellees' argument that t

he antitrust analy

sis need not consider A

bbott's patent rights because the ‘207 pa

tent was declare

d invalid. We the

n discuss appellees'

argument that the lawful rig

ht of exclusion does not i nclude the right to pay

competitors not to produce infringing products. Finally, we offer several observations with respect to the framew

ork to be developed on r

emand for dec

iding the appropriate

antitrust analysis. B. The individual Sher

man Act plaint

iffs-appellees a

rgue that because th

e '207 patent was declared invalid after the Agreements were entered into, Abbott never had any patent rights an d our antitrust ana lysis need not consid er the '207 patent. We reject th

e appellees' argu

ment that the ag

reements by

Geneva and Zenith

not to produce infringing pr

oducts are subjec

t to per se condemnation and treble-damages liabilit y merely because th e '207 pate nt was subs equently de clared inv alid. We begin with the proposit

ion that the reasonableness of agreem ents under the antitr

ust laws are to be judged at th e time the agreements are entered in to. Polk Bros. v. Forest City E

nters. , 776 F.2d 185, 189 (7 th Cir. 1985); SCM Corp. , 645 F.2d at 1207. At the time the Agreements were entered into, no court had declared19 That is, appellees have neither alleged nor asserted that the patent was procured by

fraud, that appellants knew the patent was invalid, that there was no objective basis to believe that the patent wa

s valid, or any

such similar alleg

ations. We theref

ore are not call

ed upon to decide what the antitrust consequences of such circumstances might be. 28 Abbott's ‘207 patent invalid, and the appellees have advanced no argument other than mere invali dity. 19 We hold that the m ere subsequent invali

dity of the paten

t does not render the pa

tent irrelevant to t

he appropriate anti

trust analysis. The right of exclusi

on conferred by

a patent has been cha

racterized as a defense to an antitru st claim, see Walker Process Equip., Inc., v. Fo od Mach. & Chem. Corp. , 382 U.S. 172, 179, 86 S.Ct. 347, 351 (1965) (Harlan, J., concurring), or as a limited

exception to the gene

ral rule that m

arkets should be fre

e from barriers to competition , see id. , 382 U.S. at 176 , 86 S.Ct. at 350; United States v. Line Material Co

. , 333 U.S. 287, 309, 68 S.Ct. 550, 561 (1948); id. , 333 U.S. at 310, 68 S.Ct. at 5 62. Appellees' a rgument im

plies that this defens e is unavailable with respect to the

Agreements because the '207 pate nt was subsequently

held invalid. The only time the Supreme Court has addressed the circum stances under which the patent im

munity from

antitrust liability

can be pierced, i

t held that the antitrust claim

ant must prove tha

t the patentee enfor

ced a patent with th

e knowledge that the patent was procured by frau d on the Patent Office. Walker29

Process , 382 U.S. at 177 , 86 S.Ct. at 350 ( considering a mo

nopolization claim against a patentee f

or suing to enforce a

patent allegedly

procured by fr

aud). Good faith procurement furnis hes a complete defense to t he antitrust claim. Id. Justice Harlan's concurrence explained that the effect of antitrust liability on the incentives for innovation and disc

losure created by

the patent regim

e must be taken i

nto account when a cour

t considers whether

a patentee is stripp ed of its imm unity from the antitrust laws: It is well also to re

cognize the rationa

le underlying this

decision, aimed of course at achieving a suitable accommodation in this area between the differing policies of the pate nt and antitrust l aws. To hold, as we do, tha

t private suits m

ay be instituted un

der § 4 of the Clayton Act to r

ecover damage s for Sherman Act monopoliza

tion knowingly pract

iced under the guise o f a patent procure d by deliberate fraud, cannot we

ll be thought to impi

nge upon the policy of the patent laws to encourage i

nventions and their disc

losure. Hence,

as to this class of improp er patent monopolies, antitrust re medies should be allowed room f

or full play. O

n the other hand, to hold, as we do not, that private antitrust suits might also reach monopolies practiced under patents that for one reason or another m ay turn out to be voi

dable under one or mor

e of the numero

us technicalities at

tending the issuance of a patent

, might well c

hill the disclosure of

inventions through the obtaining of

a patent because of

fear of the vexati

ons or punitive consequences

of treble-dam

age suits. Hence , this private antitrust remedy should not be deemed to reach § 2 monopolies carried on under a nonfraudule

ntly procured pa

tent. 382 U.S. at 179-80 , 86 S.Ct. at 351- 52. This approach i s commonly used by courts considering the i ntersection of pate nt law and antitrust law. See , e.g. , SCM Corp. ,30

645 F.2d at 1203-06 (considering antitrust c laims against a

patentee for acqu

iring and refusing to licen

se various patents); Handgards, Inc., v. Ethicon, Inc. , 601 F.2d 986, 992-93 (9th Cir. 1979) (considering a monopolization claim against a patentee for asserting a pat

ent it allegedly

knew to be invalid).A suitable accom modation between antitrust law's free competition requirement and the patent regim e's incentive system

is required by th

e complem

entary objec

tives of the two: It is comm

only said . . . that the patent and a ntitrust laws nece ssarily clash . . . At t

he same tim

e, the two regim

es seek the sam

e object: the welfare of the pu

blic . . . [A] ntitrust law forbid s certain agreem

ents tending to restrict ou

tput and elevate prices and profits above t he competitive le

vel. Patent law

also serves the inte

rests of consume

rs by protecting invention a

gainst prompt im

itation in order to en

courage more innovation than would otherwise occur. H. Hovenkam

p, Antitrust Law : An Analysis of Antitrust Principl

es and Their Application, ¶ 1780 a (1999) ("Hovenkamp") (cit ations and quota tions omitted). See also D. Crane, “

Exit Paym

ents in Settlem

ent of Patent Infr

ingement Law

suits: Antitrust Rules and E

conomic Im

plications,” 54 Fla . L. Rev. 747, 748 n.1 (2002) ("It is generally recognized that antitrust and patent law, although polar opposites in their treatm

ent of monopolies , share comm on objectives.") ; Zenith Elecs. Corp. v. Exzec, Inc. , 182 F.3d 1340, 135 2 (Fed. Cir. 1999) ("The pat ent and antitrust l aws are complem

entary in purpose

in that they eac

h promote innovati

on and competition . . . .") (citation omitted).20 The cost and complexity of most patent litigation is a familiar problem to the

court system. See , e.g. , Blonder-Tongue , 402 U.S. at 331-32 & 334-38, 91 S.Ct. at 1444 & 1445-48; Cyber Corp. v. FAS Techs., Inc. , 138 F.3d 1448, 1475-76 (Fed. Cir. 1998) (Rader, J., dissenting) (dis

cussing claim co

nstruction); Matter of Schering-Plough Corp. , No. 9297, 2002 WL 1488085, *166-67 & *239-40 (F.T.C. June 27, 2002), also available at http://www.ftc.gov/os/caselist/d9297.htm. See also Crane, 54 Fla. L . Rev. at 757. The c

ost savings of settlement, both to the parties and to the public, are equally widely -recognized. See Aro Corp. v. Allied Witan Co. , 531 F.2d 1368, 1372 (6th Cir. 1976) ("Public policy favors settlement of disputes without litigation. Settlement is of particular value in patent litigation, the nature of which is often inordinately complex and time consuming."). 31 Employing t

his approach, we c

onclude that exposing se

ttling parties to antitrust liability

for the exclusionar

y effects of a

settlement re

asonably within t

he scope of the patent m

erely because

the patent is subseque

ntly declared i

nvalid would undermine

the patent incentive s. Patent litigati on is too complex a

nd the results too uncertai

n for parties to acc

urately forecast whether enfor cing the exclusionary ri

ght through settlem

ent will expose them

to treble dama

ges if the patent imm

unity were des

troyed by the

mere invalidit

y of the patent. 20 This uncertainty, coupled with a trebl e damages pena

lty, would tend to discourage settlement of a

ny validity c

hallenges except thos e that the patentee is certain to win at trial and the infringer is certain to lose. By restricting settlement options, which would effectively

increase the cost o f patent enforcem ent, the proposed ru

le would impair the incentives fo r disclosure and in novation. See Ciprofloxacin , 261 F. Supp. 2d at 256 (expre ssing concern for the effect of settle

ment-restric

ting antitrust liability rules o

n the incentives for research and deve lopment); cf. Walker Proces s ,32

382 U.S. at 180, 86 S.Ct. at 352 (H arlan, J., conc

urring) (perm

itting antitrust liability based on

a showing mere

invalidity "m

ight well chill the di sclosure of inventions through the obt aining of a patent because of fear of the vexations or punitive consequences of treble-damages suits"). There may be circumstances under w hich the unreasonableness of a settlement agr

eement regar

ding a subsequently

-invalidated or unenf

orceable patent would be sufficient

ly apparent tha

t antitrust liability

would not underm

ine the encouragement of genuin e invention and di sclosure. Cf. Walker Proces s , 382 U.S. at 179-180, 86 S.Ct. at 351 (Harlan, J., concurring) (noting that exposing patentees to antitrust liability

for the assertion of

a patent known to have

been procured by fraud "cannot wel

l be thought to impin

ge upon the policy o f the patent laws to encourage inventions and their disclosure"). In this regard we note that some lower courts have extended Walker Proces s to permit antitrust claims against patentees for the anticom

petitive effects o f infringemen t lawsuits when the

antitrust claim

ant proves that the pat entee knew that the pat ent was invalid, Handgards , 601 F.2d at 994-96, or knew that t he patent was not infr inged, Loctite Corp. v.Ultraseal Ltd. , 781 F.2d 861, 876-7 7 (Fed. Cir. 1985), overruled on other gr ounds by21 Similarly, it h as been sugge

sted that the “sha

m” exception to the a

ntitrust immunity afforded by the Noerr

- Pennington doctrine is or may

be available als

o to antitrust plaintiffs seeking to pierce the patent immunity. See Independent Services Organizations , 203 F.3d at 1326-27. Because the parties have not briefed such potential exceptions to the patent immunity from antitrust liability, we do not address them at this time. 33 Nobelpharma AB v. Implant Innovations, Inc. , 141 F.3d 1059 (Fed. Cir. 1998). 21 To the extent that th

e appellees have de

monstrated nothi

ng more than subse

quent invalidity, we hold that this alone is insufficient to render the patent's potential exclusionary ef

fects irrelevant

to the antitrust anal

ysis. C. The class action pl

aintiffs-appellee s argue that the pate nt right does not include the right to pa

y infringers,

with the implication that any exc lusion resulting from pa yment ra ther t han ju dicia l enfo rcemen t is n ot pro tecte d from per seantitrust liability by the patent laws. Our discussion with regard to the important role played by settlement in the enforcement of patent rights leads us to reject this argum ent as well. Appellee s have not explained w hy a moneta

ry paym ent as part of a pate

nt litigation settlement should be flatly prohibited as a per se violation, particul arly where the allege

d infringer has not y

et caused the patent

ee any harm

and the patentee does not h ave a damages claim to bargain wit h. See Ciprofloxacin , 261 F. Supp.2d at 251-52 (dis cussing the asym metries of lit

igation risk create

d by Hatch-Waxm

an and rejecting t

he argument tha

t payments f

rom the patente

e to the34

infringer are subj ect to per se antitrust analy sis); Crane, 54 Fl

a. L. Rev. at

774 (discussing the dy

namics of settl

ement before

the alleged infringe

r has entered the market). We cannot conclud

e that the exclusiona

ry effects of

the Agreeme

nts not to enter the mar

ket were necessa

rily greater

than the exclusionar

y effects of t

he '207 patent merely

because Abbott paid

Geneva and Zenith

in return for their

respective agreements. If Abbott had a law ful right to exclude competitors, it is not obvious that competition was limited more than that lawful degree by paying potential competitors for

their exit. The f

ailure to produce the

competing tera

zosin drug, rather than the pay

ment of mon

ey, is the excl

usionary effe

ct, and litigation is

a much more

costly mec

hanism to achiev

e exclusion, both to the

parties and to the public, than is set tlement. See Aro Corp. , 531 F.2d at 1372. To hold that an ostensibly reaso

nable settleme

nt of patent litigatio

n gives rise to per se antitrust liability if it involves any payment by the patentee w ould obviously chill such settlements,

thereby incre

asing the cost of pate

nt enforceme

nt and decreasing the value of patent protection generally. We are not persuaded that such a per serule would be an appropria

te accomm

odation of the com

peting policies of the

patent and antitrust laws. It may be that the size of the paym ent to refrain from competing, sometim es22 For example, the size of the payments might be evidence supporting a claim that

the patentee knew that the patent was procured by fra ud, or knew that the patent was invalid, or that there was no objective basis to believe the patent was valid. See discussion in Part B, supra .

23 For example, it seems reasonable to assume that part of the payments to Geneva were in return for Geneva's agreement not to waive its 180-day exclusivity period. Payments for provisions other th

an the acknowled

gment of validity

would not shed ligh

t on the parties' evaluations of the merits of the validity issue. 35 called a "reverse

payment" or

an "exit paym

ent," raises the s

uspicion that the parties lacked fa

ith in the validity

of the patent

22 , particularly

when those paym

ents are non-refundabl

e in the event that the

patentee prevails on the infringem ent claim (as a bond posted as pa

rt of a prelim

inary injuncti

on would be). How

ever, in the instant case and give

n the state of the cur

rent record, it i s difficult to infer from the size of the paym

ents alone that the inf

ringement suits l

acked merit.We do not know, for exam

ple, what lost prof

its Abbott expected f

rom generic competition or what profits Gene

va and Zenith expec

ted to gain from

entry, the ri sk of the defendants' inability to satisfy a judgment, or the litigation costs each side expected to save from se

ttlement. W

e do not know how m

uch of the paym

ent might have been in exchange for

provisions of the Agr

eements other than Zenith's and Geneva' s ackno wledgmen t of val idity. 23 Without these fac ts we cannot confide

ntly draw the conclusion,

merely f rom the size of

the paymen

ts, that there we

re no genuine disputes over t

he validity of the

patent. Given the

asymm etries of risk and large profits at sta

ke, even a patente

e confident in the val

idity of its paten

t might24 Neither appelle es nor the district

court have offe

red any simi

lar suspicions with regard to the st

ructure of pay

ments under the Z

enith Agreeme

nt. 36 pay a potential infring er a substantial su m in settlement. See , e.g. , Ciprofloxacin Hydrochloride , 261 F. Supp. 2d at 196, 234 (settlem

ent agreement

s under which a patentee paid an inf

ringer $49.1 mi

llion to acknowledge t

he validity of a p atent, and at least $398 m

illion for the infrin

ger to remain o ff the marke t, though the patent was subsequen

tly approved by

the PTO on reexa

mination and unsuccessfully challenged in court three times). Another possibly suspicious characte ristic of the pay

ments to Geneva

is their structure ( i.e. , tying their dur ation to the length of th

e litigation), whi

ch, as the district court noted,

may have gi

ven Geneva an ince

ntive to delay re solution of the infringement su

it. 24 But if the paym

ents were in furth

erance of the see

mingly reasonable purpose o f compensating G eneva for any l

ost profits during the c

ourse of litigation (m

uch like a bond posted as part of a prelim

inary injuncti

on), it is difficult to ima

gine how else to struc

ture the paym

ents but by tyi

ng them to the length of the litigatio

n. We recognize th

at the Sixth Circuit

appeared to take the

opposite view in In re Cardizem

CD Antitrust Lit

ig. , 332 F.3d 896, 908 (6

th Cir. 2003) ("[I

]t is one thing to take advantage

of a monopoly

that naturally a

rises from a p atent, but25 The terms of the agreements at issue in the Cardizem CD case were similar to the terms of the Agreements in this case.

26 The Sixth Circuit se ems to have p laced consi derable reli ance upon th e generic's agreement to delay entering the marke t in exchange for exit payments, although it may also ha ve been influenced by other provisions of the agreement whic h might more readily seem to exceed the potential exclusionary power of the patent. For example, the Sixth Circuit mentioned the effect of the agreements regarding the 180-da y exclusivity period as well, and its reference to the district court opinion in that case might reflect some reliance on the restriction on non-infringing products. See Cardizem CD , 332 F.3d at 907-0 8; In re Cardizem CD Antitru st Litig. , 105 F. Supp. 2d 682, 705 (E. D.Mich. 2000). How ever, the Sixth Circu

it opinion did not purp

ort to measure the seve

ral provisions ag

ainst the exclusiona

ry power of

the patent, or dif

ferentiate between provisions that fell within the scope of the patent's protection and those which did not. Cf. Cardizem CD , 105 F. Supp. 2d at 701 ("The anticompetitive effects of [the] patent are likewise not at issue."). To the extent that the Sixth Circuit suggests that a settlement of patent litigation was a per se

violatio n of the anti trust laws merely because i t involves a generic's agreement to de

lay market

ing until resolutio

n of the patent inf

ringement case

in exchange for

exit payments, we respectfully disag ree. We believe that the potential exclusionary power of the patent must first be considered. 37 another thing altogeth

er to bolster the pat

ent's effectiven

ess in inhibiting competition by paying the only potential competitor $40 million per y ear to stay out of the market."). 25 When the exclusio nary power of

a patent is impli

cated, however, the antitrus t analysis cannot ign ore the scope of the pa tent exclusion. "[T]he protec

tion of the patent law

s and the coverage of

the antitrust laws a

re not separate issues." Studiengesellschaft , 670 F.2d at 1128. A s the above discussion indicates, we do not think that a payment from the patentee to the alleged infringer should be automatical ly condemned under the anti trust laws 26 , nor do we think that the evidence regar

ding the exit paym

ents in this case allo

ws a confident conc

lusion to be drawn at this st

age of the litigation that the exclusionar y effect of th

e27 Application of rule of reason analysis is similarly inappropr iate, as the anticompetitive effects of exclusion cannot be seriously debated. Rule of reason and per se analysis ar

e both aimed at ass

essing the antic

ompetitive effec

ts of particular c

onduct; what is required here is an analysis of the extent to which antitrust liability might unde rmine the encouragement of innovation and disclosure, or the extent to which the patent laws prevent antitrust liability

for such exclusiona

ry effec ts. 38 Agreements w

ere bolstered by

the exit paym

ents to a degree tha

t exceeds the potential exclusionar

y power of the p atent. Because these m

atters were give

n scant attention in the

district court, considering the court's primary conclusion that the Agreements were m arket division agreem

ents like those in Palmer

and Topco , these questions have not been explored. We si

mply note the

m here to expla

in our conclusion that t

he presence of an exit paym

ent as part of the se

ttlement does not

alone demonstra

te that the Agreements had obvious anticompetitive tendencies above and beyond Abbott's potential exclusionar

y rights under the

'207 patent. D. Our discussion so far

has been limite

d to the exclusionary

effects of the instant Agreem

ents to delay ent

rance into the m

arket, the subseque

nt invalidation of the patent, and the mere fact of exit payme nts. To the extent that these or other effects of the A

greements ar

e within the scope of

the exclusionary

potential of the patent, such effe

cts are not subjec

t to per se antitrust condem

nation. 27 From the preceding discussion,

we conclude that de

ciding the antitrust im

plications of these39

exclusionary ef

fects requires an

analysis of the e

ffects of antitrus

t liability on the innovation and disclosur

e incentives crea

ted by the patent regime, wit h the aim of "achieving a suitable accommodation between the differing policies." Walker Process , 382 U.S. at 179, 86 S.Ct. at 351 (Harlan, J., concurring). As alluded to earlier, h owever, see supra at ___ n.18 (M/S at 2 6, n.18), the instant Agreem

ents are not confine

d to matters involving restrictions on i nfringing products, exit pay

ments, and a su

bsequent court decisi

on declaring the pate

nt invalid. Appellees also challenge other provisions of the Agreements, such as those prohibiting the marketing of "any" generic terazosin product; Geneva's agreement not to waive its 180-day exclusivity per

iod; and Geneva's a

greement not to come to m

arket until a final,

unappealable judgm

ent of invalidity rather than on a district court j udgment. Thes e arguments re quire consideration of the scope of the exclusionary

potential of the pate

nt, the extent to wh

ich these provisions of

the Agreements e

xceed that scope, a

nd the anticompe

titive effects the

reof. Because these considerations

require a differ

ent analytic fr

amework than that applied by the district court and a

dvocated by the pa

rties on appeal, it

is appropriate to re

mand to the district court to

apply an appropr

iate framew

ork derived from

this decision, and the arguments of

the parties and the f

acts developed on re

mand. To aid i

n the development of a

n appropriate fra

mework, we

offer the followi

ng observations.28 We express no view at this time on what role the FDA's regulation of market entry

might play i

n the appropriate

antitrust analy

sis. 40 We recognize the patent exception to antitrust liability, but also recognize that the exception is l

imited by the

terms of the pa

tent and the statutory

rights granted the patentee. "[T]he precise terms of the grant define the lim its of a patentee's mo

nopoly and the are

a in which the patent

ee is freed from

competition of price, service, quality or otherwise." Line Material , 333 U.S. at 300, 68 S.Ct. at 557. See also New Wrinkle , 342 U.S. at 378 , 72 S.Ct. at 353 ( "Patents give no protection from

the prohibitions of the

Sherman Act

to [price fixing] when the licenses are used,

as here, in the sc

heme to restra

in."); United States v. M

asonite Corp. , 316 U.S. 265, 277, 62 S.Ct. 1070, 1077 (1942) ("The ow

ner of a patent cannot extend his statu

tory grant by

contract or agree

ment. A pate

nt affords no immunity for a monopoly not fairly or plainly within the grant."). The appropriate a

nalysis on rem

and will likely r

equire an identification of the protection afforded by the patents and the relevant law 28 and consideration of the extent to which t he Agreements reflect a reasona ble implementation of these

. Appellants, for e

xample, conte

nd that certain provi sions of the Geneva A greement are analogous to a co

nsensual prelim

inary injuncti

on and stay of j udgment pending appeal. To evalu

ate this claim,

the provisions of this A

greement should be29 Courts have not hes itated to apply

traditional antitr

ust principles to ag

reements not within the scope of the patent protection. See Line Material , 333 U.S. at 307, 68 S.Ct. at 560 (holding a patent pooling agreement that fixed the prices at which licensees would sell the patented produc

t per seillegal); Masonite , 316 U.S. at 274, 62 S.Ct. at 1076 (holding a pricefixing agreeme

nt among patente

es and their lice

nsees per se

illegal)

. 41 compared to the protections afforded by the preliminary inj unction and stay mechanisms and considered in light of the likelihood of Abbott's obtaining such protections. Cf. Hovenkamp at ¶ 2046 ("some care must b e taken to ensure tha t . . . the settlement

. . . is not m

ore anticompet

itive than a likely

outcome of the litigation"). Any provisions of

the Agreeme

nts found to have effe

cts beyond the exclusionary ef

fects of Abbott's p atent may then be subject to tr aditional antitrust analysis to asse ss their probable ant icompetitive effects in order to determine whether those provi sions violate § 1 of the S herman Act. 29 Standard Oil Co., Ind., v. United States , 283 U.S. 163, 175, 51 S.Ct. 421, 425-26 (1931) (recognizing that cross-licensing agreements and a division of royalties could be used to monopolize or fix prices and ex

amining the evide

nce to assess the pote

ntial for anticom

petitive effects as a res

ult of the agreem

ents at issue). T

he appropriate ana

lysis of the market effe

cts of such provisions m

ay depend on the na

ture of the provision challenged. It m

ay be that som

e challenged provisio

ns are so obviously anticompetitive that they can be condemned as illegal on the evidence so far30 Because the appellants' arguments supporting the application of the rule of r eason rely primar

ily on the cir

cumstance that th

e Agreements a

rise out of patent

litigation, and be

cause the determination of the appropriate analysis should await the inquiries to be made on remand, we decline at this time to address the issue further. We note, however, that the application of the rule of reason is not synonymous with exhaustive factual inquiry . “[S]ome rule-of-reason cases can be disposed of merely on the basis of the parties’ arg uments and, more often, on the basis of a limited summary judgment record.” Hovenkamp, ¶ 1508.

31 This is not to suggest that the provisions should be considered in isolation; agreements tha

t are anticompeti

tive when conside

red in isolation (su

ch as covenants n

ot to compete) can sti

ll be lawful if they

are ancillary

to another agr

eement and, when

viewed in combination, will have the overall effect of enhancing competition. See Business Elecs. Corp. v. Sharp Elecs. Corp. , 485 U.S. 717, 729, 108 S.Ct. 1515, 1523 & n.3 (1988), Polk Bros. , 776 F.2d at 189. We simply suggest that careful consideration of individual provisions may be helpful should it appear th

at the Agreeme

nts are unlawful o

nly in part. 42 adduced, or it m

ay be that the te

ndencies of some

challenged provisions

cannot be confid ently pr edicte d witho ut furt her inq uiry. [T]here is gen

erally no cate

gorical line to be dr

awn between res

traints that give rise to an in

tuitively obvious inf

erence of anticom

petitive effect and those tha

t call for mor

e detailed treatm

ent. What is required, rather

, in an enquiry m

eet for the case,

looking to the circumstance s, details, and logi c of a restraint. Cal. Dental , 526 U.S. at 780 -81, 119 S.Ct. a t 1618. 30 If on remand t

he court should conclude that part,

but not all, of the pr

ovisions of the Agree

ments violate the Sherman Act

, it may a lso be helpful to identi

fy with specif

icity which pro

visions or combination of provisions are illegal 31 and the nature of the anticompetitive

effects of those provisions or combinations in orde r to aid subsequent det

erminations on causation and antitr

ust injury. F inally, the par ticular circum

stances of this case

and the arguments of

the parties on rem

and may dem

onstrate other rel

evant32 All pending motions are DENIED. 43 considerations.

IV. CONCLUSION The district court's o rder granting parti al summary judgment is REVERSED and this case is REM

ANDED for f

urther proceedings consistent with this opinion. 32