United States Court of Appeals for the Federal Circuit 

2008-1097 

IN RE CIPROFLOXACIN HYDROCHLORIDE ANTITRUST LITIGATION 

--------------------------------------------------------------------------- 

ARKANSAS CARPENTERS HEALTH AND WELFARE FUND, PAPER, A.F. OF L. - 

A.G.C. BUILDING TRADES WELFARE PLAN, MARK ASTON, BOARD OF TRUSTEES 

OF THE UNITED FOOD & COMMERCIAL WORKERS OF ARIZONA HEALTH AND 

WELFARE FUND, ADELE BRODY, MICHELLE CROSS, DONNA FRANCK, KRISTINE 

GADDIS, DAVID GREEN, IBEW-NECA LOCAL 505 HEALTH & WELFARE PLAN, 

JOHN H. IRONS, LOCAL 1199 NATIONAL BENEFIT FUND FOR HEALTH AND 

HUMAN SERVICES EMPLOYEES, MARIA LOCURTO, CAROLINE M. LOESCH, 

KIMBERLY MCCULLAR, LINDA K. MCINTYRE, MECHANICAL CONTRACTORS-UA 

LOCAL 119 WELFARE PLAN, THERESA MEYERS, PATRICIA NELSON, FRANCES 

NORRIS, PAPER, ALLIED-INDUSTRIAL, CHEMICAL AND ENERGY WORKERS 

INTERNATIONAL UNION, AFL-CIO, CLC, MARY ANN SCOTT, SHEET METAL 

WORKERS LOCAL 441 HEALTH & WELFARE PLAN, MAURICE STEWART, ANN 

STUART, UNITED FOOD & COMMERCIAL WORKERS AND PARTICIPATING FOOD 

INDUSTRY EMPLOYERS TRI-STATE HEALTH & WELFARE FUND, and 

VISTAHEALTHPLAN, INC., 

 Plaintiffs-Appellants, 

v. 

BAYER AG and BAYER CORP., 

 Defendants-Appellees, 

and 

HOECHST MARION ROUSSEL, INC., THE RUGBY GROUP, INC. (doing business as 

Rugby Laboratories, Inc.), and WATSON PHARMACEUTICALS, INC., 

 Defendants-Appellees, 

and 

BARR LABORATORIES, INC., 

 Defendant-Appellee. 

 

J. Douglas Richards, Pomerantz Haudek Block Grossman & Ross LLP, of New 

York, New York, argued for all plaintiffs-appellants. With him on the brief were 
Christopher J. McDonald, Labaton Sucharow LLP, of New York, New York, and Patrick 

E. Cafferty, Cafferty Faucher LLP, of Ann Arbor, Michigan. Of counsel were Dan 

Drachler, Zwerling, Schachter & Zwerling, LLP, of Seattle, Washington; Robert S. 

Schachter and Joseph Lipofsky, of New York, New York; Eric B. Fastiff and Joseph R. 

Saveri, Lieff Cabraser Heiman & Bernstein, LLP, of San Francisco, California; and 

David Kalow and Scott D. Locke, Kalow & Springut LLP, of New York, New York. 

 Fred H. Bartlit, Jr., Bartlit Beck Herman Palenchar & Scott LLP, of Chicago, 

Illinois, argued for all defendants-appellees. With him on the brief were Peter B. 

Bensinger, Jr., Michael J. Valaik, and Paul J. Skiermont, for Bayer AG, et al. Of counsel 

on the brief were Phillip A. Proger, Kevin D. McDonald, and Lawrence D. Rosenberg, 

Jones Day, of Washington, DC. 

Karen N. Walker, Kirkland & Ellis LLP, of Washington, DC, for defendantappellee Barr Laboratories, Inc. With her on the brief were Edwin John U, Bridget K. 

O’Connor and Gregory L. Skidmore. 

David E. Everson, Stinson Morrison Hecker LLP, of Kansas City, Missouri, for 

defendants-appellees Hoechst Marion Roussel, Inc., et al. With himon the brief were 

Heather S. Woodson and Victoria L. Smith. 

Cheryl L. Johnson, Deputy Attorney General, United States Department of 

Justice, of Los Angeles, California, for amici curiae The State of Alabama, et al. With 

her on the brief were Manuel Medeiros, Solicitor General; Janet Gaard, Chief Assistant 

Attorney General; Kathleen Foote, Senior Assistant Attorney General; and Edmund G. 

Brown, Jr., Attorney General, of The State of California, of Sacramento, California. 

Professor Mark A. Lemley, Stanford Law School, of Stanford, California, for amici 

curiae, Law Professors John R. Allison, et al. 

Imad D. Abyad, Attorney, Federal Trade Commission, of Washington, DC, for 

amicus curiae Federal Trade Commission. With him on the brief were William 

Blumenthal, General Counsel; John D. Graubert, Principal Deputy General Counsel, and 

John F. Daly, Deputy General Counsel for Litigation. Of counsel were Jeffrey Schmidt, 

Director, Suzanne T. Michel, Assistant Director; and Elizabeth R. Hilder, Attorney. 

Bruce B. Vignery, AARP Foundation Litigation, of Washington, DC, for amici 

curiae AARP, et al. 

Don L. Bell, II, National Association of Chain Drug Stores, of Alexandria, Virginia, 

for amicus curiae National Association of Chain Drug Stores. 

Elizabeth M. Locke, Kirkland & Ellis LLP, of Washington, DC, for amicus curiae 

Generic Pharmaceutical Association. With her on the brief was Susan E. Engel. 

 

Appealed from: United States District Court for the Eastern District of New York 

Senior Judge David G. Trager 
United States Court of Appeals for the Federal Circuit 

2008-1097 

IN RE CIPROFLOXACIN HYDROCHLORIDE ANTITRUST LITIGATION 

---------------------------------------------------------------------- 

ARKANSAS CARPENTERS HEALTH AND WELFARE FUND, PAPER, 

A.F. OF L. – A.G.C. BUILDING TRADES WELFARE PLAN, MARK ASTON, BOARD OF 

TRUSTEES OF THE UNITED FOOD & COMMERCIAL WORKERS OF ARIZONA 

HEALTH AND WELFARE FUND, ADELE BRODY, MICHELLE CROSS, DONNA 

FRANCK, KRISTINE GADDIS, DAVID GREEN, IBEW-NECA LOCAL 505 HEALTH & 

WELFARE PLAN, JOHN H. IRONS, LOCAL 1199 NATIONAL BENEFIT FUND FOR 

HEALTH AND HUMAN SERVICES EMPLOYEES, MARIA LOCURTO, CAROLINE M. 

LOESCH, KIMBERLY MCCULLAR, LINDA K. MCINTYRE, 

MECHANICAL CONTRACTORS –UA LOCAL 119 WELFARE PLAN, 

THERESA MEYERS, PATRICIA NELSON, FRANCES NORRIS, 

PAPER, ALLIED-INDUSTRIAL, CHEMICAL AND ENERGY WORKERS 

INTERNATIONAL UNION, AFL-CIO, CLC, MARY ANN SCOTT, 

SHEET METAL WORKERS LOCAL 441 HEALTH & WELFARE PLAN, 

MAURICE STEWART, ANN STUART, UNITED FOOD & COMMERCIAL WORKERS 

AND PARTICIPATING FOOD INDUSTRY EMPLOYERS TRI-STATE HEALTH & 

WELFARE FUND, and VISTAHEALTHPLAN, INC., 

 Plaintiffs-Appellants, 

v. 

BAYER AG and BAYER CORP., 

 Defendants-Appellees, 

and 

HOECHST MARION ROUSSEL, INC., THE RUGBY GROUP, INC. (doing business as 

Rugby Laboratories, Inc.), and WATSON PHARMACEUTICALS, INC., 

 Defendants-Appellees, 

and 

BARR LABORATORIES, INC., 

 Defendant-Appellee. 
Appeal from the United States District Court for the Eastern District of New York, in 

1:00-MD-01383, Senior Judge David G. Trager. 

 __________________________ 

DECIDED: October 15, 2008 

 __________________________ 

Before SCHALL and PROST, Circuit Judges, and WARD, District Judge.

∗

PROST, Circuit Judge. 

This case under the Hatch-Waxman Act presents the issue of whether a 

settlement agreement between a patent holder and a generic manufacturer violates the 

antitrust laws. The agreements here involve a reverse payment from the patent holder 

to the generic manufacturer, but do not implicate the 180-day exclusivity period. 

Indirect purchasers of Cipro and several advocacy groups (“appellants”) appeal the 

grant of summary judgment of their federal antitrust claims and dismissal of their state 

antitrust claims against the patent holders and brand-name manufacturers, Bayer AG 

and Bayer Corp. (collectively “Bayer”), and the generic manufacturers, Barr Labs., Inc. 

(“Barr”), Hoechst Marion Roussel, Inc. (“HMR”), The Rugby Group, Inc. (“Rugby”), and 

Watson Pharmaceuticals, Inc. (“Watson”) (collectively “generic defendants”). The 

United States District Court for the Eastern District of New York granted Bayer’s and the 

generic defendants’ motion for summary judgment, holding that any anti-competitive 

effects caused by the settlement agreements between Bayer and the generic 

defendants were within the exclusionary zone of the patent, and thus could not be 

redressed by federal antitrust law. In re Ciprofloxacin Hydrochloride Antitrust Litigation, 

 ∗

 Honorable T. John Ward, District Judge, United States District Court for 

the Eastern District of Texas, sitting by designation. 

2008-1097 2
363 F. Supp. 2d 514 (E.D.N.Y. 2005) (“Cipro II”). The court further granted Bayer’s 

motion to dismiss the state antitrust claims. For the reasons set forth below, we affirm. 

I 

A 

 Bayer is the owner of U.S. Patent No. 4,670,444 (“the ’444 patent”). The patent 

relates to certain quinoline- and napthyridine-carboxylic acid compounds with 

antibacterial properties and methods of administering the compounds to combat 

bacterial illnesses. ’444 patent, col.1 ll.13-17, col.2 ll.28-32, claims 1, 21. More 

particularly, the patent is directed to ciprofloxacin hydrochloride, the compound that is 

the active ingredient in Cipro® (“Cipro”). Id., claim 12. The patent issued on June 2, 

1987, and Bayer’s predecessor obtained approval from the Food and Drug 

Administration (“FDA”) to market Cipro in October 1987. The FDA granted Bayer an 

additional six-month period of marketing exclusivity (pediatric exclusivity) following the 

expiration of the patent on December 9, 2003. 

 In October 1991, Barr filed an abbreviated new drug application (“ANDA”) for a 

generic version of Cipro. The ANDA included a Paragraph IV certification1

 indicating 

that Barr sought to market its generic drug before expiration of the ’444 patent on the 

grounds that the patent was invalid and unenforceable.2

 Specifically, Barr asserted that 

the patent was invalid based on obviousness under 35 U.S.C. § 103 and obviousness 

type double patenting under 35 U.S.C. § 101, and unenforceable due to inequitable 

 1

 The filer of a Paragraph IV ANDA certifies that the patent is invalid or will 

not be infringed by the generic drug. 21 U.S.C. § 355(j)(2)(A)(vii)(IV). 

2

 Barr did not certify that its product did not infringe the ’444 patent. 

2008-1097 3
conduct. Under the Hatch-Waxman Act, the first filer of a Paragraph IV ANDA is 

automatically entitled to a 180-day period of market exclusivity, which, in the version of 

the Act in effect at the time, begins to run either on the date that the first ANDA filer 

begins to market its drug or on the date of a final court decision finding the patent to be 

invalid or not infringed, whichever is earlier. 21 U.S.C. § 355(j)(4)(B)(iv) (1988). Thus, 

as the first Paragraph IV ANDA filer, Barr was entitled to the 180-day exclusivity period. 

 On January 16, 1992, Bayer sued Barr for patent infringement in the Southern 

District of New York. Barr answered and counterclaimed for a declaratory judgment that 

the ’444 patent is invalid and unenforceable and that its generic ciprofloxacin would not 

infringe the ’444 patent. In 1996, Rugby (a subsidiary of HMR) and Barr entered into 

the “Litigation Funding Agreement,” in which Rugby agreed to help Barr fund its 

litigation against Bayer in exchange for half of any profits realized from Barr’s sale of 

ciprofloxacin. Also, in 1996, Bayer entered into settlement discussions with HMR and 

Barr. 

Just before trial, Bayer, Barr, HMR, and Rugby entered into the following 

agreements (collectively “the Agreements”): (1) the “Barr Settlement Agreement” 

between Bayer and Barr; (2) the “HMR/Rugby Settlement Agreement” among Bayer, 

HMR, and Rugby; (3) the “Apotex Settlement Agreement” among Bayer, Bernard 

Sherman (Barr’s principal shareholder), and Apotex (another company controlled by 

2008-1097 4
Sherman); and (4) the “Cipro Supply Agreement” among Bayer, Barr, and HMR.3

 

The first three agreements provided that Barr, HMR, Rugby, Apotex, and Bernard 

Sherman would not challenge the validity or enforceability of the ’444 patent. Pursuant 

to the Barr Settlement Agreement, Barr agreed to convert its Paragraph IV ANDA to a 

Paragraph III ANDA, thus certifying that it would not market its generic version of Cipro 

until after the ’444 patent expired.4 See 21 U.S.C. § 355(j)(2)(A)(vii)(III). In exchange, 

Bayer agreed to make a settlement payment to Barr of $49.1 million. 

Under the Cipro Supply Agreement, Bayer agreed to either supply Barr with 

Cipro for resale or make quarterly payments (referred to as “reverse payments” or 

“exclusion payments”) to Barr until December 31, 2003.5

 In return, Barr agreed not to 

manufacture, or have manufactured, a generic version of Cipro in the United States. 

Beginning at least six months before the ’444 patent expired, Bayer agreed to allow Barr 

to sell a competing ciprofloxacin product. Bayer and Barr then entered into a consent 

judgment, whereby Barr affirmed the validity and enforceability of the ’444 patent and 

admitted infringement. 

 3

 Notably, the Agreements were entered into before the 2003 amendments 

to the Hatch-Waxman Act, requiring a patent holder and a first Paragraph IV ANDA filer 

who settle their patent litigation to file their agreement with the Federal Trade 

Commission and Department of Justice for review, and if the agreement is found to 

violate the antitrust laws, the first ANDA filer loses its right to the 180-day exclusivity 

period. Pub. L. No. 108-173, § 1112; see 21 U.S.C. § 355(j)(5)(D)(i)(V). 

4

 Barr, however, preserved the option to reamend its ANDA to a Paragraph 

IV certification—in order to reclaim the 180-day exclusivity period—in the event a court 

declared the ’444 patent to be invalid or unenforceable. 

5

 Added to the $49.1 million initial payment, the payments from Bayer to 

Barr totaled $398.1 million. Barr shared the payments equally with HMR. 

2008-1097 5
 On July 25, 1997, Bayer filed for reexamination. Bayer cancelled and amended 

certain claims, and the validity of the remaining claims of the ’444 patent was reaffirmed 

by the Patent and Trademark Office (“PTO”) in the reexamination certificate. In 

particular, the patentability of claim 12, directed to ciprofloxacin hydrochloride, was 

confirmed. 

 Thereafter, four other companies—Ranbaxy, Mylan, Schein, and Carlsbad—filed 

Paragraph IV ANDAs for a generic version of Cipro. Bayer sued each of them for 

infringement of the reexamined ’444 patent. The issue of inequitable conduct was not 

adjudicated in any of the actions. Bayer defeated Schein and Mylan’s challenges to the 

validity of the ’444 patent on summary judgment. Bayer AG v. Schein Pharm., Inc., 129 

F. Supp. 2d 705 (D.N.J. 2001), aff’d, 301 F.3d 1306 (Fed. Cir. 2002). The validity of the 

’444 patent was upheld after a bench trial in the Carlsbad case. Bayer AG v. Carlsbad 

Tech., Inc., No. 01CV0867-B (S.D. Cal. June 7, 2002 & Aug. 7, 2002). The Ranbaxy 

case was dismissed after Ranbaxy withdrew its Paragraph IV certification. 

B 

 In 2000 and 2001, direct and indirect purchasers of Cipro and advocacy groups 

filed several antitrust actions in federal courts challenging the Agreements. The cases 

were consolidated in the Eastern District of New York pursuant to 28 U.S.C. § 1407. In 

re Ciprofloxacin Hydrochloride Antitrust Litig., No. 1383, 2001 WL 253240 (J.P.M.L. Jan. 

10, 2001). Thereafter, the plaintiffs filed a consolidated complaint containing Counts IIV, which alleged that the Agreements constituted an illegal market allocation in violation 

of the prohibition on contracts in restraint of trade contained in sections 1 and 2 of the 

Sherman Act and in violation of various state antitrust and consumer protection laws. 

2008-1097 6
On May 20, 2003, the district court denied the plaintiffs’ motion for partial 

summary judgment that the Agreements were per se unlawful under the Sherman Act 

and under the state antitrust and consumer protection laws. In re Ciprofloxacin 

Hydrochloride Antitrust Litig., 261 F. Supp. 2d 188 (E.D.N.Y. 2003) (“Cipro I”). 

The plaintiffs then amended their complaint to add Count V, a state law Walker 

Process type6 antitrust claim, alleging that Bayer unlawfully monopolized the 

ciprofloxacin market in violation of state antitrust laws by enforcing a patent obtained by 

fraud. Specifically, they alleged that Bayer violated state antitrust and/or consumer 

protection laws through fraud on the PTO and sham litigation in enforcing the ’444 

patent against Barr. 

The parties filed cross-motions for summary judgment regarding whether the 

Agreements had anti-competitive effects under section 1 of the Sherman Act. The 

district court denied the plaintiffs’ motion and granted Bayer’s and the generic 

defendants’ motion. Cipro II, 363 F. Supp. 2d at 548. Employing a rule of reason 

analysis, the district court first determined that the relevant market is ciprofloxacin and 

that Bayer had market power within that market. Id. at 520-23. The court then 

determined that any adverse effects on competition stemming from the Agreements 

were within the exclusionary zone of the ’444 patent, and hence could not be redressed 

by antitrust law. Id. at 523-40. In so concluding, the court considered recent decisions 

by the Second Circuit, as well as other regional circuits, and rejected the plaintiffs’ 

 6

 In Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 

382 U.S. 172 (1965), the Supreme Court held that the enforcement of a patent procured 

by fraud on the patent office may be a violation of the Sherman Act provided that the 

other elements necessary to a Sherman Act claim are present. Id. at 177. Here, 

however, the plaintiffs alleged a violation of state antitrust laws. 

2008-1097 7
argument that the exclusionary power of the patent, for the purpose of the anticompetitive effects analysis, should be tempered by the patent’s potential invalidity. Id. 

Given the absence of evidence that the Agreements created a bottleneck on challenges 

to the ’444 patent or otherwise restrained competition beyond the scope of the patent, 

the court concluded that the plaintiffs had failed to show that the Agreements had any 

anti-competitive effects on the market for ciprofloxacin beyond that permitted under the 

patent. Id. at 540. Thus, the court found it unnecessary to address the second and 

third steps of the rule of reason analysis. Id. at 541. 

 Bayer also filed a motion to dismiss Count V as preempted by federal patent law 

and barred by the statute of limitations. The district court agreed that Count V is 

preempted by federal patent law because the plaintiffs alleged no theory for a Walker 

Process claim or sham litigation claim that does not depend on a showing of misconduct 

before the PTO. Id. at 542-46. The court noted that Count V does not allege any 

misconduct other than misconduct before the PTO, i.e., there is no allegation of 

marketplace misconduct. Id. Thus, the court concluded that Count V rests entirely on 

patent law.7

 Id. The court also reasoned that Bayer’s success in its litigation against 

Schein, Mylan and Carlsbad foreclosed any argument that its lawsuits were shams. Id.

at 547. Because the court granted Bayer’s motion to dismiss on preemption grounds, it 

did not reach whether Count V was barred by the statute of limitations. Id. at 547-48. 

 This appeal followed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).8

 7

 The court further noted that there was a serious question whether the 

indirect purchasers even had standing to assert a Walker Process claim. Id. at 547. 

8

 Count V is subject to exclusive federal court jurisdiction under 28 U.S.C. 

§ 1338(a) because the determination of fraud before the PTO necessarily involves a 

2008-1097 8
II 

 This court reviews the district court’s grant of summary judgment de novo, 

applying the same legal standards applied by the district court. Innogenetics, N.V. v. 

Abbott Labs., 512 F.3d 1363, 1378 (Fed. Cir. 2008); U.S. Phillips Corp. v. Iwasaki Elec. 

Co., 505 F.3d 1371, 1374 (Fed. Cir. 2007). Summary judgment is appropriate where, 

after drawing all reasonable inferences in favor of the non-movant, there are no genuine 

issues of material fact and the moving party is entitled to judgment as a matter of law. 

Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); 

Rubens v. Mason, 527 F.3d 252, 254 (2d Cir. 2008). 

This court also reviews the district court’s grant or denial of a motion to dismiss 

de novo. Adenta GmbH v. OrthoArm, Inc., 501 F.3d 1364, 1368 (Fed. Cir. 2007); Univ. 

of W. Va. Bd. of Trs. v. Vanvoorhies, 278 F.3d 1288, 1295 (Fed. Cir. 2002). Whether 

federal patent law preempts a state law claim is a question of law which we review de 

novo. Ultra-Precision Mfg., Ltd. v. Ford Motor Co., 411 F.3d 1369, 1376 (Fed. Cir. 

2005). 

III 

 The appellants allege that the district court erred in its determination that the 

Agreements did not constitute an unreasonable restraint of trade in violation of section 1 

of the Sherman Act, and in its grant of Bayer’s and the generic defendants’ motions for 

summary judgment on Counts I-IV, as follows: (1) by not finding the Agreements to be 

per se unlawful, or at least applying a proper rule of reason analysis; (2) by finding the 

 

substantial question of patent law. See Christianson v. Colt Indus. Operating Corp., 486 

U.S. 800, 808 (1988). 

2008-1097 9
Agreements to be lawful because they fell within the “exclusionary zone” of the ’444 

patent; (3) by not considering the law of the regional circuits and government agencies 

in evaluating the Agreements; (4) by failing to appreciate the effects of the Agreements 

on other generic manufacturers; and (5) by not considering evidence showing that the 

Agreements preserved Barr’s claim to the 180-day exclusivity period. We address each 

asserted error in turn. 

A 

According to the appellants, the Agreements allowed Bayer to exclude a 

horizontal competitor from the market not by enforcing its rights as a patentee, but 

instead by ceasing to enforce its rights and paying the competitor $398 million. The 

appellants contend that the district court should have concluded that the Agreements 

were per se unlawful or should have applied a proper rule of reason analysis. At a 

minimum, the appellants assert, the court should not have resolved the case on 

summary judgment, but instead should have presented it to a fact-finder to determine 

whether the Agreements constituted an unreasonable restraint on trade.9

 

 The Sherman Act provides that “[e]very contract, combination in the form of trust 

or otherwise, or conspiracy, in restraint of trade or commerce among the several States, 

or with foreign nations, is declared to be illegal.” 15 U.S.C. § 1. Although by its terms, 

the Act prohibits any “restraint of trade,” the Supreme Court “has long recognized that 

Congress intended to outlaw only unreasonable restraints.” State Oil Co. v. Khan, 522 

 9

 Specifically, the appellants contend that there are genuine issues of 

material fact relating to whether the defendants received far more under the 

Agreements then they could have had Barr won the litigation against Bayer, invalidated 

the ’444 patent, and entered the market. Further, the appellants aver that the court 

needs to assess the apparent strength of the patent at the time of the Agreements. 

2008-1097 10
U.S. 3, 10 (1997). Courts will presumptively apply a “rule of reason” analysis to 

determine whether an agreement imposes an unreasonable restraint on competition. 

Texaco, Inc. v. Dagher, 547 U.S. 1, 5 (2006). Only agreements that have a “predictable 

and pernicious anticompetitive effect, and . . . limited potential for procompetitive 

benefit” are deemed to be per se unlawful under the Sherman Act. State Oil, 522 U.S. 

at 10. A finding of per se unlawfulness “is appropriate ‘[o]nce experience with a 

particular type of restraint enables the Court to predict with confidence that the rule of 

reason will condemn it.’” Id. (quoting Arizona v. Maricopa County Med. Soc’y, 457 U.S. 

332, 344 (1982)). The Supreme Court has expressed reluctance to adopt per se rules 

where the economic impact is not immediately obvious. Id.

Since there was no basis for the district court to confidently predict that the 

Agreements at issue here would be found to be unlawful under a rule of reason 

analysis, we find no error by the court in declining to find them to be per se unlawful. 

Instead, the court properly went through a rule of reason analysis to determine whether 

the Agreements were in fact an unreasonable restraint of trade. 

Under the law of the Second Circuit, the rule of reason analysis is a three-step 

process: 

First, the plaintiff bears the initial burden of showing that the challenged 

action has had an actual adverse effect on competition as a whole in the 

relevant market. Then, if the plaintiff succeeds, the burden shifts to the 

defendant to establish the pro-competitive redeeming virtues of the action. 

Should the defendant carry this burden, the plaintiff must then show that 

the same pro-competitive effect could be achieved through an alternative 

means that is less restrictive of competition. 

Clorox Co. v. Sterling Winthrop, Inc., 117 F.3d 50, 56 (2d Cir. 1997) (citations and 

internal quotations omitted). Typically, the starting point is to define the relevant market, 

2008-1097 11
Geneva Pharms. Tech. Corp. v. Barr Labs., Inc., 386 F.3d 485, 495-96 (2d Cir. 2004), 

and to determine whether the defendants possess market power in the relevant market. 

United States v. Visa U.S.A., Inc., 344 F.3d 229, 238 (2d Cir. 2003). Although the 

precise role that market power plays in the rule of reason analysis is unclear, it may be 

a highly relevant factor. Id. at 238 n.4; Capitol Imaging Assocs., P.C. v. Mohawk Valley 

Med. Assocs., 996 F.2d 537, 546 (2d Cir. 1993). 

 Contrary to the contentions of the appellants, the court did undertake a full rule of 

reason analysis. It first determined that the relevant market is ciprofloxacin and that 

Bayer had market power within that market. Cipro II, 363 F. Supp. 2d at 523. It then 

determined that there was no evidence that the Agreements created a bottleneck on 

challenges to the ’444 patent or otherwise restrained competition outside the 

“exclusionary zone” of the patent. Id. at 540. Thus, the court concluded that the 

plaintiffs had failed to demonstrate that the Agreements had an anti-competitive effect 

on the market for ciprofloxacin beyond that permitted by the patent. Id. Because the 

court concluded that the plaintiffs failed to meet their burden under the first step of the 

rule of reason analysis, it did not find it necessary to consider the second or third steps 

of the analysis. Id. at 541. 

B 

The appellants assert, however, that the district court erred in concluding that the 

Agreements were within the “exclusionary zone” of the ’444 patent, in essence treating 

them as per se legal. According to the appellants, the patentee’s right to exclude 

competition is not defined by the facial scope of the patent, but rather is limited to the 

right to exclude others from profiting from the patented invention. Under the 

2008-1097 12
Agreements, the appellants argue, Bayer is seeking not simply to enforce its patent 

rights, but to insulate itself from competition and avoid the risk that the patent is held 

invalid. 

The district court did not treat the Agreements as per se legal. Rather, the court 

simply recognized that any adverse anti-competitive effects within the scope of the ’444 

patent could not be redressed by antitrust law. United States v. Gen. Elec. Co., 272 

U.S. 476, 485 (1926); E. Bement & Sons v. Nat’l Harrow Co., 186 U.S. 70, 91 (1902); 

see In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187, 201-02 (2d Cir. 2006); Valley 

Drug Co. v. Geneva Pharms., Inc., 344 F.3d 1294, 1312 (11th Cir. 2003); United States 

v. Studiengesellschaft Kohle, m.b.H., 670 F.2d 1122, 1127 (D.C. Cir. 1981). This is 

because a patent by its very nature is anticompetitive; it is a grant to the inventor of “the 

right to exclude others from making, using, offering for sale, or selling the 

invention . . . .” 35 U.S.C. § 154(a)(1); Dawson Chem. Co. v. Rohm & Haas Co., 448 

U.S. 176, 215 (1980) (“[T]he essence of a patent grant is the right to exclude others 

from profiting by the patented invention.”). Thus, “a patent is an exception to the 

general rule against monopolies and to the right of access to a free and open market.” 

Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 816 (1945). 

The district court appreciated this underlying tension between the antitrust laws and the 

patent laws when it compared the anti-competitive effects of the Agreements with the 

“zone of exclusion” provided by the claims of the patent. See In re Tamoxifen, 466 F.3d 

at 201-02; Andrx Pharms., Inc. v. Elan Corp., 421 F.3d 1227, 1235 (11th Cir. 2005); 

Schering-Plough Corp. v. FTC, 402 F.3d 1056, 1066 (11th Cir. 2005); Valley Drug, 344 

F.3d at 1312. Because the court found no anti-competitive effects outside the 

2008-1097 13
exclusionary zone of the patent, it concluded that the Agreements were not violative of 

section 1 of the Sherman Act. Cipro II, 363 F. Supp. 2d at 540-41. 

We find no error in the court’s analysis. Pursuant to the Agreements, the generic 

defendants agreed not to market a generic version of Cipro until the ’444 patent 

expired10 and not to challenge the validity of the ’444 patent, and Bayer agreed to make 

payments and optionally supply Cipro for resale. Thus, the essence of the Agreements 

was to exclude the defendants from profiting from the patented invention. This is well 

within Bayer’s rights as the patentee. Furthermore, there is a long-standing policy in the 

law in favor of settlements, and this policy extends to patent infringement litigation. 

Flex-Foot, Inc. v. CRP, Inc., 238 F.3d 1362, 1368 (Fed. Cir. 2001); Foster v. Hallco Mfg. 

Co., 947 F.2d 469, 477 (Fed. Cir. 1991). Settlement of patent claims by agreement 

between the parties—including exchange of consideration—rather than by litigation is 

not precluded by the Sherman Act even though it may have some adverse effects on 

competition.11 Standard Oil Co. v. United States, 283 U.S. 163, 171 & n.5 (1931). 

We disagree with the appellants that the fact that the generic defendants agreed 

not to challenge the validity of the ’444 patent renders the Agreements violative of the 

antitrust laws. According to the appellants, there is a vital public interest in patent 

validity challenges to ensure that consumers are not burdened by unwarranted patent 

monopolies. Appellants assert that Congress underscored this public interest by 

providing in 35 U.S.C. § 282 that an issued patent carries only a rebuttable presumption 

 10 Under the Cipro Supply Agreement, however, Barr was allowed to sell a 

competing ciprofloxacin product six months before the ’444 patent expired. 

2008-1097 14
of validity, which can be challenged in court. In fact, appellants argue, at the preliminary 

injunction stage, the patentee has the burden of establishing the likelihood of success 

on the merits of the patent’s validity. Furthermore, the appellants contend, in the HatchWaxman Act, Congress provided the incentive of a 180-day exclusivity period to the first 

generic manufacturer to challenge a patent. 

Settlements in patent cases, however, frequently provide that the alleged 

infringer will not challenge the validity of the patent. See, e.g., Flex-Foot, 238 F.3d at 

1367, 1370; Diversey Lever, Inc. v. Ecolab, Inc., 191 F.3d 1350, 1351 (Fed. Cir. 1999); 

Interspiro USA, Inc. v. Figgie Int’l, Inc., 18 F.3d 927, 932 (Fed. Cir. 1994). Thus, the 

mere fact that the Agreements insulated Bayer from patent validity challenges by the 

generic defendants was not in itself an antitrust violation. Indeed, there is no evidence 

that the Agreements prevented challenges by other generic drug manufacturers to the 

validity of the ’444 patent. In fact, four other generic manufacturers—Ranbaxy, Mylan, 

Schein, and Carlsbad—filed Paragraph IV ANDAs and initiated challenges of the validity 

of the patent. 

C 

The appellants urge this court to consider the legal standards applied by the 

regional circuits and government agencies in addressing Agreements involving 

exclusion payments in the context of the Hatch-Waxman Act, all of which, they assert, 

encompass greater antitrust scrutiny than the standard adopted by the district court. In 

particular, the appellants point to the Sixth Circuit’s decision in In re Cardizem CD 

 11 Indeed, a sizable exclusion payment from the patent holder to the generic 

manufacturer is not unexpected under the Hatch-Waxman Act, where the relative risks 

of litigation are redistributed. Schering-Plough, 402 F.3d at 1074; see infra pp. 23-24. 

2008-1097 15
Antitrust Litigation, 332 F.3d 896 (6th Cir. 2003), upholding a summary judgment ruling 

by the district court that a reverse payment agreement is per se illegal. Further, the 

appellants assert that although the Eleventh Circuit in Valley Drug reversed the district 

court’s ruling of per se illegality, it provided a more extensive analytical framework within 

which to review the settlement agreements on remand. And, in Schering-Plough, the 

appellants assert the Eleventh Circuit adhered to the standard in Valley Drug and 

recognized the need to evaluate the strength of the patent in determining whether 

reverse payments are unlawful. The appellants contend that the Federal Trade 

Commission (“FTC”) advocates a rule of reason inquiry focusing on the amount of the 

payment and several other factors, although not requiring consideration of the validity of 

the patent. Finally, the appellants note that the Solicitor General has suggested that a 

reverse payment should be evaluated using a rule of reason approach and that “the 

strength of the patent as it appeared at the time at which the parties settled” should be 

considered in the analysis, citing Brief for the United States as Amicus Curiae at *12, 

Joblove v. Barr Labs., 127 S. Ct. 3001 (2007) (No. 06-830), 2007 WL 1511527. 

According to the appellants, only the Second Circuit in In re Tamoxifen, has concluded 

that a settlement between a patent holder and an alleged infringer in Hatch-Waxman 

litigation does not violate the antitrust laws provided the litigation is not baseless, 

although it recognized that such an approach shields settlement agreements involving 

“fatally weak” patents. Therefore, the appellants assert, the district court’s treatment of 

the Agreements here was not in line with that of the other circuits, the FTC, and the 

Solicitor General, and we should reject the district court’s approach in lieu of those other 

standards. 

2008-1097 16
We find, however, the district court’s analysis to be sound. As noted above, the 

district court applied a rule of reason analysis in assessing the lawfulness of the 

Agreements. In that analysis, it considered whether there was evidence of sham 

litigation or fraud before the PTO, and whether any anticompetitive effects of the 

Agreements were outside the exclusionary zone of the patent. The application of a rule 

of reason analysis to a settlement agreement involving an exclusion payment in the 

Hatch-Waxman context has been embraced by the Second Circuit, and advocated by 

the FTC and the Solicitor General. And, although the Sixth Circuit found a per se 

violation of the antitrust laws in In re Cardizem, the facts of that case are distinguishable 

from this case and from the other circuit court decisions. In particular, the settlement in 

that case included, in addition to a reverse payment, an agreement by the generic 

manufacturer to not relinquish its 180-day exclusivity period, thereby delaying the entry 

of other generic manufacturers. In re Cardizem, 332 F.3d at 907. Furthermore, the 

agreement provided that the generic manufacturer would not market non-infringing 

versions of the generic drug. Id. at 908 n.13. Thus, the agreement clearly had anticompetitive effects outside the exclusion zone of the patent. See Brief for the United 

States at *16 n.7, Joblove, 127 S. Ct. 3001 (No. 06-830); Brief for the United States as 

Amicus Curiae at *17, FTC v. Schering-Plough Corp., 548 U.S. 919 (2006) (No. 05-

273), 2006 WL 1358441. To the extent that the Sixth Circuit may have found a per se 

antitrust violation based solely on the reverse payments, we respectfully disagree. 

The Eleventh Circuit in Valley Drug reversed a finding by the district court that 

settlement agreements constituted a per se violation of the antitrust laws because the 

court failed to consider the exclusionary power of the patent in its antitrust analysis. 344 

2008-1097 17
F.3d at 1306, 1312. Although it rejected the court’s condemnation of the agreements as 

a per se antitrust violation, it did not advocate application of a rule of reason analysis, 

finding such an analysis to be inappropriate given that the anticompetitive effects of the 

exclusionary zone of a patent are not subject to debate. Id. at 1312 n.27. In so holding, 

it emphasized that the subsequent declaration of invalidity did not render the patent’s 

potential exclusionary effects irrelevant to the antitrust analysis. Id. at 1309. It did leave 

open the possibility, however, that an antitrust violation could be found in the extreme 

situation where there was evidence of fraud on the PTO or sham litigation. Id. at 1309 

& n.21. On remand, it ordered the district court to consider the exclusionary potential of 

the patent, the extent to which provisions of the settlement agreement exceeded the 

scope of the patent, and the anticompetitive effects of those provisions. Id. at 1312. 

This approach was followed by the Eleventh Circuit in Schering-Plough and 

Andrx Pharmaceuticals and by the Second Circuit in In re Tamoxifen. In re Tamoxifen, 

466 F.3d at 212; Andrx Pharms., 421 F.3d at 1235; Schering-Plough, 402 F.3d at 1066. 

In Schering-Plough, the Eleventh Circuit set aside the decision by the FTC that the 

settlement agreements constituted an unreasonable restraint of trade. 402 F.3d at 

1058. It noted that there was no evidence that the patent was invalid or that the 

litigation was a sham, and thus the proper analysis was whether the agreements 

restricted competition beyond the exclusionary effects of the patent. Id. at 1068. After 

reviewing the terms of the settlement agreements, it found that they were within the 

exclusionary zone of the patent and therefore protected by patent law. Id. at 1072. The 

Second Circuit, in In re Tamoxifen, similarly concluded that the validity of the patent 

need not be considered in the analysis of whether the settlement agreement violates the 

2008-1097 18
antitrust laws unless the infringement suit was objectively baseless. 466 F.3d at 213. 

In that case, the patent holder settled with the generic manufacturer after losing on 

validity before the district court and while on appeal to this court. Id. at 193. In so 

holding, the Second Circuit recognized that alleged Sherman Act violations are 

generally evaluated under a rule of reason analysis. Id. at 201 n.13. It concluded that 

the presence of a reverse payment, or the size of a reverse payment, alone is not 

enough to render an agreement violative of the antitrust laws unless the anticompetitive 

effects of the agreement exceed the scope of the patent’s protection. Id. at 212-13. 

Because the agreement did not extend to non-infringing products and did not create a 

bottleneck for other generic manufacturers, the court held that any anticompetitive 

effects were within the exclusionary power of the patent. Id. at 213-16. 

We conclude that in cases such as this, wherein all anticompetitive effects of the 

settlement agreement are within the exclusionary power of the patent, the outcome is 

the same whether the court begins its analysis under antitrust law by applying a rule of 

reason approach to evaluate the anti-competitive effects, or under patent law by 

analyzing the right to exclude afforded by the patent. The essence of the inquiry is 

whether the agreements restrict competition beyond the exclusionary zone of the 

patent. This analysis has been adopted by the Second and the Eleventh Circuits and 

by the district court below and we find it to be completely consistent with Supreme Court 

precedent. See Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 

172, 175-77 (1965) (holding that there may be a violation of the Sherman Act when a 

patent is procured by fraud, but recognizing that a patent is an exception to the general 

rule against monopolies). 

2008-1097 19
In addition, we agree with the Second and Eleventh Circuits and with the district 

court that, in the absence of evidence of fraud before the PTO or sham litigation, the 

court need not consider the validity of the patent in the antitrust analysis of a settlement 

agreement involving a reverse payment.12 The FTC has also rejected the application of 

a post hoc analysis of the validity of the patent as part of the antitrust analysis. In its 

decision that led to the Eleventh Circuit appeal in Schering-Plough, the FTC concluded 

that “it would not be necessary, practical, or particularly useful for the Commission to 

embark on an inquiry into the merits of the underlying patent dispute when resolving 

antitrust issues in patent settlements.” In re Schering-Plough Corp., No. 9297, 2003 WL 

22989651, slip op. at 19 (F.T.C. Dec. 8, 2003). However, on petition for writ of 

certiorari, the FTC criticized the Eleventh Circuit’s approach to evaluating the 

exclusionary potential of the patent because it “ignore[d] the most salient factor that 

gives rise to patent litigation and settlements, the existence of uncertainty regarding 

whether a patent is valid or . . . infringed by particular products.” Petitioner’s Opening 

Brief at *15, Schering-Plough, 548 U.S. 919 (2006) (No. 05-273), 2005 WL 2105243. 

Similarly, here, the FTC argues that the district court erred by equating the exclusionary 

power of the patent with the scope of the patent claims without consideration of the 

uncertainty of patent validity. Corrected Br. of Amicus Curiae FTC in Supp. of 

Appellants 19. Apparently, the FTC, in recognizing the “probabilistic” nature of the 

 12 Although certain statements by the Eleventh Circuit have been interpreted 

to mean that it advocated consideration of the validity of the patent, Brief for the United 

States at *16, Joblove, 127 S. Ct. 3001 (No. 06-830); Brief for the United States at *17-

19, Schering-Plough 548 U.S. 919 (No. 05-273), the district court correctly noted that 

the Eleventh Circuit did not consider or rely on evidence of patent invalidity in either 

Valley Drug or Schering-Plough. Cipro II, 363 F. Supp. 2d at 525, 529. 

2008-1097 20
patent interest, recommends that the “expected value” of the lawsuit at the time of the 

settlement be considered in the antitrust analysis. Petitioner’s Opening Brief at *16, 

Schering-Plough, 548 U.S. 919 (No. 05-273); Reply Brief for the Petitioner at *6, 

Schering-Plough, 548 U.S. 919 (No. 05-273), 2005 WL 2652617. 

The Solicitor General advocates that an appropriate antitrust analysis “should 

take into account the relative likelihood of success of the parties’ claims, viewed ex 

ante.” Brief for the United States at *12, Joblove, 127 S. Ct. 3001 (No. 06-830); Brief for 

the United States at *11, Schering-Plough, 548 U.S. 919 (No. 05-273). Practically, the 

Solicitor General proposes that, while the court need not conduct a full trial, it could 

conduct a limited evaluation of the merits of the patent claims. Brief for the United 

States at *13, Joblove, 127 S. Ct. 3001 (No. 06-830); Brief for the United States at *11 

n.1, Schering-Plough, 548 U.S. 919 (No. 05-273). While the expected value of the 

lawsuit (considered in the approach advocated by the FTC) should relate directly to the 

relative strength of the claim (considered in the approach advocated by the Solicitor 

General), the distinction between the approaches advocated by the FTC and the 

Solicitor General may lie in the fact that the expected value of the lawsuit depends on 

the subjective views of the parties as opposed to objective evidence of validity. See

Brief for the United States at *12, Schering-Plough, 548 U.S. 919 (No. 05-273). 

We disagree that analysis of patent validity is appropriate in the absence of fraud 

or sham litigation. Pursuant to statute, a patent is presumed to be valid, 35 U.S.C. § 

282, and patent law bestows the patent holder with “the right to exclude others from 

profiting by the patented invention.” Dawson Chem. Co. v. Rohm & Haas Co., 448 U.S. 

176, 215 (1980). A settlement is not unlawful if it serves to protect that to which the 

2008-1097 21
patent holder is legally entitled—a monopoly over the manufacture and distribution of 

the patented invention. In re Tamoxifen, 466 F.3d at 208-09. Thus, the district court 

correctly concluded that there is no legal basis for restricting the right of a patentee to 

choose its preferred means of enforcement and no support for the notion that the HatchWaxman Act was intended to thwart settlements. Cipro II, 363 F. Supp. 2d at 531-32. 

As Judge Posner remarked, if “there is nothing suspicious about the circumstances of a 

patent settlement, then to prevent a cloud from being cast over the settlement process a 

third party should not be permitted to haul the parties to the settlement over the hot 

coals of antitrust litigation.” Asahi Glass Co. v. Pentech Pharms., Inc., 289 F. Supp. 2d 

986, 992 (N.D. Ill. 2003). 

Accordingly, we find the analysis by the district court to be fully supported in law 

and to demonstrate that it was cognizant of the legal standards applied by the regional 

circuits and government agencies in addressing agreements involving exclusion 

payments in the context of the Hatch-Waxman Act. 

D 

 The appellants next contend that the district court erred in reasoning that even 

though Bayer settled with Barr, other generic companies could still challenge the ’444 

patent and their incentive to challenge the patent would grow with the chance that the 

patent would be held invalid, rendering any anticompetitive effects of the Agreements 

short-lived. According to the appellants, while that reasoning may make sense outside 

the Hatch-Waxman context, it does not apply under Hatch-Waxman, where they allege 

generic manufacturers are less motivated to initiate and vigorously challenge a patent. 

The appellants contend that the incentives are significantly reduced in the Hatch2008-1097 22
Waxman context because any generic manufacturer that wishes to challenge the patent 

must first undertake the effort, time, and expense of filing a Paragraph IV ANDA. The 

appellants further assert that few generic manufacturers are capable of initiating such a 

challenge and any challenge would be significantly delayed. Thus, the appellants argue 

that the brand name manufacturer, by paying off the first Paragraph IV ANDA filer, can 

protect its monopoly from competition for years—particularly near the end of the patent 

term—even if its patent is “fatally weak.” It is that delay in challenge by generic 

manufacturers that is emphasized by the appellants here, since there is no dispute that 

four other generic manufacturers ultimately challenged the validity of the ’444 patent. 

 While we recognize that the Hatch-Waxman Act creates certain burdens for 

generic manufacturers, it also provides significant benefits. First, it streamlines the 

process of obtaining FDA approval to market a generic version of a drug without having 

to go through the rigorous new drug application (“NDA”) process that the patent holder 

is required to do. Compare 21 U.S.C. § 355(j)(2)(A) with 355(b)(1). See Eli Lilly & Co. 

v. Medtronic, Inc., 496 U.S. 661, 676 (1990). Thus, the generic drug manufacturers can 

piggyback on the safety and efficacy studies conducted by the patent holder. Second, it 

allows the generic manufacturers to challenge the validity of a patent simply by filing a 

Paragraph IV ANDA. 21 U.S.C. § 355(j)(2)(A)(vii), (5)(C)(i); see Eli Lilly, 496 U.S. at 

677. Thus, as explained by the Eleventh Circuit, the Hatch-Waxman Act redistributes 

the relative risks between the patent holder and generic manufacturers, allowing generic 

manufacturers to challenge the validity of the patent without incurring the costs of 

market entry or the risks of damages from infringement. Schering-Plough, 402 F.3d at 

1074. Thus, the district court reasonably concluded that the incentive to mount a 

2008-1097 23
challenge would increase with the chance that the patent would be held invalid. Cipro 

II, 363 F. Supp. 2d at 534. Further, the district court noted that there was no evidence 

that the Agreements created a bottleneck preventing generic challenges to the ’444 

patent. Id. at 540. Indeed, the patent was subsequently challenged by four other 

generic manufacturers and was upheld as valid. 

E 

 Finally, the appellants contend that the district court erred in not considering 

evidence showing that the Agreements preserved Barr’s claim to the 180-day exclusivity 

period, which served the defendants’ joint interest in protecting the Cipro monopoly from 

generic competition. According to the appellants, the district court refused to consider 

the evidence in Cipro II because it had earlier denied the plaintiffs’ motions for partial 

summary judgment in Cipro I. But, the appellants assert, the district court should have 

considered the evidence anew in Cipro II, because: (1) the plaintiffs were now the nonmoving parties and thus the evidence should have been considered in the light most 

favorable to the plaintiffs; and (2) at issue was whether the Agreements had an actual 

adverse effect on competition in the relevant market, whereas in Cipro I the issue was 

the per se illegality of the Agreements. The appellants aver that the evidence raised 

genuine issues of material fact regarding whether the Agreements preserved Barr’s 

claim to the 180-day exclusivity period, delayed and deterred other generic 

manufacturers from entering the ciprofloxacin market, and thus had an actual adverse 

effect on competition. 

 Again, we find no error in the district court’s analysis. In addressing whether the 

Agreements restrained competition outside the scope of the ’444 patent, the court 

2008-1097 24
observed that the only legitimate allegation by the plaintiffs was that the 180-day 

exclusivity period had been manipulated by Barr. Cipro II, 363 F. Supp. 2d at 540. 

However, the court noted that that theory had already been addressed in Cipro I. 

Specifically, in Cipro I, the court determined that the Agreements did not create a 

“bottleneck” for future Paragraph IV ANDA filers because Barr had no right to the 180-

day exclusivity period. 261 F. Supp. 2d at 243. That was because at the time of the 

Agreements, the FDA regulation in effect conditioned the first Paragraph IV ANDA filer’s 

right to the 180-day exclusivity period on a “successful defense” of its Paragraph IV 

ANDA against the patent holder. Id.; see 21 C.F.R. § 314.107(c)(1) (1998), revoked 63 

Fed. Reg. 59710, 59711 (Nov. 5, 1998). However, Barr acknowledged in the consent 

judgment both its infringement and the validity of the ’444 patent, thereby ending the 

underlying litigation. Cipro I, 261 F. Supp. 2d at 243. More importantly, as part of the 

Agreements, Barr converted its Paragraph IV ANDA to a Paragraph III ANDA. Id. 

Thus, the court concluded that Barr had failed to satisfy the successful defense 

requirement necessary to be eligible for the 180-day exclusivity period. Id. 

We do not know what evidence the plaintiffs believe would have created a 

genuine issue of material fact had it been considered by the district court in Cipro II. 

There appears to be no dispute about the contents of the consent judgment and the 

Agreements, and there does not appear to be a dispute about what was contained in 

the FDA regulation that was in effect at the time. Although the appellants make much of 

the uncertainty in the law regarding the validity of the “successful defense” 

2008-1097 25
requirement,13 we find no merit to that argument. The district court acknowledged that 

two circuit courts issued opinions in April 1998, more than a year after the Agreements 

were executed, striking down the FDA regulation. Cipro I, F. Supp. 2d at 243-44 (citing 

Mova Pharm. Corp. v. Shalala, 140 F.3d 1060 (D.C. Cir. 1998); Granutec, Inc. v. 

Shalala, 139 F.3d 889 (4th Cir. 1998)). The court further noted that the FDA ultimately 

removed the successful defense requirement from the regulation in November 1998. 

Cipro I, F. Supp. 2d at 244 (citing 63 Fed. Reg. 59710, 59711 (Nov. 5, 1998)). 

Nevertheless, the court correctly concluded that “the fact still remains that the 

requirement was in effect at the time of the [Agreements].” Cipro I, F. Supp. 2d at 244; 

see Tamoxifen, 466 F.3d at 218 (concluding that because the established law at the 

time of the settlement agreement required that a generic manufacturer must 

successfully defend an infringement lawsuit in order to obtain exclusivity, the generic 

manufacturer had no claim to the exclusivity period despite the terms of the agreement). 

Furthermore, the court appreciated that even without the successful defense 

requirement, there was still no support for the claim that Barr retained the 180-day 

exclusivity period after amending from a Paragraph IV ANDA to a Paragraph III 

ANDA.14 Cipro I, F. Supp. 2d at 247. Finally, the court recognized that since the 

 13 At oral argument, the appellants emphasized that Mylan was delayed for 

two-and-a-half years in filing its ANDA and challenging the patents because it believed 

that Barr was entitled to the 180-day exclusivity period. Oral Arg. at 5:56-6:29, 6:49-

7:02, available at http://www.cafc.uscourts.gov/oralarguments/mp3/2008-1097.mp3. 

hey further asserted that because of the delay, none of the generic challengers raised 

the iss f in

T

ue o equitable conduct. Id. at 7:05-7:57. 

14 Although the Agreements apparently did contain a provision preserving 

the option for Barr to reamend to a Paragraph IV ANDA (presumptively for the purpose 

of reclaiming the 180-day exclusivity period) if the ’444 patent was subsequently 

declared by a court to be invalid or unenforceable, that provision does not change the 

2008-1097 26
Agreements were executed, Bayer has sued four other generic manufacturers that filed 

ANDAs and defended against invalidity counterclaims; thus, the Agreements did not 

prevent other generic manufacturers from challenging the ’444 patent. Id. We find no 

error by the district court in declining to consider anew the evidence allegedly showing 

that the Agreements preserved Barr’s claim to the 180-day exclusivity period, and in 

concluding that the Agreements did not create a “bottleneck” for other generic 

manufacturers. 

Accordingly, we affirm the district court’s grant of summary judgment on Counts 

I-IV, holding that the Agreements were not violative of section 1 of the Sherman Act 

since all anticompetitive effects were within the exclusionary power of the ’444 patent. 

IV 

Count V alleges that Bayer violated state antitrust and consumer protection laws 

by fraudulently obtaining the ’444 patent and enforcing it through sham litigation. The 

district court dismissed Count V as preempted by federal patent law. Cipro II, 363 F. 

Supp. 2d at 547. 

The appellants challenge the district court’s dismissal of Count V, arguing under 

Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318 (Fed. Cir. 1998), and 

Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059 (Fed. Cir. 1998), that the 

court erred in concluding that their state law monopolization claims are preempted by 

federal patent law because preemption does not apply when the patent was procured 

 

analysis. Under the FDA regulations in effect at the time of the Agreements, the first 

generic manufacturer was not entitled to the 180-day exclusivity period unless it had 

satisfied the successful defense requirement. Furthermore, since the option was never 

exercised, there was no evidence of an actual adverse effect on competition due to that 

provision. See Clorox, 117 F.3d at 56. 

2008-1097 27
by fraud. Further, the appellants contend that the district court erroneously concluded 

that no tortious conduct in the marketplace had been alleged, ignoring Bayer’s lawsuit 

against Barr seeking to enforce a fraudulently procured patent. According to the 

appellants, the district court’s reliance on Semiconductor Energy Laboratory Co. v. 

Samsung Electronics Co., 204 F.3d 1368 (Fed. Cir. 2000), and Abbott Laboratories v. 

Brennan, 952 F.2d 1346 (Fed. Cir. 1991), is misplaced because neither case involves a 

state law antitrust claim based on wrongful enforcement of a patent procured by fraud. 

The appellants assert that an antitrust claim under Walker Process is distinguishable 

from an inequitable conduct claim because it contains the additional elements of an 

antitrust claim, namely, market power and antitrust injury. The monopolization claims 

here, the appellants contend, like those in Dow Chemical Co. v. Exxon Corp., 139 F.3d 

1470 (Fed. Cir. 1998), have elements other than inequitable conduct before the PTO—

and therefore are not preempted by federal patent law. Finally, the appellants argue 

that because antitrust is a field traditionally regulated by the states, there is a 

presumption against preemption of state law, and Congress has made no express 

legislative statement to overcome that presumption. 

It is not clear that the district court considered the portions of Hunter Douglas and 

Nobelpharma that the appellants rely on in their brief. However, the result in this case 

would not change even if we were to adopt the appellants’ interpretation of these cases 

because the district court determined, and we agree, that no fraud occurred. In light of 

this, the district court’s disposition of Count V was not erroneous. 

V 

For the foregoing reasons, we affirm the grant of summary judgment by the 

2008-1097 28
District Court for the Eastern District of New York that the Agreements were not in 

violation of section 1 of the Sherman Act because any anti-competitive effects caused 

by the Agreements were within the exclusionary zone of the patent. We further affirm 

the court’s dismissal of the state antitrus

AFFIRMED

t claims. 

2008-1097 29