FTC Commissioner Wright Delivers Speech on Pay-for-Delay Agreements and Patent Assertion Entities | Practical Law

FTC Commissioner Wright Delivers Speech on Pay-for-Delay Agreements and Patent Assertion Entities | Practical Law

FTC Commissioner Joshua D. Wright delivered a speech addressing the FTC's outlook for pay-for-delay agreements and Patent Assertion Entities.

FTC Commissioner Wright Delivers Speech on Pay-for-Delay Agreements and Patent Assertion Entities

by Practical Law Antitrust
Published on 23 Sep 2013USA (National/Federal)
FTC Commissioner Joshua D. Wright delivered a speech addressing the FTC's outlook for pay-for-delay agreements and Patent Assertion Entities.
On September 16, 2013 in Beijing, FTC Commissioner Joshua D. Wright delivered a speech on the FTC's antitrust enforcement agenda regarding:
  • Pay-for-delay agreements.
  • Patent Assertion Entities (PAEs) (businesses that purchase and license patents and enforce them against infringers).

Pay-for-Delay Activity

Commissioner Wright explained that following the US Supreme Court's recent decision in FTC v. Actavis, the FTC plans to continue prosecuting anticompetitive drug settlements, including:
  • Continuing litigation against Actavis and two generic manufacturers with respect to the production of the drug AndroGel.
  • Challenging pay-for-delay agreements between Cephalon and four generic manufacturers of the drug Provigil.
  • Prosecuting similar agreements between branded and generic drug manufacturers.
  • Continuing pending investigations into pay-for-delay agreements.
For more information on the Supreme Court's Actavis decision, see Legal Update, Supreme Court Issues Decision in Pay-for-Delay Case FTC v. Actavis.
Commissioner Wright noted that the Supreme Court's Actavis decision gave lower courts considerable leeway with respect to how they structure rule of reason analyses for pay-for-delay agreements. By continuing to challenge and prosecute pay-for-delay agreements, the FTC will continue to try to shape the development of the body of law governing the agreements.
Commissioner Brill, a democrat, also recently discussed the FTC’s conviction against pay-for-delay agreements, signaling that pay-for-delay agreements appear to be an issue that commissioners agree on no matter what their political affiliation.

Analyzing Patent Assertion Entities

Commissioner Wright also briefly addressed the FTC's recent activity regarding PAEs. Commissioner Wright explained that the FTC is concerned that PAEs, which do not generally develop patentable ideas, may cause anticompetitive harm by prosecuting marginal infringement claims that practicing entities would typically ignore. However, Commissioner Wright also acknowledged that PAEs generate efficiencies by allowing patent holders to easily sell patents they no longer wish to maintain.
To help policy makers form guidelines regarding PAEs, the FTC is considering using its power under Section 6(b) of the FTC Act to subpoena and collect data on PAEs to conduct an empirical study on the anticompetitive costs and benefits of PAEs.