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A Machete for the Patent Thicket

Posted by on Monday, January 24, 2022 in Notes, Volume 75, Volume 75, Number 1, Volumes.

Lisa Orucevic | 75 Vand. L. Rev. 277 (2022) |

Outrageous drug prices have dominated news coverage of the American healthcare system for years. Yet despite widespread condemnation of skyrocketing drug prices, nothing seems to change. Pharmaceutical companies can raise drug prices with impunity because they hold patents on their drugs, which give them monopolies. These monopolies are only supposed to last twenty years, and then competing lower-cost drugs like generics can enter the market, driving down the costs of pharmaceuticals for all. But pharmaceutical companies have created “patent thickets,” dense webs of overlapping patents surrounding one drug, which have artificially extended the companies’ monopolies for years or even decades after a drug’s initial patent expires. These problems will only be exacerbated as the pharmaceutical industry increasingly focuses on biologic drugs, which already provide more opportunities to acquire multiple patents on one drug than traditional small-molecule drugs.

Patent law’s weapons in the fight against patent thickets, namely litigation and inter partes reviews (an abbreviated process for challenging patent validity), have proven to be inadequate—a scalpel when the public needs a machete. Antitrust law, which polices anticompetitive behavior and corrects market failures, is the ideal weapon to fight the pharmaceutical industry’s exploitation of patent law. The Noerr-Pennington doctrine, which immunizes parties from antitrust liability when a party “petitions” the government, currently stands in the way of an antitrust solution to the patent-thicket problem. “Petitions” eligible for Noerr-Pennington antitrust immunity include patent applications and patent-infringement lawsuits, so the pharmaceutical industry can wield the Noerr-Pennington doctrine as a sword against potential antitrust challenges. The Noerr-Pennington doctrine has a narrow “sham exception,” where Noerr-Pennington antitrust immunity is pierced when a party’s petitions are “mere shams” to interfere with the operations of a competitor. Unfortunately, after two Supreme Court decisions about the sham exception, the circuit courts have disagreed on the sham exception’s operation, leaving potential antitrust plaintiffs, such as consumers and government regulators, with uncertain prospects for challenging patent thickets under antitrust law.

This Note proposes that courts adopt an approach to reconcile the Supreme Court decisions wherein courts apply a stricter standard for invoking the sham exception when an antitrust plaintiff challenges a single sham petition and a looser standard when an antitrust plaintiff challenges a pattern of sham petitions. Further, this Note proposes a general framework for analyzing patent proceedings under the looser pattern standard. This solution strikes a balance between protecting parties’ First Amendment petitioning right and discouraging abuse of the patent law system for anticompetitive effect. If successful, antitrust challenges can lead to quicker market entry for lower-cost drugs and allow more people to benefit from innovative and life-altering drugs.

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Lisa Orucevic