Endo Antitrust Case Dismissal Affirmed by U.S. Court of Appeals

A panel of judges from the U.S. Court of Appeals for the D.C. Circuit unanimously affirmed the 2022 dismissal of an antitrust case filed by the Federal Trade Commission against pharmaceutical manufacturer Endo Pharmaceuticals (Endo).

The FTC’s case against Endo involved a novel challenge to the royalty structure in a patent license based on the theory that it effectively created an exclusionary non-compete agreement between two competitors. The district court threw out the FTC’s case on the grounds that the challenged license agreement had no exclusionary effect beyond that contemplated by the Patent Act.

The D.C. Circuit affirmed that ruling on appeal, explaining that the challenged agreement was, at most, an exclusive license agreement expressly authorized by the Patent Act and, as such, could not violate the antitrust laws. 

The D.C. Circuit’s ruling is particularly significant in an antitrust enforcement environment that has become increasingly hostile to, and suspicious of, the exercise of patent rights. In affirming dismissal of the FTC’s case, the appellate panel confirmed the boundary between antitrust enforcement and the legitimate exercise of patent rights. As the court explained, the use of such patent rights does not violate the antitrust law unless it restrains trade beyond what is permitted by the Patent Act or existing precedent.

The Dechert LLP team that argued the appeal on behalf of Endo was led by George Gordon and Julia Chapman.

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