We have previously posted about the New York Attorney General’s “product hopping” suit against Actavis and its subsidiary, Forest Laboratories LLC (together, “Actavis”), including our analysis of the District Court’s opinion enjoining Actavis from discontinuing sales of the Alzheimer’s drug Namenda IR, and of the Second Circuit’s decision affirming the district court’s ruling. The Second Circuit panel that heard the appeal has now denied rehearing, and the active members of the Second Circuit have also denied rehearing en banc.
In its petition for rehearing, Actavis argued that the issues presented by this case are exceptionally important because the panel’s decision “dramatically changes the law governing antitrust cases involving patents, purported duties to aid competitors, and incremental innovations.” Actavis took particular exception with the panel’s focus on whether a product redesign “coerces consumers” by forcing them to purchase a new product. The petition for rehearing states:
The limits of this new exception to once-clear patent rights are anyone’s guess. When in the patent term does ceasing sales become unlawful? Forest planned to make an unlimited supply
of IR available through a mail-order pharmacy—so how much distribution is enough? What if the patentee continued to sell the old product but raised its price, or stopped advertising and
marketing efforts? The panel never explains what “coercion” means, giving innovators no way of knowing how to avoid antitrust liability ahead of time.
Actavis also urged that the panel opinion conflicts with prior decisions, including those by the Supreme Court, and urged that the ruling “creates a new antitrust duty to aid competitors.”
As is often the case, the Second Circuit’s one-page order denying rehearing does not state its reasons for doing so. But it is perhaps unsurprising that the original panel was unmoved by Actavis’s arguments for rehearing, which were similar to its arguments for vacating the district court’s injunction. Additionally, the Second Circuit is famously the least likely U.S. Court of Appeals to grant rehearing en banc, and touts a “longstanding tradition of general deference to panel adjudication” that is set aside “only in rare and exceptional circumstances.”[1] In refusing to rehear the appeal, the Second Circuit adhered to that tradition. Accordingly, Actavis’s last chance for vacatur of the injunction now lies with the U.S. Supreme Court.
[1] See Alexandra Sadinsky, Note, Redefining En Banc Review in the Federal Courts of Appeals, 82 Fordham L. Rev. 2001, 2015 (2014) (quoting Ricci v. DeStefano, 530 F.3d 88, 89–90 (2d Cir. 2008)), available at http://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=4965&context=flr.
