7th Circuit Evaluates the “Patent Thicket”

Last week the 7th Circuit Court of Appeals heard arguments in UFCW Local 1500 Welfare Fund v. AbbVie Inc., Case No. 20-2402.  The appeal concerns the United States District Court for the Northern District of Illinois’ dismissal of a proposed class action alleging that AbbVie, Inc. created a “patent thicket” around Humira to block biosimilars from entering the market.  Humira is AbbVie’s autoimmune disorder biologic product approved for the treatment of, among other things, moderate to severe rheumatoid arthritis, psoriatic arthritis, and Crohn’s disease.

In June 2020, Judge Shah of the Northern District of Illinois dismissed without prejudice a Complaint brought by purchasers of Humira alleging that, inter alia, Humira through anticompetitive conduct, including applying for and obtaining 132 patents, “elbow[ed] its competitors” out of the market.  The Complaint alleged that AbbVie subsequently entered into agreements with those competitors to keep their competing products off the market in violation of § 1 Of the Sherman Act, a so-called “pay-for-delay” scheme.  The Plaintiffs also alleged that AbbVie “created a thicket of intellectual property protection so dense that it prevented would-be challengers from entering the market with cheaper biosimilar alternatives” in violation of Section 2 of the Sherman Act.

In dismissing the case, Judge Shah found that there was no violation of Section 2 of the Sherman Act as the “the vast majority of the alleged scheme is immunized from antitrust scrutiny” under the Noerr–Pennington doctrine, which protects certain actions against antitrust liability when those actions involve petitioning the government, e.g., petitioning the USPTO for patent protection.  The Court found that “AbbVie’s rate of success with its patent applications—more than half (53.4%)” compels the conclusion that AbbVie’s patent applications, although numerous, were not objectively baseless.  The Court also rejected the assertion that AbbVie’s behavior violated Section 1 of the Sherman Act.  Judge Shah concluded Plaintiffs’ did “not plausibly allege the existence of an agreement that restrained competition” in violation of Section 1.

In July 2020, Plaintiffs appealed the decision to the 7th Circuit.  Leading up to the arguments last week, in October 2020, Appellants urged the 7th Circuit to reverse the lower court’s decision which, according to Appellants, force Humira purchasers “to pay higher prices as a result of AbbVie’s unlawful scheme to block entry by rivals.”  During oral argument, attorneys for Appellants argued that there was “widespread, objective baselessness in the patent minefield erected by AbbVie.”  Appellants also pointed to the fact that AbbVie never went to trial, summary judgement, or claim construction on a single claim of a single patent as evidence that its patent thicket was objectively baseless.  The Court asked Appellants to address how their anti-trust claims would be impacted if there was even one valid patent claim among the 132 patents and also questioned Appellants on why there would be no presumption of validity of the patents given that they were issued by the USPTO and some “even withstood inter partes review.”  Appellants responded that they intend to prove that more likely than not, one or more of the biosimilar applicants would have prevailed in a manner such that they would have been able to enter the market earlier than the date of entries provided by the respective agreements.

Stay tuned as we continue to monitor and provide updates as this case proceeds.