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Federal Trade Commission v. Boehringer Ingelheim Pharmaceuticals, Inc.

United States Court of Appeals, District of Columbia Circuit

June 19, 2018

Federal Trade Commission, Appellant
v.
Boehringer Ingelheim Pharmaceuticals, Inc., Appellee

          Argued November 15, 2017

          Appeals from the United States District Court for the District of Columbia (No. 1:09-mc-00564)

          Mark S. Hegedus, Attorney, Federal Trade Commission, argued the cause for appellant. With him on the briefs were David C. Shonka, Acting General Counsel, and Joel Marcus, Deputy General Counsel for Litigation.

          Lawrence D. Rosenberg argued the cause for appellee. With him on the briefs were Michael Sennett and Nicole C. Henning.

          John P. Elwood, Zachary J. Howe, Kate Comerford Todd, Sheldon Gilbert, and Amar D. Sarwal were on the brief for amicus curiae Chamber of Commerce of the United States of America and Association of Corporate Counsel in support of Boehringer Ingelheim Pharmaceuticals, Inc. Warren D. Postman entered an appearance.

          Before: Kavanaugh and Pillard, Circuit Judges, and Randolph, Senior Circuit Judge.

          OPINION

          KAVANAUGH, CIRCUIT JUDGE.

         The pharmaceutical company Boehringer claimed attorney-client privilege over certain documents subpoenaed by the Federal Trade Commission. The attorney-client privilege applies to a communication between attorney and client if at least "one of the significant purposes" of the communication was to obtain or provide legal advice. In re Kellogg Brown & Root, Inc., 756 F.3d 754, 758 (D.C. Cir. 2014). Under that standard, the attorney-client privilege applies to the documents at issue here. We affirm the judgment of the District Court.

         I

         A drug manufacturer that holds a patent has a market advantage. When a generic drug company challenges the validity of that patent, it threatens the patent holder's monopoly. Such a challenge can result in a settlement in which the patent holder pays the challenger to drop the challenge. That scenario is known as a "reverse payment" settlement - so labeled because the settlement requires the patent holder to "pay the alleged infringer, rather than the other way around." FTC v. Actavis, Inc., 570 U.S. 136, 141 (2013).

         In Actavis, the Supreme Court analyzed the legality of reverse payments. If the payments are made simply to avoid litigation costs, they may be lawful. But if "the basic reason is a desire to maintain and to share patent-generated monopoly profits, " then "the antitrust laws are likely to forbid the arrangement." Id. at 158.

         In 2008, a patent negotiation occurred between Boehringer (the name brand with the patent) and Barr (the generic seeking to challenge the patent). Ultimately, the parties reached a reverse payment settlement.

         The Federal Trade Commission pays close attention to reverse payment settlements to ensure that they do not run afoul of antitrust law. In 2009, the Commission began investigating the Boehringer-Barr settlement. During the investigation, the Commission subpoenaed documents from Boehringer. Boehringer claimed that the subpoenaed documents were created by Boehringer employees for Boehringer's general counsel, Marla Persky, at her request. The documents allowed Persky to analyze and navigate the treacherous antitrust issues surrounding reverse payment settlements. Other documents reflected communications between Persky and Boehringer executives regarding the possible settlement. Boehringer asserted attorney-client privilege over the documents.

         The burden is on the proponent of the privilege to demonstrate that it applies. See United States v. Legal Services for New York City, 249 F.3d 1077, 1081 (D.C. Cir. 2001). In a thorough and careful opinion, the District Court agreed with Boehringer that the documents at issue here are covered by the attorney-client privilege. To the extent the Commission challenges the legal test employed by the District Court, our review is ...


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