Fed. Trade Comm'n v. Abbvie Prods. LLC

• Decision Date: 21 March 2013
• Docket Number: No. 12–16488.,12–16488.
• Citation: 713 F.3d 54
• Parties: FEDERAL TRADE COMMISSION, Plaintiff–Counter Defendant–Appellee, v. ABBVIE PRODUCTS LLC, Defendant–Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

713 F.3d 54

FEDERAL TRADE COMMISSION, Plaintiff–Counter Defendant–Appellee,

v.ABBVIE PRODUCTS LLC, Defendant–Appellant.

No. 12–16488.

United States Court of Appeals, Eleventh Circuit.

March 21, 2013.

Mark S. Hegedus, Bradley S. Albert, John F. Daly, Michael J. Perry, John R. Robertson, Lore A. Unt, Mark J. Woodward, Office of Gen. Counsel, FTC, Washington, D.C., Chris Couillou, Cindy A. Liebes, FTC, Atlanta, GA, for Plaintiff–Counter Defendant–Appellee.

Jeffrey I. Weinberger, Adam R. Lawton, Munger, Tolles & Olson, LLP, Los Angeles, CA, Teresa Bonder, Matthew Kent, Alston & Bird, LLP, Atlanta, GA, Michelle Friedland, Rohit K. Singla, Munger, Tolles & Olson, LLP, San Francisco, CA, John Roberti, Mayer Brown, LLP, Washington, DC, for Defendant–Appellant.

Appeal from the United States District Court for the Northern District of Georgia.

Before MARCUS, BLACK and SILER,^* Circuit Judges.

MARCUS, Circuit Judge:

Several years ago, Appellee Federal Trade Commission (“FTC”) began investigating a settlement between Appellant AbbVie Products LLC, then known as Solvay Pharmaceuticals (“Solvay”), and several other pharmaceutical companies. The settlement, the FTC believed, violated the antitrust laws because the companies effectively had colluded to preserve the monopoly profits from Solvay's highly lucrative patent on AndroGel, a topical testosterone gel. During the course of the investigation, Solvay voluntarily disclosed a confidential document called the Project Tulip Financial Analysis (“Tulip FA”), which projected AndroGel's profits and also discussed the appropriate terms of, and benefits from, a settlement between Solvay and its competitors. The FTC filed an antitrust suit against Solvay and the other pharmaceutical companies based on the settlement and attached the Tulip FA as the sole exhibit to its complaint.

In 2010, Solvay convinced a district court judge in the Northern District of Georgia to issue a protective order sealing the Tulip FA because the document contained sensitive financial information that could be harmful to Solvay's business interests. The district court eventually dismissed the FTC's suit, and a panel of this Court affirmed. FTC v. Watson Pharm., Inc., 677 F.3d 1298 (11th Cir.2012). In 2012, however, the Supreme Court issued a writ of certiorari to review this Court's decision in Watson, and the FTC returned to the district court and asked for the Tulip FA to be unsealed so that the FTC and its amici could discuss the document openly in the Supreme Court. The district court did so, based in large part on its finding that the harms Solvay would suffer from the Tulip FA's being made public have been reduced in the intervening three years. Solvay appeals the district court's decision to modify the earlier protective order and unseal the Tulip FA. Because we conclude that the district court did not abuse its considerable discretion to modify its own protective order, we affirm.

I.

A.

Solvay Pharmaceuticals, which was later acquired by Abbott Laboratories and subsequently renamed AbbVie Products LLC, had a license to sell a topical testosterone gel called AndroGel. Watson, 677 F.3d at 1304.AndroGel was protected by a patent that expired in 2020, and therefore Solvay had a monopoly on its sale, which resulted in more than $1.8 billion in revenue. However, a threat to this very lucrative business emerged; two other drug manufacturers, Watson Pharmaceuticals and Paddock Laboratories, developed generic versions of AndroGel and sought FDA approval to begin selling those products. Id.

To defend its patent, Solvay filed a patent infringement lawsuit against Watson and Paddock. Par Pharmaceuticals became involved in the lawsuit by sharing the costs of litigation with Paddock in exchange for a share of the potential profits. Id. Faced with the possibility that its patent would be invalidated, and the generic entrants allowed into the market, Solvay opted to settle with Watson and Par/Paddock. The settlement agreement featured a so-called “reverse payment,” in which Solvay paid Watson and Par/Paddock to delay marketing their generic versions of AndroGel until 2015. Id. at 1305. The upshot of the settlement was that Solvay got to keep its monopoly until 2015, with the reverse payments to its potential competitors effectively giving them a share of the monopoly profits.

The FTC has contested the legality of reverse payments for some time, claiming that “they closely resemble the sorts of horizontal agreements to suppress competition that have previously been condemned under the antitrust laws” and “[n]othing in the Patent Act legitimizes the use of reverse payments.” Brief for Pet'r at 15–16, FTC v. Watson Pharmaceuticals, Inc., ––– U.S. ––––, 133 S.Ct. 787, 184 L.Ed.2d 527 (2012). Upon learning of Solvay's settlement, the FTC began investigating the matter and ultimately filed an antitrust lawsuit against Solvay, Watson, Par, and Paddock, which was transferred to the Northern District of Georgia. Watson, 677 F.3d at 1305. During its investigation, the FTC asked Solvay to divulge confidential documents regarding the settlement of the patent litigation and the development, marketing, and sale of AndroGel. The FTC's written request stated that “[i]nformation submitted in response to this letter will be afforded confidential treatment and is exempt from disclosure under the Freedom of Information Act, as provided in 16 C.F.R. §§ 4.10–4.11 and 15 U.S.C. §§ 46(f) and 57b–2(f), respectively.” Solvay cooperated with the investigation.

In particular, Solvay produced the Tulip FA, an April 2006 document that contained revenue and profit projections for the AndroGel product line along with recommendations for how to settle the patent infringement suit between Solvay and its competitors. The Tulip FA was created by a Solvay financial analyst, Elaine Yang, to assist Solvay's management during settlement negotiations with Watson and Paddock.

B.

In the underlying antitrust action, the FTC sought to attach the Tulip FA to its second amended complaint and filed the document under temporary seal to give Solvay an opportunity to seek a protective order from the district court sealing the document.¹ Solvay promptly moved for a protective order sealing the Tulip FA, which the district court granted in February 2010. Specifically, the district court found that Solvay “ha[d] shown good cause for sealing indefinitely [the Tulip FA] which contains sensitive and confidential information.”

During this time, Solvay sought to dismiss the complaint because, as a matter of law, Eleventh Circuit precedent established that anticompetitive behavior within the “scope of the patent” was not a violation of the antitrust laws. Prior to sealing the exhibit, the district court dismissed the complaint on this basis, In re AndroGel Antitrust Litig., 687 F.Supp.2d 1371, 1378–79 (N.D.Ga.2010), and a panel of this Court affirmed, Watson, 677 F.3d 1298. The panel in Watson based its decision largely on prior precedent, which “establish[ed] the rule that, absent sham litigation or fraud in obtaining the patent, a reverse payment settlement is immune from antitrust attack so long as its anticompetitive effects fall within the scope of the exclusionary potential of the patent.” Id. at 1312. The FTC sought Supreme Court review, and the Supreme Court granted certiorari in the case on December 7, 2012. FTC v. Watson Pharmaceuticals, Inc., ––– U.S. ––––, 133 S.Ct. 787, 184 L.Ed.2d 527 (2012). The question presented in that case is whether reverse-payment agreements, such as the one between Solvay and its competitors, are per se lawful unless the underlying patent litigation was a sham or the patent was obtained by fraud, or instead are presumptively anticompetitive and unlawful. See Pet'n for Writ of Certiorari at I, Watson Pharmaceuticals, Inc., –––U.S. ––––, 133 S.Ct. 787. The parties submitted the Tulip FA to the Supreme Court in a sealed volume of the parties' Joint Appendix.

Shortly after the grant of certiorari, the FTC moved the district court to unseal the Tulip FA, claiming that both the FTC and its amici wished to discuss the document's contents in the Supreme Court, and that the public interest supported unsealing the document. The FTC submitted evidence that, since Solvay's acquisition by Abbott, the company had disclosed information regarding the volume of AndroGel sales and had also introduced a new version of the product, AndroGel 1.62%, which was different than the AndroGel 1% product discussed in the Tulip FA.

Solvay opposed the motion and argued that the Tulip FA would allow both competitors and counterparties to reverse-engineer Solvay's profit margins, which would give them an advantage in product pricing and rebate negotiations. Solvay also disputed the FTC's need for the document to be public and argued that it had produced the document in reliance on the FTC's promises of confidential treatment. As for the proper test to apply, Solvay argued that “[t]he party seeking modification of a protective order bears the burden of demonstrating good cause for the modification, particularly where, as here, good cause was shown for entry of the original protective order.”

The FTC responded by introducing additional evidence, including testimony from the Tulip FA's author, Yang. Yang testified that she could not reverse-engineer Solvay's profit margins using the Tulip FA alone. In addition, the FTC presented testimony from Solvay's then-CEO, Laurence J. Downey, who said that the costs of producing AndroGel had changed in the months following the Tulip FA's creation. Finally, the FTC argued that Solvay had no valid reliance claim because Solvay could not have reasonably expected that the document would not be disclosed in a judicial proceeding.

After oral argument, the district court immediately granted the motion to modify its protective order and unseal the Tulip FA but granted Solvay's motion to stay the unsealing until Solvay...