United States V. Glaxo Group Ltd. - Subsequent Developments

Subsequent Developments

The Glaxo case was brought, initially, as a test case on government standing to challenge patent validity—a vehicle for overturning or at least limiting the 1897 decision of the Supreme Court in United States v. Bell Tel. Co. Substantively, Glaxo was one of a series of antitrust challenges against patent license restrictions on the sale of bulk drugs. Such restrictions were used to keep the bulk chemical form of drugs out of the hands of generic drug houses and other potential price-cutters, so that "finished" drug prices could be maintained at high levels. (The Supreme Court's statement of the facts in its Glaxo opinion explains this point.)

In preparing the case for trial, government counsel sought to determine what defenses the defendants would assert to justify their use of the restriction—presumably health and safety arguments, as had been advanced in other similar cases. However, the District of Columbia federal trial court, where the case had been filed, at that time had a very strong rule against permitting "contention" interrogatories. After a series of adverse rulings on discovery motions (not officially reported) by the magistrate in charge of pretrial, government counsel realized that it would not be possible to force the defendants to disclose what their defenses at trial would be. Therefore, solely to "smoke out" the defenses, government counsel filed a series of summary judgment motions—which normally force an opposing party to disclose whatever it has available to prevent entry of judgment against it. It was not anticipated that the motions would prevail, because it was expectable that the defendants would then assert factual defenses raising issues precluding any grant of summary judgment. That did not occur.

The defendants asserted no health and safety or other factual defenses. The district court then granted three summary judgment motions in the government's favor on the issue of antitrust violation, granted the defendants' motion to dismiss the patent validity challenges, and denied any significant relief. The case then went to the Supreme Court on a record consisting of legal briefs and supporting affidavits, without live testimony: there had not been a single day of trial in the usual sense—nothing but legal argumentation.

After the Supreme Court's decision, the government found itself possessed of a new power to challenge antirust defendants' patents. However, the government did not rush to exploit this power. It appears that only one reported decision has involved a patent validity challenge based on the doctrine of the Glaxo case.