The Legal Pulse has devoted several posts (here, here, and here) recently to the misguided crusade that the Federal Trade Commission and some in Congress are pursuing against certain settlements of patent litigation between generic and branded drug producers.  The first of these commentaries discussed the Commission’s efforts to subpoena the CEO of generic producer Watson Pharmaceuticals and the FTC’s dubious and possibly unlawful motivations for issuing the subpoena.  Paul Bisaro, Watson’s CEO, opposed the subpoena, and asked for limited discovery to show that FTC’s subpoena was issued “for an improper purpose.”

Yesterday, federal Magistrate Judge Alan Kay ruled that Bisaro can pursue limited discovery, through interrogatories, of certain FTC officials.  The order is rather remarkable given the high burden of “extraordinary circumstances” Mr. Bisaro had to meet.  Judge Kay could cite only one instance where the appeals court whose precedents rule his determination – the D.C. Circuit – had found circumstances sufficiently “extraordinary” to allow discovery in a subpoena setting. 

In a dispassionate tone, the court recounted the circumstances underlying the subpoena, noting that the facts suggested that “FTC sought to place Watson between a rock and a hard place” by demanding that it enter into a deal with a competitor for Watson’s exclusive rights to market generic Provigil and then alleging anti-competitive behavior when Watson refused.  Judge Kay wrote that “Mr. Bisaro has made a colorable claim that the FTC may have exceeded its authority by using its investigatory power to pressure Watson,” and elaborated:

This Court finds that the facts before it present a strong possibility that the FTC did share confidential information with Watson’s competitor, that it did attempt to broker a deal between Apotex and Watson that would require Watson to relinquish any statutory “first filer” rights it had acquired, and that it did initiate this investigation to pressure Watson to relinquish these rights and to harass it when it refused.

FTC has ten days to respond to Bisaro’s interrogatories, and Bisaro in turn has ten days after that to provide supplemental information to the court.