Full opinion text
MEMORANDUM AND ORDER TRAGER, District Judge. This action involves agreements between the brand-name manufacturer of the widely used antibiotic ciprofloxacin hydrochloride (“Cipro”) and potential generic manufacturers of Cipro. The brand-name manufacturer, Bayer AG, a German company, and its American subsidiary, Bayer Corporation (collectively, “Bayer”) and the generics, Barr Laboratories, Inc. (“Barr”); The Rugby Group, Inc. (“Rugby”); Hoechst Marion Roussel, Inc. (“HMR”); and Watson Pharmaceuticals, Inc. (“Watson”) (collectively, “generic defendants”) entered into agreements that Direct Purchaser Plaintiffs (“direct plaintiffs”) and Indirect Purchaser Class Plaintiffs (“indirect plaintiffs”) allege prevented competition in the market for Cipro in violation of federal and state antitrust laws. Plaintiffs previously filed motions for partial summary judgment seeking a determination that these agreements were per $e unlawful under Section 1 of the Sherman Act, 15 U.S.C. § 1 (and various state antitrust and consumer protection laws), which were denied. Subsequently, indirect plaintiffs amended their complaint to add a new count, Count V, alleging Walker Process-type and sham litigation antitrust violations under state law. Bayer and generic defendants have now each filed motions for summary judgment asserting that these agreements do not violate Section 1 of the Sherman Act because they had no anti-competitive effects beyond the scope of Bayer’s patent on ciprofloxacin, while direct plaintiffs have filed a motion for partial summary judgment arguing that the agreements meet the “anti-competitive conduct” requirement of Section 1 of the Sherman Act and the “antitrust injury” requirement of the Section 4 of the Clayton Act. Bayer has also filed two motions relating to Count V of indirect plaintiffs’ second amended complaint (“Count V”). The first, a motion to dismiss Count V, is made on the grounds that indirect plaintiffs’ state law Walker Process-type claim is preempted by federal patent law and is barred by the statute of limitations. The second, filed in the event Count V is not dismissed, is a motion for summary judgment on Count V on the grounds that indirect plaintiffs have failed to demonstrate that any misrepresentations or omissions made by Bayer in prosecuting its patent were so highly material that the patent would not have issued but for the alleged deceptions and that plaintiffs’ sham litigation claim fails as a matter of law. Finally, HMR and Rugby have filed a motion for summary judgment that indirect plaintiffs’ claims against them are barred by the doctrine of Illinois Brick and that any rights assigned to indirect plaintiffs do not include claims against HMR. Background The statutory and regulatory background, as well as the circumstances of this case, were fully described in the court’s initial opinion, In re Ciprofloxacin Hydrochloride Antitrust Litig., 166 F.Supp.2d 740 (E.D.N.Y.2001) (“Cipro I”) (granting certain plaintiffs’ motions to remand to state court). The developments in the case were further discussed and analyzed in a second opinion, In re Ciprofloxacin Hydrochloride Antitrust Litig., 261 F.Supp.2d 188 (E.D.N.Y.2003) (“Cipro II ”) (granting in part and denying in part defendants’ motions to dismiss, and denying plaintiffs’ motion for partial summary judgment asserting that the agreements constituted per se violations of the antitrust laws). Familiarity with those decisions is presumed, and what follows is a summary of only those facts necessary for the resolution of the pending motions. Bayer is the assignee of U.S. Patent No. 4,670,444 (“the ’444 Patent”), a compound patent which claims the chemical entity that is the active ingredient in Cipro—-ciprofloxacin hydrochloride—and all its generic equivalents. See Cipro II, 261 F.Supp.2d at 249 (“A patent on a compound that is the only active ingredient in a drug covers all generic versions of that drug .... regardless of how formulated, processed or delivered .... ”). The ’444 Patent issued on June 2, 1987 from patent application Ser. No. 614,923 (“the ’923 application”), which was filed on May 29, 1984. The ’923 application was filed as a continuation-in-part of Ser. No. 292,560 (“the ’560 application”), which was filed on August 13, 1981, and Ser. No. 436,112 (“the ’112 application”), which was filed on October 22, 1982. See App. to Aff. of Paul J. Skiermont in Support of Bayer’s Mot. for Partial Summ. J. on Count V of the Indir. Pls.’ Proposed Second Am. Consol. Class Action Compl. (“Bayer Count V App.”), Ex. 1. In October 1987, Bayer’s predecessor, Miles, Inc., obtained FDA approval to market Cipro in the United States. Cipro II, 261 F.Supp.2d at 194. From 1987 until 2004, Bayer was the only producer of Cipro in the United States. Id. On October 22, 1991, Barr filed Abbreviated New Drug Application (“ANDA”) 74-124 for permission to market a generic version of Cipro, and included a Paragraph IV certification, seeking permission to market its generic drug before expiration of the ’444 Patent on the grounds that the patent was invalid and unenforceable. Id. Because the ’444 Patent claims the active ingredient in Cipro and because Barr was required in its ANDA to certify that its generic version of Cipro was bioequivalent to Bayer’s Cipro, there is no dispute that Barr’s product would have infringed Bayer’s patent. Cipro II, at 249; see also App. to Aff. of Paul J. Skiermont in Support of Bayer’s Mot. for Partial Summ. J. on Pls. Claims Under the Sherman Act and Corr. State Law Claims (“Bayer Sherman Act App.”), Tab 5 (Stipulation and Order (Barr’s stipulation that it infringed the ’444 Patent)). Pursuant to the Hatch-Waxman Amendments to the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 355, on December 6, 1991, Barr notified Bayer of its ANDA TV filing, and on January 16, 1992, Bayer sued Barr for patent infringement in the Southern District of New York, where the case was assigned to Judge Whitman Knapp. Cipro II, 261 F.Supp.2d at 194. In January 1996, Bayer and Barr filed cross-motions for partial summary judgment, which Judge Knapp denied in an order and opinion dated June 5, 1996. Id. at 195. In March 1996, while these cross-motions were sub judice, Barr agreed to share equally any profits from the eventual marketing and/or distribution of Cipro with Rugby, which was then a subsidiary of HMR, and, in return, Rugby agreed to finance a portion of the costs and expenses of the patent litigation against Bayer. Id. On January 8, 1997, just weeks before trial was scheduled to begin, Bayer and Barr reached a settlement of the patent litigation, with Bayer entering into three separate agreements with Barr, HMR and Rugby, and Bernard Sherman and Apotex, Inc. (collectively, the “Settlement Agreements”) and a supply agreement with Barr and HMR (the “Supply Agreement”) (collectively with the Settlement Agreements, the “Agreements”), the terms of which give rise to the plaintiffs’ claims of Sherman Act violations. Id. at 195-96. Under the Barr Settlement Agreement, Bayer paid Barr $49.1 million and, in return, required Barr to amend its ANDA from a Paragraph IV certification to a Paragraph III certification, which would permit it to market a generic form of Cipro only upon the expiration of the ’444 Patent. Id. at 196. However, the Barr Settlement Agreement preserved the option for Barr to re-amend to a Paragraph IV certification (for the purpose of reclaiming the 180-day exclusivity period that is awarded to a first-filer of an ANDA IV) in the event the ’444 Patent were subsequently declared invalid or unenforceable by a court of competent jurisdiction. Bayer Sherman Act App., Ex. 16 ¶ 5(a); see Cipro II, 261 F.Supp.2d at 243-47. Under the terms of the Supply Agreement, Barr and HMR agreed not to manufacture or have manufactured a generic form of Cipro in the United States. Cipro II, 261 F.Supp.2d at 196. The Supply Agreement further provides that Bayer will either supply Bayer-manufactured Ci-pro to Barr, HMR and Rugby for distribution in the United States, or make quarterly payments to Barr from January 1998 through December 2003, at which time the ’444 Patent was due to expire. Id. Bayer opted to make the payments, which, by December 2003, when added to the initial $49.1 million payment, totaled approximately $398 million. Id. Bayer and Barr also entered into a Consent Judgment, terminating the litigation, in which Barr affirmed the validity and enforceability of the ’444 Patent and admitted infringement. Id. at 196; Bayer Sherman Act App., Ex. 18. The Consent Judgment was signed by Judge Knapp, but made no mention of any payments from Bayer to Barr. Id. Six months after settling with Barr, in July 1997, Bayer submitted the ’444 Patent to the Patent and Trademark Office (“PTO”) for reexamination. During the reexamination, Bayer amended certain of the claims of the ’444 Patent and cancelled others, after which the PTO reaffirmed the patent’s validity, including the validity of claim 12, which was not substantively amended and which all parties agree covers ciprofloxacin hydrochloride. Id. at 197; Bayer’s Reply Mem. in Supp. of Its Mot. for Partial Summ. J. on Count V of the Indirect Purchaser Class Pls.’ Proposed Second Am. Consolidated Class Action Compl. (“Bayer’s Count V Reply Mem.”) at 19; Bayer Sherman Act App., Ex. 5; App. to Aff. of Paul J. Skiermont in Support of Bayer’s, Mot. for Partial Summ. J. on Count V of the Indir. Pls.’ Proposed Second Am. Consol. Class Action Compl. (“Bayer Count V S.J.App.”), Ex. 9. Thereafter, four other generic companies— Schein, Mylan, Carlsbad and Ranbaxy— each challenged the reexamined ’444 Patent by filing ANDA IVs for Cipro. Cipro II, 261 F.Supp.2d at 197. Bayer defeated Schein and Mylan’s validity challenges on summary judgment, and those decisions were upheld by the Court of Appeals for the Federal Circuit. Id. at 201. The Carlsbad case proceeded to a nine-day bench trial, after which the judge rejected Carlsbad’s invalidity argument and upheld the validity of the ’444 Patent. See Bayer Count v.App., Exs. 15 and 16 (Bayer AG v. Carlsbad Tech., Inc., No. 01-cv-0867-B, slip op. at 5-13 (S.D. Cal. June 7, 2002 and Aug. 7, 2002)). Ranbaxy’s challenge was dismissed as moot after Ranbaxy withdrew its Paragraph IV certification. Cipro II, 261 F.Supp.2d at 197. Discussion (1) Sherman Act Motions for Summary Judgment The Cipro II decision made clear that Barr’s agreement with Bayer not to sell ciprofloxacin in exchange for the exclusion payments, also commonly known as reverse or exit payments, did not constitute a per se violation of the Sherman Act because the exclusionary effect of the Agreements was within the scope of the ’444 Patent. Direct plaintiffs now move for summary judgment that the exclusion-payment scheme meets the “anti-competitive conduct” requirement of Section 1 of the Sherman Act under a rule of reason analysis, while both Bayer and ge-nerie defendants move for summary judgment that the Agreements had no anti-competitive effects that are actionable under the Sherman Act because they were within the scope of the ’444 Patent. Resolution of this issue requires a close look at the intersection of patent and antitrust laws. The rule of reason analysis involves a three-step process. First, the plaintiff must prove that “the challenged action has had an actual adverse effect on competition as a whole in the relevant market.” K.M.B. Warehouse Distributors, Inc. v. Walker Mfg. Co., 61 F.3d 123, 127 (2d Cir.1995) (emphasis in original) (quoting Capital Imaging Assocs. v. Mohawk Valley Med. Assocs., 996 F.2d 537, 543 (2d Cir.), cert. denied, 510 U.S. 947, 114 S.Ct. 388, 126 L.Ed.2d 337 (1993)). Next, “the burden shifts to the defendant to establish the ‘pro-competitive redeeming virtues’ of the action.” Id. If the defendant succeeds, the burden shifts back to the plaintiff to “show that the same pro-competitive effect could be achieved through an alternative means that is less restrictive of competition.” M, a. Relevant market Taking these steps one at a time, the first question is whether plaintiffs have shown that the Agreements had an actual adverse effect on competition in the relevant market. Traditionally, the starting point of an antitrust inquiry is the definition of the relevant market. See, e.g., Geneva Pharma. Tech. Corp. v. Barr Labs. Inc., 386 F.3d 485, 496 (2d Cir.2004) (“Evaluating market power begins with defining the relevant market.”). The purpose of this inquiry is to determine whether defendants possess market power, ie., the ability to lessen or destroy competition, which, while not the sine qua non of a violation of Section 1 of the Sherman Act, is “a highly relevant factor in rule of reason analysis because market power bears a particularly strong relationship to a party’s ability to injure competition.” Capital Imaging, 996 F.2d at 546. The parties dispute whether the relevant market comprises only ciprofloxacin, as plaintiffs have asserted in their complaint, see Indir. Pls.’ Second Am. Consol. Class Action Compl. ¶ 34, or includes other drugs in the same molecular family as ciprofloxacin (flouroquinolones), which Bayer contends compete with ciprofloxacin in the U.S. antibiotic market, see Bayer Defs.’ Mem. of Law in Opp’n to Direct Purchaser Pls.’ Mot. for Partial Summ. J. (“Bayer’s Opp. Mem.”), at 26-29. Plaintiffs assert that it is unnecessary to show a relevant market in this case because there exists direct evidence of anti-competitive effects. Mem. in Support of Direct Purchaser Pls.’ Mot. for Partial Summ. J. (“Dir.' Pls.’ Mem.”), at 25. In general, to sidestep the traditional relevant market analysis, a plaintiff must show by direct evidence “an actual adverse effect on competition, such as reduced output.” Geneva v. Barr, 386 F.3d at 509 (“If plaintiff can demonstrate an actual adverse effect on competition, such as reduced output, ... there is no need to show market power in addition.”) (citing FTC v. Indiana Fed’n of Dentists, 476 U.S. 447, 460-61, 106 S.Ct. 2009, 2019, 90 L.Ed.2d 445 (1986); K.M.B. Warehouse, 61 F.3d at 128-29). The reason for permitting this alternative showing is simply that the purpose of an inquiry into market power “is to determine whether an arrangement has the potential for genuine adverse effects on competition.” FTC v. Indiana Fed’n of Dentists, 476 U.S. at 460, 106 S.Ct. at 2019, 90 L.Ed.2d 445. In effect, market power is “but a ‘surrogate for detrimental effects.’ ” Id., 476 U.S. at 461,106 S.Ct. at 2019 (quoting 7 P. Areeda, Antitrust Law ¶ 1511, p. 429 (1986)). For their direct evidence showing, direct plaintiffs point to government and academic-studies concluding that purchasers derive substantial savings from the availability of generic drugs; internal analyses by the brand name and generic manufacturers themselves forecasting significant price reductions once generic drugs become available; and sales data showing the actual effects of competition once generic Cipro was introduced into the market. Dir. Pls.’ Mem. at 25-31. In particular, direct plaintiffs rely on a 1998 study by the Congressional Budget Office comparing brand-name and generic prices for twenty-one different drugs that faced generic competition between 1991 and 1993, which found that the average retail price of a prescription for a generic drug in 1994 was less than half the average brand-name drug price. App. in Support of Decl. of Monica L. Rebuck for Dir. Pls.’ Mot. for Partial Summ. J. (Dir. Pls.’ Summ. J.App.), Tab 5 (Congressional Budget Office, How Increased Competition from Generic Drugs Has Affected Prices and Returns in the Pharmaceutical Industry, at 28-31 (July 1998) (“CBO Study”)). Another study cited by direct plaintiffs found that by 2000, the average brand-name prescription cost 340 percent more than its generic equivalent ($65.29 versus $19.33). Dir. Pls.’ Summ. J.App., Tab 20 (Kirkling et al., Economics and Structure of the Generic Pharmaceutical Industry, 41 J. Amer. Pharm. Assoc. 578, 579 (2001)). These studies notwithstanding, the significant price differences actually suggest a finding contrary to the one implied by plaintiffs. Namely, brand-name pharmaceuticals and their generic counterparts might not always compete in the same markets at all because, based on the higher prices of the brand-name drugs, there is less cross-elasticity of demand than one might expect. (If there were, the prices for brand-name drug prices should fall and be closer to that of generics). Indeed, the CBO Study cited by plaintiffs indicates that prices for brand-name drugs continue to rise faster than inflation even after generic competition begins. CBO Study at 30-31. The Second Circuit recently relied on similar price differential data to reach a particularly narrow market definition in Geneva v. Barr, 386 F.3d at 496-500. In that case, the court, relying on the factors set forth in Brown Shoe Co. v. United States, 370 U.S. 294, 325, 82 S.Ct. 1502, 1524, 8 L.Ed. 1264 (1962), defined the market as limited to generic warfarin sodium. Id.; see also Asahi Glass Co., Ltd. v. Pentech Pharma., Inc., 289 F.Supp.2d 986, 995-96 (N.D.Ill.2003) (Posner, J., sitting by designation) (noting that paroxetine, the active ingredient in Paxil, competes with molecules that are the basis for other antidepressant drugs such as Prozac and Zoloft, but reserving the possibility that pa-roxetine might still warrant treatment as a separate market). Despite the fact that brand-name pharmaceuticals are apparently able to maintain significantly higher prices even after generic entry, the parties’ internal analy-ses prepared at the time the Agreements were entered into confirm that both Bayer and Barr expected Bayer to lose significant sales once generic competition began, with Bayer estimating losses of between $510 million and $826 million in Cipro sales during the first two years of generic competition, depending on the number of generic manufacturers entering the market. Dir. Pls.’ Summ. J.App., Tab 47A, at BCP4630078. Another contemporaneous internal Bayer document estimated Bayer’s losses due to a potential adverse judgment in the ’444 Patent litigation at $1,679 billion net present value. Dir. Pls.’ Summ. J.App., Tab 47D at BCP-P-0001572-004(2). Barr, similarly, projected that it and other generic manufacturers would capture a large percentage of the market for ciprofloxacin within the first two years of generic competition, and would enter the market at a 30 percent discount off Bayer’s price. Dir. Pls.’ Summ. J.App., Tab 36A at BLI-003560. Finally, direct plaintiffs point to post-generic entry data showing that Barr in fact did capture more than 50 percent of Bayer’s Cipro sales soon after entering the market, and that it initially priced its generic ciprofloxacin at only 8 percent below Bayer’s Cipro product. Dir. Pls.’ Summ. J.App., Tab 35 (Expert Report of Jeffrey J. Leitzinger, Ph.D., at 38 n. 93). Direct plaintiffs also note that the Amended and Restated Supply Agreement between Bayer and Barr, dated August 28, 2003, which provides for Bayer to continue supplying ciprofloxacin to Barr for resale after expiration of the pediatric marketing exclusivity extension that Bayer obtained pursuant to 21 U.S.C. § 355a, sets drastically reduced prices for Cipro after the commencement of open generic competition. Dir. Pls.’ Summ. J.App., Tab 43A at BCP4660023. For example, a 100-pill bottle of oral, 500-mg ciprofloxacin that cost Barr $321.96 before the beginning of open generic competition would cost only $14.30 after the expiration of Bayer’s pediatric exclusivity, a 95 percent difference in price. Id. Bayer has admitted that the purpose of the price drop was to allow Barr to compete with additional generic manufacturers who would then be entering the market. Dir. Pls.’ Summ. J.App., Tab 80 at 112. Bayer discounts the import of these facts, insisting instead that Cipro competes in the larger market of flouroquinolones, which includes other drugs such as Leva-quin, Floxin and Noroxin, within which Cipro has been losing market share, from 75 percent in 1996 to 43 percent in 2001. Bayer’s Opp. Mem. at 28-29. Bayer maintains that a properly defined market must include all quinolone antibiotics and that defendants did not possess enough market power to control prices or exclude competition within that larger market. Id. at 29. Although evidence that Bayer charged high prices for Cipro “may of course be indicative of monopoly power,” it is not necessarily conclusive in the absence of any analysis of Bayer’s costs. See, e.g., Geneva Pharm. v. Barr, 386 F.3d at 500. Plaintiffs have provided neither evidence of Bayer’s costs nor any direct evidence that defendants restricted output. However, the pricing strategy encompassed in the Amended and Restated Supply Agreement compels an inference that Bayer was reaping an abnormally high price-cost margin, given the 95 percent price drop that was to occur almost a full year in the future for an identical quantity of an identical strength of the identical drug. Dir. Pls.’ Summ. J.App., Tab 43A at BCP4660023. Given Bayer’s obvious ability to control prices, and its admission that it did not anticipate a commensurate drop in its own production costs for Cipro, it is reasonable to accept plaintiffs’ contention and conclude both that the relevant market is for ciprofloxacin and that Bayer had market power within that market. b. Adverse effect on competition The ultimate question — and this is the crux of the matter — is not whether Bayer and Barr had the power to adversely affect competition for ciprofloxacin as a whole, but whether any adverse effects on competition stemming from the Agreements were outside the exclusionary zone of the ’444 Patent. It goes without saying that patents have adverse effects on competition. See Precision Instrument Mfg. Co. v. Automotive Maintenance Mach. Co., 324 U.S. 806, 816, 65 S.Ct. 993, 998, 89 L.Ed. 1381 (1945) (A patent "is an exception to the general rule against monopolies and to the right to access to a free and open market."); Schering-Plough, 402 F.3d 1056, 1065-1066, 2005 WL 528439, at *7 ("By their nature, patents create an environment of exclusion, and consequently, cripple competition. The anticompetitive effect is already present."). However, any adverse effects within the scope of a patent cannot be redressed by antitrust law. See United States v. Studiengesellschaft Kohle, m.b.H., 670 F.2d 1122, 1127 (D.C.Cir.1981) ("[T]he conduct at issue is illegal if it threatens competition in areas other than those protected by the patent and is otherwise legal."); see also United States v. General Electric Co., 272 U.S. 476, 485, 47 S.Ct. 192, 195, 71 L.Ed. 362 (1926); E. Bement & Sons v. National Harrow Co., 186 U.S. 70, 91, 22 S.Ct. 747, 755, 46 L.Ed. 1058 (1902). The ’444 Patent gave Bayer the right to exclude competition entirely for ciprofloxacin for the term of the patent, and any conduct within the scope of the patent is exempt from antitrust scrutiny. See Cipro II, 261 F.Supp.2d at 248 ("[A] patent holder does not run afoul of the Sherman Act unless the patent holder acts beyond the confines of the patent monopoly."). Defendants argue that a determination that the Agreements do not restrict competition beyond the scope of the claims of the ’444 Patent ends the inquiry as to anti-competitive effects. Plaintiffs, on the other hand, argue that the exclusionary power of the patent for purposes of the anti-competitive effects analysis should be tempered by its potential invalidity. i. The validity inquiry While there have been to date only a handful of cases discussing the legality of patent settlement exclusion payments, some courts and commentators have dealt with the questions of whether and to what extent the validity of the patent should be a factor in appraising the legality of an exclusion payment, and what sort of inquiry into validity an antitrust court should make. The Second Circuit has not yet addressed these issues, but two federal circuits, two district courts (including one on which Judge Posner sat by designation) and the Federal Trade Commission (“FTC”) have considered them. Although those courts have come to different conclusions regarding the legality of exclusion payments at issue in those cases, they have generally agreed that an antitrust court need not make an independent assessment of the underlying patent’s validity. The Eleventh Circuit’s approach in Valley Drug The Eleventh Circuit in Valley Drug Co. v. Geneva Pharma., Inc., 344 F.3d 1294 (11th Cir.2003), held that to the extent the effects of the subject settlement agreements are within the scope of the exclusionary potential of the patent, such effects are not subject to per se (or rule of reason) antitrust condemnation, even where the patent is later held invalid. Valley Drug, 344 F.3d at 1311. The two agreements at issue in that case were between Abbott, manufacturer of the pioneer drug Hytrin, and two of its generic competitors—Geneva and Zenith. Id. at 1296. Abbott held multiple patents on Hytrin, a drug containing terazosin hydrochloride, which is used to treat hypertension and enlarged prostate, and Geneva filed several ANDA IVs on Hytrin over a period of years. Id. at 1298. Zenith, meanwhile, had also filed an ANDA IV on Hytrin, which was pending when two additional patents relating to the active ingredient in Hytrin were issued to Abbott. Id. Abbott listed the new patent information with the FDA, which then required Zenith to make a certification with respect to the newly-issued patents. Id. Rather than comply, Zenith filed suit against Abbott to force Abbott to delist the new patents, alleging that Abbott listed them with the knowledge that they were not applicable to Hytrin. Id. On March 31, 1998, Abbott and Zenith entered an agreement settling their de-listing and infringement dispute, under which Zenith agreed not to sell or distribute any generic terazosin hydrochloride product until a third party entered the market or until one of Abbott’s patents expired, in exchange for payments by Abbott of $6 million every three months. Id. at 1300. The next day, Abbott entered a similar agreement with Geneva whereby Geneva agreed not to sell or distribute any generic terazosin hydrochloride product until one of Abbott’s patents expired, a third party entered the market or Geneva obtained a final court judgment from which no further appeal could be taken that its terazosin products did not infringe one of Abbott’s patents or that the patent was invalid. Id. In exchange, Abbott agreed to pay Geneva $4.5 million per month. Id. Geneva subsequently prevailed in the patent infringement suit Abbott had filed against it, obtaining a judgment on September 1, 1998 that the patent at issue in that case was invalid. Id. at 1301. The district court concluded that Abbott’s agreements with Zenith and Geneva were per se violations of Section 1 of the Sherman Act, holding that the exclusionary effect of the agreements constituted an allocation of the market between horizontal competitors. Id. at 1304. The Eleventh Circuit reversed, however, rejecting the argument “that the agreements by Geneva and Zenith not to produce infringing products are subject to per se condemnation and treble-damages liability merely because the ’207 patent was subsequently declared invalid.” Id. at 1306. The court ruled that “the mere subsequent invalidity of the patent does not render the pátent irrelevant to the appropriate antitrust analysis.” Id. at 1306-07. The court invoked the rationale of Justice Harlan’s concurrence in Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 179-80, 86 S.Ct. 347, 351-52, 15 L.Ed.2d 247 (1965): “[T]o hold, as we do not, that private antitrust suits might also reach monopolies practiced under patents that for one reason or another may turn out to be voidable under one or more of the numerous technicalities attending the issuance of a patent, might well chill the disclosure of inventions through the obtaining of a patent because of fear of the vexations or punitive consequences of treble-damage suits.” Id. at 1307. The court accordingly reserved any post hoc validity analysis for those cases in which the patent was procured by fraud or known by the patentee to be invalid. Id. at 1307. The court concluded that “[pjatent litigation is too complex and the results too uncertain for parties to accurately forecast whether enforcing the exclusionary right through settlement will expose them to treble damages if the patent immunity were destroyed by the mere invalidity of the patent.” Id. at 1308. The court held open the possibility that the size of the payment to refrain from competing could be evidence of a lack of faith in the validity of the patent or evidence that the patent was obtained by fraud but, citing this court’s decision in Cipro II, noted that the asymmetries of risk inherent in a Hatch-Waxman patent litigation and the high profits at stake could induce even a confident patentee to pay a substantial sum in settlement. Id. at 1309-10. The Valley Drug court thus took the position that an antitrust court need not consider the potential invalidity of the patent in an exclusion-payment settlement, except in those extreme cases involving fraud on the Patent Office or assertion of a patent known to be invalid, i.e., in circumstances giving rise to an allegation of Walker Process fraud or sham litigation. However, the court went on to direct the district court on remand to evaluate the defendants’ claim that the exclusionary effects of the patent and the agreements were coextensive because certain provisions of the agreements were analogous to a consensual preliminary injunction and stay of judgment pending appeal. Id. at 1312. The court instructed that this evaluation should include a comparison between “the provisions of the agreement and the protections afforded by the preliminary injunction and stay mechanisms,” and, furthermore, that the “likelihood of Abbott’s obtaining such protections” should be considered. Id. On remand, the district court interpreted the Eleventh Circuit’s instructions as requiring an analysis of the likelihood that Abbott would have won a preliminary injunction at the time the agreements were executed, which it construed as requiring an analysis of whether Abbott would have been able to show that its patent was likely valid, rather than an analysis simply of whether the patent claims covered Abbott’s product. In re Terazosin Hydrochloride Antitrust Litig., 352 F.Supp.2d 1279, 1295 (S.D.Fl.2005). The district court proceeded to determine the likely validity of the patent at the time the agreements were entered, employing the standards applicable to a preliminary injunction analysis. Id. at 1303-07. The district court ultimately concluded that Abbott would likely not have been able to show that its patent was likely valid at the preliminary injunction stage of its suit against Geneva and, therefore, held that the Geneva agreement went beyond the exclusionary zone of the patent and was a per se violation of the Sherman Act. It is not certain that the district court correctly interpreted the Eleventh Circuit’s opinion, and, indeed, the Eleventh Circuit seems to have expressed some doubt on that point in an unrelated opinion. See Schering-Plough, 402 F.3d at 1065, 2005 WL 528439, at *7 n. 14 (“On remand, the district court in Valley Drug still applied a per se analysis.... ”). In any event, the implication of the district court’s reasoning conflicts with the proposition already rejected in Cipro II—that the legality of the Agreements is contingent on Barr’s chances of having won at trial. See Cipro II, 261 F.Supp.2d at 202 (“[Pjlaintiffs cannot avoid dismissal based on a claim of injury-in-fact that relies on the hope that Barr would have prevailed in its suit against Bayer.”). The Sixth Circuit’s approach in Cardiz-em The Sixth Circuit, in In re Cardizem CD Antitrust Litig., 332 F.3d 896 (6th Cir. 2003), also eschewed an analysis of the patent’s validity in analyzing the anti-competitive effects of an exclusion-payment patent settlement agreement, although that court, unlike this one, concluded that such a settlement was a per se violation of the Sherman Act without considering the scope of the underlying patent right. The agreement at issue in that case, however, contained provisions that clearly exceeded any competitive restrictions accruing to the defendants under patent law, particularly because the settling generic manufacturer, Andrx, did not relinquish its claim to 180 days of generic marketing exclusivity under the Hatch-Waxman Act. That is, a term of the agreement required that Andrx maintain its status as first-filer of an ANDA IV even after entering the agreement with the brand-name manufacturer. In re Cardizem, 332 F.3d at 902. Andrx’s refusal to amend its ANDA to give up the exclusivity claim resulted in a market bottleneck since no other generic manufacturer could come to market until at least 180 days after Andrx began marketing the drug, a trigger that was postponed indefinitely by the settlement. Id. at 907. Thus, the brand-name manufacturer used the agreement to effectively bar third parties from mounting challenges to its patent—a power clearly not within the exclusionary power of a patent. Therefore, although the Sixth Circuit arrived at a different conclusion regarding per se liability, its approach was consistent with the position taken by this court in Cipro II— namely, that a patent holder cannot exploit the Hatch-Waxman provisions to create a bottleneck that indefinitely excludes subsequent generic challengers from the market. It is also clear that the Sixth Circuit did not engage in an after-the-fact analysis of the patent’s likely validity in reaching its determination. Judge Posner’s approach in Asahi Glass Judge Posner, sitting by designation for the Northern District of Illinois, adopted similar reasoning to that of the Eleventh Circuit in Valley Drug in analyzing the merits of an antitrust action brought by a supplier to a generic pharmaceutical company that was shut out of the market for paroxetine hydrochloride (sold as the antidepressent Paxil) by a settlement agreement between the generic and the brand-name manufacturer. Asahi Glass, 289 F.Supp.2d at 992-93. The agreement settled a Hatch-Waxman patent litigation and stipulated that the brand-name manufacturer would provide the finished drug product free of charge to the generic company, which would then sell it as an unbranded version of Paxil and pay a sizeable royalty to the brand-name manufacturer. The plaintiff, which had previously anticipated selling the active ingredient for the drug to the generic manufacturer, found itself without a customer, since the generic manufacturer had no incentive to pay for that which it was already getting for free from the brand-name drug maker. The plaintiff sued both parties to the agreement, alleging that the agreement violated Section 1 of the Sherman Act. Judge Posner dismissed the complaint on the ground that the agreement was a legitimate settlement of a patent infringement suit. Id. at 991. Commenting on the hesitation of an antitrust court to delve into the merits of a predicate patent suit and its potential effect on a settlement agreement, Judge Posner noted: [T]he private thoughts of a patentee, or of the alleged infringer who settles with him, about whether the patent is valid or whether it has been infringed is not the issue in an antitrust case. A firm that has received a patent from the patent office (and not by fraud ...), and thus enjoys the presumption of validity that attaches to an issued patent, 35 U.S.C. § 282, is entitled to defend the patent’s validity in court, to sue alleged infring-ers, and to settle with them, whatever its private doubts, unless a neutral observer would reasonably think either that the patent was almost certain to be declared invalid, or the defendants were almost certain to be found not to have infringed it, if the suit went to judgment. Id. at 992-93. Although Asahi Glass did not involve an exclusion-payment settlement, Judge Posner employed a similar approach to that of the Eleventh Circuit in Valley Drug in declining to independently assess the likely validity of the patent unless it was almost certainly invalid or obtained by fraud., The district court’s approach in Tamoxifen This district has also previously adjudicated the legality of a settlement of a patent litigation in which the validity of the patent was less than certain, without engaging in a post hoc analysis of the patent’s validity. See In re Tamoxifen Citrate Antitrust Litig., 277 F.Supp.2d 121 (E.D.N.Y.2003) (Glasser, J.). In that case, the brand-name manufacturer, Zeneca, settled with the first generic challenger— coincidentally, Barr—after Barr had obtained a district court judgment, at that time on appeal, that the patent was invalid and unenforceable. Id. at 125. Under the settlement, Zeneca paid Barr $21 million and licensed Barr to sell tamoxifen manufactured by Zeneca for a royalty in exchange for Barr’s withdrawal of its challenge to the validity to the patent and agreement not to market its generic version of tamoxifen until the patent expired. Id. Barr and Zeneca jointly moved the appeals court to dismiss the appeal as moot in light of the settlement and to vacate the judgment below, which motions were granted. Id. Three additional generic manufacturers subsequently challenged Zeneca’s patent for tamoxifen, and the patent was upheld in each instance, despite an attempt by one of the challengers to invoke collateral estoppel based on Barr’s earlier vacated district court judgment. Id. at 126-27. The district court dismissed the subsequent antitrust action brought by consumers, third-party payors and consumer advocacy groups alleging that they were forced to pay higher prices for tamoxifen as a result of the Zeneea/Barr settlement agreement. The court reasoned: “The lack of competition was not the result of any anti-competitive conduct by Zeneca or Barr, but rather the result of the existence of the ’516 patent and the decision by the patent holder to enforce it.” Id. at 138. In reaching this conclusion, the court did not independently assess the probable validity of the patent, even in light of the earlier district court’s finding of invalidity and unenforceability, although it did note the traditional Walker Process-type exceptions for patent antitrust liability where the patent is fraudulently procured or the infringement action was a sham. Id. at 136. The Federal Trade Commission’s approach in Schering-Plough In a decision heavily relied on by plaintiffs for its holding that exclusion payments exceeding litigation costs up to $2 million are prohibited under the Federal Trade Commission Act, the FTC also “question[ed] the utility of a rule that would give decisive weight to an after-the-fact inquiry into the merits of the patent issues in a settled case.” In re Schering-Plough Corp, No. 04-10688, 2003 WL 22989651 (FTC Dec. 8, 2003) (.“Schering-Plough I ”), set aside and vacated, Schering-Plough Corp. v. Federal Trade Comm’n, 402 F.3d 1056, 2005 WL 528439 (11th Cir. Mar.8, 2005) (“Schering-Plough II”). The facts of that case involved two settlement agreements—one between Scher-ing-Plough, the brand-name manufacturer of two extended-release microencapsulated potassium chloride products, K-Dur 20 and K-Dur 10, and Upsher, a generic manufacturer, and one between Schering-Plough and American Home Products (“AHP”), another generic manufacturer. Id. at 1065-1066. The Schering/Upsher agreement, entered on the eve of the parties’ Hatch-Waxman patent infringement trial, called for Schering to make payments totaling $60 million to Upsher in exchange for, inter alia, Upsher’s agreement not to enter the market with any generic version of K-Dur 20 for over four years. The Schering/AHP settlement, which also ended a Hatch-Waxman patent infringement trial, required Schering-Plough to make payments totaling $30 million in exchange for AHP’s agreement not to market any generic version of K-Dur 20 for at least six years. Id. After rejecting Schering-Plough’s argument that it had received any other consideration for its payments than Upsher’s and AHP’s agreements to delay marketing (both agreements included ancillary licenses), the FTC condemned the agreements as anti-competitive, but not on the basis of a post hoc review of the patents’ validity. The FTC provided a pragmatic reason for its refusal to assess validity, which had not been previously articulated by courts considering the issue: An after-the-fact inquiry by the Commission into the merits of the underlying litigation is not only unlikely to be particularly helpful, but also likely to be unreliable. As a general matter, tribunals decide patent issues in the context of a true adversary proceeding, and their opinions are informed by the arguments of opposing counsel. Once a case settles, however, the interests of the formerly contending parties are aligned. A generic competitor that has agreed to delay its entry no longer has an incentive to attack vigorously the validity of the patent in issue or a claim of infringement. Schering-Plough I, 2003 WL 22989651, at *19. Although the Eleventh Circuit heavily criticized the FTC for other aspects of its decision, it had no quarrel with the FTC’s rejection of a post hoc analysis of patent validity, as its own analysis took no account of the potential invalidity of the patent. Schering-Plough II, 402 F.3d 1056, 2005 WL 528439. This survey of the case law reveals that, with the possible exception of the Eleventh Circuit’s instructions to the district court on remand in the Valley Drug case (see discussion supra), courts assessing the legality of patent settlement agreements have not engaged in a post hoc determination of the potential validity of the underlying patent (except in cases of Walker Process or sham litigation claims) when deciding whether an agreement concerning the patent violates antitrust law. These authorities are persuasive. Above all, making the legality of a patent settlement agreement, on pain of treble damages, contingent on a later court’s assessment of the patent’s validity might chill patent settlements altogether. Moreover, as explained infra, such an approach would undermine the presumption of validity of patents in all cases, as it could not logically be limited to drug patents, and would work a revolution in patent law. In any event, although “the reasonableness of agreements under the antitrust laws are to be judged at the time the agreements are entered into,” Valley Drug, 344 F.3d at 1306, a post hoc assessment of the validity of the ciprofloxacin patent would likely do plaintiffs little good. After all, the ’444 Patent has withstood multiple subsequent challenges and its validity has been affirmed by the Federal Circuit. At oral argument, plaintiffs asserted that the court should give little weight to these subsequent failed attacks because none of them raised what plaintiffs believe to be the most forceful attack on the ’444 Patent—-namely, inequitable conduct. Plaintiffs argue that this defense required extensive discovery and would take a long period of time to prepare and try, and that this explains why none of the subsequent challengers raised this issue. But this argument is not very convincing in light of the fact that one of the challenges—Carlsbad’s, on the ground of obviousness-—-also required extensive discovery and resulted in a nine-day bench trial. It is difficult to accept the notion that Carlsbad abandoned a stronger argument because it would have presumably required a greater effort, especially since Barr had already done most of the preparatory work on the inequitable conduct issue. Plaintiffs further argue that the ’444 Patent that emerged from reexamination in the PTO after Bayer’s settlement with Barr was much changed from the ’444 Patent that Barr had challenged, insinuating that the allegedly strong inequitable conduct defense that Barr had developed would be weaker, or possibly even unavailable, in the hands of challengers of the reexamined ’444 Patent. Indir. Pls.’ Count V Opp’n, at 3. This is clearly wrong, since the defense of inequitable conduct was available for all the ’444 Patent’s post-reexamination challengers. See Molins PLC v. Textron, Inc., 48 F.3d 1172, 1182 (Fed.Cir.1995) (affirming a finding of inequitable conduct, notwithstanding that the withheld reference was later cited during reexamination and the claims were allowed to issue). Thus, the ability of the patent to withstand the subsequent challenges is persuasive, and the there is little likelihood that plaintiffs here would prevail in a post hoc attack on the patent. In sum, it is inappropriate for an antitrust court, in determining the reasonableness of a patent settlement agreement, to conduct an after-the-fact inquiry into the validity of the underlying patent. Such an inquiry would undermine any certainty for patent litigants seeking to settle their disputes. In addition, exposing the parties to a patent settlement agreement to treble antitrust damages simply because the patent is later found to be invalid would overstep the bright-line rule adopted by the Supreme Court in Walker Process, first elaborated upon by Justice Harlan in his concurrence and relied upon by the patent bar for the past forty years. Walker Process, 382 U.S. at 179-80, 86 S.Ct. at 351-52 (1965). ii. The effect of the possible invalidity of the patent on the legality of the Agreements Having resolved that the validity of the ’444 Patent should not be independently assessed, the next question that needs to be addressed is how the possibility that the patent is invalid should affect the legality of an exclusion payment. The heart of plaintiffs’ argument is that there was at least a chance that the ’444 Patent was invalid and, therefore, the Agreements violated antitrust law because the patent rights they enforce derive from a potentially invalid patent. They argue that the potential invalidity of the patent translates into a potential for open competition (and, hence, lower prices), and that the possibility of realizing such open competition was unfairly foreclosed by the Agreements. Although plaintiffs do not attempt to litigate the validity of the ’444 Patent in their motion for summary judgment, or in their opposition to defendants’ motions for summary judgment, they do argue that the patent’s potential invalidity should be taken into account when assessing whether the anti-competitive effects of the Agreements exceed the exclusionary scope of the patent. These arguments, plaintiffs assert, do not depend on an analysis of the ’444 Patent’s validity. In that regard, plaintiffs advance the reasoning of the FTC in Schering-Plough, now rejected by the Eleventh Circuit, and the views of several academics. The starting point of the FTC’s analysis whether the exclusion payments in that case were anti-competitive was to compare the amount of competition that occurred under the exclusion payment to “the amount of competition that was likely to occur had it not been for the payment .... ” Schering-Plough I, 2003 WL 22989651, at *16. The FTC then examined and rejected Schering’s defense that the restraint on trade due to the exclusion payment was ancillary to the legitimate settlement of a patent dispute, reasoning that the amount of the payment ($60 million) was too high to be “a reasonably necessary element of a settlement that is procompetitive overall.” Id. at 21. The FTC also rejected as implausible Schering’s separate justification for the payment, that it was in exchange for some licenses. Id. at 40. The FTC concluded that the payment was made in exchange for delayed entry, and was therefore an agreement that “unreasonably restrains commerce.” Id. Plaintiffs note that the FTC relied on the economic analysis advocated by Professor Carl Shapiro in his article Antitrust Limits to Patent Settlements, 34 Rand J. Econ. 391 (2003), see Dir. Pls.’ Summ. J.App., Tab 16, in which he states that, like litigants to a patent infringement suit, consumers have an “expected” gain from the patent challenge that equals their actual gains if the patent is invalidated, discounted by the probability of its being upheld. Dir. Pls.’ Mem. at 14. The parties to the litigation, Professor Shapiro argues, should not be allowed to bargain away this assumed consumer surplus in reaching their settlement. Shapiro, 34 Rand J. of Econ. at 396 (“[A] patent settlement cannot lead to lower expected consumer surplus than would have arisen from ongoing litigation. Effectively, consumers have a ‘property right’ to the level of competition that would have prevailed, on average, had the two parties litigated the patent dispute to a resolution in the courts.”). This concept of a public property right in the outcome of private lawsuits does not translate well into the realities of litigation, and there is no support in the law for such a right. There is simply no legal basis for restricting the rights of patentees to choose their enforcement vehicle (i.e., settlement versus litigation). Equally important, there is no duty to use patent-derived market power in a way that imposes the lowest monopoly rents on the consumer. See, e.g., E. Bement & Sons v. Nat. Harrow Co., 186 U.S. 70, 91, 22 S.Ct. 747, 755, 46 L.Ed. 1058; Studiengesellschaft Kohle, 670 F.2d at 1127. Requiring parties to a lawsuit either to litigate or negotiate a settlement in the public interest, at the risk of treble damages is, as a practical matter, tantamount to establishing a rule requiring litigants "to continue to litigate when they would prefer to settle" and "to act as unwilling private attorneys general and to bear the various costs and risks of litigation." Nestle Co., Inc. v. Chester’s Market, Inc., 756 F.2d 280, 284 (2d Cir.1985); see also Times Mirror Magazines, Inc. v. Field & Stream Licenses Co., 103 F.Supp.2d 711, 741 (S.D.N.Y.2000) ("Insisting that a court review a settlement [of a trademark suit] to assure that no public confusion will result would make such agreements of little value to the parties.... Parties would sensibly conclude that they might better litigate the issue of confusion to conclusion rather than reach a settlement which might later be found to be unenforceable.") (quoting T & T Mfg. Co. v. A.T. Cross Co., 449 F.Supp. 813, 827 (D.R.I.), aff’d 587 F.2d 533 (1st Cir.1978), cert. denied, 441 U.S. 908, 99 S.Ct. 2000, 60 L.Ed.2d 377 (1979)); Gen Defs. Opp. Mem. at 16 ("Plaintiffs’ rule that any of these settlements can be challenged by a third party claiming `property rights’ in some litigation outcome would increase the costs of litigation and of settlement by imbuing the entire process with an additional layer of uncertainty. Litigants would fear third-party challenges to settlements based on unknowable conceptions of what `consumer surplus’ might have occurred had litigation continued."). Although plaintiffs would no doubt argue that litigation is to be preferred in these drug patent cases, as pointed out in Cipro II, there is no support for the view that Hatch-Waxman intended to thwart settlements. Cipro II, 261 F.Supp.2d at 256. Furthermore, even assuming some consumer surplus that the parties are bound to respect in settlement negotiations, such an interest would first have to be quantified. In seeking to calculate this consumer surplus, plaintiffs first couch their analysis in probabilistic terms, acknowledging this court’s earlier admonishment that antitrust liability cannot be predicated on the possible outcome of litigation. Dir. Pls.’ Mem. at 12-23; Cipro II, 261 F.Supp.2d at 202; Schering-Plough I, 402 F.3d, at 1074-1075, 2003 WL 22989651, at *16. In particular, plaintiffs argue that every patent has a chance of being held invalid, which should inure to the public’s benefit. Dir. Pls.’ Mem. at 12-23 (citing Shapiro, 34 Rand J. of Econ. at 395 (“[A] patent is best viewed as a probabilistic property right. What the patent grant actually gives the patent holder is the right to sue to prevent others from infringing the patent. Nothing in the patent grant guarantees that the patent will be declared valid, or that the defendant in the patent suit will be found to have infringed.”) (emphasis in original)). To support this approach, plaintiffs resort to generalized statements about how patents fare in the courts. Dir. Pls.’ Mem. at 18 (“Defendants themselves have admitted that, except in the rarest of cases, no patent stands a greater than 70% chance of being found to be .Valid.”). This argument has some facial appeal, as it is common knowledge that many patents, once challenged, are ultimately held invalid and/or unenforceable. See, e.g., Dir. Pls.’ Summ. J.App., Tab 15 (John R. Allison and Mark A. Lemley, Empirical Evidence on the Validity of Litigated Patents, 26 AI-PLA Q.J. 185, 205 (1998) (showing that nearly half of all litigated patents are found to be invalid)). Ultimately, however, this argument proves too much. To begin with the premise, as characterized by generic defendants, that every patent is “a little bit invalid,” results in undermining the presumption of validity that Congress has afforded patents. 35 U.S.C. § 282 (“A patent shall be presumed valid.”); see Generic Defs.’ Mem. in Opp’n to Direct Purchaser Pls.’ Mot. for Partial Summ. J., at 9. Moreover, this premise could have far-reaching effects on everyday patent transactions. See Schering-Plough II, 402 F.3d at 1067, 2005 WL 528439, at *8 (“Indeed, application of antitrust law to markets affected by the exclusionary statutes set forth in patent law cannot discount the rights of the patent holder.”) (citing Simpson v. Union Oil Co., 377 U.S. 13, 14, 84 S.Ct. 1051, 12 L.Ed.2d 98 (1964)). For example, whenever a patentee and accused infringer enter a settlement (usually a license agreement), the accused infringer always either explicitly or implicitly acknowledges the patent’s validity, and in many cases must pay the patentee a royalty if it wishes to continue selling the infringing goods. Although plaintiffs contend that entry with a license is preferable to no entry at all, unless the license is royalty-free, the royalty itself is a barrier to entry, anathema to unfettered competition and, depending on the royalty rate, may offer minimal benefit to the public. If the settlement with a payment to a generic is to be subject to antitrust liability, even though it does not exceed the scope of the patent, the next antitrust challenge to a patent settlement might well take place in the context of a license with royalty, a result that even Professor Shapiro would presumably disfavor. See, e.g., Shapiro, Antitrust Limits to Patent Settlements, 34 RAND J. of Econ. at 395 (“[A] prohibition on settling patent disputes cannot make sense: as noted earlier, virtually every patent license can be viewed as the settlement of a patent dispute, and settlements generally can provide many benefits not only to the settling parties but to consumers as well.”). To open royalty-bearing patent license agreements to antitrust scrutiny simply because patents are often held invalid when tested in litigation would undermine the settled expectations of pat-entees and potential infringers/licensees across countless industries. See In re Tamoxifen, 277 F.Supp.2d at 137 (“No antitrust injury can flow from the prices at which Zeneca licensed tamoxifen to Barr.”); see also Studiengesellschaft Kohle, 670 F.2d at 1127. Plaintiffs argue, as an alternative to the probabilistic method described above, that the potential invalidity of the patent can be inferred from the parties’ behavior. Plaintiffs suggest that the settlement amount is evidence of the patent’s fallibility because its value exceeds the litigation costs of fending off a challenge. Mem. of Dir. Pls. in Opp’n to Defs.’ Mots, for Summ. J. at 45. Plaintiffs make the sensible argument that the higher the patentee’s expectation of invalidity, the more it will be willing to pay a generic challenger to concede validity and stay out of the market. Thus, the very amount of the exclusion payment is evidence of the probable invalidity of the patent. Indeed, Bayer’s own documents bear this theory out: a presentation slide prepared by Bayer’s chief negotiator of the Bayer/Barr settlement contains the title, “The maximum settlement amount we should consider paying increases as the risk of losing increases.” Dir. Pls.’ Summ. J.App., Tab 47B, at BCP-P-0001668A-004. It is worth mentioning that the presentation slide in question includes a graph plotting Bayer’s perceived risk of losing against various dollar amounts and that the amount Bayer ultimately paid Barr (approximately $398 million) is at the 20-25 percent risk-of-loss mark. However, although direct plaintiffs contend that the amount of the exclusion payment in this case—$398 million—corresponds to a perceived chance of losing of about 50 percent, in absolute numbers Bayer’s perceived chance of losing would appear to be much lower. How direct plaintiffs calculated this number is difficult to fathom, especially since they cite Professor Hovenkamp’s explanation of expected gains and losses in analyzing the anti-competitive effects of exclusion payments, who states: “[I]f the patentee has a 25% chance of losing, it is willing to pay up to 25% of the value of its monopoly to exclude its competitors without a trial.” Herbert Hovenkamp et al., Anticompetitive Settlement of Intellectual Property Disputes, 87 Minn. L.Rev. 1719, 1759 (2003). Applying this model to Bayer’s situation—plaintiffs submit that Bayer stood to lose more than $1.5 billion in profits if the ’444 Patent was invalidated—reveals that Bayer’s payment of $398 million translates to a perceived chance of losing of 26.5 percent. Of course, Bayer’s payment to Barr was likely also constrained by the maximum amount Bayer expected Barr to make if it won the lawsuit, but applying a straight “expectation” economic analysis to these facts would indicate that Bayer was relatively confident of its chances of winning at trial. Plaintiffs’ point is well-taken that the greater the chance a court would hold the patent invalid, the higher the likelihood that the patentee will seek to salvage a patent by settling with an exclusion payment. If courts do not discount the exclusionary power of the patent by the probability of the patent’s being held invalid, then the patents most likely to be the subject of exclusion payments would be precisely those patents that have the most questionable validity. This concern, on its face, is quite powerful. But the answer to this concern lies in the fact that, while the strategy of paying off a generic company to drop its patent challenge would work to exclude that particular competitor from the market, it would have no effect on other challengers of the patent, whose incentive to mount a challenge would also grow commensurately with the chance that the patent would be held invalid. See, e.g., Herbert Hovenkamp, Sensible Antitrust Rules for Pharmaceutical Competition, 39 U.S.F.L.Rev. 11, 25 (2004) (“In a world in which there are numerous firms willing and able to enter the market, an exit payment to one particular infringement defendant need not have significant anticompeti-tive effects. If there is good reason for believing the patent invalid others will try the same thing.”). Moreover, it is unlikely that the holder of a weak patent could stave off all possible challengers with exclusion payments because the economics simply would not justify it. Cf. id. at 25 n. 54 (noting “ample history of litigation among large numbers of rivals