Gilead Sciences' White & Case counsel likened its client's agreement with several pharmaceutical companies to not compete on HIV medication to the contracts lawyers sign when joining a firm in an attempt to dodge a class action lawsuit alleging the biotech company has violated antitrust and consumer-protection laws.

On Thursday, U.S. District Judge Edward Chen of the Northern District of California heard arguments to dismiss a consolidated class action complaint filed in August. The lawsuit, brought by 20 users of HIV therapies, claims Gilead joined forces with Bristol-Myers Squibb Co.; Japan Tobacco Inc.; and Johnson & Johnson subsidiary Janssen R&D Ireland to snuff competition on generic versions of HIV medications and extend the life of Gilead's patents.

When Chen asked Christopher Curran, a Washington, D.C.-based White & Case attorney representing Gilead, to come up with an analogy for the type of agreements the company made with fellow defendants, Curran pointed to his own industry.

"As a lawyer, you agree to not compete against the other lawyers in the law firm over clients," Curran said. "Every joint venture and business combination has to make sure the collaborators don't directly compete."

Chen asked what would happen if he went to the firm's co-counsel and asked them to not represent a client in any other matters?

Curran said that might not be an example of an ancillary restraint, a kind of restraint that promotes competition, unlike Gilead's agreements. The question is does the restraint support and enhance pro-competitive collaboration, he said.

Co-lead plaintiffs counsel Mark Lemley of Durie Tangri in San Francisco called the comparison "remarkable."

"A law firm is a single integrated enterprise that acts like a single firm," said Lemley, who is also a professor at Stanford Law School. "If instead what happened was lawyers, who were all part of the San Francisco Bar but worked for different firms, agreed they would not compete with each other, that would be illegal."

He said the agreements featured in this case don't look anything like a law firm, because they include two separate entities agreeing to not compete. In fact, Lemley called the "joint venture" agreements "a sham" to prolong the shelf life of Gilead's patents, because they include a clause that agrees to continue paying royalties to the companies' for a decade, even if they don't have any valid patents.

"We think that provision is in fact the purpose of the agreement," he said. "They want to have monopoly power even after the patent has expired."

Chen said the agreement didn't seem unusual.

"Even if someone doesn't have a patent on something and you agree not to sell it, what's wrong with that?" he said.

Lemley said nothing is wrong with that on its face and said it is a common business relationship. This case is different, he said, because the pharmaceutical companies are horizontal competitors.

"It's not Apple making an agreement with an iPhone distributor," he said. "It's Apple and Samsung saying, 'let's enter into an agreement where we don't compete with each other anymore.'"

Curran called the allegation that the collaboration extended the life of the patent "irrelevant and a red herring."

"Joint ventures are often created by people who do not have intellectual property rights," he said. "They need protection to assure they will reap the benefits of that investment, and that the collaborators are not going to undermine the whole enterprise by competing with it."

Lemley argued that the decision over the alleged ancillary nature of the agreements should be decided under a motion of summary judgement, since deciding the restraints are ancillary would require the court to "engage in extensive fact finding outside the record," according to plaintiff's opposition to the motion to dismiss.

Chen asked Curran why that debate over whether the restraints were ancillary does not raise factual questions that could result in summary judgement motion. The attorney said the agreements were "unquestionable ancillary."

Chen concluded the more than two-hour hearing by saying it would take a while for him to review the arguments and come to a decision. In the meantime, he set a trial date for the case Feb. 28, 2022.