FTC Issues Final HSR Rule for Transfer of Exclusive Pharmaceutical Industry Patent Rights | Practical Law

FTC Issues Final HSR Rule for Transfer of Exclusive Pharmaceutical Industry Patent Rights | Practical Law

The FTC issued its final changes to the HSR reporting rules relating to transfers of exclusive patent rights in the pharmaceutical industry.

FTC Issues Final HSR Rule for Transfer of Exclusive Pharmaceutical Industry Patent Rights

by Practical Law Antitrust
Published on 06 Nov 2013 • USA (National/Federal)
The FTC issued its final changes to the HSR reporting rules relating to transfers of exclusive patent rights in the pharmaceutical industry.
On November 6, 2013, the FTC, in agreement with the DOJ, announced its finalized amendments to the HSR premerger notification rules clarifying when transfers of exclusive pharmaceutical patent rights are reportable under the HSR Act. The FTC proposed the amendments in August 2012 and received three comments before finalizing these rules. The FTC limited the amended rules to the pharmaceutical industry because it receives the largest number of filings involving exclusive patent licenses for pharmaceutical patents.
The amended HSR rules set out clear definitions to help practitioners determine when an HSR premerger filing is necessary in connection with the transfer of exclusive pharmaceutical patent rights, including:
  • All commercially significant rights.
  • Limited manufacturing rights.
  • Co-rights.

All Commercially Significant Rights

Under the new rules, a patent licensing agreement is reportable if it transfers all commercially significant rights to a patent or part of a patent in a:
  • Particular therapeutic area.
  • Specific indication within a therapeutic area.

Limited Manufacturing Rights

The new rules specify that a license may still be considered exclusive even where the licensor retains only a limited right to manufacture exclusively for the licensee. As a result, the acquisition of a patent from a licensor retaining limited manufacturing rights may be reportable as an asset transfer if the HSR thresholds are met.

Co-rights

The new rules codify the FTC Premerger Notification Office's long-standing position that a license to a patent or part of a patent does not become non-exclusive where the licensor retains co-rights, such as the right to co-promote or co-market the patent. Therefore, the acquisition of a patent from a licensor retaining co-rights is potentially reportable as an asset acquisition if the HSR thresholds are met.
The final amendments take effect 30 days after they are published in the Federal Register.