The Federal Trade Commission has issued for public comment a notice of proposed rulemaking that is intended to clarify “when a transfer of exclusive rights to a patent in the pharmaceutical industry results in a potentially reportable asset acquisition under the Hart Scott Rodino (HSR) Act.” Comments are requested by October 25, 2012.
The rule would adopt the “all commercially significant rights” test that would focus on “the substance of what is being transferred, not the form of the transfer. Thus, any transfer of exclusive rights to a patent in the pharmaceutical industry is a potentially reportable event, regardless of whether this transfer is called an exclusive license or something else.” According to the FTC, the test reflects existing policy in part and establishes “a new approach to the analysis of manufacturing rights under an exclusive license. Under the proposed rule, when the licensor retains the right to manufacture exclusively for the licensee, it will retain ‘limited manufacturing rights,’ as defined by the proposed §801.1(p). In retaining these rights, the licensor does not retain the right to use the patent in the same therapeutic area. As in the case of co-rights, the licensor retains limited manufacturing rights to aid the licensee’s efforts to market and sell the product and generate royalties in that therapeutic area. Thus, when it retains limited manufacturing rights, the licensor is still transferring all commercially significant rights to the licensee and a potentially reportable asset acquisition is taking place.” See Federal Trade Commission News Release, August 13, 2012.