The Federal Trade Commission (FTC) recently announced proposed amendments to the Premerger Notification Rules (HSR Rules) to clarify reporting requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the HSR Act), for transactions involving the transfer of patent rights in the pharmaceutical industry. The proposed rule is largely a codification of the FTC’s current treatment of exclusive licenses, with one significant change regarding the weight given to manufacturing rights retained by the licensor in pharmaceutical transactions.

The HSR Act requires parties engaged in certain transactions (involving the acquisition of voting securities, assets, or controlling non-corporate interests) to file a notification with the FTC and the Antitrust Division of the Department of Justice (DOJ), and to observe the statutorily prescribed waiting period prior to closing. The acquisition of a patent is treated as an asset acquisition, and thus a potentially reportable transaction under the HSR Act. However, whether the transfer of rights to a patent is also deemed an asset acquisition commonly involves a complex analysis focused on whether the transferred rights grant the licensee the exclusive right to “make, use and sell.”

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