Changes to FTC Premerger Rules Expand HSR Notification Requirements for Pharmaceutical Patent License Transactions

Morrison & Foerster LLP

Yesterday, the U.S. Federal Trade Commission (“FTC”) issued its final rule (the “New Rule”) to the Hart-Scott-Rodino (“HSR”) Act Premerger Notification Regulations to clarify and expand the coverage of the HSR Act to patent license and collaboration agreements in the pharmaceuticals industry where the licensee acquires “all commercially significant rights” to the pharmaceutical patents.

Under the existing HSR Act regulations and policy, the outright acquisition of a patent and the exclusive license of a patent are potentially HSR reportable transactions (assuming the other HSR criteria, such as size of person and size of transaction, are satisfied). Thus, existing HSR regulations do not require an HSR notification for non-exclusive patent licenses, even if the licensor retains only very limited rights. The New Rule clarifies and expands the HSR reporting obligation, but only with respect to patent license agreements in the pharmaceuticals industry. The New Rule will become effective 30 days after publication in the Federal Register, which will likely happen within the next few days.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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