Patent Acquisitions – When Are They HSR Reportable?
Overview:
The Knowledge Group has developed a panel of key thought Leaders and practitioners to help companies understand the Hart-Scott-Rodino (HSR) rules for patent acquisitions, including the new rules of the Federal Trade Commission (FTC) for exclusive pharmaceutical patent licenses. The program will cover the most significant topics involved along with a Q&A panel to whom the attendees' questions will be addressed.Key Topics includes:
- The HSR Act: An Overview
- The "Size of Transaction" Test
- The "Size of Parties" Test
- Patents as "Assets" Whose Acquisition May Be Reportable
- Patent Acquisitions in the Pharmaceutical Industry: What Is New and What Is Not under the Amended Rules?
- Impact and Key Risks
- Compliance Issues
- Up-to-Minute Regulatory Updates
Agenda:
SPEAKERS
- Deidre J. Johnson, Counsel, Ropes & Gray [NAME PRONOUNCED: DAY-DRA]
- Timothy Cornell, Counsel, Clifford Chance
- Hartmut Schneider, Partner, WilmerHale
- Christopher A. Williams, Associate, Wilson Sonsini Goodrich & Rosati
- Ngoc Pham Hulbig, Associate, Cadwalader, Wickersham & Taft [NAME PRONOUNCED: KNOCK]
OUTLINE
- Introduction of Topic/Speakers [MODERATOR?]
- Overview of HSR Notification Thresholds [NGOC]
- Exclusive licenses as asset acquisitions
- Previous Rule [NGOC]
- Previous PNO position on exclusivity focused on the bundled right to make, use and sell
- Prior to the new rule, an exclusive license to use a patent (or part of a patent) to “make, use and sell” a commercial product was treated as a potentially reportable acquisition of assets.
- “Make” refers to the right to manufacture the commercial product. The retention of manufacturing rights by the licensor for any reason (including to manufacture and supply only the licensee) renders the license non-exclusive and thus non-reportable.
- Prior to the new rule, an exclusive license to use a patent (or part of a patent) to “make, use and sell” a commercial product was treated as a potentially reportable acquisition of assets.
- Previous PNO position on exclusivity focused on the bundled right to make, use and sell
- New Rule
- New rule: “all commercially significant rights” [NGOC]
- Under the new rule, a license is deemed exclusive if it transfers to the licensee “all commercially significant rights” to the product.
- Applies exclusively to pharmaceutical patent licenses.
- “Make, use and sell” no longer is the test for exclusivity for pharmaceutical patent licenses.
- Licensor’s retention of manufacturing rights to manufacture and supply only the licensee does not render the license non-exclusive.
- Under the new rule, a license is deemed exclusive if it transfers to the licensee “all commercially significant rights” to the product.
- New rule: “all commercially significant rights” [NGOC]
-
- Rationale behind new rule [TIM]
- Rationale for law is that “the pharmaceutical industry presents unique incentives for the use of exclusive licenses,” providing the scenario of an innovator without financial resources to bring a drug to market which has the incentive to license the product to larger pharmaceutical company with such resources.
- Breaking Down the Rule - Scope of “all commercially significant” rights [TIM]
- Some factors that the PNO may consider when determining whether a particular transaction represents a transfer of all commercially significant rights, based on informal PNO guidance
- “all”
- “commercially significant”
- Examples [Deidre & others to provide examples]
- Questions arising under new rule relating to retention os manufacturing rights in US but with no right to sell
- Some factors that the PNO may consider when determining whether a particular transaction represents a transfer of all commercially significant rights, based on informal PNO guidance
- Rationale behind new rule [TIM]
-
- Ambiguity [TIM]
- The changes did not simplify the HSR Rules for pharmaceutical licensing transactions; there is still ambiguity that will require guidance from the FTC’s Premerger Notification Office.
- Co-exclusivity and what it means for filing [TIM]
- Examples of reportable and non-reportable transactions [TIM]
- Ambiguity [TIM]
- Valuation [DEIDRE]
- Rules didn’t change how valuations done
- Acquisition price/FMV
- Contingent payments
- Application of foreign asset exemption, Ex-USpatents – valuation of patent portfolios that comprise US and non-US patents
- Practical Implications [DEIDRE]
- a. More HSR filings (stats from rule-making, etc.), cost
- b. Preparation Time/Waiting period
- c. Risk that transaction poses substantive issues to be addressed
- Substantive analysis of exclusive licenses under Section 7: when does an HSR filing become more than an administrative issue? [HARTMUT]
- Pharma deals
- Non-Pharma deals
- For pharma industry, the FTC’s definition of market exercise is fairly straightforward compared to other industries
- Reportability of Patent Licenses ex-US [HARTMUT]
- Reportability of pharmaceutical (and other) patent licenses in other jurisdictions: many follow the EU model, which requires that the patent at issue represents an “undertaking with market presence to which a turnover can be clearly attributed.” As a practical matter, this means that acquisitions of, or exclusive licenses under, patents that don’t generate a current royalty revenue steam are not reportable.
- What is on Tap for the Future? [CHRIS]
- PhRMA challenge – what does it mean?
- PhRMA industry group raised some administrative law issues with the new rule during the comment phase. In particular, they have raised that the rule is discriminatory against the pharmaceutical industry and that the Commission lacks statutory authority to issue this rule and that the rule contradicts the Commission’s established policy of non-discrimination.
- Transactions in other industries?
- Not clear how the FTC will treat licensing transactions in other industries, which are not part of the new rule and therefore covered under the older interpretations. Perhaps, talk about how (if at all) any old PNO guidance on pharmaceutical licensing transactions will be applicable
- The medial device industry is similar to pharma in structure – why did it limit rule-making to pharma? Did it not see the same volume of transactions involving medical device licensing?
- Revisit rationale for law – are there licensing transactions where incentives are not met?
- Generics licensing to other generics
- Discuss nature of industry and access to PNO
- PhRMA challenge – what does it mean?
Who Should Attend:
- Pharmaceutical company Executives/Senior Management
- General Counsel
- Attorneys in the field of Pharmaceutical Patent Law
- Antitrust Lawyers involved in Pharmaceutical/Biotech Industries
- Other related/interested professionals
Ngoc Pham Hulbig’s practice focuses on counseling regarding U.S. and global premerger notification requirements. She has extensive experience in preparing …
Tim heads Clifford Chance's US antitrust practice and advises clients on antitrust issues in government civil and criminal investigations, the …
Deidre Johnson focuses her practice on antitrust and is head of Ropes & Gray’s premerger notification practice. She counsels clients …
Hartmut Schneider is a partner in the Regulatory and Government Affairs Department of Wilmer Cutler Pickering Hale and Dorr LLP, …
Chris Williams is an associate in the Washington, D.C., office of Wilson Sonsini Goodrich & Rosati, where he is a …
Course Level:
Intermediate
Advance Preparation:
Print and review course materials
Method of Presentation:
On-demand Webcast (CLE)
Prerequisite:
NONE
Course Code:
134589
NASBA Field of Study:
Business Law
NY Category of CLE credit:
Areas of Professional Practice
Total Credits:
2.0 CLE
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SPEAKERS' FIRMS:
About Cadwalader, Wickersham & Taft LLP
Established in New York in 1792, Cadwalader, Wickersham & Taft LLP is a leading advisor to corporations and financial institutions, providing innovative solutions to complex legal issues. With offices in strategically located financial and governmental centers, the firm is well positioned to offer top-flight services to clients conducting business across the globe.
Website: https://www.cadwalader.com/
About Clifford Chance
Clifford Chance is one of the world's leading law firms with 36 offices in 26 countries and some 3,400 legal advisers, creating a significant depth and range of resources across five continents. As a single, fully integrated, global partnership, Clifford Chance prides themselves on their approachable, collegiate and team based way of working. They strive to exceed the expectations of their clients, which include corporates from all the commercial and industrial sectors, governments, regulators, trade bodies and not for profit organisations. Clients are provided with the highest quality advice and legal insight, which combines the firm's global standards with in-depth local expertise.
About Ropes & Gray LLP
Ropes & Gray LLP is a leading global law firm with offices in New York, Washington, D.C., Boston, Chicago, San Francisco, Silicon Valley, London, Hong Kong, Shanghai, Tokyo, and Seoul. Built on a foundation of more than 140 years of forging strong client relationships, Ropes & Gray has over 1,000 lawyers and professionals representing interests across a broad spectrum of industries in corporate law and litigation matters, as well as counseling on labor and employment issues, tax and benefits, creditors' rights, and private client services. The firm's clients include leading industrial companies, financial institutions, government agencies, hospitals and health care organizations, colleges and universities, as well as families and individuals.
Website: https://www.ropesgray.com/
About WilmerHale
WilmerHale offers unparalleled legal representation across a comprehensive range of practice areas that are critical to the success of our clients. We practice at the very top of the legal profession, working at the intersection of government, technology and business to offer a cutting-edge blend of capabilities that enables us to handle deals and cases of any size and complexity. WilmerHale has one of the leading global antitrust and competition practices, with more than 50 years of experience and more than 70 competition lawyers in the United States, Europe and China. We have secured antitrust clearance for hundreds of complex mergers and joint ventures, helped clients avoid fines and prison terms in many cartel investigations, and won numerous victories for clients in private and government litigation.
Website: https://www.wilmerhale.com/
About Wilson Sonsini Goodrich & Rosati
Wilson Sonsini Goodrich & Rosati is the premier provider of legal services to technology, life sciences, and growth enterprises worldwide. For more than 50 years, the firm has offered a broad range of services and legal disciplines focused on serving the principal challenges faced by the management and boards of directors of business enterprises. WSGR is nationally recognized as a leader in the fields of corporate governance and finance, mergers and acquisitions, private equity, securities litigation, employment law, intellectual property, and antitrust, among many other areas of law. With deep roots in Silicon Valley, Wilson Sonsini Goodrich & Rosati has offices in Austin; Beijing; Brussels; Georgetown, DE; Hong Kong; Los Angeles; New York; Palo Alto; San Diego; San Francisco; Seattle; Shanghai; and Washington, D.C. For more information, please visitwww.wsgr.com.
Website: https://www.wsgr.com