New HSR Rules For Pharmaceutical Patent Licenses

The Federal Trade Commission ("FTC") this week adopted a significant change to the notification rules under the Hart Scott Rodino ("HSR") Act that will increase the number of pharmaceutical patent licenses covered by the Act. The amendments apply explicitly only to pharmaceutical patent licenses. They likely will have the largest impact on those arrangements where the licensor retains only a limited right to manufacture for the licensee under the licensed patent, which previously had been non-reportable under the FTC's interpretation of the HSR Act. 
 
The rule of thumb for the application of the HSR Act to patent licenses is that a license is not reportable if it is non-exclusive, but may be reportable if it is exclusive and otherwise meets the requirements for reportability, including being valued above a minimum threshold that is adjusted annually (currently $70.9 million). The amendments leave this basic principle intact, but clarify—and partially modify—what