Your SlideShare is downloading. ×
Patent Acquisitions – When Are They HSR Reportable? LIVE Webcast
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Patent Acquisitions – When Are They HSR Reportable? LIVE Webcast

398
views

Published on

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 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

To view the webcast go to this link: http://youtu.be/3AhqADcjzp4

To learn more about the webcast please visit our website: http://theknowledgegroup.org/

Published in: Education, Business, Technology

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
398
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Speaker Firms and Organization: Cadwalader, Wickersham & Taft LLP Ngoc Pham Hulbig Attorney Clifford Chance Timothy Cornell Counsel Ropes & Gray LLP Deidre J. Johnson Counsel WilmerHale Hartmut Schneider Partner Wilson Sonsini Goodrich & Rosati Christopher A. Williams Attorney Thank you for logging into today’s event. Please note we are in standby mode. All Microphones will be muted until the event starts. We will be back with speaker instructions @ 11:55am. Any Questions? Please email: Info@knowledgecongress.org Group Registration Policy Please note ALL participants must be registered or they will not be able to access the event. If you have more than one person from your company attending, you must fill out the group registration form. We reserve the right to disconnect any unauthorized users from this event and to deny violators admission to future events. To obtain a group registration please send a note to info@knowledgecongress.org or call 646.202.9344. Presented By: April 09, 2014 1 Partner Firms:
  • 2. April 09, 2014 2  If you experience any technical difficulties during today’s WebEx session, please contact our Technical Support @ 866-779-3239.  You may ask a question at anytime throughout the presentation today via the chat window on the lower right hand side of your screen. Questions will be aggregated and addressed during the Q&A segment.  Please note, this call is being recorded for playback purposes.  If anyone was unable to log in to the online webcast and needs to download a copy of the PowerPoint presentation for today’s event, please send an email to: info@knowledgecongress.org. If you’re already logged in to the online webcast, we will post a link to download the files shortly.  If you are listening on a laptop, you may need to use headphones as some laptops speakers are not sufficiently amplified enough to hear the presentations. If you do not have headphones and cannot hear the webcast send an email to info@knowledgecongress.org and we will send you the dial in phone number.
  • 3. April 09, 2014 3  About an hour or so after the event, you'll be sent a survey via email asking you for your feedback on your experience with this event today - it's designed to take less than two minutes to complete, and it helps us to understand how to wisely invest your time in future events. Your feedback is greatly appreciated. If you are applying for continuing education credit, completions of the surveys are mandatory as per your state boards and bars. 6 secret words (3 for each credit hour) will be given throughout the presentation. We will ask you to fill these words into the survey as proof of your attendance. Please stay tuned for the secret word.  Speakers, I will be giving out the secret words at randomly selected times. I may have to break into your presentation briefly to read the secret word. Pardon the interruption.
  • 4. April 09, 2014 4 Welcome to the Knowledge Group Unlimited Subscription Programs. We have Two Options Available for You: FREE UNLIMITED: This program is free of charge with no further costs or obligations. It includes:  Unlimited access to over 15,000 pages of course material from all Knowledge Group Webcasts.  Subscribers to this program can download any slides, white papers, or supplemental material covered during all live webcasts.  50% discount for purchase of all Live webcasts and downloaded recordings. PAID UNLIMITED: Our most comprehensive and cost-effective plan, for a one-time fee:  Access to all LIVE Webcasts (Normally $199 to $349 for each event without a subscription). Including: Bring-a-Friend – Invite a client or associate outside your firm to attend for FREE. Sign up for as many webcasts as you wish.  Access to all of Recorded/Archived Events & Course Material includes 1,500+ hours of audio material (Normally $299 for each event without a subscription).  Free CLE/CPE/CE Processing (Normally $49 Per Course without a subscription).  Access to over 15,000 pages of course material from Knowledge Group Webcasts.  Ability to invite a guest of your choice to attend any live webcast Free of charge (Exclusive benefit only available for PAID UNLIMITED subscribers).  6 Month Subscription is $299 with No Additional Fees Other options are available.  Special Offer: Sign up today and add 2 of your colleagues to your plan for free Check the “Triple Play” box on the sign-up sheet contained in the link below. https://gkc.memberclicks.net/index.php?option=com_mc&view=mc&mcid=form_157964
  • 5. April 09, 2014 5 Knowledge Group UNLIMITED PAID Subscription Programs Pricing: Individual Subscription Fees: (2 Options) Semi-Annual: $299 one-time fee for a 6 month subscription with unlimited access to all webcasts, recordings, and materials. Annual: $499 one-time fee for a 12 month unlimited subscription with unlimited access to all webcasts, recordings, and materials. Group plans are available. See the registration form for details. Best ways to sign up: 1. Fill out the sign up form attached to the post conference survey email. 2. Sign up online by clicking the link contained in the post conference survey email. 3. Click the link below or the one we just posted in the chat window to the right. https://gkc.memberclicks.net/index.php?option=com_mc&view=mc&mcid=form_157964 Discounts: Enroll today and you will be eligible for the “Triple Play” program and 3% off if you pay by credit card. Also we will waive the $49 CLE/CPE processing fee for today’s conference. See the form attached to the post conference survey email for details. Questions: Send an email to: info@knowledgecongress.org with “Unlimited” in the subject.
  • 6. Thank you to our partner firms: April 09, 2014 6 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. 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.
  • 7. Thank you to our partner firms: April 09, 2014 7 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. 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.
  • 8. Thank you to our partner firm: April 09, 2014 8 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.
  • 9. Brief Speaker Bios: April 09, 2014 9 Timothy Cornell Tim heads Clifford Chance's US antitrust practice and advises clients on antitrust issues in government civil and criminal investigations, the regulatory review of mergers and acquisitions, intellectual property and technology licensing, supply and distribution agreements, joint venture formation, retail pricing issues, horizontal and vertical restraints, private party civil litigation, and the adoption of antitrust best practices. Tim has advocated on behalf of dozens of clients before the U.S. Federal Trade Commission and U.S. Department of Justice, representing transacting parties and parties opposing transactions between their competitors. He brings significant experience in assisting clients through government antitrust investigations, representing targets of governmental investigations and non-parties cooperating with the government. He has litigated antitrust and other high profile cases before arbitration panels, and in federal and state courts across the US. His antitrust representations span numerous industries including telecommunications, software, business services, computer networking, banking and financial services, healthcare, electronic lotteries, satellites, solar energy, power distribution and generation, automotive, printing, pharmaceutical, media, and fire and security systems. Tim obtained his JD from Georgetown Law Center, cum laude, and his Bachelor of Science from the United States Naval Academy. Ngoc Pham Hulbig Ngoc Pham Hulbig’s practice focuses on counseling regarding U.S. and global premerger notification requirements. She has extensive experience in preparing filings under the Hart-Scott-Rodino Act and has coordinated competition filings around the world for complex and high-stakes transactions. Ngoc also counsels clients in the full range of antitrust matters, including mergers and acquisitions, joint ventures, and in connection with investigations by the U.S. Department of Justice and the U.S. Federal Trade Commission. She has experience representing clients in matters involving a wide variety of industries, including software, airlines, pharmaceuticals, gaming, spirits, chemicals, credit, financial services, and security.
  • 10. Brief Speaker Bios: Hartmut Schneider Hartmut Schneider is a partner in the Regulatory and Government Affairs Department of Wilmer Cutler Pickering Hale and Dorr LLP, resident in the firm’s Washington office. Mr. Schneider practices antitrust law primarily before US agencies and courts and has extensive experience in securing merger clearance for transactions in a diverse range of industries. He also regularly counsels clients on legal issues at the intersection of antitrust and intellectual property law, as well as on the compliance of joint ventures, other horizontal cooperation agreements and vertical distribution agreements with the antitrust laws. Before relocating to Washington, Mr. Schneider worked in the Antitrust and Competition Department of the firm's Brussels and Berlin offices. In addition to his US antitrust law expertise, Mr. Schneider has significant experience in EC and German competition law. April 09, 2014 10 Deidre J. Johnson Deidre Johnson focuses her practice on antitrust and is head of Ropes & Gray’s premerger notification practice. She counsels clients on their obligations under the Hart-Scott-Rodino Antitrust Improvements Act and foreign premerger regimes and has successfully guided numerous clients through the premerger process, responding to informal inquiries and second requests as necessary. Deidre routinely represents buyers, shareholders and sellers in financial and strategic acquisitions of all types from leveraged buy-outs, stock acquisitions, joint venture formations and public takeovers to licensing transactions and co-development/co-promotion agreements. Her clients include multi-national corporations, private equity, venture capital and hedge funds, mutual funds and investment advisors. She also counsels executive officers and directors in HSR Act compliance in connection with the grant and exercise of stock and stock options, and advises clients with respect to permissible pre-clearance and pre-closing activities, including information exchanges.
  • 11. Brief Speaker Bios: April 09, 2014 11 ► For more information about the speakers, you can visit: http://theknowledgegroup.org/event_name/the-federal-trade-commissions-ftcs-rules-for-exclusive-pharmaceutical-patent-licenses- explored-live-webcast/ Christopher A. Williams Chris Williams is an associate in the Washington, D.C., office of Wilson Sonsini Goodrich & Rosati, where he is a member of the firm's antitrust and national security practices. His antitrust experience includes merger notification and clearance, civil and criminal litigation, government investigations, and business counseling. He has represented clients in a wide range of industries, including information technology, electronics and computer hardware, semiconductors, telecommunications, healthcare, life sciences, pharmaceuticals, and energy and utilities. Chris's national security experience includes counseling clients on matters affecting foreign investment, export controls, and economic sanctions laws. He has represented various companies in obtaining clearance before the Committee on Foreign Investment in the United States (CFIUS), as well as in obtaining export approvals and classifications, particularly in the area of encryption, from the U.S. Department of Commerce. Prior to joining the firm, Chris was an associate in the Washington, D.C., office of Squire, Sanders & Dempsey, where he practiced antitrust, international trade, export controls and economic sanctions, and foreign investment law. During law school, he studied comparative law and Latin American competition, trade, and foreign investment law in Chile and Argentina. He was also a fellow in the Marshall-Brennan Constitutional Literacy Program, through which he co-taught a course on constitutional law and juvenile justice at a public high school in the District of Columbia.
  • 12. 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 April 09, 2014 12
  • 13. Featured Speakers: April 09, 2014 13 Deidre J. Johnson Counsel Ropes & Gray LLP Timothy Cornell Counsel Clifford Chance Hartmut Schneider Partner WilmerHale Ngoc Pham Hulbig Attorney Cadwalader, Wickersham & Taft LLP Christopher A. Williams Attorney Wilson Sonsini Goodrich & Rosati
  • 14. Introduction • New rules took effect December 2013 • Expand the reportability of pharmaceutical patent licenses • Result in more transactions being HSR reportable • Significant ambiguity remains regarding when transactions are reportable, including transactions in related industries • New rules are being challenged by Pharmaceutical Research and Manufacturers of America (PhRMA) April 09, 2014 14 Deidre J. Johnson Counsel Ropes & Gray LLP
  • 15. When May an HSR Filing Be Required? April 09, 2014 15 Ngoc Pham Hulbig Attorney Cadwalader, Wickersham & Taft LLP
  • 16. Exclusive Licenses as Acquisitions • Under the HSR rules, exclusive licenses are treated as asset acquisitions – Acquiring person = licensee – Acquired person = licensor • If the HSR thresholds are met, both the acquiring and acquired persons have HSR filing obligations • What is considered to be “exclusive” has changed as a result of the rule-making April 09, 2014 16 Ngoc Pham Hulbig Attorney Cadwalader, Wickersham & Taft LLP
  • 17. Previous Rule on Exclusivity: Bundled Rights to “Make, Use and Sell” • To be potentially reportable, a patent owner must transfer all “make, use and sell” rights to a patent (or part of a patent) on an exclusive basis to the licensee, even as against the grantor - “Make” referred to the right to manufacture the commercial product • Anything less than an exclusive license on the bundled rights to “make, use and sell” rendered the transfer less than an “asset acquisition” and thus non-reportable - “Make” or manufacturing rights often were the rights excluded, rendering the license non- exclusive and non-reportable April 09, 2014 17 Ngoc Pham Hulbig Attorney Cadwalader, Wickersham & Taft LLP
  • 18. Some Results Under the Previous Rule • A license was not “exclusive” if: – Licensor retained the right to manufacture but could not sell the licensed product (or had to pay a fee to licensee to do so) – Licensor retained manufacturing rights solely to supply licensee – Licensor and licensee could both manufacture product – Licensor retained right to manufacture in the U.S. but could sell products only abroad April 09, 2014 18 Ngoc Pham Hulbig Attorney Cadwalader, Wickersham & Taft LLP
  • 19. New Rule on Exclusivity: “All Commercially Significant Rights” • To be potentially reportable, “all commercially significant rights” to use a patent for any therapeutic area (or specific indication within a therapeutic area) must be transferred to the licensee – “Make, use and sell” no longer is the test for exclusivity • Applies only to pharmaceutical patent licenses: – Medical and Botanical Manufacturing – Pharmaceutical Preparation Manufacturing – In-Vitro Diagnostic Substance Manufacturing – Biological Product (except Diagnostic) Manufacturing • Other industries dealt with on a case-by-case basis April 09, 2014 19 Ngoc Pham Hulbig Attorney Cadwalader, Wickersham & Taft LLP
  • 20. Retention of Limited Manufacturing Rights Is Not “Commercially Significant” • Under new rule, license is “exclusive” even where grantor retains limited manufacturing rights (e.g., to supply only the licensee) • FTC notes that “the right to manufacture is far less important than the right to commercialize” in the pharmaceutical industry – Often “licensor retains the right to manufacture exclusively for licensee. As the licensor is manufacturing solely for the use of the licensee, this is substantively the same as giving the licensee the exclusive right to manufacture, use and sell the product(s) covered by the license” – If licensee is the only party who can commercially use the patent, then transfer may be reportable April 09, 2014 20 Ngoc Pham Hulbig Attorney Cadwalader, Wickersham & Taft LLP
  • 21. Comparison of the Rules April 09, 2014 21 Ngoc Pham Hulbig Attorney Cadwalader, Wickersham & Taft LLP
  • 22. Rationale Behind the New Rule • Pharmaceutical industry “presents unique incentives for the use of exclusive licenses” • “Typical” scenario: Small innovator, without financial resources to bring a drug to market, teams with larger pharmaceutical company that can shepherd a drug through FDA approval process, marketing/promotion of drug • Both companies share in profits of commercialized product • Result: Exclusive license “unlike that seen in any other industry” April 09, 2014 22 Timothy Cornell Counsel Clifford Chance
  • 23. “Co-Rights”/”Co-Exclusivity” and Impact on Filing • “Co-rights" will not render an otherwise exclusive license non-exclusive for HSR purposes. • Co-rights—including the right to co-develop, co-promote, co-market or co-commercialize, to assist the licensee in developing and commercializing the product—are ones that the FTC views as not affecting whether the grantee has received exclusive rights April 09, 2014 23 Timothy Cornell Counsel Clifford Chance
  • 24. FTC Examples of Reportable Transactions • Where A obtains exclusive right to all of B’s patent rights, and B retains limited manufacturing rights for certain ingredients to be sold by A under the agreement • Where B grants A an exclusive license of all patents for certain enumerated indications and B retains all patent rights for separate and distinct indications • Where B grants A an exclusive license to all of B’s patent rights in all therapeutic areas, but A and B also enter into co-development and co-commercialization agreements • Where B grants A an exclusive license to use a certain compound in order to manufacture and sell a finished product in a certain therapeutic area, while B retains the right to manufacture the same or similar products in separate and distinct therapeutic areas April 09, 2014 24 Timothy Cornell Counsel Clifford Chance
  • 25. FTC Examples of Non-Reportable Transactions • Exclusive distribution agreement (which was also not reportable under the old rule) April 09, 2014 25 Timothy Cornell Counsel Clifford Chance
  • 26. Where Ambiguity Remains • Between the “clearly reportable” and “clearly non-reportable” transactions there is significant gray area • Proposed rule does not address territory covered by license or duration of license – What if retained manufacturing rights are not only limited to providing the recipient of the patent rights with products? – What if licensor retains right to manufacture in U.S. but only for sale abroad? • Rules emphasize “use” of patent but provide no definition/examples – What if licensor retains the right to “sell” but not specifically to “use”? – Is this merely retention of a “co-right” and still reportable? • NPRM appears to differentiate between sale and commercialization April 09, 2014 26 Timothy Cornell Counsel Clifford Chance
  • 27. Where Ambiguity Remains (cont’d.) • Application to other industries is unclear even though current rule continues to apply – “Combined” transactions – e.g., license for pharmaceutical product combined with medical device license? – Technological license? April 09, 2014 27 Timothy Cornell Counsel Clifford Chance
  • 28. April 09, 2014 28 CLE PROCESSING The Knowledge Group offers complete CLE processing solutions for your webcasts and land events. This comprehensive service includes everything you need to offer CLE credit at your conference:  Complete end-to-end CLE credit Solutions  Setting up your marketing collateral properly.  Completing and filing all of the applications to the state bar.  Guidance on how to structure content meet course material requirements for the state Bars.  Sign up forms to be used to check & confirm attendance at your event.  Issuing official Certificates of Attendance for credit to attendees. Obtaining CLE credit varies from state to state and the rules can be complex. The Knowledge Group will help you navigate the complexities via complete cost effective CLE solutions for your conferences. Most CLE processing plans are just $499 plus filing fees and postage. To learn more email us at info@knowledgecongress.org or CALL 646-202-9344
  • 29. April 09, 2014 29 PRIVATE LABEL PROGRAM & INTERNAL TRAINING The Knowledge Group provides complete private label webcasts and in-house training solutions. Developing and executing webcasts can be a huge logistical nightmare. There are a lot of moving parts and devolving a program that is executed smoothly and cost effectively can prove to be a significant challenge for companies who do not produce events on a regular basis. Live events require a high level of proficiency in order to execute proficiently. Our producers will plan and develop your webcast for you and our webcast technicians will execute your live event with expert precision. We have produced over 1000 live webcasts. Put our vast expertise to work for you. Let us develop a professional webcast for your firm that will impress all your clients and internal stakeholders. Private Label Programs Include:  Complete Project Management  Topic Development  Recruitment of Speakers (Or you can use your own)  Marketing Material Design  PR Campaign  Marketing Campaign  Event Webpage Design  Slides: Design and Content Development  Speaker coordination: Arranging & Executing Calls, Coordinating Slides & Content  Attendee Registration  Complete LIVE Event Management for Speaker and Attendees including: o Technical Support o Event Moderator o Running the Live event (All Aspects) o Multiple Technical Back-ups & Redundancies to Ensure a Perfect Live Event o Webcast Recording (MP3 Audio & MP4 Video) o Post Webcast Performance Survey  CLE and CPE Processing Private Label Programs Start at just $999
  • 30. April 09, 2014 30 RESEARCH & BUSINESS PROCESS OUTSOURCING The Knowledge Group specializes in highly focused and intelligent market and topic research. Outsource your research projects and business processes to our team of experts. Normally we can run programs for less than 50% of what it would cost you to do it in-house. Here are some ideal uses for our services:  Market Research and Production o List Research (Prospects, Clients, Market Evaluation, Sales Lists, Surveys) o Design of Electronic Marketing Collateral o Executing Online Marketing Campaigns (Direct Email, PR Campaigns) o Website Design o Social Media  Analysis & Research o Research Companies & Produce Reports o Research for Cases o Specialized Research Projects  eSales (Electronic Inside Sales – Email and Online) o Sales Leads Development o eSales Campaigns  Inside Sales people will prospect for leased, contact them and coordinate with your sales team to follow up.  Our Inside eSales reps specialize in developing leads for big-ticket enterprise level products and services. o Electronic Database Building – Comprehensive service which includes development of sales leads, contacting clients, scoring leads, adding notes and transferring the entire data set to you for your internal sales reps.  eCustomer Service (Electronic Inside Sales – Email and Online) o Real-Time Customer Service for Your clients  Online Chat  Email o Follow-Up Customer Service  Responds to emails  Conducts Research  Replies Back to Your Customer Please note these are just a few ways our experts can help with your Business Process Outsourcing needs. If you have a project not specifically listed above please contact us to see if we can help.
  • 31. Valuation • The value of a license is the fair market value (“FMV”) or, if determined and greater, its acquisition price • Rules don’t change how valuations are made • Complexity in valuation frequently arises from multiple contingent payments, development stage of products – Up-front payments – Developmental milestones – Sales milestones – Royalties – Other transactions – e.g., equity investment? April 09, 2014 31 Deidre J. Johnson Counsel Ropes & Gray LLP
  • 32. Acquisition Price • An acquisition price is “determined” if it can be reasonably estimated • Includes the value of all consideration given, including: – Up-front consideration, – Future royalties or contingent payments (valued at face value) likely to be paid to the licensor, and – Consideration for voting securities, non-corporate interests or additional assets acquired. • It is up to the acquiring person to decide whether it can make a reasonable estimate of the acquisition price. • The acquisition price is frequently not able to be determined (e.g., in cases where the product is still in development or without sufficient sales history). April 09, 2014 32 Deidre J. Johnson Counsel Ropes & Gray LLP
  • 33. Principles for Making a Fair Market Valuation • Little guidance on how to perform FMV – Good faith – Reasonable basis • Generally, FMV is the amount a third-party buyer, in an arm’s length transaction, would pay at present for the assets being acquired (e.g., the license) without any contingencies – essentially a risk-adjusted net present value. • FMV must be determined: – in good faith – by the licensee’s board of directors or equivalent body (or its designee) – within 60 calendar days of filing HSR or the closing of the licensing transaction (if a filing is not required). April 09, 2014 33 Deidre J. Johnson Counsel Ropes & Gray LLP
  • 34. Practical Aspects for Determining Valuation • Many valuation methodologies may be reasonable depending on the specifics of the transaction, including: – Summing annual minimum royalty and other contingent payments, – Determining expected royalty payments based upon historic sales, – Discounting future royalty payments if the “useful life” of the licenses will likely be limited, and – Using the net present value of the annual minimum (or estimated) royalty and other contingent payments adjusted downward for any expected changes in the nature of the license. April 09, 2014 34 Deidre J. Johnson Counsel Ropes & Gray LLP
  • 35. Foreign Asset Exemption in Licensing Context • Where license includes US and ex-US component, only include US value for HSR determination • Foreign-registered IP is a “foreign asset” for HSR purposes April 09, 2014 35 Deidre J. Johnson Counsel Ropes & Gray LLP
  • 36. Remember other aspects of transaction value • Investment in Voting Securities of Acquired Person – When voting securities of a non-publicly-traded issuer are acquired, their value is the acquisition price; if the acquisition price is undetermined, the value is FMV. – There are separate rules for valuing acquisitions of stock of publicly-traded issuers. • Aggregation with Other Transactions April 09, 2014 36 Deidre J. Johnson Counsel Ropes & Gray LLP
  • 37. Practical Implications • More HSR filings – Result in at least 50% increase in HSR filings in the pharmaceutical industry • Increased costs underestimated? (FTC: $1.225 million) – Filing Fees: $1.35 - 8.4 million per year – Preparation: $1.0 million per year – Second Requests: $10 - 15 million per year April 09, 2014 37 Deidre J. Johnson Counsel Ropes & Gray LLP
  • 38. Practical Implications (cont’d.) • Preparation time • Waiting period prior to closing • How to treat options to acquire product coupled with reportable license? • Risk that transaction poses substantive risks – Risk shifting and other provisions April 09, 2014 38 Deidre J. Johnson Counsel Ropes & Gray LLP
  • 39. When does an HSR Filing Become More than an Administrative Issue? • Potential substantive issues raised by exclusive licenses – May prevent actual competition from another drug – May prevent potential competition from a drug in development – May discourage innovation by foreclosing third-party access to the licensed drug • Many difficult questions in practice, e.g.: – Relevant market? – Licensed compounds are often years away from FDA approval and commercialization – Exclusive license may be part of larger collaboration between the parties • Which rules apply? April 09, 2014 39 Hartmut Schneider Partner WilmerHale
  • 40. Basic Approach • IP Guidelines (1995) ¶2.1 – “The Agencies apply the same general antitrust principles to conduct involving IP that they apply to conduct involving any other form of … property.” • IP Guidelines (1995), ¶5.7 – “The Agencies will apply a merger analysis … to a transaction in which a person obtains … an exclusive license for intellectual property …” April 09, 2014 40 Hartmut Schneider Partner WilmerHale
  • 41. Merger Analysis: Background • Section 7 Clayton Act – “Substantial Lessening of Competition” • Sources of Guidance – IP Guidelines (1995) – Horizontal Merger Guidelines (2010) – DOJ/FTC Speeches – Recent Enforcement Actions April 09, 2014 41 Hartmut Schneider Partner WilmerHale
  • 42. Potential Effects • Substitutable drugs – Horizontal merger analysis – Substantial lessening of actual or potential competition in the relevant market? • Complementary drugs – Vertical merger analysis – Substantial lessening of competition as a result of incentive and ability to foreclose rivals? April 09, 2014 42 Hartmut Schneider Partner WilmerHale
  • 43. Examples • Biovail Corp. (FTC 2002) – Biovail was branded manufacturer of Tiazac – Acquired exclusive license to patent on API in Tiazac from DOV Pharma – FTC alleged that exclusive license and other conduct sought to delay entry of generic Tiazac – FTC order required Biovail to divest part of the exclusive rights of the acquired patent back to DOV Pharmaceuticals, among other things • Fresenius Medical Care/Daiichi Sankyo (FTC 2008) – Fresenius acquired exclusive license to manufacture and supply Venofer, an intravenous iron drug, to dialysis clinics – Fresenius was large provider of dialysis services and products – FTC alleged that acquisition would enable Fresenius to inflate the average sales price for Venofer used in its clinics, thereby increasing reimbursement rates – FTC order placed restrictions on Fresenius’ ability to report intra-company transfer prices April 09, 2014 43 Hartmut Schneider Partner WilmerHale
  • 44. Reportability of Patent Licenses Ex-US • Pharmaceutical (and other) patent licenses may not be reportable in many jurisdictions • Many jurisdictions 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 • But consider “associative agreements” in Brazil • Joint venture analysis April 09, 2014 44 Hartmut Schneider Partner WilmerHale
  • 45. PhRMA Complaint • PhRMA filed a complaint against FTC challenging new rule on December 12, 2013 (in D.D.C.) • Four Count Complaint Seeking Declaratory and Injunctive Relief – Rule exceeds FTC’s statutory authority under the HSR Act – Rule is arbitrary, capricious, and an abuse of discretion in violation of the Administrative Procedure Act (APA) – Rulemaking was without observance of procedure required by APA – There is an actual controversy of sufficient immediacy and concreteness relating to the legal rights and duties of PhRMA’s members to warrant declaratory relief April 09, 2014 45 Christopher A. Williams Attorney Wilson Sonsini Goodrich & Rosati
  • 46. PhRMA: Overview of Arguments • Principle arguments why the Rule should be declared unlawful and vacated – Rule exceeds scope of FTC’s authority under HSR Act – Rulemaking was arbitrary and capricious – Rulemaking was without observance of procedure required by law • Impact of Rule Change – FTC: Additional 30 transactions reportable per year, at a cost of more than $1.0M each year – PhRMA: FTC underestimates impact and cost; filing fees for 30 transactions range $1.35M- $8.4M per year; cost of preparing forms range $2.4-$3.6M per year; Second Request range: $5M-$20M. April 09, 2014 46 Christopher A. Williams Attorney Wilson Sonsini Goodrich & Rosati
  • 47. FTC: Overview of Arguments • PhRMA does not dispute substantive standard contained in Rule • Only question before the court is whether the Rule must apply to all industries and not just pharmaceutical industry – FTC reasonably interpreted the HSR Act – FTC complied with requirements of APA • Vacating the Rule is not warranted April 09, 2014 47 Christopher A. Williams Attorney Wilson Sonsini Goodrich & Rosati
  • 48. PhRMA: No Statutory Basis • Statute of General Application – “Except as exempted . . . no person shall acquire . . . any . . . assets of any other person . . . .” – Applies across-the-board to every person – FTC only permitted to grant exemptions for specific and limited classes of transactions or persons (narrowly drawn) April 09, 2014 48 Christopher A. Williams Attorney Wilson Sonsini Goodrich & Rosati
  • 49. PhRMA: No Statutory Basis (cont’d.) • Legislative History – Rejected Language in Senate Bill that: – Would have allowed FTC “to require pre-merger notifications from particular companies or industries or from any class or category of persons.”  Rep. Rodino: “In the view of the House conferees, the coverage of this bill should be decided by Congress—not the FTC and the Justice Department.” – Would have allowed FTC to promulgate rules of “general or special applicability as may be necessary or proper.”  Sen. Hruska: Language intended to be narrowly construed to apply only to exemptions and not “so broad and general as to undermine an otherwise carefully structured statutory scheme.” April 09, 2014 49 Christopher A. Williams Attorney Wilson Sonsini Goodrich & Rosati
  • 50. PhRMA: No Statutory Basis (cont’d.) • Beyond FTC’s Rulemaking Authority – Clayton Act 7A(d)(2) grants FTC authority to:  define the terms used in this section;  exempt, from the requirements of this section, classes of persons, acquisitions, transfers, or transactions which are not likely to violate the antitrust laws; and  prescribe such other rules as may be necessary and appropriate to carry out the purposes of this section. • FTC cannot use authority to define terms to circumvent that HSR requirements apply uniformly to all “persons" – FTC adds defined terms that do not appear in HSR Act • Rule not “necessary and appropriate” – HSR Act intended only to apply to transactions:  Substantially lessen competition; and  Difficult to unwind – No evidentiary showing of FTC/DOJ ever challenging a transaction of the type at issue April 09, 2014 50 Christopher A. Williams Attorney Wilson Sonsini Goodrich & Rosati
  • 51. PhRMA: No Statutory Basis (cont’d) • Other related points: – First time since enactment of HSR Act (37 years) that HSR requirement has singled out one industry – Industry sector discrimination contrary to principles of non-discrimination in antitrust enforcement promoted by FTC and DOJ globally April 09, 2014 51 Christopher A. Williams Attorney Wilson Sonsini Goodrich & Rosati
  • 52. FTC Response: Statutory Basis • Chevron two-part test applies – Step 1: Whether Congress has “directly spoken to the precise question at issue.”  If yes, the court “must give effect to the unambiguously expressed intent of Congress.”  If statute is silent or ambiguous, proceed to second step – Step 2: Defer to agencies interpretation if it offers “permissible construction of the statute.” April 09, 2014 52 Christopher A. Williams Attorney Wilson Sonsini Goodrich & Rosati
  • 53. FTC Response: Statutory Basis (cont’d) • Step 1: Congress has not “directly spoken to the precise question at issue.” – Nothing in text that Congress intended to prohibit industry-specific coverage – Legislative history does not demonstrate a “clear congressional intent” to prohibit industry- specific rules for above-threshold transactions  Senate bill provision addressed transactions falling below the HSR Act’s monetary thresholds prescribed by Congress  Sen. Hruska was not the original proponent of “general or special applicability” language.  Wanted to eliminate the premerger notification section altogether  Opposed the provision at issue not because he disliked rules of “special applicability” in particular, but because he wished to keep the Commission from exercising any rulemaking authority (other than to exempt transactions from the notification requirement) April 09, 2014 53 Christopher A. Williams Attorney Wilson Sonsini Goodrich & Rosati
  • 54. FTC Response: Statutory Basis (cont’d) • Step 2: FTC entitled to deference because Congress silent on permissibility of industry-specific implementing rules – Appropriate for an agency to limit rules to those areas where it has observed a problem – Rule gives meaning to (i.e., defines) terms (i.e., “acquisition” and “asset”) that appear in the Act • FTC not required to demonstrate anticompetitive consequences of a class of transactions before subjecting them to the Rule – The HSR Act requires transactions that qualify as “acquisitions” meeting certain size criteria to be reported, for the very purpose of allowing the antitrust agencies to ascertain whether or not they pose competitive concerns; – “Nonsense” to require FTC to show—as a condition of reportability—that a particular class of transactions is likely to have adverse competitive consequences April 09, 2014 54 Christopher A. Williams Attorney Wilson Sonsini Goodrich & Rosati
  • 55. PhRMA: Violation of APA • No reasoned explanation supported by evidence to justify discriminatory application to pharma industry – No rational empirical analysis – Only justification was its “institutional experience” • FTC’s explanation contrary to only record evidence and failed to respond to issues raised by PhRMA – Pharma industry does not provide “unique” incentives for use of exclusive licenses – Arrangements where licensor retains manufacturing rights and/or co-rights are not limited to pharma: chemical, electronics, and medical device industries (Varner Report) – No evidence provided to show that licensor’s manufacturing rights are less important in pharmaceuticals than other industries – Other industries have substantial R&D costs and/or require regulatory approvals – Royalty provisions across industries are similar April 09, 2014 55 Christopher A. Williams Attorney Wilson Sonsini Goodrich & Rosati
  • 56. PhRMA: Violation of APA (cont’d.) • FTC did not explain why targeted rule is necessary – FTC did not reference any examples of problematic transactions involving the types of exclusive licensing arrangements covered by the Rule – FTC failed to explain how the Rule met its goal of providing “clarity and consistency” – Applying the same rule to all industries equally would provide more clarity and consistency • Rulemaking failed to follow procedures required by APA – FTC did not set forth any factual material on which it relied in making the Rule; only its institutional knowledge and experience – Targets of Rule denied the opportunity to assess and refute any data supporting the FTC’s vague assertions and conclusory remarks regarding institutional “knowledge,” “experience,” and “expertise” April 09, 2014 56 Christopher A. Williams Attorney Wilson Sonsini Goodrich & Rosati
  • 57. FTC: Rulemaking Complied with APA • FTC provided a reasoned basis for the Rule – Increasingly common in recent years for licensors in the pharma industry to retain right to manufacture only for licensee and to retain co-rights – Pharma is only industry where these types of licenses are prevalent  All 66 exclusive licensing filings in past five years involved pharma  Requests for PNO guidance nearly all for pharma – Not improper to rely on an agency’s experience in promulgating a rule April 09, 2014 57 Christopher A. Williams Attorney Wilson Sonsini Goodrich & Rosati
  • 58. FTC: Rule Complied with APA (cont’d) • FTC justified in limiting to pharmaceuticals industry – Exclusive arrangements cited by PhRMA are exclusive distribution agreements which convey only an exclusive right to distribute a patented product – Narrower rule is beneficial  Tailor rule to terminology relevant to pharma industry, making it easier to apply  FTC lacks experience with analogous licensing transactions in other industries, which would make it a challenge to specify how the Rule should apply to those industries  More prudent approach because avoids risk of unintended consequences • FTC provided sufficient notice of basis for Rule – PNO database is public April 09, 2014 58 Christopher A. Williams Attorney Wilson Sonsini Goodrich & Rosati
  • 59. PhRMA v FTC: Potential Outcomes • Court denies PhRMA’s Motion for Summary Judgment and Rule stands • Court remands to FTC on: – Statutory Basis Claim  Expand Coverage of Rule to All Industries – APA Claims  Further Explanation and Industry-Specific Rule Stands • Court vacates Rule • Appeal(?) April 09, 2014 59 Christopher A. Williams Attorney Wilson Sonsini Goodrich & Rosati
  • 60. What Is on Tap for the Future? • Licensing Transactions in Other Industries? – Will any old PNO guidance on pharmaceutical licensing transactions be applicable? • Licensing transactions where incentives are not met? − Generics licensing to other generics • Nature of industry and access to PNO April 09, 2014 60 Christopher A. Williams Attorney Wilson Sonsini Goodrich & Rosati
  • 61. ► You may ask a question at anytime throughout the presentation today. Simply click on the question mark icon located on the floating tool bar on the bottom right side of your screen. Type your question in the box that appears and click send. ► Questions will be answered in the order they are received. Q&A: April 09, 2014 61 Deidre J. Johnson Counsel Ropes & Gray LLP Timothy Cornell Counsel Clifford Chance Hartmut Schneider Partner WilmerHale Ngoc Pham Hulbig Attorney Cadwalader, Wickersham & Taft LLP Christopher A. Williams Attorney Wilson Sonsini Goodrich & Rosati
  • 62. April 09, 2014 62 Welcome to the Knowledge Group Unlimited Subscription Programs. We have Two Options Available for You: FREE UNLIMITED: This program is free of charge with no further costs or obligations. It includes:  Unlimited access to over 15,000 pages of course material from all Knowledge Group Webcasts.  Subscribers to this program can download any slides, white papers, or supplemental material covered during all live webcasts.  50% discount for purchase of all Live webcasts and downloaded recordings. PAID UNLIMITED: Our most comprehensive and cost-effective plan, for a one-time fee:  Access to all LIVE Webcasts (Normally $199 to $349 for each event without a subscription). Including: Bring-a-Friend – Invite a client or associate outside your firm to attend for FREE. Sign up for as many webcasts as you wish.  Access to all of Recorded/Archived Events & Course Material includes 1,500+ hours of audio material (Normally $299 for each event without a subscription).  Free CLE/CPE/CE Processing3 (Normally $49 Per Course without a subscription).  Access to over 15,000 pages of course material from Knowledge Group Webcasts.  Ability to invite a guest of your choice to attend any live webcast Free of charge. (Exclusive benefit only available for PAID UNLIMITED subscribers.)  6 Month Subscription is $299 with No Additional Fees. Other options are available.  Special Offer: Sign up today and add 2 of your colleagues to your plan for free. Check the “Triple Play” box on the sign- up sheet contained in the link below. https://gkc.memberclicks.net/index.php?option=com_mc&view=mc&mcid=form_157964
  • 63. April 09, 2014 63 Knowledge Group UNLIMITED PAID Subscription Programs Pricing: Individual Subscription Fees: (2 Options) Semi-Annual: $299 one-time fee for a 6 month subscription with unlimited access to all webcasts, recordings, and materials. Annual: $499 one-time fee for a 12 month unlimited subscription with unlimited access to all webcasts, recordings, and materials. Group plans are available. See the registration form for details. Best ways to sign up: 1. Fill out the sign up form attached to the post conference survey email. 2. Sign up online by clicking the link contained in the post conference survey email. 3. Click the link below or the one we just posted in the chat window to the right. https://gkc.memberclicks.net/index.php?option=com_mc&view=mc&mcid=form_157964 Discounts: Enroll today and you will be eligible for the “Triple Play” program and 3% off if you pay by credit card. Also we will waive the $49 CLE/CPE processing fee for today’s conference. See the form attached to the post conference survey email for details. Questions: Send an email to: info@knowledgecongress.org with “Unlimited” in the subject.
  • 64. April 09, 2014 64 ABOUT THE KNOWLEDGE GROUP, LLC. The Knowledge Group, LLC is an organization that produces live webcasts which examine regulatory changes and their impacts across a variety of industries. “We bring together the world's leading authorities and industry participants through informative two-hour webcasts to study the impact of changing regulations.” If you would like to be informed of other upcoming events, please click here. Disclaimer: The Knowledge Group, LLC is producing this event for information purposes only. We do not intend to provide or offer business advice. The contents of this event are based upon the opinions of our speakers. The Knowledge Congress does not warrant their accuracy and completeness. The statements made by them are based on their independent opinions and does not necessarily reflect that of The Knowledge Congress' views. In no event shall The Knowledge Congress be liable to any person or business entity for any special, direct, indirect, punitive, incidental or consequential damages as a result of any information gathered from this webcast. Certain images and/or photos on this page are the copyrighted property of 123RF Limited, their Contributors or Licensed Partners and are being used with permission under license. These images and/or photos may not be copied or downloaded without permission from 123RF Limited