Question
December 11, 2003
VIAEMAIL
Nancy Ovuka, Esq.
Premerger Notification Office
Bureau of Competition
Federal Trade Commission
Room 303
600 Pennsylvania Avenue, N.W.
Washington, DC 20580
DearMs. Ovuka:
Thank you for taking the time to speak with me this pastMonday regarding my questions on the application of the Hart-Scott RodinoAntitrust Improvements Act (the "HSR Act"). I am writing this letterto confirm the conclusion that Company X in the following fact situation wouldnot have to file a Notification and Report Form for Certain Mergers andAcquisitions (the "Notification Form") pursuant to the HSR Act. Thefacts that we discussed are as follows:
In 1998, Company X was granted an exclusivelicense to develop and commercialize a product for which Company Y held certainintellectual property and regulatory filing rights ("W"). At thetime, the size of the transaction did not exceed the statutory threshold, so noNotification Form was required or filed.
In 2001, Company X granted an exclusive sublicense of theIP to Company Z, which gave Company Z exclusive rights to develop andcommercialize the product. In connection with the grant of the exclusivesublicense, Company X and Company Z filed a Notification Form and receivedearly termination of the HSR Act waiting period.
Presently, Company X has agreed to purchase from Company Ythe IP underlying the license. The purchase price for the IP will be in excess of$50 million, and the size of person test is satisfied. As a result of thetransfer, Company X will be entitled to royalty payments that would otherwisehave been made to Company Y, but the exclusive license to develop andcommercialize the product will remain with Company Z.
Although Company X isnow seeking to take title to the IP, the exclusive license will remain withCompany Z. As a result, it is my understanding based on our conversations thatthe transfer of the IP from Company Y to Company X will not require the filingof a Notification Form because a Notification Form for the exclusive sublicenseto Company Z was previously filed and early termination was granted. Inaddition, although you and I did not discuss this, we believe that, unless an exemptionapplies, Company X and Company Z would have to file a Notification Form in theevent that Company Z transfers the exclusive license back to Company X in thefuture and the notification threshold and other requirements are met.
Please let me know atyour earliest convenience whether the conclusions in this letter correctlyreflect our conversations and the view of the Premerger Notification Office ofthe Federal Trade Commission. I can be reached at the number listed above.Thank you again for your time and attention.