FTC Submits Comment Supporting Proposed USPTO Rule

The Federal Trade Commission today submitted a comment supporting a proposed U.S. Patent and Trademark Office (USPTO) rule involving the disclosure of patent settlement agreements.

In April, the USPTO published a Notice of Proposed Rulemaking on a variety of proposed changes to the Patent Trial and Appeal Board (PTAB) proceedings. One of the proposed rule changes, which the FTC supports in its comment, would require parties to file with the USPTO all pre-institution patent settlement agreements, including collateral agreements. Pre-institution agreements occur prior to the PTAB’s decision on whether to institute trial.

As the FTC’s comment states, the proposed rule, if adopted, would enhance both the FTC and Department of Justice’s ability to monitor and curb potentially anticompetitive settlement agreements. Currently, parties are only required to disclose settlement agreements if their dispute settles after a PTAB trial proceeding has been initiated.

According to the comment, by requiring the disclosure of any settlement regardless of timing, the proposed rule change would support the FTC’s ability to identify and investigate potentially unlawful settlements in the pharmaceutical sector and across other industries. USPTO’s proposed rule would apply to a broader set of patent settlement agreements related to pharmaceuticals as well as those in other industries, which benefits the FTC’s ability to enforce antitrust laws and prevent unfair methods of competition. For example, the broader disclosure requirements in the proposed rule would help the FTC detect reverse payment settlements between pharmaceutical companies that raise antitrust concerns by preventing competition from lower-cost generic drugs and keeping drug prices high.

The Commission voted 5-0 to submit the comment to USPTO.

The FTC’s comment to the USPTO is the Commission’s latest effort to promote competition involving pharmaceutical drug patents. In April, the FTC expanded its campaign against pharmaceutical manufacturers’ improper or inaccurate listing of patents in the Food and Drug Administration’s Orange Book, disputing junk patent listings for diabetes, weight loss, asthma, and COPD drugs, including Novo Nordisk Inc.’s blockbuster weight-loss drug, Ozempic. The FTC in February submitted a comment to the National Institute of Standards and Technology in support of the use of “march-in” rights as an important check on companies charging Americans inflated prices for drugs developed with taxpayer-funded research. In March, the FTC filed an amicus brief in an asthma inhaler patent dispute which was extensively cited in a district court decision ordering Teva to delist five patent listings.