The Federal Trade Commission (FTC) has submitted a comment supporting a proposed rule by the U.S. Patent and Trademark Office (USPTO) regarding the disclosure of patent settlement agreements.
In April, the USPTO published a Notice of Proposed Rulemaking on various changes to the Patent Trial and Appeal Board (PTAB) proceedings. One significant change, which the FTC endorses, would require parties to file all pre-institution patent settlement agreements with the USPTO, including collateral agreements. Pre-institution agreements occur before the PTAB decides whether to institute a trial.
According to the FTC’s comment, adopting this rule would enhance both the FTC's 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.
The FTC’s comment highlights that requiring disclosure of any settlement regardless of timing would aid in identifying and investigating potentially unlawful settlements in the pharmaceutical sector and other industries. The proposed rule would apply broadly to patent settlement agreements related to pharmaceuticals as well as other sectors, thus supporting the FTC’s efforts to enforce antitrust laws and prevent unfair competition practices. For instance, broader disclosure requirements could help detect reverse payment settlements between pharmaceutical companies that prevent competition from lower-cost generic drugs and keep drug prices high.
The Commission voted 5-0 in favor of submitting the comment to USPTO.
This submission is part of the FTC’s ongoing efforts to promote competition concerning pharmaceutical drug patents. In April, the FTC expanded its campaign against improper or inaccurate listing of patents in the Food and Drug Administration’s Orange Book, challenging junk patent listings for drugs treating diabetes, weight loss, asthma, and COPD, including Novo Nordisk Inc.’s Ozempic. In February, the FTC supported using “march-in” rights as a check on companies charging inflated prices for taxpayer-funded research-developed drugs. In March, an amicus brief filed by the FTC in an asthma inhaler patent dispute was extensively cited in a district court decision ordering Teva to delist five patents.
The Federal Trade Commission develops policy initiatives on issues affecting competition, consumers, and the U.S. economy. The FTC advises against demands for money or threats from anyone claiming affiliation with them.
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