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Michael Verne


I am writing to confirm advice that you gave to me through our exchange of voice mail messages on June 5, 2008.

1. A and B are planning to enter into an agreement to co-develop and co-promote specific new products. B currently has a product on the market ("Product B'). A is developing a new product ("Product A") that can work with Product B as well as with certain products of others.

A would grant to B the co-exclusive right under A's relevant IP to develop and co promote Product A. B would grant to A the co-exclusive right under B's relevant IP to develop and c-promote a product combining Product A with Product B (hereafter, the "Combination Product"). A and B would agree to collaborate exclusively worldwide with each other to develop, manufacture, and commercialize Product A and the Combination Product.

IP developed through the collaboration effort would be owned jointly by A and B.

B would pay to A an upfront payment, would help fund Product A development costs, and would make payments to A upon the achievement of certain milestones related to Product A and the Combination Product.

A would be responsible for selling Product A, once it is developed, and would pay royalties to B based on a percentage of Product A's sales. B would have co-promote rights with respect to Product A. B would be responsible for selling the Combination Product once it is developed, and would remit a portion of the revenues attributable to sales of the Product A portion of the Combination Product to A. A would have co promote rights with respect to the Combination Product.

A would have the freedom to enter into agreements with others to combine Product A with any other product except a product identical to Product B. Consumers would be able to use standalone Product A by itself or with standalone Product B or with other products.

I understand that a HSR filing would not be required in connection with this transaction because under the HSR rules neither A nor B would be granting the other exclusive rights to IP. This is because each would retain rights to the IP it is granting to the other for purposes of the co-development and c-promotion of the new products.

Please let me know if you agree with my HSR analysis. As always, thank you for your help.

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

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