[00:00:00] Speaker 00: Case number 14-5182, Pharmaceutical Research and Manufacturers of America Appellant vs. Federal Trade Commission. [00:00:08] Speaker 00: Mr. Young for the Appellant, Ms. [00:00:10] Speaker 00: Arrington for the Appellate. [00:01:25] Speaker 04: May it please the Court, this rule relies on an assertion of FTC power to selectively impose notification obligations on a single industry, a power that FTC never claimed for four decades, and one that, if accepted, would fundamentally rewrite the Hart-Scott-Rodino Act. [00:01:41] Speaker 04: And central to understanding how that act operates, [00:01:44] Speaker 04: Congress purposefully divided the question of what is covered from the question of who is subject to notification. [00:01:52] Speaker 04: And as to the first, what is covered, Congress in the act gives to FTC the authority to define what constitutes an asset acquisition. [00:02:01] Speaker 04: But Congress treated the who question very differently. [00:02:05] Speaker 02: You say this is a Chevron 1 case, right? [00:02:08] Speaker 02: Yes, Your Honor. [00:02:09] Speaker 02: So help me think that through a little bit. [00:02:12] Speaker 02: And you do it based on your no-person language. [00:02:14] Speaker 02: The no-person language of the statute says leads to no other conclusion than the one you're arguing for, and that is that the FTC cannot make these industry-specific rules. [00:02:26] Speaker 02: Now, help me understand that. [00:02:29] Speaker 02: Why is it so clear? [00:02:30] Speaker 02: I mean, it seems to me it's not a bad argument for statutory interpretation, but you've got to do better than that under Chevron. [00:02:35] Speaker 02: You've got to say that that was the only reasonable [00:02:39] Speaker 02: interpretation we come up with, how is that the only reasonable interpretation? [00:02:43] Speaker 04: Your Honor, I think it's because the who question is decided both based on the no person mandate and then the other part of the statute in which who is addressed is the exemption authority. [00:02:55] Speaker 04: Congress was quite clear in saying when it comes to who is subject to notification, no person [00:03:02] Speaker 04: may evade notification except as exempted either by Congress itself directly or by the Commission upon a specific finding that whomever it exempts is not likely to violate the anti-trust laws. [00:03:15] Speaker 04: And that's the direct quote. [00:03:16] Speaker 01: Well, don't you have, I mean, you don't dispute [00:03:19] Speaker 01: BFTC's authority to have promulgated regulations specific to, for example, the banking industry. [00:03:25] Speaker 01: No, that's correct. [00:03:26] Speaker 01: In defining hold. [00:03:27] Speaker 01: There's a regulation that defines hold to cover a bank or trust company. [00:03:30] Speaker 01: Not everybody, not any person, but a bank or trust company. [00:03:34] Speaker 01: Right? [00:03:35] Speaker 04: That is correct, Your Honor. [00:03:36] Speaker 01: So they can make industry-specific [00:03:39] Speaker 04: We have never said that an industry-specific reference or definition is absolutely foreclosed. [00:03:47] Speaker 04: And there are two important things, I think, to keep in mind about the insurance and banking. [00:03:51] Speaker 04: The first is that that's an example of Congress making an exemption. [00:03:55] Speaker 04: Subsection C-11 deals with those types of [00:03:58] Speaker 04: industry, so it's quite telling that FTC's only example really of industry-specific definitions even, not impositions, but is one in which Congress has spoken to it. [00:04:07] Speaker 04: Here, there's nothing about the pharmaceutical industry or all other industries except for pharmaceutical industry, and it is in fact a direct imposition on a single industry. [00:04:17] Speaker 04: So when we have the no-person mandate combined with express text that says if you want someone to not be covered once you define something to be an asset, that's the what question, FTC's sole authority to address the who question comes in an exemption that's targeted at a particular industry and says that that industry or person or whatever it exempts is not likely to violate the antitrust law. [00:04:43] Speaker 01: What if the FTC found that [00:04:47] Speaker 01: The only industry that we're aware of that engages in these sort of partial exclusive licenses and does so at a value level, the cost of these partial exclusive licenses, transferring all material commercial rights, [00:05:09] Speaker 01: is high enough to trigger the thresholds is the pharmaceutical industry. [00:05:13] Speaker 01: If that's the determination that you're the only industry that does it at this level, that you have things that are this valuable that you can get less than the entire right and split up some of the rights, manufacturing from the others, [00:05:27] Speaker 01: You're the only ones that do it. [00:05:29] Speaker 01: Why should they have to write a rule up front that says there is nobody else? [00:05:35] Speaker 01: I mean, they could say any person, but there would be nobody but the pharmaceutical industry. [00:05:40] Speaker 04: Well, the simple answer is that that is the requirement that Congress gives. [00:05:44] Speaker 04: It's a prophylactic statute that in its very nature assumes that the agency doesn't know everything, what industries might arise, what industries are out there that it doesn't have experience with, as it claims it doesn't have experience with other industries with this transaction. [00:05:58] Speaker 04: But maybe another way to look at it is, if that really is true, in the pharmaceutical industry, we're the only one where this kind of transaction occurs, which is not this case. [00:06:07] Speaker 04: The FTC concedes that they typically see it in pharmaceutical industry, not that it only could or does exist here, but even if that were the case. [00:06:14] Speaker 04: What would be the harm, or what benefit would there be, maybe is a better way to ask it, in doing something different than the way they've always done it, the way Congress expects them to do it, which is to say, adopt a general rule saying here's what an asset is, and then follow the no person mandate. [00:06:29] Speaker 04: Now it turns out that only pharmaceutical is going to be filing notifications, no problem. [00:06:34] Speaker 01: Well maybe what they're gonna do is look at, they're defining the terms asset acquisition. [00:06:41] Speaker 01: And we're not sure whether a partial exclusive license will have the commercial value. [00:06:50] Speaker 01: We'll be able to figure that out in other industries. [00:06:52] Speaker 01: And it's never happened, at least at this value level, this $50 or $90 million value level. [00:06:59] Speaker 01: And we want to be careful in deciding when these types of unusual asset acquisitions are asset acquisitions for the purpose of this statute. [00:07:11] Speaker 01: We've got experience here. [00:07:12] Speaker 01: This is valuable stuff in the pharmaceutical industry, and they consider it for practical purposes as an asset acquisition for them, and it triggers these concerns. [00:07:25] Speaker 01: We just want to be careful. [00:07:26] Speaker 04: Well, Your Honor, the answer is that Congress said when you're being careful, when you're regulating incrementally, you're carving away, not adding to. [00:07:34] Speaker 04: And when there's any doubt in the matter... Well, how can they carve away? [00:07:38] Speaker 01: How can they decide that there's no anti-competitive implications for [00:07:44] Speaker 01: industry practices they've never seen. [00:07:46] Speaker 01: They haven't found anyone who's ever done it. [00:07:49] Speaker 01: So how can you assess anti-competitive nature of something that's never happened to their knowledge? [00:07:54] Speaker 04: Because that's the whole point of the Hart-Scott-Rodino Act, is to bring notifications so that the agency will gather that kind of information. [00:08:01] Speaker 01: How are they going to gather it? [00:08:02] Speaker 04: I mean, because people have to file the notification, if in fact it's an asset acquisition. [00:08:07] Speaker 01: There's no, you said, I thought you said maybe I misunderstood, was that the way they should have done this is pass an exemption, write a general thing and then say everybody's out except the pharmaceutical industry. [00:08:20] Speaker 04: No, no, no, I don't say that at all because what an exemption requires is a specific fine, is what Congress says, D2B of the statute. [00:08:28] Speaker 04: you have to show that whomever is exempted is not likely to violate the intellectual rights. [00:08:32] Speaker 01: No, that's exactly my point. [00:08:33] Speaker 01: So if they had, instead of defining asset acquisition, they had said, this approval applies, they'd written it as a generic rule, any person instead of any pharmaceutical industry, right? [00:08:47] Speaker 01: It was a generic rule, just like you want. [00:08:49] Speaker 01: And then they passed another determination that said, if there's anyone else in the world that does this, we're not aware of it. [00:08:57] Speaker 01: But we think it wouldn't be any competitive. [00:09:01] Speaker 01: That's how they should do it. [00:09:01] Speaker 01: I just don't know how they can make that determination. [00:09:06] Speaker 01: And so why is that their only route? [00:09:10] Speaker 01: It seems silly. [00:09:10] Speaker 04: That's starting from the premise that they can do what they want to do based on ignorance, based on a lack of experience. [00:09:16] Speaker 01: Not ignorance, I can define asset acquisition. [00:09:18] Speaker 01: And they have a particular circumstance that seems to [00:09:21] Speaker 01: meet the definition of asset acquisition as it operates in this particular industry. [00:09:25] Speaker 02: You must admit the statute does give them awfully broad authority to define terms. [00:09:33] Speaker 02: The district court called it a blank slate, I'm not certain that's quite right, but it's awfully broad authority that's running up against your no-person argument. [00:09:41] Speaker 04: No, that's because it's a difference between what and who. [00:09:44] Speaker 04: That authority defined what an asset is, which is the way they've always done it. [00:09:48] Speaker 04: This is the first time they've said, well, we see prevalence of this sort of transaction in the pharmaceutical industry. [00:09:55] Speaker 04: They back that up with 66 filings that they don't dispute, involve none of the kinds of transactions that are at issue here because they arose under the prior rule and were just straight up [00:10:06] Speaker 04: patent, exclusive patent licenses. [00:10:08] Speaker 04: They cite a database that they themselves recognize only has a tiny fraction of inquiries by unknown people for unknown reasons. [00:10:16] Speaker 04: They don't say how many, if any of those, involve the kind of transactions at issue here. [00:10:20] Speaker 04: If there were a case to start imposing [00:10:24] Speaker 04: coverage selectively on particular industries, this wouldn't be that case. [00:10:29] Speaker 04: They've never in 40 years found a single example, even before that, before the Heart Stop Reading Act was passed, in which this kind of transaction targeted... That's a different argument. [00:10:38] Speaker 03: You're saying their factual basis is wrong. [00:10:40] Speaker 03: Yes, they're... But I mean, they're saying in the rule, they said when they promulgated the rule that to the extent that there are others who engage in similar activity, they remain potentially reportable events too. [00:10:52] Speaker 03: I'm just not following your argument. [00:10:54] Speaker 03: If they can find only one example of this, and they have the authority to define the term, the who is clearly only the person they've found so far. [00:11:10] Speaker 03: And they've said if we find others, they will be within the who, too. [00:11:14] Speaker 03: I don't know how they find, it's certainly not Chevron 1. [00:11:16] Speaker 03: Well, Your Honor, it could be Chevron 2. [00:11:19] Speaker 03: It's absolutely not Chevron 1. [00:11:22] Speaker 03: I'm just not understanding conceptually. [00:11:24] Speaker 03: They are entitled to the find. [00:11:26] Speaker 03: the asset term, and they're entitled to regulate, and they say out front, this is the only industry in which we can find it. [00:11:34] Speaker 03: So that can be the only who. [00:11:36] Speaker 03: If that were the case? [00:11:38] Speaker 03: Well, that's a factual argument. [00:11:41] Speaker 03: You can argue that the record doesn't support that conclusion, but assuming they're right, assuming the only who, that does not violate the statute, especially when they say if we can find any more who fit within the [00:11:53] Speaker 03: They're going to be covered, too. [00:11:54] Speaker 03: So there's no discrimination. [00:11:56] Speaker 03: It's an anyway pattern. [00:11:57] Speaker 03: I'm just not following you. [00:11:59] Speaker 03: There can be no other who, if they are right. [00:12:04] Speaker 04: They do not say that only this industry does it. [00:12:09] Speaker 03: They say we typically see it. [00:12:10] Speaker 03: Well, that's what we claim about what the record says, but if they're right in what they're saying, we're all really wrong in this argument. [00:12:16] Speaker 03: I don't think so, Your Honor, because if... But do you agree that if we would all agree in this room, the only who can be X [00:12:24] Speaker 03: that they could have this kind of regulation. [00:12:26] Speaker 04: I would not agree to that. [00:12:27] Speaker 03: That's where I think your argument makes no sense whatsoever. [00:12:32] Speaker 04: I wouldn't agree with it because the whole purpose of the Harts.Rodino Act and the whole way that they have applied it for its entire history is to say even if there's only one who that we can imagine, we write a neutral rule, if it turns out that we're wrong or that an industry emerges that was unforeseen, Congress has said if this is an asset acquisition, whoever [00:12:52] Speaker 02: It arises based on the new person clause. [00:12:55] Speaker 04: And the accept as exempted. [00:12:57] Speaker 04: We have those two references to persons. [00:13:00] Speaker 04: And I hasten to add that this is not something that we're just making up. [00:13:04] Speaker 04: This is the way it always has been. [00:13:05] Speaker 03: The fact that something has always been a certain way doesn't mean an agency can't figure out something going forward and do it better. [00:13:13] Speaker 04: That is true, Your Honor, but here they have given no rational explanation of reason basis. [00:13:18] Speaker 03: Well, that goes for your record argument. [00:13:19] Speaker 03: That's a different argument. [00:13:21] Speaker 03: You're arguing it's arbitrary and capricious, I guess because the record doesn't support their assumptions, but that's a different argument. [00:13:28] Speaker 03: But your so-called Chevron one, there's no way they can do this argument. [00:13:33] Speaker 03: It makes no sense whatsoever if it is true [00:13:37] Speaker 03: only one group fits the who. [00:13:39] Speaker 03: It just doesn't make any sense. [00:13:40] Speaker 03: With this broad authority that this agency has under this statute, and they can show there's only one group that fits the who, and if we find anyone else, we'll put them in it too. [00:13:51] Speaker 03: That doesn't violate the statute. [00:13:53] Speaker 04: It does, Your Honor, and I guess I'll turn to Chevron too briefly if I may. [00:13:57] Speaker 04: If the Chevron one argument is unavailing, you nonetheless have a statutory structure that is predicated on the idea of general neutral regulation, even if there's only one who, because if there's only one who, the general regulation is still going to only capture that one who. [00:14:15] Speaker 04: There is no harm to the agency doing something like this for the first time here. [00:14:19] Speaker 03: But your definition becomes sloppy. [00:14:21] Speaker 03: If you have only one who and you're the agency, you would define by reference to the industry found because it'll make sense to the regulated industry. [00:14:32] Speaker 03: That's what a good agency official will do. [00:14:34] Speaker 03: If there's only one who in this area, your regulation would reference them because it's going to be clear and tidy as opposed to some general thing. [00:14:44] Speaker 03: where your understanding is we know who the who is, but we're going to write it very broadly so no one will know what we're talking about. [00:14:49] Speaker 04: Now, baking the who into the what is very problematic, because you can have... It's not problematic. [00:14:53] Speaker 03: I don't understand the mischief. [00:14:55] Speaker 03: What is the mischief? [00:14:56] Speaker 03: The mischief is that we're taking... Other than your client is regulated. [00:14:59] Speaker 04: Well, it's that there is not an adequate basis to have the kind of notice and comment that the agency should have. [00:15:05] Speaker 03: That's a record argument. [00:15:07] Speaker 03: Well, I think that Congress is trying to create... You should have run one argument. [00:15:11] Speaker 03: blows this away. [00:15:12] Speaker 03: I can't speak for my colleagues, but I would suggest it might blow them away. [00:15:16] Speaker 03: I know it blows me away. [00:15:17] Speaker 03: I don't get it. [00:15:20] Speaker 03: Your record argument, I hear you. [00:15:22] Speaker 03: You read the right or wrong on the record, but the Sherbrook [00:15:29] Speaker 04: Well, I think that the other argument that my colleague on the other side has renders superfluous the no person and the accept as extension provision. [00:15:38] Speaker 04: Now, from this point forward, FTC can regulate instead of generally and neutrally and even-handedly by choosing industries that favors or disfavors for whatever reason or none, and it makes the review by this court exceedingly difficult. [00:15:51] Speaker 03: Now, it does not lead to that. [00:15:53] Speaker 03: If the requirement is that you have to be able to assert, we can't find anyone else. [00:15:59] Speaker 03: And that's why we've cast the rule in these terms. [00:16:02] Speaker 04: Well, if they had even asserted that, that would be a different case. [00:16:04] Speaker 04: What they say is we typically see this in pharmaceutical industry. [00:16:07] Speaker 04: Don't know why. [00:16:08] Speaker 04: They don't have experience with other industries. [00:16:11] Speaker 04: They don't say that other industries this could never arise or does never arise. [00:16:15] Speaker 04: In fact, most of the data that they're using, and this is both Chevron and APA, relies on transactions that are not those that are targeted, just the exclusive patterns. [00:16:24] Speaker 03: The record argument is your record argument. [00:16:25] Speaker 04: It's not Chevron 1. [00:16:26] Speaker 04: On Chevron 2, if I can for just a moment explain this, we have a long history in which Congress has crafted this statute for one purpose only, and that is to ensure that if this kind of transaction were to arise anywhere, that everyone will provide notification, no matter how rare it might be in any given industry or whether it even exists yet in a given industry. [00:16:50] Speaker 01: Just imagine, I have no idea, but imagine hypothetically, industrial solvents engage in these same types of transactions and aren't covered. [00:17:00] Speaker 01: How is your client hurt? [00:17:02] Speaker 01: Since you don't seem to challenge the substance of the rule, how are you hurt? [00:17:08] Speaker 01: by the fact that the rule isn't applied to industrial solvent companies? [00:17:12] Speaker 04: Well, it's important. [00:17:13] Speaker 04: Our injury is not that someone else isn't also regulated. [00:17:18] Speaker 04: That is a separate question, the what question. [00:17:21] Speaker 04: If this court vacates this rule as we ask it to, then if the agency, and it's speculative whether it even would, tries to impose the general rule that it threatens to do, [00:17:30] Speaker 04: then the industrial solvents and everyone else would be able to participate in the notice-and-comment rulemaking where we could persuade the agency, ultimately this court would not... You're here representing the right of other companies to provide notice-and-comment rulemaking? [00:17:43] Speaker 01: No. [00:17:43] Speaker 04: Our injury is being subject to all of these requirements. [00:17:46] Speaker 04: We're the one industry that is targeted. [00:17:49] Speaker 04: The reason that this rule is unlawful is that it goes about notice-and-comment rulemaking to seek precedent on the cheap. [00:17:55] Speaker 04: We're going to target one industry so that really only one industry is on notice that it needs to comment. [00:18:00] Speaker 04: in order to be able to label something that we've never had a single instance of an anarchist problem. [00:18:05] Speaker 02: So if we remanded and they wrote the rule more broadly, you'd be in the same position? [00:18:09] Speaker 04: Well, we wouldn't be because it would be a different rule. [00:18:12] Speaker 04: They don't say we can back up this rule with a little more data. [00:18:16] Speaker 04: They say, if you tell us that this is no good, what we're going to do is we'll expand it to everyone, thereby prejudging the notice and comment that would [00:18:23] Speaker 04: occur when the whole world is subject to being able to say if these transactions happen, and frankly that would be a pretty good way to find out what they say they're ignorant of right now. [00:18:32] Speaker 04: We don't know about these transactions in other industries. [00:18:34] Speaker 04: They haven't said it never happens or couldn't or it's inherent in pharmaceutical. [00:18:38] Speaker 04: If they pass a general rule and only pharmaceutical industry has any skin in the game, then probably only the pharmaceutical industry would comment. [00:18:45] Speaker 01: But we don't know that because they have expressly... Do you happen to know of any other industries that do this? [00:18:50] Speaker 04: Well, I know of a Ninth Circuit case that you can go back to the 1930s in which they had exclusive patent licenses with retained rights in the motion picture industry. [00:18:59] Speaker 01: Was that distribution rights that were retained? [00:19:01] Speaker 04: Well, the question of what is distribution even is a question that's getting into the Varner Declaration and other things. [00:19:09] Speaker 04: It's some stick in that bundle, make, use, and sell, I think, again, [00:19:13] Speaker 04: make that was retained. [00:19:16] Speaker 04: And the point is, if that really is an asset acquisition, which I think it probably is questionable whether that's so, there's no reason to think, and the FTC has never said, that it really couldn't arise. [00:19:26] Speaker 04: They thought at one point that the incentives for the pharmaceutical industry were higher. [00:19:31] Speaker 04: Well, after notice and comment, they abandoned that because it really isn't true. [00:19:34] Speaker 01: Well, such as incentives, I mean, there has to be a threshold value amount. [00:19:38] Speaker 01: Well, and they don't rely on that. [00:19:39] Speaker 04: They say it's prevalence. [00:19:40] Speaker 04: That is it. [00:19:41] Speaker 04: We've got prevalence, and prevalence alone, justifying, targeting for the first time in history one industry for a kind of transaction they have never, before or after the Scott Rodino Act, before or after consummation, ever sought to unwind, penalize. [00:19:55] Speaker 01: But just to be clear, you don't otherwise challenge, if they were able to go back and just scratch out anything that sounded industry specific, [00:20:04] Speaker 01: so that it would no longer be industry-specific on a reading. [00:20:09] Speaker 01: You have no objection. [00:20:11] Speaker 04: We will challenge that. [00:20:12] Speaker 04: That's something that I'm prepared to represent to the court, that that's something that we're ready to challenge. [00:20:18] Speaker 04: The case before the court today is the... But you didn't challenge it here in case you were to lose it. [00:20:23] Speaker 01: I'm not saying one way or the other, but in case you were to lose this reading, [00:20:27] Speaker 01: I acknowledge that. [00:20:27] Speaker 01: You'd be stuck with this rule without having made those substantive challenges. [00:20:30] Speaker 04: If you rule against us on all our points, then, you know, that's it. [00:20:33] Speaker 04: We're not going to ask you to go back to another notice of combat. [00:20:35] Speaker 04: But what we say is we've presented a clear matter of law, Chevron 1, Chevron 2, APA argument, as to why this rule should not be allowed to be a precedent and can be set to give the agency an unclaimed power that subverts the structure of the Act. [00:20:50] Speaker 04: And if you do that, if you recognize this is a new uncharted step, one that's not lawful based on what Congress was trying to achieve and what it did in the statute, if they want to go back and impose a new rule, it would be a neutral one applied to all industries. [00:21:05] Speaker 04: They say that themselves. [00:21:06] Speaker 04: Then we would be in a position to finally have a rule. [00:21:09] Speaker 04: They would have to reveal all of their data, where we and all of our sister industries would be able to comment as to why this definition of asset acquisition is improper. [00:21:18] Speaker 04: That isn't the case. [00:21:19] Speaker 04: That's the what question. [00:21:20] Speaker 04: What we've got in this case before the court is the who question. [00:21:23] Speaker 04: Can they bake who into the definition of what? [00:21:26] Speaker 04: They've never done it before. [00:21:28] Speaker 04: They shouldn't do it here. [00:21:29] Speaker 04: Text, structure, and purpose of this act all converge in the same direction, saying this agency needs to do what Congress has delegated. [00:21:37] Speaker 04: It's an important job, but it's not what they've tried to seize here. [00:21:40] Speaker 04: And I thank the court. [00:21:41] Speaker 04: Thank you. [00:21:42] Speaker 04: We'll give you a couple minutes back. [00:21:43] Speaker 02: Thank you. [00:21:49] Speaker 00: Good morning. [00:21:50] Speaker 00: I'm Michelle Arrington for the Federal Trade Commission. [00:21:53] Speaker 01: Are you making a standing argument or not? [00:21:55] Speaker 01: You kind of dropped a hint in your brief and then plowed ahead, which I wouldn't expect the government to be doing. [00:22:05] Speaker 00: We're not making the direct scanning argument because they are asking for vacator of the rule. [00:22:11] Speaker 00: And if that were to happen, then there would not be a rule for the Commission to enforce against them for some period of time. [00:22:19] Speaker 01: So why mention it at all? [00:22:21] Speaker 00: Because it does highlight the very odd nature of their argument where they haven't challenged the substance of the rule or frankly even [00:22:29] Speaker 00: whether they can be required to report these sort of transactions. [00:22:35] Speaker 00: What they're arguing is that the rule is too narrow because we haven't regulated everybody else. [00:22:40] Speaker 00: And it is very difficult to see how the pharmaceutical industry is injured by a rule that they don't challenge the substance of. [00:22:48] Speaker 00: But because they do ask for vacator, which we don't think is appropriate, even if this court were to agree with some of their arguments for the reasons we've stated in the brief, [00:22:59] Speaker 00: if the court were vacated, there would be redress available to them. [00:23:03] Speaker 00: So that's why we don't make the full frontal argument on that. [00:23:07] Speaker 00: But, Your Honors, I won't spend long on the Chevron argument unless you have specific questions. [00:23:12] Speaker 00: I would note that their argument depends on inserting a lot of extra words and a lot of extra explanation that is simply not... Well, maybe it just means that you have to read any person in conjunction with [00:23:25] Speaker 01: I'm sorry, if I have a BTB or whatever, the exemption clause, which says, you know, and if you're not going to be any person, the only way any person gets out is if you make a specific finding of no anti-competitive risk. [00:23:39] Speaker 00: Well, I mean, the commission has not exempted anybody. [00:23:43] Speaker 00: It has not said that pharma to the extent that there are other industries other than pharma that engage in these sort of transactions that have the same sort of anti-competitive potential that they're off the hook. [00:23:57] Speaker 00: Well, what do you mean? [00:23:58] Speaker 01: But it sounds like you might think about them [00:24:00] Speaker 01: What if, in fact, and I'm just completely making this up, but an industrial solvents company did the exact same thing, that if they were a pharmaceutical company, they would have to report. [00:24:13] Speaker 01: You know, the exact same, or an energy drink, pick your hypothetical, but any of these companies did the exact same thing right now, today. [00:24:20] Speaker 01: Would they have to file a report? [00:24:25] Speaker 00: If it's not, if it doesn't come within what the commission has long advised is a sort of exclusive patent license that is typically reported. [00:24:35] Speaker 01: It's exclusive patent licensing except that the patent holder says I'll manufacture, you use and sell. [00:24:45] Speaker 00: Then right now there would not be a rule that clearly requires them to do that. [00:24:50] Speaker 01: Not clearly. [00:24:51] Speaker 00: Is there a rule that requires them to report at all? [00:24:54] Speaker 00: No. [00:24:54] Speaker 00: There is the general informal interpretations that the commission has advanced. [00:24:59] Speaker 00: Now if somebody were to come to the commission, as happens, the pre-merger notification office and kind of lay out, here's the transaction that I propose and it's outside of the pharmaceutical industry, but it looks very much like [00:25:14] Speaker 00: the sort of transactions that are covered by this rule. [00:25:17] Speaker 00: The pre-merger notification office would likely, if it saw that say, [00:25:21] Speaker 00: We think that this is something that that you should report. [00:25:25] Speaker 01: I don't want to report. [00:25:27] Speaker 01: That's a pain. [00:25:28] Speaker 01: It's a lot of paperwork. [00:25:29] Speaker 01: It's a lot of delay. [00:25:30] Speaker 01: And you might throw a wrench in the works. [00:25:32] Speaker 01: I think of the regulations. [00:25:34] Speaker 01: The statute don't see anything there. [00:25:36] Speaker 01: Regulations don't see anything there. [00:25:39] Speaker 01: And your published regulations, it's just the pharmaceutical industry must mean I don't have to do it. [00:25:46] Speaker 01: And you said you can't come in for them. [00:25:49] Speaker 01: There's no violation. [00:25:50] Speaker 00: Then there potentially is a gray area there where... I think it's gray. [00:25:56] Speaker 01: I think the regulation says if it's not therapeutic, you don't have to report it. [00:25:59] Speaker 00: It doesn't count. [00:26:01] Speaker 00: The commission would, if it started to get this information, could then decide whether there's a gap there that it needs to fill with either a broader rule on this or another rule that addresses those circumstances. [00:26:14] Speaker 00: But it's bedrock principle of administrative law that that is generally what agencies get to do in rulemaking is to address problems. [00:26:21] Speaker 01: Well, they generally get to do that. [00:26:23] Speaker 01: But do you have cases where they get to do that when the statute already provides its own exemption process? [00:26:29] Speaker 00: But the fallacy of Pharma's argument is that if there is not a rule in place, that means everybody else is automatically exempted. [00:26:40] Speaker 00: By saying that there's not a rule that squarely tells people that may engage in similar transactions, which the Commission has not found, [00:26:48] Speaker 00: that says that they necessarily have to report does not mean that they're exempted. [00:26:53] Speaker 00: They're not off the hook. [00:26:55] Speaker 00: There's just a question as to whether there is sufficient guidance or affirmative obligation for them to know that they have to file. [00:27:04] Speaker 00: The commission can, if it gets additional information and starts to see these sort of transactions happening in other industries, [00:27:11] Speaker 00: Since it has not exempted other people, it's just said right now we don't have enough information in order to say that we need a rule and what that rule might look like. [00:27:21] Speaker 00: And so if it does, in fact, find those transactions in other industries, it can then formulate a rule. [00:27:29] Speaker 03: But it has not let everyone else top the book. [00:27:31] Speaker 03: Can you take action against parties in other industries for failure to comply with what this rule says with respect to the pharmaceutical industry? [00:27:41] Speaker 00: not with regard to this specific rule, because this specific rule applies to pharma, but with regards to... It would be statutorily based. [00:27:49] Speaker 00: Right, it is. [00:27:49] Speaker 03: Could you take action? [00:27:51] Speaker 00: The same way. [00:27:52] Speaker 03: Or would they win on failure of notice? [00:27:54] Speaker 00: No, not... I mean, the question of notice is then, you know, is a close call, but under the HSR Act, the Commission, for example, the Commission could take action to enforce even in the absence of a rule. [00:28:06] Speaker 00: So, for example, the broader [00:28:10] Speaker 00: rule, that informal rule, that the Commission has always advised parties that exclusive licenses under the make, use, and sell, that entire bundle is something that is reportable. [00:28:22] Speaker 00: There is no formal rule that says that, but it is well established. [00:28:27] Speaker 00: And the Commission, if there are industries and pharma is where it principally sees those exclusive licenses, it could bring an action under the HSR Act itself. [00:28:39] Speaker 00: even in the absence of a formal rule. [00:28:41] Speaker 03: The fight's going to be on notice, right? [00:28:44] Speaker 00: The fight would be on notice, yes, but it does not mean that because there is not a formal rule that other industries are exempt. [00:28:54] Speaker 03: Why didn't the agency write a rule that appears more general and then in explaining it say, for example, in the pharmaceutical industry, this is what we see, and if there are other situations that [00:29:06] Speaker 03: We're putting everybody on notice. [00:29:08] Speaker 00: Well, potentially that is very confusing to industry. [00:29:13] Speaker 03: Why is that confusing? [00:29:14] Speaker 03: They don't have this argument. [00:29:16] Speaker 00: Well, it can be very confusing because the rule is not just for a whole patent, it's for the rights to part of a patent. [00:29:23] Speaker 00: And the question of what part of a patent you're talking about [00:29:26] Speaker 00: In this case, we know that this is how the pharmaceutical industry transfers rights either to the entirety of the patent or part of a patent, and we can articulate it very specifically in a way that provides them guidance. [00:29:40] Speaker 00: To do just a very broad patent or part of a patent [00:29:43] Speaker 00: that might apply to anyone else who possibly does this, although we haven't seen it, that could engender a tremendous amount of confusion. [00:29:52] Speaker 00: There may be overreporting by people who say, oh, well, I've never thought of this. [00:29:57] Speaker 00: Is this part of a patent, not part of a patent? [00:29:59] Speaker 00: Well, maybe we'll be cautious and report it. [00:30:00] Speaker 00: But there's a tremendous cost that comes with that. [00:30:03] Speaker 00: And the pre-merger notification office would surely get [00:30:06] Speaker 00: get flooded with calls. [00:30:08] Speaker 00: It would just be, you know, in the instance where we have not seen examples, real-life examples of this. [00:30:15] Speaker 00: Commission has made a very reasoned determination not to create a problem where none exists. [00:30:21] Speaker 03: What do you do with their argument that the record, with respect to your factual assumptions, doesn't exist? [00:30:29] Speaker 00: Well, it does exist because the commission has explained the basis for its reasoning is that in its experience administering the HSR program, and it has described the nature of this experience, the HSR filings that it has received, the inquiries from the pre-merger notification office, that has informed its decision. [00:30:52] Speaker 00: And because it gets these questions [00:30:56] Speaker 00: very frequently from pharma, it sees these sort of transactions from the pharmaceutical industry, not from others. [00:31:02] Speaker 00: That is sufficient for both the pharmaceutical industry as they did to challenge the basis [00:31:11] Speaker 00: for that decision by saying, no, as a matter of fact, we think that other industries engage in this. [00:31:19] Speaker 00: And they retained an expert who purported to do that. [00:31:22] Speaker 00: The commission found that his arguments were not persuasive for the reasons that we stated in our brief. [00:31:28] Speaker 00: That is ample information. [00:31:30] Speaker 00: for Pharma to test, for this court to understand the Commission's rationale. [00:31:38] Speaker 00: And the cases don't require anything else in a determination of this sort, which is not based on [00:31:45] Speaker 00: technical studies, empirical data. [00:31:47] Speaker 00: It is based on the Commission's cumulative experience over years of administering the program. [00:31:52] Speaker 01: Why don't we require the agency that wants to make this type of determination under the statute to make a specific finding? [00:32:00] Speaker 01: Not just the typically, and we haven't seen one, but we've looked [00:32:08] Speaker 01: And based on our experience and study, we have found no other industry that is doing this at this time. [00:32:17] Speaker 01: Shouldn't that specific finding be required? [00:32:21] Speaker 00: No, I don't think so, Your Honor. [00:32:23] Speaker 00: I don't think that there is precedent in the case law for this sort of determination for that. [00:32:28] Speaker 00: And it would be a very difficult thing. [00:32:30] Speaker 00: It would certainly be costly if we haven't seen a problem. [00:32:34] Speaker 00: And we're an agency. [00:32:37] Speaker 00: We're the agency that people bring these sort of questions to. [00:32:40] Speaker 00: We're also informed by the Department of Justice's Antitrust Division's experience. [00:32:46] Speaker 00: That is an ample basis to [00:32:48] Speaker 00: to get the sort of information that we need, it would be costly and frankly pointless if we haven't had a clue up until now from all of those sources of information that there are these transactions elsewhere that should suffice. [00:33:03] Speaker 01: Your statement, sir, it just seemed a bit more affirmative than the Federal Register, which had words like typically and left me a little bit unclear as to whether they were actually making a determination that [00:33:16] Speaker 01: based on all our knowledge and study, this is the universe as of the time we're promulgating this rule. [00:33:24] Speaker 00: But that's not a necessary, we don't need to find as a factual certainty that nobody else does this. [00:33:31] Speaker 01: Why? [00:33:31] Speaker 01: What if in fact there were one other, it doesn't happen often, but one other time, you were aware of one other time that [00:33:41] Speaker 01: energy drinks or whatever, did the same thing. [00:33:45] Speaker 01: And then you went ahead and wrote this rule. [00:33:48] Speaker 01: Is that okay? [00:33:49] Speaker 01: When you know that someone else has done it? [00:33:51] Speaker 00: It is okay, because an administrative law is where we perceive [00:33:58] Speaker 01: where agencies perceive a problem, they can make a rule to address the problem, just because there is perhaps someone... But you're not making any determination that other industry, when it does it, doesn't present the exact same anti-competitive concerns. [00:34:13] Speaker 01: Without making that determination, how is it that you could go 95% [00:34:19] Speaker 01: of what we see is pharmaceutical. [00:34:21] Speaker 01: So when pharma does it, it's covered. [00:34:25] Speaker 01: 5% other folks, we're not finding no anti-competitive effect. [00:34:29] Speaker 01: We're just letting them out of the regulation. [00:34:32] Speaker 00: Well, we always have the problem of drawing lines. [00:34:34] Speaker 00: You can't regulate, you can't try to regulate everything that might potentially be a problem or has been a one-off instance. [00:34:46] Speaker 00: Regulation, the sort of, [00:34:49] Speaker 00: reasoned decision-making that the Commission engaged in here has identified a problem. [00:34:52] Speaker 02: But doesn't that run against your opponent's statutory argument about the way we read the No Person Clause and the Exemption Clause together? [00:35:00] Speaker 02: Doesn't that suggest that you are supposed to act more broadly and neutrally and not target industries, unless they are completely unique? [00:35:12] Speaker 02: But the hypothetical that Judge Millett gave you is they're not completely unique here. [00:35:16] Speaker 00: I don't think that it does run into the chevron-type argument as to what the HSR Act requires. [00:35:25] Speaker 00: The HSR Act says nothing about whether the Commission in deciding how to define [00:35:33] Speaker 00: these broad, undefined terms in the Act can define them in the specific context in which it understands that. [00:35:42] Speaker 00: And that, as the Commission said in its rulemaking, it may be subject to further rulemaking if the Commission comes to learn that there are [00:35:54] Speaker 00: the other industries that engage in this, and the Commission gains enough understanding, assuming they exist, to formulate a rule that would be helpful. [00:36:03] Speaker 03: You don't mean to take on my colleague's hypothetical and insist that that's what we would have to say in the opinion. [00:36:10] Speaker 03: As she said, hypothetically, you know of someone else. [00:36:13] Speaker 03: Correct. [00:36:13] Speaker 03: But you write only this rule. [00:36:15] Speaker 03: We don't have to decide that case. [00:36:16] Speaker 00: No, absolutely. [00:36:17] Speaker 03: Your assumption in this record is you don't know of anyone else. [00:36:27] Speaker 03: That is, the who, as far as the agency is concerned, is limited to former non. [00:36:33] Speaker 03: Maybe that there's more in the who, but we're not aware of it. [00:36:37] Speaker 03: That's correct. [00:36:37] Speaker 03: And even when that comes, we'll deal with it. [00:36:39] Speaker 03: So it's really a fight about whether you're accurate on the who. [00:36:42] Speaker 03: You're not running into a statutory issue. [00:36:45] Speaker 00: Yes, that's correct. [00:36:46] Speaker 03: We don't have to decide that, well, if there was someone else and you failed to include them, [00:36:52] Speaker 03: That would still be okay. [00:36:54] Speaker 03: You answered it was okay. [00:36:56] Speaker 03: I thought your answer would be that's not our case [00:36:58] Speaker 00: Well, it's not our case. [00:37:00] Speaker 00: That's true. [00:37:00] Speaker 00: And other industries had the opportunity to comment as well. [00:37:03] Speaker 00: I mean, the rule was out there. [00:37:05] Speaker 00: It's only related to pharma. [00:37:07] Speaker 00: But it was no secret what these sort of transactions were. [00:37:11] Speaker 00: And we haven't heard from anybody else. [00:37:13] Speaker 01: Can you just help me with that, then? [00:37:16] Speaker 01: Where in the final rule or in the record can I look to find some assurance that [00:37:26] Speaker 01: this determination was based on the conclusion by the FTC that we've never seen anything else. [00:37:36] Speaker 01: We aren't aware of anything else. [00:37:38] Speaker 01: Sometimes it sounds like they're saying that, and sometimes it sounds like typically, which is a much more dangerous word. [00:37:43] Speaker 00: I really want to understand the record. [00:37:45] Speaker 00: I think the confusion is this. [00:37:46] Speaker 00: The question for the broader universe of exclusive patent licenses, the kind that would be captured by the broader make, use, or end cell, there have been the rare instance where the commission has seen exclusive licenses that fall into that broader. [00:38:10] Speaker 00: Again, very rare, as the commission said in its rulemaking in the last five years of the [00:38:15] Speaker 00: all of those have come from pharma. [00:38:18] Speaker 00: What the commission has really not seen from anyone outside of pharma is the type of all of the commercially significant rights being passed, both the holding back of some limited manufacturing rights and co-rights. [00:38:36] Speaker 00: Those have come from pharma, and that's that. [00:38:39] Speaker 01: Can you point me to where they, just so we have some assurance that we're not deciding the 95, 5% case, but we're deciding the, as of now, 100% in this, and I understand, I'm not talking about the general exclusive licensing, I'm talking about the subset of partial exclusive licenses, or however you want to describe this setting. [00:38:59] Speaker 01: Sure. [00:39:00] Speaker 01: Which language is it that you think best conveys that? [00:39:03] Speaker 01: I think that. [00:39:06] Speaker 01: And if it's too long for you to find it, you could send a letter after it. [00:39:09] Speaker 01: I want to hold everybody up. [00:39:11] Speaker 00: Sure. [00:39:11] Speaker 00: If it would be helpful, I can sit down and take a look at it. [00:39:15] Speaker 01: How much do you want to point me to what you're relying on? [00:39:18] Speaker 01: Because I found some sort of, sometimes the language seemed more specific, and other times it seemed a little bit looser. [00:39:24] Speaker 01: And so that's why. [00:39:26] Speaker 01: Right. [00:39:27] Speaker 01: I would have to look through this, but I think we can do it. [00:39:31] Speaker 00: Is that OK? [00:39:34] Speaker 04: I think a lot of what. [00:39:46] Speaker 04: The court was just discussing started from the premise. [00:39:53] Speaker 04: that agencies identify problems and then they regulate. [00:39:57] Speaker 04: But that default production was switched in this act, in which Congress prescribes the rule for coverage. [00:40:03] Speaker 04: It says if something is an asset, it doesn't matter whether we know or don't know, no person can do it, except as exempted. [00:40:10] Speaker 04: Those textual conditions are central to the purpose of how this act functions, and whether they know about it or even looked and couldn't find, no person means no person, [00:40:21] Speaker 04: which is exactly the way that the FTC has always administered this act up until now. [00:40:27] Speaker 01: Can you tell me, just explain as a practical matter, how it would [00:40:35] Speaker 01: unravel the Act, or impair the Act's operation, or why Congress wouldn't have wanted them to be able, if they found this unusual situation where partial transfers of rights, which might ordinarily not be thought of as an asset acquisition, but in this particular setting it in fact happens [00:40:56] Speaker 01: commonly extraordinary amounts of money are in the line and it raises the same, in their judgment, any competitive concerns as a full grant of exclusive licensing. [00:41:06] Speaker 01: Why would Congress have not wanted them to be able to do that? [00:41:09] Speaker 04: Because Congress passed the HSR Act for the purpose of ensuring that the Commission would have notification of any [00:41:17] Speaker 04: high-threshold dollar amount transaction regardless of who has that particular bundle of property sticks. [00:41:23] Speaker 01: I'm sorry, the commission would have notice or the commission would give notice? [00:41:26] Speaker 04: The commission would get notice from whoever wanted to pursue that transaction regardless of who that person was or what industry they came from or whatever. [00:41:35] Speaker 04: And so there was a specific tool that was given to the agency in 18A, D2B is the exemption clause, and it says you can exempt classes of transactions even. [00:41:46] Speaker 04: So for instance, they could, if they really only wanted to focus on transactions at an even higher amount than the threshold, there are some exemptions like that, that could be neutral as well, but it would capture what you're saying the agency would want to see. [00:42:05] Speaker 01: Hard to me to think why Congress would, if they determined, and you can tell me if you think they didn't, but if they determined that this is the only one, we've looked, we can't find, we've never seen one, this is the only one, that [00:42:19] Speaker 01: The only way the agency can be specific and clear about what it means by asset acquisition in this context is to, in passing that regulation, pass another determination. [00:42:30] Speaker 01: And if anyone else in the world does it, we don't think that's any competitive. [00:42:34] Speaker 01: Wouldn't Congress want them to be very, very careful before making a, if anyone else is out there doing it, [00:42:40] Speaker 01: We don't know about it. [00:42:41] Speaker 01: We don't understand it. [00:42:42] Speaker 01: But I guess we have to decide it's anti-competitive up front before we even know what it is. [00:42:46] Speaker 04: If the exemption is on the basis of person, then what the statute says is they have to decide that whomever they exempt is not likely to violate the antitrust laws. [00:42:54] Speaker 04: I don't think they could just do a global exemption of everybody except this. [00:42:58] Speaker 04: It's not so easy. [00:42:59] Speaker 04: They haven't exempted anybody. [00:43:00] Speaker 04: Well, that's, that's correct. [00:43:02] Speaker 04: They haven't, they've never purported to use their exemption authority. [00:43:04] Speaker 03: The district court said it was... No, but I mean, there's no exemption here. [00:43:07] Speaker 04: It's a practical matter, as was discussed, you know, a little earlier. [00:43:12] Speaker 04: Nobody else has to follow this burden. [00:43:14] Speaker 03: No, that's not true. [00:43:15] Speaker 03: It, in fact, is true. [00:43:16] Speaker 03: I mean, that's your underlying assumption. [00:43:18] Speaker 03: That's just not accurate. [00:43:19] Speaker 03: Well... There is a statutory prescription. [00:43:21] Speaker 03: There could be a fight on notice. [00:43:23] Speaker 03: And the first time, if they lose that the first time, that would be the last time they would lose it, because then there would be notice. [00:43:30] Speaker 03: The agency still has the right to enforce the statute. [00:43:34] Speaker 03: Whether or not they capture all of it in regulations is a different question. [00:43:39] Speaker 03: They have not exempted other industries that might be out there. [00:43:43] Speaker 03: And they might take on someone if they find it, and they might lose it on notice. [00:43:46] Speaker 03: As the Supreme Court said, in the FCC case, you could. [00:43:49] Speaker 03: Sometimes you do, sometimes you don't. [00:43:51] Speaker 03: They have not exempted anything. [00:43:54] Speaker 04: they indeed can enforce against anyone, including the pharmaceutical industry, that's entirely separate from the Hart-Stott-Rodino Act. [00:44:01] Speaker 04: What we're talking about is the notification burden. [00:44:04] Speaker 04: And what they said, JA77, you know, this kind of transaction is non-reportable until this rule, which makes it reportable exclusively for the pharmaceutical industry. [00:44:15] Speaker 04: is not reportable for any other industry because of this rule, but it is for pharmaceutical industry. [00:44:21] Speaker 04: Exact same transaction. [00:44:23] Speaker 04: No difference in dollar amount. [00:44:24] Speaker 04: No difference in any economic. [00:44:27] Speaker 04: We don't know if there are others out there. [00:44:28] Speaker 04: We don't have as much experience. [00:44:30] Speaker 04: I think page 40, footnote 10 of our opening brief gives a few examples of how the agency said we typically see it, almost solely see it, almost solely occurs in that industry. [00:44:43] Speaker 04: That's a far cry from no person. [00:44:45] Speaker 04: is exempt from notification unless specifically exempted under a particular statute. [00:44:52] Speaker 04: And that's all we're really asking for is that this agency do what it has always done. [00:44:56] Speaker 04: adopt rules, much like, Judge Edwards, you said, in my colleague's response, why couldn't they adopt a general rule and then provide guidance? [00:45:06] Speaker 04: They can have comments. [00:45:07] Speaker 04: We have a lot of room to listen. [00:45:08] Speaker 03: I knew you would like that. [00:45:10] Speaker 04: Yes, and I'm very appreciative, because I think it makes good sense, and it's good policy, and it fits the purpose of why Congress adopted this act in the first place. [00:45:19] Speaker 01: Can you answer quickly, if someone's supposed to report and doesn't, is it a fine? [00:45:24] Speaker 04: $11,000 a day, I believe, from the date in which they were supposed to have reported. [00:45:30] Speaker 04: You can see that for the pharmaceutical industry, there are pretty serious burdens here. [00:45:35] Speaker 04: The cost of complying with reporting [00:45:38] Speaker 04: is high, the time delay is great for drugs that are trying to get to market in the most efficient way. [00:45:44] Speaker 04: It's a unique burden on one industry. [00:45:47] Speaker 04: Without any real explanation for why, why they would pick a kind of transaction that has never been enforced against outside of Hartsgott or inside of it, to say in this one kind of industry, we're gonna break our practice that we followed since the beginning and target a single industry for a kind of transaction that's never given anybody any problem, even though we could have enforced it against them [00:46:08] Speaker 04: And we can unwind. [00:46:09] Speaker 04: It's easy to unwind. [00:46:10] Speaker 04: That's another purpose of the Hart-Scott Act is to make sure that transactions don't go through without notification because they're so hard to unwind. [00:46:18] Speaker 04: All of those may get to the what question, but the who question really is what's essential here. [00:46:22] Speaker 04: There's no basis in this record to say that prevalence exists. [00:46:27] Speaker 04: There's no basis [00:46:28] Speaker 04: is to say that prevalence is a proxy for antitrust risk if we start to get into the realm of selective imposition. [00:46:35] Speaker 04: And because it violates the text, structure, history, and purpose of this act, we would ask this court to vacate the rule and reverse the judgment of the district court. [00:46:46] Speaker 04: Thank you, Mr. Udall. [00:46:47] Speaker 04: Your Honor. [00:46:48] Speaker 02: Ms. [00:46:48] Speaker 02: Errington, did you have a record site [00:46:51] Speaker 02: If you want to add something to what she's saying, Ms. [00:46:54] Speaker 02: Schelling, what let's you? [00:46:55] Speaker 00: I guess the clearest articulation would be the statement in that first paragraph under limitation to the pharmaceutical industry. [00:47:02] Speaker 00: The PNO has not found other industries that rely on these type of arrangements. [00:47:07] Speaker 01: I'm sorry, you said JA77? [00:47:08] Speaker 01: Sorry, I took my regulation out. [00:47:12] Speaker 01: And which column is it? [00:47:14] Speaker 00: Is there anything? [00:47:15] Speaker 00: It's the central column. [00:47:17] Speaker 00: It's under limitation to the pharmaceutical industry. [00:47:20] Speaker 00: I mean, I guess the key is there is that rely. [00:47:23] Speaker 00: I guess that doesn't exclude that there might not be an instance, but as a form of transactions that are used in the industry that the Commission has seen. [00:47:32] Speaker 00: It hasn't seen ones that rely on these sort of transactions. [00:47:36] Speaker 04: Well, all I would respond is in that very same paragraph on J77, if you'd read the whole paragraph, [00:47:41] Speaker 04: You'll see that the commission says, although it's possible for other industries to engage in the kind of exclusive licensing that typifies the pharmaceutical industry, the PNO has not processed these. [00:47:51] Speaker 04: And it says that the 66 in the past five years, well, they weren't even that for the pharmaceutical industry. [00:47:55] Speaker 04: They continue on. [00:47:56] Speaker 04: It says exclusive patent licensing transactions have generally been limited to the pharmaceutical industry. [00:48:01] Speaker 04: I think you can read through JH70 has more to rebut this. [00:48:05] Speaker 04: This is not something that really has ever been disputed, that this truly is unique. [00:48:09] Speaker 02: Thank you very much. [00:48:10] Speaker 02: We have your arguments. [00:48:11] Speaker 02: Case is submitted. [00:48:11] Speaker 02: Thank you.