USPTO Proposes Major Change to Terminal Disclaimer Practice

By: Robert Hulse , Michael Saffron , Malashaan Kind

What You Need To Know

  • The U.S. Patent and Trademark Office has proposed new rule that terminal disclaimers can only overcome an obviousness-type double patenting rejection by tying the subject application's enforceability to the reference application's validity.
  • If these changes are enacted, patent applicants may want reconsider how to respond to double patenting rejections or how to scope claims for continuation applications.
  • The USPTO proposes these changes to reduce litigation costs for fighting multiple patents with similar scope, though its power to enact this rule is an open question.

On May 9, the USPTO released a Notice of Proposed Rulemaking for significant changes to terminal disclaimers. The USPTO suggests adding a new requirement that applicants can overcome an obviousness-type double patenting rejection only by tying the enforceability of the subject application to the validity of the reference application. These updated rules, if enacted, would likely change how patent applicants approach responding to double patenting rejections and, more broadly, developing their IP portfolios through continuation applications. Obviousness-type double patenting is a judicially created doctrine that prohibits patent applicants from obtaining multiple patents with patentably indistinct claims. There are two main motivations behind this doctrine. First, patent owners should not be able to extend the term of their monopoly on an invention by filing multiple applications with patentably indistinct claims. Second, a defendant can be subject to infringement suits from multiple parties for the substantially same invention if the patent owner assigns one of these indistinct patents to another person or entity.

One very common solution to overcome double patenting rejections is filing a terminal disclaimer. When a patentee or an applicant files a terminal disclaimer, they disclaim the terminal portion of the patent’s term starting from some date. These terminal disclaimers typically reference another patent or application to disclaim the portion of the patent term after the expiration date of the reference patent. This terminal disclaimer causes both patents to expire on the same day, addressing the concern of applicants inappropriately extending their patent terms. Furthermore, 37 C.F.R. § 1.321(c)(3) requires that terminal disclaimers include a provision that the subject patent be enforceable only so long as it and the reference patent are commonly owned, addressing the concern of harassment by different patentees for the same invention.

The USPTO’s proposal would add a new condition for applicants to overcome double patenting rejections. Specifically, the proposed rule change would require terminal disclaimers to include an agreement that the subject patent is only enforceable so long as the subject patent is not tied “directly or indirectly” to a patent in which “any claim has been finally held unpatentable or invalid as anticipated or obvious by a Federal court in a civil action or by the USPTO, and all appeal rights have been exhausted; or a statutory disclaimer of a claim is filed after any challenge based on anticipation or obviousness to that claim has been made.” In other words, the terminally disclaimed patent becomes unenforceable if it files a terminal disclaimer referencing a patent that has even a single claim deemed invalid.

The USPTO proposes these changes to lower the costs of challenging multiple related patents. If a patent holder owns multiple patents with very similar scopes, defendants may spend a lot of time and money addressing very similar issues for each of the asserted patents. By tying the validity/enforceability of the patents, the parties can focus the validity disputes on only one of the patents, which “could result in more focused claim construction hearings, lower litigation costs, and faster resolution.”

If this proposal is enacted, however, applicants will have to think carefully about whether to file terminal disclaimers to overcome double patenting rejections in their applications and may want to more-strongly consider traversing the rejection or amending claims rather than filing a terminal disclaimer. Furthermore, applicants may consider filing earlier applications in a family with relatively narrow claims or amending more aggressively in applications and progressively broadening in continuation applications, rather than traversing for broader claims, so that later-filed applications are less likely to be rendered unenforceable by broader, earlier applications.

Ultimately, it is not clear that this proposal will be enacted—or even that it would be upheld in court. The USPTO’s statutory authority to establish regulations governing “the conduct of proceedings in the Office” arguably does not allow it to establish new conditions for terminal disclaimers to overcome a double patenting rejection. The USPTO cites the Court of Custom and Patent Appeals’ upholding of a USPTO rule requiring the anti-alienation clause in In re Van Ornum, 686 F.2d 937 (CCPA 1982), to support its position that it can make these kinds of regulations. However, Van Ornum emphasized the long history of multiple harasser concerns in double patenting jurisprudence to find that the law already supported the USPTO’s regulation. There is not a similarly clear history of concerns on the cost of litigations in double patenting, and these proposed rules, if enacted, may be an example of unlawful agency action.