Executive Summary
On May 10, 2024, the United States Patent and Trademark Office (USPTO) issued a notice of proposed rulemaking to add a new requirement for terminal disclaimers filed to obviate nonstatutory double patenting rejections to the public for comment. Comments can be submitted via this link until July 9, 2024. The proposed rule “would require terminal disclaimers filed to obviate nonstatutory double patenting to include an agreement” that ties the patent’s fate to the patentability of claims in related patents. Specifically, the patent with the terminal disclaimer would “be enforceable only if the patent is not tied and has never been tied directly or indirectly to a patent by one or more terminal disclaimers filed to obviate nonstatutory double patenting 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.”1
If the proposed rule goes into effect, the change would be a significant departure from current practice and a detriment to patentees.
Proposed Rule
Under the proposed rule, terminal disclaimers would include an agreement that the patent with the terminal disclaimer will not be enforceable if any claim of the second patent (for which the terminal disclaimer was filed to obviate a nonstatutory double patenting) is invalidated by prior art. Terminal disclaimers, including those with the new language, would continue to be unidirectional. Therefore, only the patent with the terminal disclaimer and not the conflicting patent would be encumbered by the language.
The Potential Effect
From the USPTO’s perspective, with the proposed rule, if there is a dispute involving multiple patents tied by terminal disclaimers, the dispute could be focused on addressing the validity of the claims of a single patent. This would in effect lower costs of challenging multiple related patents and result in a faster resolution.
However, the proposed rule would have the significant substantive effect of compelling a conditional admission, yet the USPTO’s notice does not identify authority for issuing such a rule other than its base rulemaking authority.2 Yet this authority has long been held to be limited to procedural rules and not to provide authority for substantive changes to the law.3 Moreover, reviewing courts look unfavorably on USPTO attempts to overrule binding case law.4
Additionally, the proposed rule operates in a disproportionate manner. While nonstatutory double patenting operates on a claim level (claims of a patent application are patentably indistinct from claims of a reference patent/patent application), terminal disclaimers operate on a patent level (disclaiming the term of a patent). The rule would render the patent with the terminal disclaimer unenforceable if any claim of the second patent (for which the terminal disclaimer was filed to obviate a nonstatutory double patenting) is invalidated by prior art. To be clear, just one claim in the second patent needs to be found invalid as being anticipated or obvious for the patent having the terminal disclaimer to be unenforceable.
The proposed rule change could also significantly raise the cost and complication of examination involving nonstatutory double patenting. Because terminal disclaimers currently do not constitute an admission regarding validity, many terminal disclaimers are filed for expediency. The proposed rule would upend this practice and convert the current non-admission into a mandatory substantive admission. Under the proposed rule, filing a terminal disclaimer would present the risk that a patent’s enforceability could depend on the strength of a single claim in another patent. In view of the risk associated, implementation of the proposed rule would likely slow patent prosecution at the USPTO, increase nonstatutory double patenting challenges by patent applicants, and further increase continuation application filings to circumvent nonstatutory double patenting rejections. Taken together, in practice the proposed rule may counter its intended purpose and result in increased costs and delays during the prosecution of patent applications at the USPTO.
Current USPTO Practice
Under current USPTO practice, where a patent application claims an obvious variant of the subject matter claimed in a reference patent or patent application, the USPTO may reject the claim under the doctrine of obviousness-type double patenting (nonstatutory double patenting). Such rejections may be appropriate when the application is related to the reference application or patent because they (a) share the same inventive entity, at least one common (joint) inventor, a common applicant, or a common owner or assignee, or (b) are not commonly owned, but are owned by parties to a joint research agreement. In this regard, the doctrine of double patenting seeks to prevent the unjustified extension of patent exclusivity beyond the term of a patent where one patent contains a claim directed to an obvious variant of a second patent/patent application.5
Patent applicants or patent owners may obviate a nonstatutory double patenting rejection by amending claims, by successfully arguing that the claims at issue are patentably distinct, or by filing a terminal disclaimer.6 Currently, terminal disclaimers disclaim the terminal part of any patent granted on an application which would extend beyond the expiration date of each one of the conflicting patents and/or applications having claims to inventions that are obvious variants. Where a terminal disclaimer is filed, the terminal disclaimer must also state that the patent or any patent issuing from the application is only enforceable for and during such period that it is owned by the same party (or parties) that owns the other patents or applications, identified in the terminal disclaimer, that claim obvious variations of one invention.7
These requirements of current terminal disclaimers are well established in case law, but the case law further clarifies that the filing of a terminal disclaimer does not constitute an admission that the unpatentability of the claim will lead to the unpatentability of related claims or vice versa.8 Thus, while current terminal disclaimer requirements simply codify existing case law, the proposed additional requirement would require an outcome contrary to binding precedent. If implemented, the proposed rule would be a significant departure from current practice.
USPTO Rationale
The USPTO contends that the proposed rule change is “intended to promote competition by lowering the cost of challenging groups of patents tied by terminal disclaimers, resulting in reduced barriers to market entry and lower costs for consumers” and “furthers the objectives of Executive Order 14036 on ‘Promoting Competition in the American Economy,’ 86 FR 36987 d(July 14, 2021).”9 The USPTO further claims that “[e]ven with the protections currently provided by a terminal disclaimer, multiple patents tied by terminal disclaimers that are directed to obvious variants of an invention could deter competition due to the prohibitive cost of challenging each patent separately in litigation or administrative proceedings.”10
Conclusion
In an effort to supposedly promote competition, the USPTO has issued a notice of proposed rulemaking for terminal disclaimers to the public for comment. The proposed rule would require an agreement in terminal disclaimers that the patent with the terminal disclaimer will not be enforceable if any claim of the reference patent(s) (for which the terminal disclaimer was filed to obviate a nonstatutory double patenting) is invalidated by prior art. If implemented, the proposed rule would drastically change terminal disclaimer practice, potentially increase costs and delays during prosecution of patent applications at the USPTO, and may raise questions regarding the USPTO’s authority to enact the proposed rule in the face of contrary authority.
Comments can be submitted via this link until July 9, 2024.
[1] USPTO, Terminal Disclaimer Practice To Obviate Nonstatutory Double Patenting, 89 Fed. Reg. 40439 (https://www.federalregister.gov/documents/2024/05/10/2024-10166/terminal-disclaimer-practice-to-obviate-nonstatutory-double-patenting).
[2] Terminal Disclaimer Practice To Obviate Nonstatutory Double Patenting, 89 Fed. Reg. at 404448 (citing 35 U.S.C. 2(b)(2).
[3] E.g., Animal Legal Def. Fund v. Quigg, 932 F.2d 920, 930 (Fed. Cir. 1991).
[4] E.g., Rowe v. Dror, 112 F.3d 473, 479 n.2 (Fed. Cir. 1997) (pointedly rejecting USPTO rule setting aside Federal Circuit holding).
[5] Manual of Patent Examining Procedure (MPEP), §804.
[6] MPEP, §804.02, II.
[7] 37 C.F.R. §1.321(c).
[8] Terminal Disclaimer Practice To Obviate Nonstatutory Double Patenting, 89 Fed. Reg. at 40411 (listing cases).
[9] Terminal Disclaimer Practice To Obviate Nonstatutory Double Patenting, 89 Fed. Reg. at 40440.
[10] Terminal Disclaimer Practice To Obviate Nonstatutory Double Patenting, 89 Fed. Reg. at 40439.
