Notice Of Proposed Rulemaking: Changes To Terminal Disclaimer Practice

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On May 10, 2024, the United States Patent and Trademark Office (USPTO) issued a Notice of Proposed Rulemaking proposing a major change to the rules of practice involving terminal.
United States Intellectual Property
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On May 10, 2024, the United States Patent and Trademark Office (USPTO) issued a Notice of Proposed Rulemaking proposing a major change to the rules of practice involving terminal disclaimers. The proposed rule would add the requirement that a party filing a terminal disclaimer agree that the subject patent will be unenforceable if the disclaimer ties it to another patent in which any claim has been held invalid over prior art. According to the USPTO, the proposed rule is intended to prevent patents directed to obvious variants of an invention from potentially deterring competition and to promote innovation and competition.

Current Practice

Under current U.S. patent law, an inventor may obtain more than one patent having claims that are directed to similar or obvious variants of one another. However, the USPTO will reject these claims for "obviousness-type double patenting" (ODP), also known as non-statutory double patenting. The ODP rejection arises from the theory that a subsequent patent with a longer term may improperly extend the period of patent exclusivity where it claims inventions that are not patentably distinct from those of a prior patent.

In common practice, an ODP rejection may be overcome by filing a terminal disclaimer. In filing a terminal disclaimer, the applicant agrees to disclaim any patent term extending beyond the term of the prior patent, thus avoiding any risk of improperly extending the period of exclusivity. Essentially, filing a terminal disclaimer in an application will always result in the subject patent having the shorter of the two patent terms, if there is a difference. It is important to note that, under the safe harbor provision of 35 U.S.C. § 121, a properly filed divisional application resulting from a restriction requirement cannot be invalidated or rejected over the parent under ODP.

Proposed Change

Currently, a proper terminal disclaimer filed to overcome an ODP rejection based on a prior patent must:

  1. Include a disclaimer of term, if any, extending beyond the term of the prior patent, and
  2. Show a common ownership or common enforcement agreement with the prior patent.

The USPTO's proposed rule would add a third requirement, that:

  1. The patentee agrees that the patent with the terminal disclaimer will be enforceable only if the patent is not tied and has never been tied, directly or indirectly, to a patent in which any claim has been finally held unpatentable or invalid over prior art.

Effectively, this means that challengers could focus on attacking the validity of the claims of a single patent to resolve a dispute involving multiple patents tied by terminal disclaimers, thereby rendering all patents tied thereto unenforceable. It is the USPTO's stated intent that this proposed rule would promote competition by lowering the cost of challenging groups of patents tied by terminal disclaimers, which would then reduce barriers to market entry. The rule would only apply to terminal disclaimers filed on or after the effective date of any final rule.

Potential Ramifications

The effect of the USPTO's proposed rule—which would, in some cases, tie the enforceability of an entire patent family to validity findings of a single claim—has the potential to fundamentally change the common practice and usage of terminal disclaimers under U.S. patent law. The decision to file a terminal disclaimer would no longer hinge on the potential value of the subject patent's end-of-life term. The proposed agreement would effectively require patent owners to tether the enforceability of their follow-on patents to the most vulnerable claims in the patents' family.

If adopted, this requirement would undoubtedly lead to significantly more arguments or amendments aimed at overcoming ODP rejections. But beyond the affect on individual applications, the USPTO's proposal has the potential to affect patent filing strategies generally. The potential impact on enforceability may lead to decreases in the filing of continuation applications, which may be of marginal value when weighed against potential invalidity challenges to prior patents. The proposed rule may also lead to increases in the number and variety of claims in original patent applications, in order to invoke the safe harbor against ODP rejections arising from restriction requirements.

Beyond patent prosecution, the proposed rule would likely encourage more litigation and adversarial challenges to issued patents, by broadly expanding the effect of a finding of invalidity. The requisite agreement would seemingly conflict with the presumption of validity afforded issued U.S. patents, as it would effectively render valueless the claims of an issued but unchallenged patent. The proposal follows a recent, broader trend of decisions weakening the scope and enforceability of U.S. patents.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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