Because No One is Immune to the Law
May 12, 2024 - Intellectual Property

USPTO Considers Changing Terminal Disclaimer Practice to Require Agreement Regarding Enforceability

MoFo Life Sciences

On May 10, 2024, the USPTO issued a Notice of Proposed Rulemaking that proposes major changes to terminal disclaimer practice that could greatly affect both patent prosecution and patent litigation strategies.

Specifically, the USPTO proposes amending the patent rules “to require that a terminal disclaimer filed to obviate nonstatutory double patenting include an agreement by the disclaimant that the patent in which the terminal disclaimer is filed, or any patent granted on an application in which the terminal disclaimer is filed, will 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: (1) any claim has been finally held unpatentable or invalid under 35 U.S.C. 102 or 103 in a Federal court in a civil action or at the USPTO, and all appeal rights have been exhausted; or (2) a statutory disclaimer of a claim is filed after any challenge based on 35 U.S.C. 102 or 103 to that claim has been made.”

The USPTO explains that this new requirement “solves the current problem of requiring a competitor to invalidate multiple patents tied by terminal disclaimers in order to have freedom to operate” and, thus, “has the likely advantages of reducing litigation and administrative proceeding costs and increasing predictability….”

Although the proposed rule characterizes this as a “voluntary agreement” regarding enforceability of the patent, there is little that is voluntary about this proposed requirement. In essence, the proposed rule change would impose the requirement that in order to obviate a nonstatutory double patenting rejection, the disclaimant would need to agree that its patent would only be enforceable if it is not tied (and has never been tied) to any patent having a claim that was invalidated under 35 U.S.C. § 102 or § 103 for anticipation or obviousness, respectively. 

This means if a challenger is successful in invalidating “any” claim in a challenged patent under § 102 or § 103, then any other patents “tied” to that challenged patent by one or more terminal disclaimers would be unenforceable. Notably, the validity of the other patents would not be affected, as only their enforceability is affected by the voluntary agreement included in the terminal disclaimers. However, what is the point of obtaining a valid patent that you cannot enforce?

This reflects a major change in current practice as it exists today where invalidation of one patent by a challenger does not affect the patent holder’s ability to enforce its other patents against the same (or a different) challenger, even if they are tied together by terminal disclaimers.

Among the many concerns with this proposed rule is that once a terminal disclaimer is filed in an application it cannot be withdrawn after the patent is issued. The finality of such an action coupled with the effect of this proposed rule would result in applicants being forced into a “voluntary agreement” that may restrict their ability to enforce their own patents many years down the road.

The USPTO will be accepting comments over the next 60 days relating to this proposed rule change.

These proposed rule changes also coincide with the USPTO’s proposed changes in its fees, which include increasing the cost of filing a terminal disclaimer. Currently, the USPTO charges $170 to file a terminal disclaimer regardless of when it is filed. Under the proposed fee changes, this fee would be increased to $200 if the terminal disclaimer is filed prior to the first action on the merits, and would be further increased to $500 to $1,400 if filed after the first action, depending on the stage of prosecution. 

The judicially created doctrine of obviousness-type double patenting was created in an effort to prevent the unjustified extension of patent term, with the “solution” to this concern being the terminal disclaimer. The USPTO’s recently proposed fee changes that tie significantly increased filing fees for terminal disclaimers to the particular timing of their submission—coupled with today’s proposed rulemaking that would render patents tied together by terminal disclaimers unenforceable—is incongruous with the purpose behind this judicially created doctrine.