The filing and recordation of an unnecessary terminal disclaimer has been characterized as an “unhappy circumstance” (MPEP 1490, citing In re Jentoft, 392 F.2d 633, 639 n.6 (CCPA 1968)). In an apparently “not significant” regulatory action, the USPTO is proposing a noteworthy change to terminal disclaimer requirements. 89 Fed. Reg. 40439-49 (May 10, 2024). The change being proposed would have profound effects on the prosecution of patent families and would turn the filing of even necessary terminal disclaimers into an even more unhappy circumstance. In essence, the proposed rule would require that a terminal disclaimer to overcome a non-statutory double patenting (NSDP) rejection also include a provision that the patent in which the disclaimer is filed (“target patent”) is no longer enforceable if that patent is or ever has been tied directly or indirectly by a terminal disclaimer to overcome NSDP to another patent (“reference patent”) that includes: (1) a claim that 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, or (2) a statutory disclaimer of a claim filed after any challenge based on 35 U.S.C. § 102 or 103 to that claim has been made.
Under today’s practice, applicants facing a NSDP rejection over a reference patent in the same patent family (applications/patents sharing a common priority date or a common patent term filing date) often file a terminal disclaimer (or ask that the requirement be held in abeyance) as a matter of course simply to remove the issue. The current consequences of a terminal disclaimer for patents in a common patent family are the need to maintain common ownership and possible effects on patent term adjustment. The consequences of filing a terminal disclaimer with the USPTO’s proposed provision – possible unenforceability of the entire patent if any claim in any reference patent is held invalid under 35 U.S.C. § 102 or 103 – are sufficiently concerning that any NSDP rejection must be carefully considered. Specifically, applicants will want to insist on a specific explanation of how each claim subject to a NSDP rejection is not patentably distinct from some claim of the reference patent to be assured that: (1) the NSDP rejection is sufficiently strong that filing the terminal disclaimer is the only way to obtain a patent on the rejected claims (i.e., an appeal would be futile); and (2) claims not properly subject to a NSDP rejection can be pursued in another application.
The USPTO is concurrently proposing a number of changes to patent fees, including tiered disclaimer fees that increase the later in prosecution the disclaimer is filed, and additional fees for continuing applications filed more than five years from the benefit date claimed under 35 U.S.C. § 120, 121, 365(c), or 386(c). The increasing disclaimer fees would appear to encourage filing of terminal disclaimers to resolve NSDP issues early in prosecution, but the USPTO’s terminal disclaimer proposal will encourage applicants to avoid filing any terminal disclaimer if at all possible, leading to terminal disclaimers being filed later in prosecution if filing a terminal disclaimer cannot be avoided. It is not clear what effect these two proposals will have on early resolution of double patenting issues, but it is clear that the proposed fee and disclaimer changes will result in an increase in the costs of obtaining patent coverage.
The USPTO’s proposed rule notice mentions a 37 CFR 1.182 option for removing a terminal disclaimer, and explains how in various examples the removal of a terminal under this procedure will determine whether or not a patent is considered to have “never been tied” to another patent by the terminal disclaimer. As discussed in the proposed rule, pre-existing USPTO guidance indicates that there is no means to remove or nullify a terminal disclaimer in an issued patent, but that a petition under 37 CFR 1.182 may be used to seek removal or nullification of a terminal disclaimer that is no longer necessary or was filed in error (MPEP 1490). The grant of a petition under 37 CFR 1.182, however, does not always assure that a patent will be considered as having “never been tied” to another patent by the terminal disclaimer (as discussed in the proposed rule), and the grant of such a petition is within the USPTO’s discretion. The only way for an applicant to ensure that a patent will not be subject to a terminal disclaimer containing this proposed provision is not filing one in the first place.
Applicants must consider prosecution of patent families (and other related patents that could form the basis of a NSDP), and not just the application subject to a NSDP rejection. An applicant cannot avoid double patenting by disclaiming the claims of the patent forming the basis of a NSDP rejection (reference patent). Eli Lilly & Co. v. Barr Labs., Inc., 251 F.3d 955, 968 n.5 (Fed. Cir. 2001)(“[a] patent owner cannot avoid double patenting by disclaiming the earlier patent”). Thus, the situation is already largely determined once the patent that may be the basis for a future double patenting rejection – the reference patent – is issued. Applicants contemplating possible continuing applications will need to consider the downstream effects of the claims in any potential reference patent. Applicants will want to avoid having distinct inventions, or possibly even separately patentable claims, in a single patent. Applicants will be less inclined than they already are to challenge restriction requirements. In a previous rulemaking (ultimately withdrawn), the USPTO provided for applicant-suggested restrictions (72 Fed. Reg. 46740-41, 46842 (Aug. 21, 2007), to have been codified as 37 CFR 1.142(c)). Applicants may want to consider such an approach, even if not expressly provided for in the rules.
Finally, it is less than clear that this rule (if adopted) would survive court review. The USPTO relies on In re Van Ornum, 686 F.2d 937 (CCPA 1982), as authority for this type of requirement for a terminal disclaimer to overcome NSDP. Van Ornum addressed a specific requirement (common ownership) that was in place for a decade at the time of the challenge and adopted with the support of the patent community. Van Ornum, 686 F.2d at 945-46. The court-recognized practical effect of a terminal disclaimer is to create a situation equivalent to having the claims of all the patents tied together by terminal disclaimer(s) in one single patent. In re Braithwaite, 379 F.2d 594, 601 (CCPA 1967) (cited in Van Ornum). The CCPA considered the common ownership provision at issue in Van Ornum acceptable because a NSDP terminal disclaimer is to create a situation equivalent to having the claims of all the patents tied together by the terminal disclaimer in one single patent, and it is not permissible to assign separate claims of a single patent to different parties. Van Ornum, 686 F.2d at 948 (citing Pope v. Gormully, 144 U.S. 248 (1892)). There is no analogous statutory or judicial principle that all or some subset of claims in a patent are no longer enforceable if any claim of that patent is held invalid under 35 U.S.C. § 102 or 103; rather, the patent statutes and judicial rulings are to the contrary. To the USPTO’s credit, it is not shy in stating that its purpose is to address existing statutory provisions and judicial rules (the current state of the law), which it sees as impeding market entry. 89 Fed. Reg. at 40441 (middle column). This USPTO effort, however, may be unavailing as the Federal Circuit does not accept the view that the USPTO may effectively set aside its judicial rules (much less statutes) by regulation. Agilent Tech. v. Affymetrix, 567 F.3d 1366, 1375 (Fed. Cir. 2009)(“This court does not accept the PTO’s statement that is can ‘administratively set aside the judicially created rule of In re Spina.’ Judicial precedent is as binding on administrative agencies as are statutes”)(citing Rowe v. Dror, 112 F.3d 473, 479 n.2 (Fed. Cir. 1997)).