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USPTO Aims to Mow Down Patent Thickets
Monday, May 20, 2024

In a stunning Federal Register Notice published May 10, 2024, the U.S. Patent and Trademark Office (USPTO) proposes to impose a new requirement on terminal disclaimers filed to overcome obviousness-type double patenting (OTDP) rejections. The USPTO would require the application/patent owner to agree that the subject patent will not be enforceable if any claim in the cited patent has been finally held unpatentable or invalid as anticipated or obvious by a Federal court in a civil action or by the USPTO, or if any claim in the cited patent has been statutorily disclaimed after any prior art challenge has been made. This proposal is aimed directly at so-called “patent thickets” alleged to improperly deter generic drug competition but would undermine the ability to fully protect inventions across all technology areas.

The Perceived Problem of “Patent Thickets”

According to the Federal Register Notice, the stated goal of this proposal is “to prevent multiple patents directed to obvious variants of an invention from potentially deterring competition and to promote innovation and competition by allowing a competitor to avoid enforcement of patents tied by one or more terminal disclaimers to another patent having a claim finally held unpatentable or invalid over prior art.”

The USPTO first floated a similar proposal in its October 4, 2022, “Robustness and Reliability” Federal Register Notice. As I noted in this article, the impetus behind those initiatives included President Biden’s July 2021 “Executive Order on Promoting Competition in the American Economy,” which was primarily focused on lowering drug costs to American consumers, and a June 8, 2022, letter from Senators Leahy, Blumenthal, Klobuchar, Cornyn, Collins, and Braun to the USPTO raising concerns about “large numbers of patents that cover a single product or minor variations on a single product, commonly known as patent thickets.” However, the fact that Senator Peter Welch (D-VT) has introduced a bill to address “patent thickets” underscores that this is an issue for Congress to address, not the USPTO.

In the Robustness and Reliability Notice, the USPTO proposed requiring a terminal disclaimer “to stipulate that the claims are not patentably distinct” from the claims of the cited patent or application. In the current Federal Register Notice, the USPTO suggests that the currently proposed requirement avoids at least some of the concerns raised against the initial proposal, but it seems to be a distinction without a difference on the ultimate issue of the right to exclude. Indeed, stipulating that a patent will not be enforceable seems to go even further than stipulating that claims are not patentably distinct.

The Real Problems of the USPTO Proposal

The Federal Register Notice gives cursory attention to concerns raised in public comments to the Robustness and Reliability Notice, but stakeholders should not be deterred from challenging the new proposal on one or more, or all of the following grounds:

  • The proposal amounts to substantive rulemaking, which is beyond the USPTO’s authority
  • The proposal is inconsistent with the statutory right to file a continuation application (35 USC § 120)
  • The proposal is inconsistent with the statutory presumption of validity that applies on a claim-by-claim basis (35 USC § 282(a))
  • The proposal is inconsistent with numerous Federal Circuit decisions holding that the filing of a terminal disclaimer does not amount to an admission of obviousness

With regard to the first point, the USPTO cites In re Van Ornum (C.C.P.A. 1982) as confirming its authority to require terminal disclaimer language “placing conditions upon enforcement.” However, the USPTO ignores the fact that the language at issue in that case (the requirement that enforceability depends on common ownership) was consistent with an earlier appellate court decision. In contrast, the current proposal is inconsistent with numerous Federal Circuit decisions that have upheld the right to independently enforce terminally disclaimed patents.

The Federal Register Notice is rife with other assertions that warrant scrutiny and challenge.

Fundamentally, the premise that OTDP rejections only are raised between “claims that vary in only minor ways from each other” does not reflect reality. Examiners approach OTDP the same way they approach obviousness under 35 USC § 103 and may rely on several additional prior art references to bridge the gap between the cited claims and the pending claims. In that context, OTDP rejections even are raised between claims that do not encompass overlapping subject matter. Additionally, OTDP rejections can arise between claims originally deemed patentably distinct in a restriction requirement, but not protected by the divisional application statute (35 USC § 121) for procedural reasons.

Additionally, the Federal Register Notice misleadingly implies that it is easy to withdraw a terminal disclaimer during examination, such as if the claims are amended to avoid OTDP. However, the cited section of the MPEP (MPEP § 1490(VIII)) only indicates that “nullification of an erroneously filed recorded terminal disclaimer” can be sought by a petition “[u]nder appropriate circumstances, consistent with the orderly administration of the examination process.” In contrast to the optimistic tone of the Federal Register Notice, the MPEP states:

Petitions seeking to reopen the question of the propriety of the double patenting rejection that prompted the filing of the terminal disclaimer have not been favorably considered.

Instead, the MPEP seems to counsel “filing of a continuing application … while abandoning the application in which the terminal disclaimer has been filed” to nullify the effect of a terminal disclaimer.

Still further, the Federal Register Notice disingenuously fails to consider how the proposed change would operate under the new fee structures proposed to take effect in January 2025, including the escalating terminal disclaimer fees, higher RCE fees, and new continuing application surcharges. For example, the Federal Register Notice suggests that applicants wishing to avoid filing a terminal disclaimer could proceed by “combining the conflicting claims into a single application,” “canceling or amending any conflicting claims,” or arguing against OTDP rejections, but each of those options will become significantly more expensive with the proposed fees. Moreover, the suggestion to instead pursue a reissue application of the cited patent overlooks substantive requirements for a reissue application, including the recapture doctrine and two-year limitation on broadening reissues.

Overall, the Federal Register Notice seems to understate the negative impact the proposal would have on innovators and overstate the options for avoiding OTDP rejections and unnecessary terminal disclaimers.

Choosing a Bush Hog Over a Weed Wacker

I am not going to convince the USPTO that the concern over “patent thickets” is overblown, but the proposal to indiscriminately undermine the value of all granted U.S. patents linked by terminal disclaimers is shocking. The Federal Register Notice does not provide or cite any empirical data supporting the need for this draconian change to terminal disclaimer practice, or justify its impact on innovators across technology areas. This proposal would effectively limit patent owners to one enforceable patent, even if several patents of varying scope have been obtained, and even if the claims are, in fact, patentably distinct from any invalidated claims.

Stakeholders are encouraged to submit comments to the USPTO via the Federal eRulemaking Portal by July 9, 2024.

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