USPTO Proposes Rule Change for Terminal Disclaimers in Patent Applications

The USPTO proposed a rule change to terminal disclaimers, requiring them to state that claims are not enforceable if a reference patent is adjudicated invalid. The proposal aims to address "patent thickets" and has sparked criticism from stakeholders who argue it would undermine patent protection.

Bijay Laxmi
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USPTO Proposes Rule Change for Terminal Disclaimers in Patent Applications

USPTO Proposes Rule Change for Terminal Disclaimers in Patent Applications

The United States Patent and Trademark Office (USPTO) published a notice of proposed rulemaking on May 10, 2024, that could significantly impact patent prosecution and litigation strategy. The proposed rule aims to change the language of terminal disclaimers filed to overcome obviousness-type double patenting (ODP) rejections.

Why this matters: This proposed rule change has far-reaching implications for the pharmaceutical industry, potentially altering the approach to brand-name drug patents and affecting the competitive landscape. It may also influence the broaderpatent landscape, impacting innovators and patent holders across various technology areas.

Under current practice, patent applicants use continuation applications to claim additional subject matter disclosed in a patent application. The USPTO may reject claims in a continuation application on ODP grounds if the invention claimed is not patentably distinct from the reference application or patent. To overcome an ODP rejection, applicants file a terminal disclaimer, which currently limits the term of any patent granted from the continuation application to not extend beyond the term of the reference patent or any patent granted from the reference application.

The new proposed rule would require terminal disclaimers to state that if a reference patent is adjudicated to be invalid by the USPTO or a federal court, and all appeals are exhausted, then the claims granted from the terminally-disclaimed continuation patent are not enforceable. This change could allow patent challengers to invalidate a single patent and gain freedom to operate, rather than incurring the cost and effort of invalidating an entire portfolio of patents connected by terminal disclaimers.

The USPTO's proposed rule comes in the wake of the Federal Circuit's holding in In re Cellect, which changed expectations about patent terms associated with patent term adjustment under 35 U.S.C. § 154. The proposal is aimed at addressing so-called "patent thickets" that allegedly improperly deter generic drug competition, an issue first raised in President Biden's July 2021 Executive Order on Promoting Competition in the American Economy.

However, the proposal has been met with criticism, with some arguing that it would undermine the ability to fully protect inventions across all technology areas. The USPTO's proposal is seen as inconsistent with numerous Federal Circuit decisions that have upheld the right to independently enforce terminally disclaimed patents. The proposal also ignores the fact that OTDP rejections can arise between claims that do not encompass overlapping subject matter, and that it may be difficult to withdraw a terminal disclaimer during examination.

The proposed changes would have a significant impact on innovators and patent holders, potentially limiting their ability to protect their inventions. The Federal Register Notice fails to consider how the proposed change would operate under the new fee structures proposed to take effect in January 2025, including escalating terminal disclaimer fees, higher RCE fees, and new continuing application surcharges.

Stakeholders are urged to challenge the new proposal on one or more grounds, including the USPTO's authority to require terminal disclaimer language, the premise that OTDP rejections only arise between claims that vary in minor ways, and the impact of the proposal on innovators and patent holders. The progress of this proposed rule will be monitored, and recommendations will be tailored should this rule, or a version thereof, be implemented.

Key Takeaways

  • USPTO proposes rule change to terminal disclaimers for overcoming obviousness-type double patenting rejections.
  • New rule would render terminally-disclaimed patents unenforceable if reference patent is invalidated.
  • Change could impact pharmaceutical industry and broader patent landscape, affecting innovators and patent holders.
  • Critics argue proposal undermines invention protection and ignores Federal Circuit decisions.
  • Stakeholders urged to challenge proposal, which may limit patent holders' ability to protect their inventions.