The USPTO's Proposed Rule On Terminal Disclaimers: A Change From The Status Quo

The USPTO issued a notice of proposed rulemaking that could significantly impact patent practice, particularly in the realm of terminal disclaimers filed to overcome non-statutory double patenting rejections.¹ Under the proposed rule, a terminal disclaimer must include an agreement that the patent will be unenforceable if it is tied directly or indirectly to another patent that has any claim invalidated or canceled based on prior art (anticipation or obviousness under 35 U.S.C. 102 or 103). The new enforceability requirement would be in addition to the existing provisions that require a terminal disclaimer to match the expiration date of the disclaimed patent to the referenced patent and promise enforcement only during common ownership. Since the proposal was announced, the public commentary about the proposed change has been negative.²

A. A Notable Potential Shift in Patent Practice

This proposal represents a departure from current practice, which evaluates claims one at a time, even within a single patent. The new rule shifts the balance of power further in favor of patent challengers, potentially undermining the statutory presumption of validity. The USPTO's primary justifications for the proposed changes are to promote competition and reduce litigation costs. They argue that multiple patents on obvious variations of an invention can deter competition, as the cost of challenging the validity of each patent separately can be prohibitive. By tying the disclaimed patents together, a competitor could potentially invalidate multiple patents by proving one claim is anticipated or obvious, significantly reducing litigation costs.

B. Historical Context and the Need for Change

To understand the necessity of these changes, it's essential to look back at the evolution of patent terms. Prior to 1995, the patent term was seventeen years from the issuance date. In 1995, the U.S. changed the patent term to twenty years from the first nonprovisional application filing date for which benefit is claimed. After this change, any USPTO delays effectively shortened the patent term. The American Inventors Protection Act of 1999 amended 35 U.S.C. § 154(b) to address USPTO-caused delays.

The practice of using large patent families to extend the life of a patent beyond what should be allowed is a significant concern. The Federal Circuit's decision in In re Cellect³ confirmed that terminal disclaimers could knock out patent term adjustment (PTA). If you have patent term extension (PTE) and filed a terminal disclaimer to overcome an obviousness-type double patenting (ODP) rejection, you can get the PTE term tacked onto the disclaimed date. However, for PTA, the court ruled that PTA term gets added to the life of the patent first, and then the terminal disclaimer goes into effect, effectively knocking out the PTA term.

C. The In re Cellect Case: An Example of Why Change is Needed

By using PTA strategically, Cellect managed to keep patents alive longer than they otherwise may have been entitled to. Cellect asserted the 6,982,742, 6,424,369, 6,452,626, and 7,002,621 Patents against Samsung in District Court⁴, causing Samsung to institute multiple post-grant proceedings⁵.

Cellect was asserting their original endoscope patent (the '255 patent) as a patent for a camera phone later in their prosecution family (the '742 patent). This strategy underscores the necessity for stricter regulations, as proposed by the USPTO, to ensure fair competition and prevent the extension of patent terms beyond their justified limits.

1. Practical Implications:

• If a parent patent has a 20-year term plus 100 days of PTA and a child patent issues with 150 days of PTA requiring a terminal disclaimer, the child patent may lose 50 days of PTA, aligning the expiration dates of the parent and child patents.
• Conversely, if a child patent receives minimal PTA (e.g., 50 days), it retains that PTA even after the terminal disclaimer, provided the total term does not exceed the aligned expiration date of the parent patent.

Cellect also demonstrates the severe consequences of failing to file terminal disclaimers when required. Cellect's patents were invalidated due to ODP because they did not receive ODP rejections during prosecution and were unable to address them during reexamination, as the patents had expired.

D. Impact on Patent Applicants and Owners

For patent applicants and owners, the proposed changes present some tough choices. Filing a terminal disclaimer with the new proposal may mean accepting the risk that an entire patent's enforceability could hinge on the strength of a single claim in another patent. Applicants may be more likely to argue against double patenting rejections or pursue other claim amendments rather than simply filing a disclaimer. With the new fee proposal, the Terminal Disclaimer fees may escalate based on the timing of the filing as follows: $200 before a first Office Action on the merits, $500 before a final Office Action, $800 after a final Office Action or Allowance, $1,100 on or after filing a Notice of Appeal, and $1,400 after patent grant.⁶

This proposal could influence patent filing strategies more broadly. Applicants may become more cautious about filing continuation applications with only minor variations, opting instead to pursue more distinct inventions. There may be a push to include more claims of varying scope in initial applications to avoid needing follow-on patents–or to 'force' a restriction requirement that avoids the ODP issue.

Appellant Cellect, LLC has filed a petition for en banc rehearing – a petition that has since been followed by numerous eleven amici curiae briefs in support of a rehearing

Footnotes

1 https://www.federalregister.gov/documents/2024/05/10/2024-10166/terminal-disclaimer-practice-to-obviate-nonstatutory-double-patenting 01/br/242170282379-l

2 https://www.regulations.gov/document/PTO-P-2024-0003-0001/comment

3 In re Cellect, LLC, No. 2022-1293 (Fed. Cir. Aug. 28, 2023).

4 Cellect LLC v. Samsung Elecs. Co., Civil Action No. 19-cv-00438-CMA-MEH (D. Colo. Jun. 23, 2020)

5 Non-Exhaustive List: United States Patent and Trademark Office, IPR2020-00477, Final Written Decision (Sept. 9, 2021), United States Patent and Trademark Office, IPR2020-00476, Final Written Decision (Sept. 9, 2021), Ex Parte Cellect LLC, Appeal No. 2021-00411, 2021 WL 5755316 (P.T.A.B. 2021), Ex Parte Cellect LLC, Appeal No. 2021-00412, 2021 WL 5755317 (P.T.A.B. 2021), Ex Parte Cellect LLC, Appeal No. 2021-00413, 2021 WL 5755318 (P.T.A.B. 2021), Ex Parte Cellect LLC, Appeal No. 2021-00414, 2021 WL 5755319 (P.T.A.B. 2021).

6 https://www.uspto.gov/about-us/performance-and-planning/fee-setting-and-adjusting

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