by Dennis Crouch
The USPTO recently 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. 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.
This is a major proposal that fundamentally alters the effect of terminal disclaimers. The proposed rule would add a new condition that directly impacts enforceability based on validity finding of claims in a separate patent. This is a substantial departure from current practice that looks one claim at a time – even within a single patent. The proposal here also shifts the balance of power further in favor of patent challengers and in a way that further undermines the statutory presumption of validity.
USPTO’s Justifications: Promoting Competition and Reducing Litigation Costs
The USPTO cites several reasons for the proposed changes. The primary concern is that an owner of multiple patents on obvious variations of an invention could deter competition, because the cost of challenging the validity of each patent separately may 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. The USPTO also suggests the changes will promote innovation by making it harder to maintain patents on trivial variations. If applicants know their continuation patents may be more vulnerable, they may be more selective in what they pursue.
The USPTO does not cite any specific studies in the notice of proposed rulemaking to support the changes to terminal disclaimer practice. The justifications provided are based on general concerns about the potential anti-competitive effects of patents on obvious variations of an invention and the high costs of challenging such patents. The USPTO also references the Biden Administration’s efforts to promote competition across industries, but does not provide empirical data or economic analysis to quantify the expected impacts of the proposed rules.
Potential Impacts on Patent Applicants and Owners
For patent applicants and owners, the proposed changes present some tough choices. Filing a terminal disclaimer with the new requirements means 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.
The proposed rule could also influence patent filing strategies more broadly. Applicants may become warier of 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 OTDP issue.
The notice comes at an interesting time when many are calling for a policy move going the other way – eliminating non-statutory OTDP as a vestige of pre-1995 patent law.
I would encourage folks to provide comments to the USPTO. The Federal eRulemaking Portal at www.regulations.gov will be open for 60 days beginning on May 10 ,2024.
Questions to address:
- What in your experience shows that the current approach to OTDP deters competition or enhances innovation?
- Are the proposed enforceability requirements for terminal disclaimers appropriate and within the legal authority of the USPTO?
- What impact would the proposed rules have on your own patent filing and enforcement strategies? (Please be specific, including discussion of particular technology or market areas).
- Are there alternative approaches the USPTO should consider to balance the interests at stake here?
- What unintended consequences or challenges do you foresee arising from the proposed rules, and how might they be mitigated?
Many will question the USPTO’s authority to make this change. The notice does address the source of rulemaking authority beyond the USPTO’s general rulemaking powers under 35 U.S.C. 2(b)(2), which grants the Office authority to establish regulations governing patent proceedings. The notice also points to In re Van Ornum, 686 F.2d 937 (CCPA 1982), which upheld the USPTO’s authority to require terminal disclaimers to include specific language that the patent would be unenforceable unless the two bound patents were commonly owned. In the case, the CCPA majority opinion by Judge Rich upheld the regulation as within the USPTO’s rulemaking authority, rejecting the appellants’ arguments that it was contrary to statute and case law. The court found the regulation justified to prevent potential harassment through multiple assignees asserting patents with obvious variant claims. Judge Baldwin dissented, arguing that the non-alienation requirement exceeded the USPTO’s authority by governing post-issuance conduct and patent enforceability, and that it was inconsistent with the free alienability of patents under 35 U.S.C. 261. In an attempt to show some humbleness, the notice distinguishes the proposed rule from a hypothetical requirement that applicants admit their claims are obvious, which some commenters argued would exceed the USPTO’s authority. The proposed rule focuses instead on enforceability conditions and does not purport to determine the validity of disclaimed claims.
While the notice asserts the proposed changes are within the USPTO’s rulemaking authority, it is likely that this question of authority will be a point of challenge from stakeholders who oppose the rules. Comments supporting or questioning the USPTO’s legal basis for the changes will likely be an important part of the public feedback.
In technical terms, this BLOOOOOOOOOOOOOOOOOWS!!!
Comments here are suggesting this particular rule proposal, “Terminal Disclaimer Practice to Obviate Nonstatutory Double Patenting (Docket No. PTO-P-2024-0003, Comments Due: July 9, 2024),” may be attempted ultra vires rulemaking. [Not all directly related to the languge or intent of the only relevant statutory languge, which is in 101, or even of its judicial expansion in OTDP.] Was there not a Congressional hearing with the Director re another package of PTO proposals earlier this year, or last year, in which there were similar criticisms?
This seems ridiculous, and potentially substantive rulemaking (tho it might be within the PTO’s purview I’m not sure). The vast majority, or entire, point of terminal disclaimers in the modern day is just to overcome a judicially created doctrine. Why that would change like this doesn’t make much sense regardless of whether anyone likes it or not.
Nice echo chamber in these comments….. innovators are meant to receive a monopoly for a limited time. File your application, prosecute reasonably broad and supported claims and don’t rely on a Terminal Disclaimer to fix prosecution later or capture another innovator’s patentable improvements.
The claim of “echo chamber” – and your other nonsense – shows that you have no clue as to what you are talking about.
As anon notes, you obviously don’t know what you’re talking about.
But hey — there’s a Reddit community for you!
“USPTO’s Justifications: Promoting Competition and Reducing Litigation Costs.”
How about “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries”? Shouldn’t we focus on that instead?
+1
Yup, so they admit this is to make it more difficult to litigate.
So . . . google – and the network effect companies – lobby – and already have the star chamber – the PTAB (stacked with revolving door gov and private, gov then private again – ‘judges’ and now it wants more. In short, public choice theory merged with regulatory capture.
Efficient Breach meet Efficient Infringer.
Again.
+1
Ultra vires?
Ortho Pharm. Corp. v. Smith, 959 F.2d 936, 941-42 (Fed. Cir. 1992) (TD not an admission of obviousness since it does not “tie the validity of …[one] patent with any other patent”); Quad Envt’l Technologies Corp. v. Union Sanitary Dist., 946 F.2d 870 (Fed. Cir. 1991) (“It is improper to convert this simple expedient of “obviation” into an admission or acquiescence or estoppel on the merits.”
and see court’s analogy to Greenfield v Hattori Seiko, 900 F.2d 238 (Fed. Cir. 1990)).
Thanks W.N. Keeper references for sure.
(Anyone else seeing puppet strings running up from Kathi to Big Tech?)
Always amusing to observe that when the patent-huffing kindergartners float their little conspiracy theories somehow the hacks who are usually so quick to cry out here about (lol!) “defamation” (lol!) fail to show up. Go figure.
Why would you expect that (single) person that cries out ‘defamation’ speak here as this is aligned with his cries?
indeed so! one cannot assume that a disclaimed patent is invalid over the disclaimed to co-owned filing as invariably said co-owned filing is the only citable art relevant to the newly examined claims. In Sun vs Eli Lilly, the Federal Circuit found claims to a method of treatment invalid as not disclaimed to the earlier filed composition of matter claims. However, the treatment disclosed was not in the previous claims, rather it was construed from the specification as the compounds ‘disclosed utility’. So, under the new proposed rules, a new, non-obvious, use of a compound could potentially be considered unenforceable simply because for completely separate and independent reasons, the underlying compound was held invalid!
+1. Yet another reason this “initiative cannot — indeed must not — be allowed to take effect.
Could this be the result of Vidal’s junket in China last month?
Inquiring minds want to know.
Examiners are not going to like this rule nor is the board. This means we aren’t going to file TDs. Watch the CLE classes spring up on how to fight TDs and win on appeal.
I wam need if the “loose” Restriction Request practice will also see a hit.
Yikes – autocorrect…
wam need ==> wonder
Re: Vague 103 rejections without “any principled basis in the law of obviousness,” but in interviews the examiner will offer to allow the claims in exchange for a limiting amendment.”
Hasn’t that been normal PTO examiner practice for nearly as long as the PTO’s existence? It also makes the examiner and his or her supervisors feel like they are doing their job if the claims are narrowed. Nor is the examiner required to cite case law or principles of the law of obviousness. Or even likely to be swayed by applicants citing them rather than citing from the MPEP.
It has been quite the while since you prosecuted, eh Paul?
“Nor is the examiner required to cite case law or principles of the law of obviousness.”
Not if the practitioner is on the ball (the onus of a prima facie case remains on the examiner.
“Or even likely to be swayed by applicants citing them rather than citing from the MPEP.”
I will cite the MPEP as a courtesy, but even the MPEP is more than clear that it is not the law (and as today’s practitioners know, has several sections which misapply the law).
“The USPTO also references the Biden Administration’s efforts to promote competition across industries, but does not provide empirical data or economic analysis to quantify the expected impacts of the proposed rules.” Well of course it does. The Biden administration stands for nothing if not executive branch overreach.
The PTO isn’t authorized to promulgate this rule. But then, it wasn’t authorized to require docx filings either, and so far no one has stepped up to challenge that either. The patent community needs someone willing to bankroll a court challenge to the PTO.
This is Tafas** redux.
** Still binding on the Office, by the way.
As described, this proposed new “terminal disclaimer rule” is a substantive legal change with no direct connection to the 101 requirement of one patent per invention or preventing a defendant from being sued on two different patents [especially if owned by two different owners] on the same basic invention. As such, it seems obviously legally challengable.
A far more sensible and valid PTO proposal [for what perhaps they are concerned about here] would be to amend Rule 56 to add a requirement to specifically disclose to all involved examiners the existence of another application or patent “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 language cited above, or better such language – “indirectly” is ambiguous unless clearly defined].
Do you really think that the underlying driver here is a lack of the Office in being aware of possible related applications known to the applicant?
That’s absurd.
“Under the proposed rule, a terminal disclaimer must include an agreement that the patent will be unenforceable if”
Looks like the proverbial “if all you have is a hammer” to me.
Also, the rule makes no sense. What if the other patent has multiple independent claims, and that other patent’s claim which is cancelled is not the claim that led to the terminal disclaimer?
This thing is as dead as a dog that barks too loud in Kristy Noem’s houshold.
The policy considerations suggested by the PTO in their justification for the proposed rule are genuine concerns. The proposed rule, however, seems to go a bit too far.
Consider: the claims of patent Y are deemed obvious over a single claim in commonly-owned patent X (let’s call it claim 1; there are 20 claims total in patent X, including three independents) and so the patentee files a terminal disclaimer to get around the rejection. In litigation, EVERY CLAIM of patent X is held invalid. Okay, it seems fair enough for patent Y to “go down with the ship”, as it were, in that circumstance.
But what if just one of the other independent claims of patent X is deemed invalid as anticipated and it’s not even the claim identified by the Examiner in the OTDP rejection which prompted the terminal disclaimer in patent Y? It seems unfair to tank patent Y under such a situation.
I expect the USPTO will receive quite a few comments like this with regards to this proposed rule.
One of our greatest fears has been realized, folks: Michelle Lee is back, and thy name is Kathi Vidal.
As if this handout to China and Big Tech wasn’t bad enough (and it certainly is), should this c.r.a.p. survive the certain, well-justified lawsuits to follow, other dilatory effects will be:
1. Initial patent apps will now contain 2 – 5 times as many initial claims (excess claims fees be d.a.m.n.e.d.). Anyone not doing so would be an idiot.
2. Inventors and their counsel will — justifiably — fight the already-overworked Examiners tooth and nail to avoid having to file TDs (including me). Resulting in repeated RCEs and interviews. Making their jobs even tougher, the Examiners are going to be — rightfully — p.i.s.s.e.d. beyond belief.
And the cost for clients to get their continuation patents through without these illegal TDs? Even if they can, expect to pay 2 – 3x as much for each patent.
3. The number of Board and yes — CAFC, too — appeals are going to skyrocket.
So please tell us, Kathi, where such a change will be quicker, easier, and more fair to ALL stakeholders.
Tell. Us.
“this handout to China and Big Tech”
My Chinese and Big Tech stocks totally spiked up today and now I know why.
LOL
+1 Pro Say
This is what I said when she was appointed. She had all the smell of a person that would be a corporate shill for the $30 million dollar payoff once she leaves the USPTO for the work she does for Google while working at the USPTO.
How much is Lee worth now? My bet is that it is at least $10 million and probably pushing $30 million for the work she did for corporations while working at the USPTO.
I heard that Lee owns a 70,000 square foot mansion in China that was 3D printed using technology from unpublished U.S. patent applications. Turns out I was hearing from the same aliens that talk to Night Wiper, transmitting news through my fillings.
Cute, but Lee did go and work for Google.
–In addition to the inexact fit caused by the inherent limitations of language, the language itself may not be adequately developed at the early stages when patent applications typically are filed, particularly in rapidly evolving research fields.
Besides the foregoing language issues, the early patent application filings encouraged by the U.S. patent laws give rise to additional difficulties in crafting a claim that particularly points out the subject matter that the inventor regards as his invention. For inventions in rapidly evolving fields, application filings are often made while the inventions are still in their nascent stages, i.e., early in the evolutionary process, necessitating inevitable and sometimes considerable fine tuning of claim language after the initial application filings have been made. Moreover, while an inventor is often aware of relevant prior art relating to the area he is developing, he is not always fully cognizant of all of the relevant prior art until after his application has been filed, thus again necessitating some fine tuning of claim language after the initial application filing has been made.
As a consequence of the foregoing, it is quite difficult for claim drafters to draft initial claims that adequately and accurately cover the “invention” on the day the patent application is filed. Consequently, claims are commonly amended during prosecution to more particularly point out and distinctly claim that which is regarded to be the invention. See Loctite Corp. v. Ultraseal Ltd., 781 F.2d 861, 871, 228 U.S.P.Q. 90, 96 (Fed.Cir.1985) (noting that comparatively few claims are allowed exactly as originally filed), overruled on other grounds by Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 46 U.S.P.Q.2d 1097 (Fed.Cir.1998); Hughes Aircraft Co. v. United States, 717 F.2d 1351, 1363, 219 U.S.P.Q. 473, 481 (Fed.Cir. 1983); Litton Sys. Inc., v. Honeywell, Inc., 140 F.3d 1449, 1455, 46 U.S.P.Q.2d 1321, 1325 (Fed.Cir.1998).–
Judge Linn’s dissent in Festo.
Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki, 234 F.3d 558, 622 (Fed. Cir. 2000).
This smells like part of the troubling trend at USPTO toward a transactional dynamic between applicants and bureaucrats. I’ve received a number of office actions that fail to articulate a legal basis for rejection, but in interviews, the examiner will offer to allow the claims in exchange for a limiting amendment. The legal basis for this rule is similarly nonexistent, and it clearly seeks instead to regulate the transactional nature of TD practice without bothering to identify any principled basis in the law of obviousness.
+1
Well said.
+1