Commenting on the USPTO’s Proposed Rule on Terminal Disclaimers

[I have substantially updated this post – correcting a couple of issues from the original and also added info from the letter from former USPTO leaders. – DC 6/1/24]

by Dennis Crouch

As I have previously discussed on Patently-O, 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. Dennis Crouch, Major Proposed Changes to Terminal Disclaimer Practice (and You are Not Going to Like it), Patently-O (May 9, 2024).  Under the proposed rule, a terminal disclaimer will only be accepted by the USPTO if it includes an agreement that the patent will be unenforceable if 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). This proposal has generated significant debate among patent practitioners, with many expressing concerns about its potential impact on innovation and patent rights.  It is a dramatic change in practice because the typical rule required by statute is that the validity of each patent claim must be separately adjudged. See 35 U.S.C. § 282(a).

The comment period is open until early July, but a number of comments have already been submitted. And I looked through them in order to get some early feedback.  You can read the comments here: https://www.regulations.gov/document/PTO-P-2024-0003-0001/comment.

Concerns About the Proposed Rule’s Impact on Bedrock Patent Law Principles

In its comments, IPValue argues that the proposed rule is contrary to fundamental principles of patent law that have been established for over 150 years. They point out that “one of the fundamental principles of U.S. patent law is that each claim of a patent is its own independent invention, and the fact that one claim is found invalid does not necessarily reflect on the validity of any other claim in the patent.” IPValue cites Supreme Court cases dating back to 1877 and 1935 that have upheld this principle.  IPValue contends that the proposed rule would ignore this bedrock principle and hold that all claims of a patent that is terminally disclaimed against another patent would be unenforceable if a single claim of that other patent were disclaimed or found invalid.

Longtime patent attorney and commentator Rick Neifeld expresses similar concerns, stating that the proposed rule “is draconian because the penalty of unenforceability of all claims in a patent in which a TD is filed is not commensurate with a finding of obviousness of a claim in the application or patent identified in the TD.” IPValue provides a particularly draconian example where only some claims in a pending application are rejected for obviousness-type double patenting, yet under the proposed rule, the entire patent could become unenforceable based on the invalidation of a single claim in the referenced patent.

This concern is echoed by a group of five former USPTO leaders, including former Directors Andrei Iancu and David Kappos, in a letter urging the Office to withdraw the proposed rule. They argue that the proposal “renders unenforceable entire patents if a single claim in a different patent is found to be invalid,” which they characterize as “a dramatic (and arguably illegal) departure from the normal process of considering each patent claim on its own merits.”

Inconsistency with Federal Circuit Precedent

Neifeld points out that in Ortho Pharm. Corp. v. Smith, the Federal Circuit specifically considered terminal disclaimers in the context of 35 U.S.C. 282 and 35 U.S.C. § 253 and concluded that “the invalidity of … claim 1 because of double patenting, even if true, does not necessarily require the invalidation of claims 5, 19, 40, and 43.” Neifeld argues that the proposed rule would directly contradict this unambiguous judicial interpretation of the relevant statutes and thus exceeds the USPTO’s procedural rulemaking authority in this area.

IPValue similarly contends that the proposed rule is “contrary to the Patent Act as interpreted by [judicial] precedent and thus beyond the USPTO’s rule making authority.” The former USPTO leaders also assert that because the proposal “clearly impacts the scope of patent rights in one application based on validity determinations in another, it will be argued that it constitutes a ‘substantive’ rule, which is outside of the Office’s statutory authority and, therefore, illegal.”

Increased Costs and Complexity of Patent Prosecution

Neifeld provides a detailed example of how examiners and applicants often take a somewhat informal approach to obviousness-type double patenting rejections under the current rules. He argues that if the proposed rule is adopted, applicants will be forced to scrutinize and challenge every such rejection much more vigorously to avoid the risk of their entire patent being rendered unenforceable by the invalidation of a single claim in a referenced patent. IPValue echoes this concern, noting that under the proposed rule, “an applicant would have no recourse but to include in the application every invention disclosed by the specification to avoid risking any continuation application being unenforceable because the continuation application may be terminally disclaimed.” They argue that this would make patent prosecution more complicated and expensive for both applicants and the USPTO. The former USPTO leaders predict that the proposal “will increase the number of challenges to double patenting rejections and reduce the use of terminal disclaimers,” which “will, in turn, significantly increase the cost of obtaining patents and the hurdles in enforcing patents.”

Negative Impact on Small Businesses and Under-Resourced Inventors

Some commenters argue that the proposed rule would disproportionately harm small businesses and under-resourced inventors. Rob Honeycutt, an individual inventor, states that “ongoing continuations with terminal disclaimers are one of the few remaining advantages available to defend intellectual property rights against infinitely larger corporate entities.” He argues that the proposed rule would further disadvantage small individual inventors and micro entities. The former USPTO leaders echo this concern, asserting that the increased costs and burdens resulting from the proposed rule “will disproportionately impact independent inventors, start-ups and small businesses, and other under-resourced innovators.”

Powerful New Tool for Infringers

The former USPTO leaders warn that the proposal “hands a powerful cudgel to infringers, who will attack an inventor’s rights where there is a continuation patent by taking advantage of the shortcut these proposed rules would create.” They argue that “[i]nfringers would be able to render strong, meritorious patent claims unenforceable without challenging those claims on their own merits.”

Questions About Need for the Rule Change

Several commenters question whether there is truly a problem with current terminal disclaimer and continuation practices that needs to be solved through this dramatic rule change. The former USPTO leaders assert that “[t]he proposal seeks to solve a problem that does not exist,” noting that “[a]t a minimum, the USPTO has made no showing that the terminal disclaimer and continuations practice is harming the American economy or that the new rules would improve matters if adopted.”  They argue that the USPTO, as “an administrative agency with no substantive rulemaking authority,” should not be unilaterally making such an important decision for the United States without thorough study and analysis.

Questions About the USPTO’s Rulemaking Authority

Although the comments argue that USPTO approach is bad policy, they also focus on a major question of whether the USPTO has the legal authority to promulgate the proposed rule. Adam Prucka, a law student at Columbia, provides a detailed analysis of why he believes the proposed rule exceeds the USPTO’s rulemaking authority under 35 U.S.C. 2(b)(2)(A). He distinguishes the current proposal from the situation in In re Van Ornum, where the court upheld the USPTO’s authority to require non-alienation terminal disclaimers, arguing that in that case the regulation merely implemented a suggestion made by a judge in a prior case, whereas here there is no such affirmative suggestion by a court.

Prucka also invokes the Major Questions Doctrine and the Supreme Court’s “elephant in a mousehole” metaphor, arguing that a vague phrase like “the conduct of proceedings” in the USPTO’s enabling statute cannot be interpreted to endow the agency with the broad powers claimed in the proposed rule. He urges the USPTO to advise the President to transmit the proposed rule to Congress for their consideration rather than trying to implement it through agency rulemaking.

The former USPTO leaders similarly argue that the proposed rule is likely outside the Office’s statutory authority, characterizing it as a “substantive” rule rather than a procedural one.

While most of the public comments express opposition to the proposed rule, there are a few that voice support. One comment patent agent Scott Keeley’s firm states that “as patent practitioners, we support this proposed rule, which should prevent patent owners from improperly extending a patent term through what they call ‘evergreening.'” Keeley argues that pharmaceutical companies in particular have been “playing this game with impunity, with American consumers always losing.”

Another comment from Sam Korte at Garmin expresses support for reforming the USPTO’s terminal disclaimer practice, arguing that it is “a major and easy, step towards improving patent quality.” Garmin states that the company is “often victimized by those who abuse continuation practice before the USPTO” and that the “harm to Garmin from the USPTO’s existing continuation practice is not theoretical,” citing a recent example where the Federal Circuit affirmed the invalidation of a patent that was the fifth continuation application in its family. Garmin argues that the proposed rule will help combat the problem of “unscrupulous patent owners [using] endless chains of continuation applications [to] repeatedly assert ‘invalid’ patents that were issued only because of terminal disclaimer practice.”

While a few commenters have voiced support for the proposed changes, the overwhelming majority of public comments thus far express opposition and urge the USPTO to reconsider or withdraw the proposal. The strongly worded letter from the five former USPTO leaders is particularly notable, as they take the unusual step of publicly calling on the Office to immediately withdraw the proposed rule. They argue that the proposal “destabilizes the patent system and advances anti-innovation policies” at a critical time for American innovation and global competitiveness. It remains to be seen how the USPTO will respond to this feedback, including the forceful opposition from the former leaders, and whether it will move forward with the proposed rule in its current form.

77 thoughts on “Commenting on the USPTO’s Proposed Rule on Terminal Disclaimers

  1. 7

    My guess is that there is some laws and regulations that are violated by the PTO adopting a proprietary standard DOCX for all applications. I don’t the federal government can give a company a monopoly where citizens are forced to use a product from only one company.

    I’d bet this is illegal.

    1. 7.1

      You “bet” there are such laws? You “guess” there are such regulations? Man, you call yourself a lawyer. If you have to guess what the law is, why would a client even hire you?

      1. 7.1.1

        I see we have another troll. St., this isn’t my area. I could figure it out with a couple of hours of research. That is why I am a good lawyer. I know what I know and what I don’t know.

        1. 7.1.1.1

          So then why say anything in the first place? “This isn’t my area,” [but I am determined to offer a take anyway] is not a good look.

          1. 7.1.1.1.1

            Actually, that is exactly what good lawyers do. We spot issues and raise them. We don’t need to know the answer off the top of our head.

  2. 6

    [They point out that “one of the fundamental principles of U.S. patent law is that each claim of a patent is its own independent invention . . . .”]

    Is that right? I though 37 CFR 1.141 says that only one independent invention can be claimed per patent. So different claims might be directed to different aspects of an invention, but not “its own independent invention.”

  3. 5

    Seems like this proposed rule isn’t going anywhere, which is the right result. The system works!

    1. 5.1

      I don’t know. We all thought the proposed claims and continuations rules weren’t going anywhere either, until they were enacted.

      1. 5.1.1

        Tafas anyone?

        1. 5.1.1.1

          the .docx fiasco (in which the pto repeatedly lied) also needs the tafas treatment, but so far hasn’t gotten it. The problem with the PTO doing things that are ultra vires is that it costs a lot of money to get a judge to say the PTO exceeded its authority, and if no one’s willing to pay, the [expletives] at the PTO win.

          1. 5.1.1.1.1

            I do not think that the argument for DOCX being ultra vires is quite as strong as is the argument that this new terminal disclaimer rule is ultra vires.

            There was a rather famous case where a farmer became trapped under his tractor out in a remote portion of his farm. Knowing that he was likely to die before help arrived, he scratched a crude will into the fender of the tractor. His widow later submitted that fender to probate, and the court accepted it as a holographic will.

            That makes for a cute story to present to 2Ls taking Wills & Trusts, but imagine if folks started scratching their patent application disclosures into boat hulls, or embroidering them into tent canvas and submitting that to the USPTO. It would be a nuisance, so Congress has—rightly—empowered the USPTO to set formalities rules about how application disclosures may be submitted. Saying “applications must be submitted as DOCX files” is not meaningfully different than saying “applications must be submitted on white, 8.5 x 11 paper with black ink.”

            By contrast, terminal disclaimers were a legal creation of the CCPA, not the USPTO. The PTO administers the terminal disclaimer system, but the PTO did not create the system. For this reason, the PTO is not empowered to make changes to the terminal disclaimer system in the same manner that it is empowered to adjust the formal rules about how disclosures are to be submitted.

            1. 5.1.1.1.1.1

              OTOH, the courts can/do fix ultra vires. They’re not supposed to fix mere poor judgment.

            2. 5.1.1.1.1.2

              “By contrast, terminal disclaimers were a legal creation of the CCPA”

              Which case was that?

              1. 5.1.1.1.1.2.1

                In re Robeson, 331 F.2d 610, 615 (C.C.P.A. 1964).

                1. “Whether a terminal disclaimer can overcome the objections to double patenting has been the subject of much discussion. The second paragraph of 35 U.S.C. § 253,[3] providing for a terminal disclaimer, was first enacted in 1952 and has no known antecedent in the earlier patent statutes. The legislative history and the Reviser’s Notes shed little light on exactly why Congress enacted that particular provision.[4]”

                  In re Robeson at 613-14.

                2. Footnote 4:

                  [4] We note the commentary of P. J. Federico, who acted as advisor to the Bryson subcommittee of The Committee on The Judiciary, House of Representatives, 82nd Congress, during the hearings on H.R. 3763, later H.R. 7794, 35 U.S.C.A. at page 49:

                  “The second paragraph of section 253 is new and provides that `in like manner’ a patentee may disclaim, or dedicate to the public, the entire term or any terminal part of the term, of a patent, and such action may also be taken by the applicant before the patent is granted. The Patent Office has interpreted the phrase `in like manner’ as including the payment of a fee as required in the first paragraph, see Rule 21(8). Under this provision a patentee, either before or after the issue of the patent, may, for example, disclaim the last two or three years of the term of a patent, or may disclaim all the term of the patent after a specified date. No specific reason for this provision appears in the printed record, but its proponents contemplated that it might be effective in some instances, in combatting a defense of double patenting, to permit the patentee to cut back the term of a later issued patent so as to expire at the same time as the earlier issued patent and thus eliminate any charge of extension of monopoly.” (Emphasis supplied)

            3. 5.1.1.1.1.3

              Greg, have you been living under that tractor for the last several years?

              .docx is not a standard. It is an internal, Microsoft proprietary format, which MS changes without notice from time to time. It is not designed for interoperability, and it is not designed to present documents that appear the same regardless of the computer/operating system/software combination used to display the document. The PTO has repeatedly lied about that.

              Additionally, the PTO takes that docx file and then converts that file to something else, using PTO-propriety software. The PTO has lied about that too. And the PTO doesn’t retain the applicant’s original docx file.

              The PTO has been presented with evidence that its software mangles some text present in “docx” format. It lied about that too and said “we didn’t find any problems”.

              There is format that is designed for interoperability. It’s called pdf. It works. What I see on my screen is what you’ll see on your screen if I send you the same pdf file I’m looking at. So the solution is there. But the PTO refused to accept it.

              The PTO’s cost calculations were also way off.

              You read about all this and more in the many comments that were submitted, on multiple occasions, to the PTO about docx. I’m not going to rehash them all. But the bottom line is the PTO lied and cheated its way into what amounts to a money grab, because no conscientious practitioner will file in docx. If this goes to court, the PTO will lose. But someone has to pay for the suit. And until now, that apparently hasn’t happened.

              1. 5.1.1.1.1.3.1

                “But the bottom line is the PTO lied and cheated its way into what amounts to a money grab, because no conscientious practitioner will file in docx.”

                Big +1. My fellow independent inventors … as I’ve strongly advised before, do not allow your patent attorney or agent (or you if you’re pro se) to file documents with the Patent Office in docx format.

                DO NOT.

                The extra fees / costs for not doing so are cheap insurance.

                Very cheap insurance indeed.

              2. 5.1.1.1.1.3.2

                I’m curious: what percent of filers use docx and do they tend to fall into a particular group?

                1. From what I saw (and heard), the biggest complainers were those in the Chem (and others that used advanced formulas).

                  When a transcription error makes a significant difference, the futzing around with a NON-true universal format may require extensive (and expensive) secondary verifications.

              3. 5.1.1.1.1.3.3

                +1 Atari Man on the DOCX. Exactly.

                +1 to Greg for the TD comments.

              4. 5.1.1.1.1.3.4

                Do you really think the USPTO’s rulemaking powers under 35 USC 2 to (“govern the conduct of proceedings in the office”) do not allow it to specify the file type of submitted applications?

                1. I do not think”file type” alone is the issue.

                  It has more to do with the efficacy and incurred costs while
                  L
                  I
                  E
                  I
                  N
                  G
                  about such during the process.

                  It is (yet another) lack of being honest and upfront while ramming something through that merely benefits the bureaucracy rather than those whom the bureaucracy is meant to serve that rankles the practitioners.

              5. 5.1.1.1.1.3.5

                I do not like the DOCX initiatives any more than you do, but “Greg does not like it” is not a relevant consideration in the ultra vires analysis. Neither is “it costs more than they projected,” nor “they were dishonest about the workability of the tech,” nor “PDFs work better than DOCX files.”

                Some of those points are relevant to an arbitrary-&-capricious challenge, but A&C is a less favorable standard of review than UV. If someone wishes to bring an A&C challenge, I wish them luck (as I said, I do not like DOCX either), but I do not expect a great success from that challenge.

                1. I am not sure of which law, but I know there are laws that forbid federal agencies from treating companies unfairly with their interactions. Favoring a company over other companies.

                  I think the PTO adopting the DOCX format for all applications probably violates one of those laws.

                  At least I’d bet there is enough to file a lawsuit against the PTO by another company such as Google.

      2. 5.1.2

        I was not surprised when the claims and continuations rules were enacted.

        This rule is different as it seems capricious, it goes too far, contradicts long-established holdings about how claims are treated, and (unless I’m mistaken) puts a lot of existing patents on much thinner ice than they were before.

        1. 5.1.2.1

          Who are you and what have you done with Malcolm?

          While not entirely supportive of a pro-patent view (“not surprised… this is different”), the rest sounds almost like you think patents are a good thing and deserve protection from capricious and arbitrary action.

          1. 5.1.2.1.1

            I, too, have been wondering the same thing . . .

          2. 5.1.2.1.2

            I calls ‘em as I sees ‘em.

          3. 5.1.2.1.3

            anon, he bats for the pharmaceutical companies. Always has.

        2. 5.1.2.2

          Why do you think the rule affects existing patents?

          1. 5.1.2.2.1

            Wondering the same thing p.l. Perhaps because any continuations after enactment would put the previous before-enactment patents’ (claims) in the family at risk? But that can’t be right, can it?

        3. 5.1.2.3

          1. It’s not arbitrary and capricious. They’re inundated with continuation applications and reams of IPR petitions on big patent families. There is a clear rationale for trying to tie the patentability of claims in the same family together–ostensibly they’re all claiming the same invention!

          2. It’s a closer question whether it contradicts the statute or Supreme Court precedent. You can at least say the Patent Act seems to assume that nothing like this would ever happen. But you could also say that seemingly inconsistent statutes like 282(a) (claims presumed valid independent of other claims of patent); 288 (can maintain action on claims even if other claims of patent invalidated); 253 (implying that you can disclaim without any additional requirement), while in tension with this rule, don’t expressly preclude it. For example, those provisions envision that claims *in the same patent* stand independently of each other, not that no encumbrances can be placed on claims of multiple patents covering the same invention.

          1. 5.1.2.3.1

            Kyle, the PTO saying, gee this is too much work for us is NOT a good reason.

  4. 4

    As history will record, with this latest initiative, Kathi Vidal has now cemented her position as one of the worst, most innovation-and America-dangerous Directors the Patent Office has ever had.

    . . . joining the most innovation-dangerous CAFC and SCOTUS the U.S. has ever had.

    Ever.

    Unfit to be the head of such a critically important office, she must either quit willingly . . . or be removed by Congress.

    Immediately.

    1. 4.1

      +1

  5. 3

    As I first noted when this topic came up, if you want ‘answers,’ follow the money: exactly WHO benefits?

      1. 3.1.1

        Why would you “bigsmile?” at that?

        (by the by, use “:” before and after “bigsmile” to insert the emoticon directly, rather than merely providing a link to the emoticon)

          1. 3.1.1.1.1

            Again, why?

            Do you understand that your insistence on posting in this manner only highlights how sad you are?

              1. 3.1.1.1.1.1.1

                False accusation – clearly.

                You are still having to “link” what should be plainly evident.

                Not very smart of you (especially as I have shared how to do it right)

                1. i would not “try this,” Snowflake, because i would look like a fool. But you do what you do.

                2. Classic errors from you: attempting to use one of my lines while getting it absolutely wr0ng.

                  Yummy.

                3. You do what you do

                  And I do it well – which may well be why you are sooo 0bsessed with me.

  6. 2

    Does anyone understand the “evergreening” objection? I mean, the whole point of a TD is to disclaim any term beyond that of the first filed application… “evergreening” is a term that gets applied to a lot of behaviours, but I don’t get it in this context.

    1. 2.1

      Yes, the term “evergreening” was far more appropriate for some later-filed divisional or continuation patents before patent term calculations were changed years ago. Now that term can only logically apply to those patents for which PTO delays provide terms extending more than 20 years beyond the earliest claimed priority filing date and which contain claims that would be infringed by the same competive products as related patents having the normal terms of 20 years from filing dates.
      However, there are allegations made that some pharma companies have also “evergreened” some products by getting the FDA to no longer approve the original patented product and only approve an “improved” version of that product that is covered by a later-filed improvemet patent. That’s a whole different topic and use of that term.
      Anyone more interested care to chip in?

    2. 2.2

      Right, the fact that the folks pushing this rule can say that they mean it to tackle “evergreening” tells you: (1) that they have no idea what they are talking about; and (2) cannot be troubled to spend even 5 minutes trying to learn. By definition, if a terminal disclaimer is given, then the resulting patent cannot “evergreen” anything. In any event, as other have noted, the proposed ruled is wildly ultra vires, so it scarcely matters. Even if the administration goes forward with it (which I sincerely hope they will not, but expect that they will), it will not survive first contact with a legal challenge, which will arrive scant weeks (at most) after the regulation comes into effect.

      1. 2.2.1

        It has already been challenged – I think that PatentDocs covered it.

      2. 2.2.2

        I believe they’re using the term in a different way. Let’s say you’re a patent troll, like IPValue. Your plan is to just sue, sue, sue. But there’s a thing called IPR, and a defendant can have your patent’s claims invalidated for a $ cost. And your patent may be in a very crowded field, with not great priority dates. Since invalidating them could just be a question of $, how do you make that $$$? By having multiple patents with claims that cover the same thing, maybe with slightly different wording. It doesn’t matter if the real claim scope is the same, the defendant still has to file x IPRs. Or you can assert different patents against different defendants (seriatim or concurrently) to protect against their collusion or maintain the threat even after one successful defendant.

  7. 1

    The May 29 IPWatchdog said that “On May 28, a group of five former Directors, Deputy Directors and Patent Commissioners at the U.S. Patent and Trademark Office (USPTO) sent a letter addressed to current USPTO Director Kathi Vidal in opposition to a rule package on terminal disclaimer practice proposed earlier this month.”
    [I have never heard of, before this, of such a large group of high-ranking former USPTO government officials filing such a joint opposition to a proposed PTO rule package?]

    1. 1.1

      Perhaps because the PTO has rarely proposed such an ill-considered rule?

      1. 1.1.1

        “all”….

        time for neoliberals like himself to “pass the baton” to their colleagues further to the left

        Saying the quiet part out loud.

        1. 1.1.1.1

          Autocorrect strikes again…

          “all” => “ll”

        2. 1.1.1.2

          Saying the quiet part out loud.
          If that is the only thing you got out of that article, I suspect you didn’t read it. Had you read it, I suspect you would have nodded your head in agreement far more than you would have disagreed with the ideas set forth therein.

          1. 1.1.1.2.1

            I read it.

            Are you disagreeing with the portion that I chose to provide?

          2. 1.1.1.2.2

            I see that you wish to retreat in regards to the specific item that I have presented.

            Or maybe you just chose not to read even that.

            1. 1.1.1.2.2.1

              Nope. Wrong again.

              1. 1.1.1.2.2.1.1

                Interesting that you would attach yourself here.

                Odd.

                But interesting.

                1. Snowflake is the “we” that have to close comments on you again and again when t
                  you recycle the same dreck again and again. And again.

                2. There you go again – projecting AND thinking that you have some ‘power’ that you clearly do not.

                  What does ‘closing comments’ even mean (to you)?

                3. Is that what they told you, Snowflake? We have the filters in place only for you because, well you don’t know how to speak English good.

                4. Your interpretation is quite off, as the George Carlin filter is agnostic to poster (by and large – there is a separate and different ‘per user’ filter).

                5. you think failing is one of the seven forbidden words, Snowflake?

                  where did you come from?

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