In the prosecution of a patent application before the U.S. Patent and Trademark Office (USPTO), under certain instances, an examiner can issue a nonstatutory obviousness-type double patenting rejection (ODP rejection) based on the claims of another reference patent or application. When facing such an ODP rejection, the filing of a terminal disclaimer in the application being prosecuted as to the reference patent or application is one avenue of overcoming the rejection.
In a terminal disclaimer, the patent applicant is agreeing that the patent issuing from the application being prosecuted will have the expiration date of the reference patent or a patent issuing from the reference application (if the ODP rejection is based on a pending application).
Also in a terminal disclaimer, the patent applicant agrees that any patent issuing from the patent application being prosecuted, and the reference patent or a patent issuing from the reference application, will have common ownership during their common patent term (or in the case of a joint research agreement, common enforcement).
Importantly, an additional agreement by the patent applicant in a terminal disclaimer is that any patent issuing from the patent application being prosecuted, and the reference patent or a patent issuing from the reference application or application, will only be enforceable during the common patent term so long as the two patents are commonly owned (or in the case of a joint research agreement, commonly enforced).
The erroneous filing of a terminal disclaimer cannot be cured by a reissue application, see Ex parte Yamazaki, Appeal 2010-002033 (BPAI 2011), aff'd, In re Yamazaki, 702 F.3d 1327 (Fed. Cir. 2012) (overruling Ex parte Durckheimer, Appeal 94-2004 (BPAI 1996)).
Thus, there can be undesired, incurable consequences for a patentee from the erroneous filing of a terminal disclaimer. This was recently exhibited in SIPCO, LLC v. Jasco Products Co., No. CIV-19-709, 2024 WL 2754047 (W.D. Okla. May 29, 2024).
Sipco owns U.S. Patent No. 8,335,304 ('304 patent), which it asserted against Jasco, alleging infringement. Jasco sought dismissal of Sipco's claims of patent infringement under Federal Rule of Civil Procedure 12(b)(6), arguing that the '304 patent and U.S. Patent No. 6,430,267 ('267 patent), to which the '304 patent was terminally disclaimed, were never commonly owned by Sipco, thereby rendering the asserted '304 patent unenforceable.
During prosecution of the '304 patent, the examiner issued an ODP rejection over the '267 patent. In response to the underlying office action, Sipco filed a terminal disclaimer over the '267 patent to overcome the double patenting rejection. The application was allowed and issued as the '304 patent.
It was later discovered that Sipco never owned the '267 patent, which is not in the same patent family as the '304 patent and whose claimed subject matter is entirely different from that of the issued '304 patent. Sipco owns related U.S. Patent No. 6,430,268 ('268 patent), which is in the same family as the '304 patent. Thus, reference to the '267 patent in USPTO communications amounted to a transcription error ultimately compounded by Sipco.
Sipco attempted to correct the error in the '304 patent by petitioning the USPTO for withdrawal of the terminal disclaimer as to the '267 patent and requesting replacement of it with a terminal disclaimer as to the '268 patent. (The Board of Patent Appeals and Interferences in Ex parte Yamazaki observed that Yamazaki has not petitioned in the Yamazaki reissue application for withdrawal of the terminal disclaimer there in issue.)
The USPTO dismissed the petition, citing an update to the Manual of Patent Examining Procedure (MPEP) effective August 15, 2017, which provides that the USPTO will not, after a patent has been granted, withdraw an incorrect terminal disclaimer that was the result of an inadvertent error, but rather will only allow a patentee to put on file an explanation of the error and additional terminal disclaimer(s) that may correct the error. See October 20, 2017 Petition Decision in USPTO file for the '304 patent; see also MPEP 1490(VIII)(B). Sipco filed a standalone terminal disclaimer over the '268 patent on February 6, 2018, but the '304 patent had already expired based on a terminal disclaimer as to yet another patent.
Jasco, in seeking dismissal of Sipco's claims of patent infringement, asserted that the plain language of the terminal disclaimer rendered the '304 patent unenforceable. Because the '304 patent and the '267 patent to which the '304 patent was terminally disclaimed were never commonly owned by Sipco, as required under the terminal disclaimer, the '304 patent was unenforceable immediately upon issue for its entire term. Jasco further asserted that Sipco, in executing and filing the terminal disclaimer, should be held to the plain language of the disclaimer, which requires common ownership for enforceability of the underlying patent to prevent harassment by multiple assignees.
Sipco argued that, based on the transcription error between the '267 and '268 patents, the terminal disclaimer would be rendered ineffective because there was never a double patenting issue between the claims of the underlying application leading to issuance of the '304 patent and the '267 patent, each of which related to different subject matter such that there was no risk of an unjustified extension of patent term.
The court, in granting Jasco's Rule 12(b)(6) motion to dismiss, ultimately held that the erroneous terminal disclaimer to the '267 patent rendered the '304 patent unenforceable upon issue. Terminal disclaimers, upon taking effect, are considered part of the original patent and assist in providing public notice as to the full scope of the limited monopoly granted to the patentee by the patent system. See 35 U.S.C. § 253. Accordingly, issuance of the '304 patent came with it being terminally disclaimed over the '267 patent. In the interest of providing public notice, the patentee should be held to the promise made in executing and filing the terminal disclaimer in which the '304 patent is only enforceable for the period in which the '304 and the '267 patents are both commonly owned.
SIPCO and the USPTO's Proposed Changes to Terminal Disclaimer Practice
The USPTO, in its May 10, 2024, notice of proposed rulemaking, has proposed requiring applicants to agree upon the filing of a terminal disclaimer to obviate obviousness-type double patenting that the underlying patent is enforceable only if the patent is not, and has never been, tied directly or indirectly to a patent by one or more terminal disclaimers filed to obviate nonstatutory double patenting where any claim has been invalidated under anticipation or obviousness by the USPTO or federal court or statutorily disclaimed. See Terminal Disclaimer Practice to Obviate Nonstatutory Double Patenting, 89 Fed. Reg. 40439.
Under the proposed rule, a patent directly tied with a reference patent via a terminal disclaimer may not be enforceable if a claim in the reference patent is invalidated over prior art. Patents and co-pending applications within a patent family may be indirectly linked together based on a series of terminal disclaimers identifying the other family members as reference applications or patents. In this scenario, a patent family that is tied directly and indirectly together by a series of terminal disclaimers risks being unenforceable in its entirety if one claim in any one patent is invalidated over prior art. Thus, the proposed rules can have the effect of wiping out entire patent families in a chain reaction.
SIPCO provides an example of the unwarranted and adverse effects of an erroneous terminal disclaimer filed on the basis of a transcription error made by the USPTO. The issues in SIPCO only compounded and snowballed based on the USPTO's error before being discovered, ultimately leading to the holding of the unenforceability of the asserted patent in an infringement action.
Based on the current procedures to not withdraw erroneous terminal disclaimers post-grant, even in view of human error, the proposed rules would only cause a further disservice to the public. Patentees and stakeholders could find themselves on the wrong end of a transcription error by the USPTO and end up in the same situation as in SIPCO with an unenforceable patent upon issue or, in an even more undesirable position, terminally disclaiming over an erroneously cited reference patent that is co-owned by the applicant in which a claim reciting completely different subject matter is later invalidated over prior art. This latter situation, which may involve patents never having any double patenting issues and relating to distinguishable and contrasting subject matter (e.g., viral vectors and beehive structures), has the potential to destroy an entire patent family under the proposed rules should the patent family involve a series of patents directly and indirectly tied by a series of terminal disclaimers, one of which is erroneous.
The apparent lack of any post-grant means to remedy or withdraw an obviously erroneous terminal disclaimer made through human error means that patentees and stakeholders are at the mercy of the USPTO to ensure that it accurately cites the intended reference patent or application in an ODP patenting rejection. Although there is still an onus on patent practitioners to diligently review the conflicting patents and/or pending applications cited in an ODP patenting rejection to determine whether the rejection is proper, the new proposed rules still fail to provide any recourse for USPTO error and can only further harm patentees and stakeholders through the potential chain reaction effect of rendering an entire patent family tied together by a series of terminal disclaimers ultimately rooted in USPTO error unenforceable.
Comments on the notice of proposed rulemaking are due on July 9, 2024.
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