By Joshua Rich and Andrew Velzen --
On May 10, 2024, the U.S. Patent and Trademark Office published a Notice of Proposed Rulemaking (NPRM) regarding terminal disclaimer practice. The proposed rule would have required any terminal disclaimer filed to obviate nonstatutory (obviousness-type) double patenting to include provisions tying the validity and enforceability of the claims of that patent to the validity and unenforceability of each of the claims in the other patent. The NPRM drew over 300 comments, including a highly critical open letter from former USPTO Directors and others. Now, in light of the vociferous criticism, much like Drake[1] or Nirvana[2] (or for an older audience, Gilda Radner[3]), the USPTO has said "Nevermind."[4]
The NPRM announced a proposed change to 37 C.F.R. § 1.321 that would have added an additional requirement for a terminal disclaimer to be used to overcome nonstatutory double patenting rejections (in addition to the common ownership requirement). Namely, under the proposed rule, the terminal disclaimer would also have needed to:
[I]nclude an agreement . . . that the patent in which the terminal disclaimer is filed, or any patent granted on an application in which a terminal disclaimer is filed, will be enforceable only if the patent is not tied and has never been tied directly or indirectly to a patent by one or more terminal disclaimers filed to obviate nonstatutory double patenting rejections in which:
any claim has been finally held unpatentable or invalid as anticipated or obvious by a Federal court in a civil action or by the USPTO . . . or
a statutory disclaimer of a claim is filed after any challenge based on anticipation or obviousness to that claim has been made."[5]
The proposed rule would purportedly "promote innovation and competition by allowing a competitor to avoid enforcement of patents tied by one or more terminal disclaimers to another patent having a claim . . . held unpatentable."[6]
There were a raft of potential problems with the proposed rule, ranging from conflicts with codified law and precedent to policy concerns, as we noted in previous posts.[7] Following in our footsteps, several former high-ranking USPTO officials (including former Directors) signed onto an open letter to Director Vidal.[8],[9] In fact, the Directors found the NPRM so inflammatory, that they called for not only a non-enactment of the proposed rule, but also an immediate withdrawal of the NPRM, itself.
The letter argued that the proposed rule was an improper -- indeed, illegal -- exercise of rulemaking authority on two basic grounds.
First, it argued that the proposed rule would constitute a "substantive" rule and, therefore, was beyond the USPTO's statutory authority to implement (i.e., illegal). Under 35 U.S.C. § 2(b)(2)(A), the USPTO "may establish regulations, not inconsistent with law, which . . . shall govern the conduct of proceedings in the Office."[10] This is frequently interpreted as giving the USPTO the authority to make procedural rules, but not substantive ones.[11] Notably, both the proposed rule and former Directors' letter preceded the overturning of Chevron deference by the Supreme Court in Loper Bright Enterprises v. Raimondo.[12] That decision shifted the ground beneath the USPTO's feet, robbing it of deference in rulemaking, and arguably making the proposed rule even further outside the USPTO's purview.
Second, the Directors' letter argued as we had before that the proposed rule conflicted with the Patent Act because it would render entire families of patents invalid or unenforceable whenever a single claim in an entirely different patent tied to it by a terminal disclaimer was found invalid or unenforceable. It did not seem like a close question, since 35 U.S.C. § 282(a) requires that:
A patent shall be presumed valid. Each claim of a patent (whether in independent, dependent, or multiple dependent form) shall be presumed valid independently of the validity of other claims; dependent or multiple dependent claims shall be presumed valid even though dependent upon an invalid claim. The burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity [emphasis added].
The proposed rule would have turned that presumption on its head and linked the validity of all members of a terminal disclaimer family together. If one claim had fallen, it would have been an anchor around the neck of all the others, sinking them with it.
The Directors' letter also attacked the proposed rule on policy grounds. It argued the NPRM relied on an insufficient investigation of the need for the proposed rule and that the proposed rule "seeks to solve a problem that does not exist." Indeed, even the data presented in the NPRM, itself, seemed to undercut the necessity of the proposed rule. Furthermore, the letter set forth a parade of horribles that could result as unintended consequences of the proposed rule.
In light of the former Directors' letter (and many other negative comments), the USPTO has now announced that it "has decided not to move forward with the proposed rule at this time and to withdraw the proposed rule," citing "resource constraints."[13] In a note of grace in withdrawing the proposed rule, the USPTO noted that:
Despite the decision not to move forward with the proposed rule at this time, the USPTO appreciates and takes seriously the thoughtful perspectives raised by commenters. The USPTO will continue engaging with its stakeholders as it works to foster a balanced, robust, and reliable intellectual property system.
Regardless, the final result is the one suggested by the authors and the former Directors alike: the withdrawal of the proposed rule requiring changes to terminal disclaimer practice to obviate nonstatutory double patenting.
[1] https://en.wikipedia.org/wiki/Honestly,_Nevermind
[2] https://en.wikipedia.org/wiki/Nevermind
[3] https://www.youtube.com/watch?v=fZLeaSWY37I
[4] https://public-inspection.federalregister.gov/2024-28263.pdf
[5] https://www.federalregister.gov/documents/2024/05/10/2024-10166/terminal-disclaimer-practice-to-obviate-nonstatutory-double-patenting.
[6] https://www.federalregister.gov/documents/2024/05/10/2024-10166/terminal-disclaimer-practice-to-obviate-nonstatutory-double-patenting
[7] For in-depth discussions of the problems with the proposed rule, see https://www.patentdocs.org/2024/05/uspto-proposed-rule-change-to-terminal-disclaimer-practice.html, https://www.patentdocs.org/2024/05/the-usptos-proposed-terminal-disclaimer-rule-a-litigators-perspective.html
[8] The letter was signed by former directors Andrei Iancu, David Kappos, and Drew Hirshfeld and former deputy directors Laura Peter and Russell Slifer. A copy of the letter can be found here: https://patentdocs.typepad.com/files/2024-05-28-letter.pdf
[9] For an extensive discussion of the letter, please see https://www.patentdocs.org/2024/06/former-directors-request-rescission-of-proposed-rule-change.html.
[10] https://www.law.cornell.edu/uscode/text/35/2.
[11] See also Merck & Co. v. Kessler, 80 F.3d 1543 (Fed. Cir. 1996); Animal Legal Def. Fund v. Quigg, 932 F.2d 920 (Fed. Cir. 1991).
[12] No. 22–451, 603 U.S. __, 144 S. Ct. 2244 (2024).
[13] https://public-inspection.federalregister.gov/2024-28263.pdf
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