The United States Patent and Trademark Office (USPTO) has proposed, in May 2024, a change to how terminal disclaimers are used. Under the current system, a terminal disclaimer allows a patent holder to disclaim the terminal portion of a patent’s term, essentially giving up some exclusivity rights, to overcome a double patenting rejection. The proposed rule adds a significant new wrinkle: a requirement that the patent with the terminal disclaimer will only be enforceable if no claims in a referenced patent are ever found invalid based on prior art by the patent examiner. This essentially links the enforceability of a patent to the validity of claims in another patent.
Background and Goal of USPTO’s Proposal
The USPTO made this proposal out of concern that some companies might be using terminal disclaimers strategically to stifle competition in the market by obtaining patents on multiple inventions that have only minor variations from one another, which can reduce innovation. Challenging the validity of each of these patents can be a costly endeavor for competitors, especially small businesses.
The USPTO believes the proposed changes could address this by enhancing competition, reducing litigation costs by discouraging patents for products that are only slightly variable from each other. The USPTO’s proposal makes it easier for patent examiners to invalidate multiple patents through a focused challenge on a single claim. This would allow market competitors to challenge patents on minor variations without the burden of expensive, multi-pronged legal battle, and increase market competition. Furthermore, challengers may concentrate resources on a single legal action against one claim in the contested patent, which would reduce overall litigation costs.
Potential Impact on Patent Holders
The proposed change, if passed, will make it more difficult for business owners to patent multiple inventions with only minor inventive variations. By tying the enforceability of a patent to the validity of claims within a referenced patent, the USPTO hopes to discourage companies from seeking patents on inventions that offer little substantive difference. As such, patent holders will need to carefully evaluate the potential risks and rewards under this new proposal before filing a terminal disclaimer. The possibility of jeopardizing their entire patent’s enforceability due to a challenge on a referenced patent could necessitate a more cautious approach.
Patent applicants might also prioritize filing patents for distinct inventions from the beginning, potentially reducing reliance on continuation applications with minor variations. This could lead to a more streamlined patent portfolio. We might also see a rise in initial applications with a broader range of claims that eliminates the need for additional patents. This could potentially lead to more comprehensive initial patent application filings that avoid the complexities of the proposed disclaimer system.